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1
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, 2000
- --------------------------------------------------------------------------------
AMISTAR CORPORATION
(Exact name of registrant as specified in its Charter)
- --------------------------------------------------------------------------------
STATE OF CALIFORNIA 95-2747332
(State or other jurisdiction of (I.R.S. Employer
Incorporation 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 20, 2000
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,
2000 1999
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,088 $ 2,476
Trade accounts and contracts receivable, net 3,072 3,514
Income taxes receivable 212 208
Inventories 3,167 3,047
Demonstration equipment 154 118
Prepaid expenses 100 72
--------------- ---------------
Total current assets 9,793 9,435
Property and equipment, net 5,233 5,382
Contracts receivable 14 25
Restricted cash 1,329 1,329
Other assets 110 114
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$ 16,479 $ 16,285
=============== ===============
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 697 $ 515
Accrued liabilities 633 683
--------------- ---------------
Total current liabilities 1,330 1,198
Industrial development bonds 4,500 4,500
Shareholders' equity:
Common stock 31 31
Additional paid-in capital 4,589 4,589
Retained earnings 6,029 5,967
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Total shareholders' equity 10,649 10,587
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$ 16,479 $ 16,285
=============== ===============
*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, 2000 1999
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 4,775 $ 4,619
Cost of sales 3,647 3,556
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Gross profit 1,128 1,063
Operating expenses:
Selling 555 803
General and administrative 268 271
Research and development 267 349
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1,090 1,423
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Income (loss) from operations 38 (360)
Other income (expense), net 24 (10)
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Earnings (loss) before income taxes 62 (370)
Income tax expense (benefit) - (148)
--------------- ---------------
Net earnings (loss) 62 (222)
Retained earnings, beginning of period 5,967 10,803
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Retained earnings, end of period $ 6,029 $ 10,581
=============== ===============
Basic and diluted earnings (loss)
per common share $ 0.02 $ (0.07)
=============== ===============
Weighted average shares
outstanding 3,137 3,137
=============== ===============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
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<TABLE>
AMISTAR CORPORATION
Statements of Cash Flows
(Unaudited and In thousands)
<CAPTION>
Three months ended March 31, 2000 1999
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<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net earnings (loss) $ 62 $ (222)
Adjustments to reconcile net earnings (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization 188 178
Gain on sale of equipment - (4)
Changes in assets and liabilities:
Trade accounts receivable, net 273 (530)
Income taxes receivable (4) (162)
Inventories 49 177
Demonstration equipment (36) 81
Prepaid expenses and other assets (24) (67)
Contracts receivable 11 (13)
Accounts payable and accrued liabilities 132 23
--------------- ---------------
Net cash provided by (used in) operating activities 651 (539)
Cash flows from investing activities:
Capital expenditures (39) (75)
Proceeds from sale of equipment - 5
--------------- ---------------
Cash flows used in investing activities (39) (70)
Net increase (decrease) in cash and cash equivalents 612 (609)
Cash and cash equivalents at the beginning of the period 2,476 1,477
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Cash and cash equivalents at the end of the period $ 3,088 $ 868
=============== ===============
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 40 $ 39
Income tax $ 4 $ 14
</TABLE>
Supplemental disclosure of non-cash operating activities:
In January 2000, the Company transferred the unsold balance of
repossessed machines recorded at $169,000 from contracts receivable to
inventory.
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 1999 annual report on Form 10-K as filed with the Securities and
Exchange Commission on March 17, 2000.
Inventories
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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,
2000 1999
--------------- ---------------
Raw Material $ 1,013 $ 965
Work In Process 1,108 1,074
Finished Goods 1,046 1,008
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$ 3,167 $ 3,047
=============== ===============
* Unaudited
Income taxes
- ------------
During the year ended December 31, 1999, the Company recorded a 100%
valuation allowance against deferred income tax assets. This valuation was based
on the 1999 year-to-date loss position and management's belief that it is not
more likely than not that the Company will be able to utilize the benefits of
the deferred tax assets in the future. The current quarter income tax expense
was offset by the utilization of net operating loss carry-forwards.
5
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AMISTAR CORPORATION
Notes to Condensed Financial Statements, Continued
Industry Segments and Geographic Information
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The following table summarizes the Company's two operating segments:
Machine Sales and Service, which encompass 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, 2000
Net sales to unaffiliated
customers $ 2,310 $ 61 $ 669 $ 3,039 $ 1,736 $ - $ 4,775
=========== =========== =========== =========== =========== =========== ===========
Earnings (loss) from operations 154 4 44 202 (164) - 38
=========== =========== =========== =========== =========== =========== ===========
Total assets 4,875 168 560 5,603 2,637 8,240 16,479
=========== =========== =========== =========== =========== =========== ===========
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)
=========== =========== =========== =========== =========== =========== ===========
Total assets 9,288 1,410 130 10,828 2,960 7,772 21,560
=========== =========== =========== =========== =========== =========== ===========
</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 trade and other factors.
RESULTS OF OPERATIONS
Net Sales
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Net sales for the three months ended March 31, 2000 were $4,775,000
compared to $4,619,000 for the same period in the prior year. During the current
period, sales of the Company's surface mount machine declined, while sales of
the newly introduced DataPlace(TM) label placement machine increased. The
current period DataPlace machine sales were made to major OEM and contract
manufacturers and included both repeat and multiple unit orders. The Company
anticipates that surface mount machine sales will continue to decline and
therefore provide a less significant contribution to machine sales.
Gross Profit
- ------------
Gross profit in the machine division improved over the comparable quarter
in 1999 due to the higher margins realized on the DataPlace machines.
Selling Expenses
- ----------------
Selling expenses decreased due to reduced commission expenses on machines
sold on a direct basis and due to marketing and field service expense
reductions.
Research and Development
- ------------------------
Research and development expenses decreased due to lower costs incurred on
the DataPlace 100LP machine during the production phase and the preliminary
development phase of the next machine in the DataPlace family.
7
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AMISTAR CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Income tax expense
- ------------------
The current quarter income tax expense was offset by the utilization of net
operating loss carry-forwards.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flow from operations was $651,000 for the three months
ended March 31, 2000. Trade accounts and notes receivable decreased primarily
due to the repossession of ten private label machines from PricePoint Micro
Technologies due to default on the contract receivable terms. The repossession
in January 2000 resulted in a transfer of $739,000 in contracts receivable to
finished goods inventory. As of March 31, 2000, seven of the ten repossessed
machines have been sold. During 1999, the Company was in default on financial
covenants related to a letter of credit reimbursement agreement with its bank.
The letter of credit supports the $4,500,000 industrial development bonds. On
November 3, 1999, the Company received a waiver related to these covenants
extending through December 31, 2000. Management believes that the Company will
be in compliance with the financial covenants by the end of fiscal 2000. The
Company believes that cash provided from operations, and cash balances at March
31, 2000 will be adequate to support its operating and investing requirements
through 2000.
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 assessed its Year 2000
requirements and determined that its major computer systems, its products, and
capital equipment were Year 2000 compliant. The costs to access Year 2000
compliance were immaterial.
The Company has not experienced any significant problems or
interruption in operations related to Year 2000 issues.
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DATA ABOUT MARKET RISK
The Company is exposed to a variety of risks, including foreign currency
fluctuations and changes in interest rates affecting the cost of its debt. A
significant decrease in the exchange rate of Yen versus the U.S. Dollar would
not have an adverse effect on the Company's financial condition or results of
operations. The Company's only long-term debt at March 31, 2000 is comprised of
Industrial Development bonds. The bonds mature in December 2005, and interest is
accrued at a variable monthly rate. A significant increase in interest rates
could have an adverse effect on the Company's financial condition or results of
operations.
8
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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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF SEPTEMBER 30, 1999 AND THE RELATED STATEMENT OF OPERATIONS FOR THE
PERIOD ENDED SEPTEMBER 30, 1999.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,088
<SECURITIES> 0
<RECEIVABLES> 3,072
<ALLOWANCES> 0
<INVENTORY> 3,167
<CURRENT-ASSETS> 9,793
<PP&E> 5,233
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,479
<CURRENT-LIABILITIES> 1,330
<BONDS> 4,500
31
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 16,479
<SALES> 4,775
<TOTAL-REVENUES> 4,775
<CGS> 3,647
<TOTAL-COSTS> 3,647
<OTHER-EXPENSES> 1,090
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41
<INCOME-PRETAX> 62
<INCOME-TAX> 0
<INCOME-CONTINUING> 62
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 62
<EPS-BASIC> .02
<EPS-DILUTED> .02
</TABLE>
