<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d)
of the Securities Act of 1934
For the quarter ended Commission File No. 0-13403
March 31, 1999
- --------------------------------------------------------------------------------
AMISTAR CORPORATION
(Exact name of registrant as specified in its Charter)
- --------------------------------------------------------------------------------
STATE OF CALIFORNIA 95-2747332
(State or other jurisdiction of Incorporation (I.R.S. Employer
or organization Identification No.)
237 VIA VERA CRUZ 92069
SAN MARCOS, CALIFORNIA (Zip Code)
(Address of principle executive offices)
(760) 471-1700
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No __
CLASS OUTSTANDING AT APRIL 28, 1999
Common Stock $.01 Par Value 3,136,500
1
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Part I
ITEM 1. FINANCIAL STATEMENT
<TABLE>
AMISTAR CORPORATION
Condensed Balance Sheets
(In thousands)
<CAPTION>
MAR. 31,* DEC. 31,
1999 1998
------------------- -------------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 868 $ 1,477
Trade accounts receivable, net 6,522 5,992
Income taxes receivable 451 289
Inventories 4,658 4,835
Demonstration equipment 193 274
Prepaid expenses 270 217
Deferred income taxes 461 461
------------------- -------------------
Total current assets 13,423 13,545
Property and equipment, net 5,664 5,768
Contracts receivable 1,000 987
Restricted cash 1,329 1,329
Other 144 130
------------------- -------------------
$ 21,560 $ 21,759
=================== ===================
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 721 $ 678
Accrued liabilities 1,138 1,158
------------------- -------------------
Total current liabilities 1,859 1,836
Industrial development bonds 4,500 4,500
Shareholders' equity:
Common stock 31 31
Additional paid-in capital 4,589 4,589
Retained earnings 10,581 10,803
------------------- -------------------
Total shareholders' equity 15,201 15,423
------------------- -------------------
$ 21,560 $ 21,759
=================== ===================
*Unaudited
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
2
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<TABLE>
AMISTAR CORPORATION
Condensed Statements of Earnings and Retained Earnings
(Unaudited and In thousands)
<CAPTION>
Three months ended March 31, 1999 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 4,619 $ 5,306
Cost of sales 3,556 3,575
-------------------- --------------------
Gross profit 1,063 1,731
Operating expenses:
Selling 803 875
General and administrative 271 290
Research and development 349 297
-------------------- --------------------
1,423 1,462
-------------------- --------------------
Income (loss) from operations (360) 269
Other income (expense), net (10) 3
-------------------- --------------------
Income (loss) before income taxes (370) 272
Income tax expense (benefit) (148) 95
-------------------- --------------------
Net earnings (loss) (222) 177
Retained earnings, beginning of period 10,803 10,573
-------------------- --------------------
Retained earnings, end of period $ 10,581 $ 10,750
==================== ====================
Basic and diluted earnings (loss)
per common share $ (0.07) $ 0.05
==================== ====================
Weighted average shares
outstanding 3,137 3,237
==================== ====================
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
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<TABLE>
AMISTAR CORPORATION
Condensed Statements of Cash Flows
(Unaudited and In thousands)
<CAPTION>
Three months ended March 31, 1999 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (222) $ 177
Adjustments to reconcile net earnings (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization 178 169
Gain on sale of equipment (4) (12)
Changes in assets and liabilities:
Trade accounts receivable, net (530) (210)
Income taxes receivable (162) -
Inventories 177 297
Demonstration equipment 81 (113)
Prepaid expenses and other assets (67) (30)
Contracts receivable (13) 226
Accounts payable and accrued liabilities 23 (96)
Income taxes payable - 73
------------------- -------------------
Cash provided by (used in) operating activities (539) 481
Cash flows from investing activities:
Capital expenditures (75) (400)
Proceeds from sale of equipment 5 12
------------------- -------------------
Cash flows used in investing activities (70) (388)
Net increase (decrease) in cash (609) 93
Cash at the beginning of the period 1,477 2,521
------------------- -------------------
Cash at the end of the period $ 868 $ 2,614
=================== ===================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 39 $ 44
Income tax $ 14 $ 22
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
4
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AMISTAR CORPORATION
Notes to Condensed Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
- ---------------------
The Interim Condensed Financial Statements of Amistar Corporation, a
California corporation (the "Company") have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in the financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to such rules and
regulations. These Interim Condensed Financial Statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's 1998 annual report on Form 10-K as filed with the Securities and
Exchange Commission on March 23, 1999.
Inventories
- -----------
Inventories are stated at the lower of cost (first-in, first-out) or market
and include material, labor and manufacturing costs. Inventories consist of the
following (in thousands):
Mar. 31,* Dec. 31,
1999 1998
---------------- ----------------
Raw Material $ 844 $ 876
Work In Process 1,943 2,016
Finished Goods 1,871 1,943
---------------- ----------------
$ 4,658 $ 4,835
================ ================
* Unaudited
5
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AMISTAR CORPORATION
Notes to Condensed Financial Statements, Continued
Industry Segments and Geographic Information
- --------------------------------------------
The following table summarizes the Company's two operating segments: Machine
Sales and Service, which encompasses the manufacture and distribution of
assembly machines and related accessories, and Amistar Manufacturing Services.
The Company identifies reportable segments based on the unique: nature of
operating activities, customer base and marketing channels. Information is also
provided by major geographical area.
<TABLE>
<CAPTION>
MACHINE SALES & SERVICE
-------------------------------------------------
UNITED REST OF MFG.
STATES EUROPE WORLD TOTAL SERVICES CORPORATE TOTAL
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1999
Net sales to unaffiliated
customers $ 2,611 $ 133 $ 152 $ 2,896 $ 1,723 $ - $ 4,619
========== ========== ========== ========== ========== ========== ==========
Earnings (loss) from operations (209) (11) (12) (232) (129) - (360)
========== ========== ========== ========== ========== ========== ==========
Identifiable assets 9,288 1,410 130 10,828 2,960 7,772 21,560
========== ========== ========== ========== ========== ========== ==========
THREE MONTHS ENDED MARCH 31, 1998
Net sales to unaffiliated
customers 3,393 173 198 3,764 1,542 - 5,306
========== ========== ========== ========== ========== ========== ==========
Earnings (loss) from operations 334 14 23 371 (102) - 269
========== ========== ========== ========== ========== ========== ==========
Identifiable assets 12,050 1,350 30 13,430 2,460 6,500 22,390
========== ========== ========== ========== ========== ========== ==========
</TABLE>
6
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AMISTAR CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward Looking Statements
- --------------------------
This Quarterly Report contains forward-looking statements within the
meaning of the Private Securities Reform Act of 1995, particularly statements
regarding market opportunities, customer acceptance of products, gross margin
and marketing expenses. These forward-looking statements involve risks and
uncertainties, and the cautionary statements set forth below, identify important
factors that could cause actual results to differ materially from those in any
such forward-looking statements. Such factors include, but are not limited to,
adverse changes in general economic conditions, including changes in the
specific markets for the Company's products, product availability, decreased or
lack of growth in the electronics industry, adverse changes in customer order
patterns, increased competition, lack of acceptance of new products, pricing
pressures, lack of success in technological advancements, risks associated with
foreign operations and other factors.
RESULTS OF OPERATIONS
Net Sales
- ---------
Net sales for the three months ended March 31, 1999, were $4,619,000
compared to $5,306,000 for the same period in the prior year. Machine sales were
negatively affected by soft demand in the electronics industry and particularly
in the memory module assembly sector. Sales of manufacturing services grew by
12% over the same three months in the prior year. The manufacturing services
sales growth was primarily from the existing account base.
Gross Profit
- ------------
Gross profit declined as a percentage of sales due to a higher mix of
manufacturing services sales, which generated a negative gross profit in the
current quarter compared to break-even in the comparative quarter last year. The
machine division gross profit was negatively impacted by additions to reserves
for obsolescence related to the PlaceMaster(R) machine inventory. In addition,
the gross profit continued to be affected by excess capacity in the machine
manufacturing division.
Sales, General and Administrative
- ---------------------------------
Selling and marketing expenses declined in the current quarter primarily
due to reductions in headcount and lower commission expenses resulting from the
decline in sales.
Research and development
- ------------------------
Research and development expenses increased in the current quarter due to
efforts to complete the Company's new assembly machine, which utilizes an
emerging technology in the circuit board assembly process.
7
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AMISTAR CORPORATION
LIQUIDITY AND CAPITAL RESOURCES
The Company used cash of $539,000 in operating activities for the three
months ended March 31, 1999. Accounts receivable increased primarily due to
delays in customer acceptance of assembly machines pending completion of certain
field upgrades. Inventory decreased due to liquidation of older machine models,
sales of thru-hole technology machines, and reductions in manufacturing services
division materials on hand. Demonstration equipment fluctuates as machines are
routinely sold and replaced. Accessories are transferred in and out of
demonstration equipment based on the specific demonstration requirements.
Expenditures in the current quarter for property and equipment were $75,000, and
primarily consisted of equipment for the manufacturing services division
facility expansion. The Company's line of credit with its' bank matured March
31, 1999. The Company is in the process of renewing the line of credit and
believes the renewal will occur in the second quarter of 1999. The Company
believes that cash provided from operations, cash balances at March 31, 1999,
and available drawings from its line of credit, when renewed, will be adequate
to support its operating and investing requirements through 1999.
YEAR 2000 ISSUES
The Year 2000 problem concerns the inability of certain computer systems to
appropriately recognize the year 2000 when the last two digits of the year are
entered in the date field. The Company has assessed its Year 2000 requirements
and believes that its major computer systems, its products, and capital
equipment are Year 2000 compliant. Therefore, the Company believes that its
costs to become Year 2000 compliant have not been material and are anticipated
to not be material in the future.
The Company, however, could be adversely affected by the Year 2000 problem
if computer systems of third parties such as customers, suppliers, banks,
utilities, and others with which the Company does business fail to address the
Year 2000 problem successfully. While the Company continues to gather data on
the Year 2000 compliance status of its customers and suppliers, there can be no
assurance that the Year 2000 problem, if experienced by such third parties, will
not have a material adverse effect upon the Company's business, operating
results or financial condition. The Company expects to have completed gathering
data on its key customers and suppliers by June 30, 1999. Of the key suppliers
identified, Tenryu Technics, the manufacturer of the private label line, has
confirmed that their Tenyru built machines are Year 2000 compliant and that they
are currently evaluating their enterprise information system for Year 2000
compliance.
The company has not yet developed a contingency plan for a worst case Year
2000 scenario. As a result of widespread or extended failure of systems of third
parties to be Year 2000 compliant, this could have a material adverse effect on
the Company's business and financial condition or operating results.
The above Year 2000 disclosure constitutes a "Year 2000 Readiness
Disclosure" as defined in The Year 2000 Information and Readiness Disclosure Act
(the "Act"), which was signed into law on October 19, 1998. The Act provides
added protection from liability for certain public and private statements
concerning a company's Year 2000 readiness.
8
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AMISTAR CORPORATION
PART II.
Items 1-6 Non-Applicable
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMISTAR CORPORATION
By /s/ William W. Holl
---------------------------
William W. Holl
Chief Financial Officer,
Chief Accounting Officer &
Duly Authorized Officer
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 1999 AND THE RELATED STATEMENT OF OPERATIONS FOR THE
PERIOD ENDED MARCH 31, 1999.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 868
<SECURITIES> 0
<RECEIVABLES> 6,973
<ALLOWANCES> 0
<INVENTORY> 4,658
<CURRENT-ASSETS> 13,423
<PP&E> 5,664
<DEPRECIATION> 0
<TOTAL-ASSETS> 21,560
<CURRENT-LIABILITIES> 1,859
<BONDS> 4,500
0
0
<COMMON> 31
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 21,560
<SALES> 4,619
<TOTAL-REVENUES> 4,619
<CGS> 3,556
<TOTAL-COSTS> 3,556
<OTHER-EXPENSES> 1,423
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10
<INCOME-PRETAX> (370)
<INCOME-TAX> (148)
<INCOME-CONTINUING> (222)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (222)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
