-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RfLzezeLX91ajs2mn+JS8Pka9c12LWuHREZnmuIUZbWRAlOi/tR71oiF4W3IbpoT am4R5AdxUWPQkql2BDy1WQ== 0000950144-98-005731.txt : 19980511 0000950144-98-005731.hdr.sgml : 19980511 ACCESSION NUMBER: 0000950144-98-005731 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980329 FILED AS OF DATE: 19980508 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEIST C H CORP CENTRAL INDEX KEY: 0000046653 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION SPECIAL TRADE CONTRACTORS [1700] IRS NUMBER: 160803301 STATE OF INCORPORATION: NY FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10893 FILM NUMBER: 98614290 BUSINESS ADDRESS: STREET 1: 810 NORTH BELCHER ROAD CITY: CLEARWATER STATE: FL ZIP: 34625 BUSINESS PHONE: 8134615656 MAIL ADDRESS: STREET 1: 45 ANDERSON ROAD CITY: BUFFALO STATE: NY ZIP: 14225 10-Q 1 C H HEIST FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 [x] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarter period ended March 29, 1998. [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Commission file number 0-7907 ------ C.H. Heist Corp. ---------------- (Exact name of registrant as specified in its charter) New York 16-0803301 -------- ---------- (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization Number) 810 North Belcher Road Clearwater, Florida 33765 ---------------------- ----- (Address of principal executive offices) (Zip Code) 813-461-5656 ------------ (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) 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 ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date - April 17, 1998. Common stock, $.05 par value 2,877,943 ---------------------------- --------- (Class) (Outstanding shares) 2 C.H. HEIST CORP. AND SUBSIDIARIES Index Part I Financial Information Condensed Consolidated Balance Sheets- March 29, 1998 - (Unaudited) and December 28, 1997 3 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - (Unaudited) thirteen week periods ended March 29, 1998 and March 30, 1997 4 Condensed Consolidated Statements of Cash Flows - (Unaudited) thirteen week periods ended March 29, 1998 and March 30, 1997 5 Notes to Condensed Consolidated Financial Statements 6 Independent Auditors' Review Report 7 Management's Discussion and Analysis of Results of Operations and Financial Condition 8-10 Part II Other Information 11 Signatures 12
* * * * * 2 3 Part I-Financial Information C.H. HEIST CORP. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share data)
March 29, December 28, Assets 1998 1997 ------ ---- ---- (Unaudited) Current assets: Cash and cash equivalents $ 1,902 2,948 Receivables 16,062 16,621 Services in progress 1,004 1,357 Income taxes receivable 497 - Parts and supplies 1,239 1,254 Prepaid expenses 865 539 Deferred income taxes 807 806 ---------- --------- Total current assets 22,376 23,525 ---------- --------- Property, plant and equipment, at cost 54,228 52,677 Less accumulated depreciation 37,195 35,838 ---------- --------- Net property, plant and equipment 17,033 16,839 ---------- --------- Deferred income taxes 179 176 Intangible assets, net 3,309 3,386 Other assets 219 160 ---------- --------- $ 43,116 44,086 ========== ========= Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Current installments of long-term debt $ 33 38 Accounts payable 2,726 2,660 Accrued expenses 4,078 3,814 Income taxes payable - 454 ---------- --------- Total current liabilities 6,837 6,966 Long-term debt, excluding current installments 8,300 8,755 Deferred incentive compensation 466 479 Deferred income taxes 398 398 ---------- --------- Total liabilities 16,001 16,598 ---------- --------- Stockholders' equity (note 3): Common stock of $.05 par value. Authorized 8,000,000 shares; issued 3,167,092. 158 158 Additional paid-in capital 4,277 4,274 Retained earnings 25,389 25,882 Accumulated other comprehensive losses (1,471) (1,583) ---------- --------- 28,353 28,731 Less cost of common stock in treasury: 289,149 and 290,269 shares for 1998 and 1997, respectively. (1,238) (1,243) ---------- --------- Total stockholders' equity 27,115 27,488 ---------- --------- $ 43,116 44,086 ========== =========
See accompanying notes to condensed consolidated financial statements. 3 4 C.H. HEIST CORP. AND SUBSIDIARIES Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (In thousands, except share data)
Thirteen Thirteen week period week period ended ended March 29, March 30, 1998 1997 --------- ---------- Net service revenues $ 28,168 24,961 Cost of services (note 1) 20,569 18,581 ---------- --------- Gross profit 7,599 6,380 Selling, general and administrative expenses (note 1) 8,319 7,145 ---------- --------- Operating (loss) (720) (765) ---------- --------- Other income (expense): Interest income 32 11 Interest expense (137) (122) Gain (loss) on disposal of property, plant and equipment, net (7) 3 Amortization of other assets (77) (36) Miscellaneous, net 19 (303) ---------- --------- Total other expense, net (170) (447) ---------- --------- (Loss) before income taxes (890) (1,212) Income tax benefit 397 369 ---------- --------- Net (loss) (493) (843) Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 112 (89) ---------- --------- Comprehensive (loss) $ (381) (932) ========== ========= Basic and diluted net (loss) per share $ (.17) (.29) ========== ========= Weighted average number of common shares outstanding 2,877,758 2,875,519 ========== =========
See accompanying notes to condensed consolidated financial statements. 4 5 C.H. HEIST CORP. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands)
Thirteen week Thirteen week period ended period ended March 29, March 30, 1998 1997 ------------ ------------- Cash flows from operating activities: Net (loss) $ (493) (843) Adjustments to reconcile net (loss) to net cash provided by operating activities: Depreciation of plant and equipment 1,280 1,269 Amortization of other assets 77 36 (Gain) loss on disposal of property, plant and equipment, net 7 (3) Deferred income taxes - - Stock compensation awards 8 16 Changes in assets and liabilities (see below) 193 (423) --------- --------- Net cash provided by operating activities 1,072 52 --------- --------- Cash flows from investing activities: Additions to property, plant and equipment (1,428) (1,682) Proceeds from disposal of property, plant and equipment 4 99 Acquisitions and earnout payments, net of cash (264) - --------- --------- Net cash used in investing activities (1,688) (1,583) --------- --------- Cash flows from financing activities: Proceeds from bank line of credit borrowings 4,400 1,300 Repayment of bank line of credit borrowings (4,850) (850) Repayment of other long-term debt (9) (9) --------- --------- Net cash provided (used) by financing activities (459) 441 --------- --------- Effect of exchange rate changes on cash and cash equivalents 29 (11) --------- --------- Net decrease in cash and cash equivalents (1,046) (1,101) Cash and cash equivalents at beginning of period 2,948 2,692 --------- --------- Cash and cash equivalents at end of period $ 1,902 1,591 ========= ========= Changes in assets and liabilities providing (using) cash: Receivables $ 593 478 Services in progress 355 46 Income taxes receivable/payable, net (953) (718) Parts and supplies 17 43 Prepaid expenses (323) (924) Other assets (58) 359 Accounts payable 53 48 Accrued expenses 523 245 Deferred incentive compensation (14) - --------- --------- Total $ 193 (423) ========= =========
See accompanying notes to condensed consolidated financial statements 5 6 C.H. HEIST CORP. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) 1. In the opinion of management of C.H. Heist Corp. and Subsidiaries (the Company), the accompanying condensed consolidated financial statements contain all normal recurring adjustments necessary to fairly present the Company's consolidated financial position as of March 29, 1998 and the results of its operations and cash flows for the thirteen week periods ended March 29, 1998 and March 30, 1997. The Company has reclassified 1997 branch expenses that are not directly attributable to the services it performs from cost of services to selling, general and administrative expenses to conform to the 1998 classification. The effect of this reclassification was to lower cost of services and increase selling, general and administrative expenses by $3,680,000 for the thirteen week period ended March 30, 1997. Management believes that its current presentation is generally consistent with industry practice. 2. The results of operations for the thirteen week period ended March 29, 1998 are not necessarily indicative of the results to be expected for the full year. 3. The changes in stockholders' equity for the thirteen week period ended March 29, 1998 are summarized as follows (in thousands, except shares):
Accumulated Additional other Total Common paid-in Retained comprehensive Treasury Stock Stockholders' stock capital Earnings losses Shares Amount Equity ------ ---------- -------- ------------- -------- --------- ------------ Balance at December 28, 1997 $ 158 $ 4,274 $ 25,882 $ (1,583) 290,269 $ (1,243) $ 27,488 Net loss - - (493) - - - (493) Foreign currency translation adjustment - - - 112 - - 112 Stock compensation awards - 3 - - (1,120) 5 8 ------ ---------- -------- ------------- -------- --------- ----------- Balance at March 29, 1998 $ 158 $ 4,277 $ 25,389 $ (1,471) 289,149 $ (1,238) $ 27,115 ====== ========== ======== ============= ======== ========= ===========
Accumulated other comprehensive losses consist solely of equity adjustments from foreign currency translation. 4. During the quarter ended March 29, 1998, no stock options were exercised, and none expired. As of March 29, 1998 and December 28, 1997, the Company had exercisable options outstanding to employees to purchase 169,484 common shares respectively, at prices ranging from $6.94 to $10.13 per share. 5. The Company has adopted the provision of Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information". Disclosures are not required until fiscal year end reporting. Management believes that the adoption of this standard will not have a material effect on the reported operating results of the Company. 6. On April 13, 1998, Ablest Service Corp., a wholly owned subsidiary of C.H. Heist Corp. acquired one hundred percent of the stock of Milestone ("Milestone") Technologies, Inc. for approximately $6.6 million paid in cash to the shareholders at closing and agreed to pay additional consideration based on the achievement of certain pre-established earning targets for 1998. Milestone provides information technology staffing services in the Phoenix, Arizona metropolitan area and had fiscal 1997 revenues of approximately $9.0 million. The purchase price was determined through negotiations and is expected to be assigned to the fair value of the assets and liabilities acquired with the excess being assigned to various intangible assets, primarily goodwill. 6 7 INDEPENDENT AUDITORS' REVIEW REPORT The Board of Directors and Stockholders C.H. Heist Corp: We have reviewed the condensed consolidated balance sheet of C.H. Heist Corp. and subsidiaries as of March 29, 1998 and the related condensed consolidated statements of operations and comprehensive loss and cash flows for the thirteen week periods ended March 29, 1998 and March 30, 1997. These condensed consolidated financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of C.H. Heist Corp. and subsidiaries as of December 28, 1997, and the related consolidated statements of earnings, stockholders' equity and cash flows for the year ended (not presented herein); and in our report dated February 11, 1998, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 28, 1997, is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Buffalo, New York KPMG Peat Marwick LLP April 24, 1998 7 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations As of the first quarter of the current fiscal year, the Company has reclassified certain previously reported branch expenses that are not directly attributable to the services it performs from cost of services to selling, general and administrative expenses. Management believes that its current presentation is generally consistent with industry practice. Please refer to Note 1 of the Notes to Condensed Consolidated Financial Statements on Page 6 of this Form 10-Q for additional information. Service revenues increased by $3.2 million or 12.8% to $28.2 million from $25.0 million for the fiscal quarter ended March 29, 1998 compared to the same fiscal quarter one year ago. Service revenues for Ablest Service Corp., "Ablest", the Company's staffing services segment, increased by $2.3 million or 16.9% to $15.7 million from $13.4 million for the current fiscal quarter as compared to the same fiscal quarter one year ago. Acquisitions during the second quarter of 1997 of information technology staffing companies accounted for $1.6 million of this increase. The remainder of the increase was the result of offices opened after the first fiscal quarter of the prior year and greater market penetration from established offices predominately in the Mid-South and Southern regions. Service revenues for the Company's industrial maintenance service segment increased by $940,000 or 8.1% to $12.5 million for the current fiscal quarter compared to $11.6 million for the same fiscal quarter one year ago. Increases were achieved in hydroblasting, industrial vacuuming and chemical cleaning services predominately in the Company's Southern region as well as in waste management services performed by the Company's Canadian subsidiary, C.H. Heist, Ltd. Gross Profit (Margin) increased by $1.2 million or 19.1% and as a percentage of sales to 26.9% from 25.6% for the current fiscal quarter compared to the same period one year ago. The increase in both gross profit dollars and percentages is the result of several factors, primary of which are the acquisitions that were made during the prior fiscal year of technology staffing companies which have produced greater margins than traditional commercial staffing services. Also contributing to this increase is a reduction of premiums charged for Workers Compensation insurance due to the continued improvements in the Company's safety-risk management programs, and increased service revenue generated from hourly rated maintenance equipment including hydroblasting, industrial vacuuming and chemical cleaning services. Selling, general and administrative expenses increased by $1.2 million or 16.4% to $8.3 million for the current fiscal quarter. As a percentage of service revenues it increased to 29.5% from 28.6% for the current fiscal quarter compared to the same period one year ago. This increase is primarily the result of costs associated with new office openings and information technology staffing acquisitions. Also contributing to this increase is the Company's ongoing strategic sales and marketing planning initiative, the hiring of additional territorial sales representatives and the Company's continued development of and investment in information technology hardware, software and personnel to better service our customers. Other expenses net, decreased by $277,000 or 62.0% during the current fiscal quarter compared to one year ago. This improvement was primarily attributable to costs associated with the planned spin-off and initial public offering of Ablest which were written off during the first fiscal quarter of the prior year and not repeated in the current year. The spin-off and initial public offering was subsequently called off by the Company's Board of Directors. Also contributing to the decrease in other expenses net, was an increase in interest income earned on investments of excess cash by the Company's Canadian subsidiary. Partially offsetting the decrease were increases in interest expense and amortization expense associated with the four acquisitions completed by Ablest in the past two years. 8 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION Continued Results of Operations The effective tax rate for the current fiscal quarter is a benefit of 44.6%. The effective tax rates are affected by the multiple taxing jurisdictions in which the Company operates. Financial Condition The quick ratio was 2.9 to 1 compared to 3.1 to 1 and the current ratio was 3.3 to 1 as compared to 3.4 to 1 for the period ending March 29, 1998 and December 28, 1997, respectively. Net working capital decreased by $1.0 million, primarily due to a $1.0 million reduction in cash and cash equivalents. The reduction in cash and cash equivalents occurred due to the equipping of a new office in Northern Ontario and additional investments in new equipment in Canada to meet the needs of a long term contract. Reference should be made to the Statements of Cash Flows which details the sources and uses of cash. Open credit commitments as of March 29, 1998 were $16.7 million. The Company also has $353,000 (the US dollar equivalent) available for C.H. Heist , Ltd., the Company's Canadian subsidiary. Capital expenditures for the current fiscal quarter were approximately $1.4 million. Of this amount, $863,000 was for additions to the mobile equipment fleet, $265,000 was for computer equipment including office automation and communication systems for both segments of the Company's business, $124,000 for new office facilities with the balance for other equipment. Open purchase commitments at March 29, 1998 were $991,000 of which $935,000 was for new mobile equipment, $42,000 was for computer equipment and the remaining for other equipment and facilities. It is anticipated that existing internally available funds, cash flows from operations and available borrowings will be sufficient to cover working capital and capital expenditures for the remainder of fiscal 1998. Recent Developments In a press release dated April 14, 1998, the Company announced that Ablest Service Corp., the Company's staffing services subsidiary, acquired one hundred percent of the stock of Milestone Technologies, Inc., ("Milestone") of Tempe, Arizona. Milestone provides information technology staffing services with 1997 annualized revenues of approximately $9.0 million. Established in 1988, the company services the Phoenix market and will continue to operate as Milestone Technologies, Inc., reporting under Ablest Technology Services. Reference is made to the definitive form 8-K that was filed on April 24, 1998. 9 10 Part II-Other Information Item 6 Exhibits and Reports on Form 8-K (A) Exhibit 27.1 Financial Data Schedules (B) Reports on Form 8-K: No reports on Form 8-K have been filed during the quarter ended March 29, 1998. 10 11 SIGNATURES 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. C.H. Heist Corp. (Registrant) Date May 8, 1998 /s/ Mark P. Kashmanian ------------------------ Mark P. Kashmanian Chief Accounting Officer EX-27.1 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-27-1998 DEC-29-1997 MAR-29-1998 1,902 0 16,062 0 1,239 22,376 54,228 37,195 43,116 6,837 0 0 0 158 26,957 43,116 28,168 28,168 20,569 20,569 8,319 0 137 (890) 397 (493) 0 0 0 (493) (.17) (.17)
-----END PRIVACY-ENHANCED MESSAGE-----