<PAGE> 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 July 2, 1995.
[ ] 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 Number)
incorporation or organization)
810 North Belcher Road
Clearwater, Florida 34625
------------------- -----
(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 - July 31, 1995.
Common stock, $.05 par value 2,872,773
---------------------------- ---------
(Class) (Outstanding shares)
1
<PAGE> 2
C. H. HEIST CORP. AND SUBSIDIARIES
Index
<TABLE>
<S> <C>
Part I
Financial Information
Condensed Consolidated Balance Sheets-
July 2, 1995 and December 25, 1994 3
Condensed Consolidated Statements of Earnings-
thirteen week periods ended July 2, 1995 and
June 26, 1994 and twenty-seven week period
ended July 2, 1995 and the twenty-six week
period ended June 26, 1994 4
Condensed Consolidated Statements of Cash Flows-
twenty-seven week period ended July 2, 1995 and the
twenty-six week period ended June 26, 1994 5
Notes to Condensed Consolidated Financial Statements 6
Independent Auditors' Review Report 7
Management's Discussion and Analysis of the
Results of Operations and the Financial Condition 8-9
Part II
Other Information 10
Signatures 11
</TABLE>
* * * * *
2
<PAGE> 3
Part I-Financial Information
C. H. HEIST CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
July 2 December 25
Assets 1995 1994
------ ---- ----
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,903,998 1,533,015
Receivables 13,887,372 14,915,198
Services in progress 2,542,297 1,840,429
Parts and supplies 2,121,929 2,058,424
Prepaid expenses 641,166 28,826
Deferred income taxes 776,362 795,623
------------ ------------
Total current assets 21,873,124 21,171,515
------------ ------------
Property, plant and equipment, at cost 44,425,056 41,029,349
Less accumulated depreciation 27,823,607 26,065,152
------------ ------------
Net property, plant and equipment 16,601,449 14,964,197
Deferred income taxes 128,592 128,592
Other assets 357,812 491,749
------------ ------------
$ 38,960,977 36,756,053
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt $ 37,667 37,667
Accounts payable 1,798,999 1,675,260
Accrued expenses 4,405,259 4,768,279
Income taxes payable 36,586 334,114
------------ ------------
Total current liabilities 6,278,511 6,815,320
Long-term debt, excluding current installments 7,598,891 5,120,863
Deferred income taxes 306,849 306,849
------------ ------------
Total liabilities 14,184,251 12,243,032
------------ ------------
Stockholders' equity (note 3):
Common stock of $.05 par value. Authorized
8,000,000 shares; issued 3,165,192 and 3,162,692
shares for 1995 and 1994, respectively 158,260 158,135
Additional paid-in capital 4,253,689 4,235,689
Retained earnings 22,762,990 22,688,158
Equity adjustment from foreign currency translation (1,146,310) (1,317,058)
------------ ------------
26,028,629 25,764,924
Less cost of common stock in treasury - 292,419 shares (1,251,903) (1,251,903)
------------ ------------
Total stockholders' equity 24,776,726 24,513,021
------------ ------------
$ 38,960,977 36,756,053
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
C. H. HEIST CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Unaudited)
<TABLE>
<CAPTION>
Thirteen- Thirteen- Twenty-seven Twenty-six
week week week week
period period period period
ended ended ended ended
July 2 June 26 July 2 June 26
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 25,301,132 24,897,330 49,845,018 48,096,659
Cost of sales 21,376,244 21,656,407 43,121,060 44,432,166
------------ ------------ ----------- ------------
Gross profit 3,924,888 3,240,923 6,723,958 3,664,493
Selling, general and administrative
expenses 2,851,392 2,562,826 6,133,660 5,291,593
------------ ------------ ----------- ------------
Operating income (loss) 1,073,496 678,097 590,298 (1,627,100)
------------ ------------ ----------- ------------
Other income (expense):
Interest income 38,887 18,309 71,120 41,055
Interest expense (129,550) (90,972) (240,883) (170,225)
Gain (loss) on disposal of property,
plant and equipment, net 18,710 (41,278) 36,116 (42,216)
Amortization of other assets (32,807) (57,085) (62,014) (133,724)
Miscellaneous 4,593 11,523 5,991 15,743
------------ ------------ ----------- ------------
Total other expense, net (100,167) (159,503) (189,670) (289,367)
------------ ------------ ----------- ------------
Earnings (loss) before
income taxes 973,329 518,594 400,628 (1,916,467)
Income tax expense (benefit) 550,868 113,755 325,796 (544,837)
------------ ------------ ----------- ------------
Net earnings (loss) $ 422,461 404,839 74,832 (1,371,630)
============ ============ =========== ============
Net earnings (loss) per share $ .15 .14 .03 (.48)
============ ============ =========== ============
Weighted average number of common
shares outstanding 2,871,427 2,871,152 2,870,850 2,873,213
============ ============ =========== ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
C. H. HEIST CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
(Unaudited)
Twenty-seven Twenty-six
week period week period
ended ended
July 2 June 26
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 74,832 (1,371,630)
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation of plant and equipment 1,935,932 2,002,929
Amortization of other assets 62,014 133,724
Loss (gain) on disposal of property, plant
and equipment, net (36,116) 42,216
Deferred income taxes 19,265 (24,639)
Changes in assets and liabilities (see below) (763,950) (3,829,591)
----------- -----------
Net cash provided (used) by operating activities 1,291,977 (3,046,991)
----------- -----------
Cash flows from investing activities:
Additions to property, plant and equipment (3,632,509) (1,511,642)
Proceeds from disposal of property, plant and equipment 178,165 21,477
----------- -----------
Net cash used in investing activities (3,454,344) (1,490,165)
----------- -----------
Cash flows from financing activities:
Proceeds from bank line of credit borrowings 4,950,000 5,706,000
Repayments on bank line of credit borrowings (2,450,000) (3,106,000)
Repayment of other long-term debt (21,972) (91,973)
Purchase of common shares for treasury -- (38,125)
Exercised stock options 18,125 --
----------- -----------
Net cash provided by financing activities 2,496,153 2,469,902
----------- -----------
Effect of exchange rate changes cash and cash equivalents 37,197 (71,919)
----------- -----------
Net increase (decrease) in cash and cash equivalents 370,983 (2,139,173)
Cash and cash equivalents at beginning of period 1,533,015 2,659,040
----------- -----------
Cash and cash equivalents at end of period $ 1,903,998 519,867
=========== ===========
Changes in assets and liabilities providing (using) cash:
Receivables $ 1,085,319 (3,679,617)
Services in progress (693,197) (486,466)
Income taxes receivable -- (737,438)
Parts and supplies (60,329) (32,451)
Prepaid expenses (610,218) (326,723)
Other assets 72,494 (17,548)
Accounts payable 106,909 554,846
Accrued expenses (368,109) 1,068,641
Income taxes payable (296,819) (172,835)
----------- -----------
Total $ (763,950) (3,829,591)
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
C. H. HEIST CORP. AND SUBSIDIARIES
Notes to Condensed consolidated financial statements
(Unaudited)
1. In the opinion of the 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 positions as of July 2, 1995 and December
25, 1994, and the results of its earnings and cash flows for the thirteen
and twenty-seven week periods ended July 2, 1995 and the thirteen and
twenty-six week periods ended June 26, 1994.
The Company's fiscal year ends on the last Sunday of December. For fiscal
1995, the Company's earnings include 53 weeks. Therefore, the period ended
July 2,1995 includes twenty-seven weeks while the period ended June 26,
1994 includes twenty-six weeks.
2. The results of operations for the thirteen and twenty-seven week periods
ended July 2, 1995 are not necessarily indicative of the results to be
expected for the full year.
3. The changes in stockholders' equity for the twenty-seven week period ended
July 2, 1995 are summarized as follows:
<TABLE>
<CAPTION>
Equity
adjustment
Additional from foreign Treasury stock Total
Common paid-in Retained currency -------------- stockholders'
stock capital earnings translation Shares Amount equity
----- ---------- -------- ------------ ------ ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 25, 1994 $ 158,135 4,235,689 22,688,158 $(1,317,058) 292,419 $(1,251,903) $24,513,021
Net earnings -- -- 74,832 -- -- -- 74,832
Exercised options 125 18,000 -- -- -- -- 18,125
Foreign currency translation
adjustment -- -- -- 170,748 -- -- 170,748
----------- --------- ---------- ----------- ------- ----------- ------------
Balance at July 2, 1995 $ 158,260 4,253,689 22,762,990 $(1,146,310) 292,419 $(1,251,903) $ 24,776,726
=========== ========= ========== =========== ======= =========== ============
</TABLE>
4. During the quarter ended July 2, 1995, no additional stock options were
issued, 1,090 options have expired and 2,500 options were exercised at
$7.25. As of July 2, 1995 and December 25, 1994, the Company had
exercisable options outstanding to employees to purchase 142,700 and
149,153 common shares, respectively, at prices ranging from $7.25 to
$11.14 per share.
6
<PAGE> 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 July 2, 1995, and the related condensed
consolidated statements of earnings and cash flows for the thirteen and
twenty-seven week periods ended July 2, 1995 and the thirteen and twenty-six
week periods ended June 26, 1994. 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 25, 1994, and the related consolidated statements of earnings,
stockholders' equity and cash flows for the year then ended (not presented
herein); and in our report dated February 3, 1995, 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 25, 1994, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
KPMG Peat Marwick LLP
Buffalo, New York
July 31, 1995
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND THE FINANCIAL CONDITION
Results of Operations
Sales increased during the current quarter by $404,000 or 1.6% and for the year
to date period by $1,748,000 or 3.6%. Sales in the temporary staffing
segment decreased $354,000 or 3.3% and increased by $1,240,000 or 6.2% during
the current quarter and year to date, respectively. Sales in the industrial
maintenance segment increased $758,000 or 5.3% and $508,000 or 1.8% during the
current quarter and year to date, respectively. The decrease in the temporary
staffing segment, for the quarter, was due to the loss of a few customers that
implemented national contracts with competitors. The Company's policy prevents
contracting high volume, low margin work, as in, these national agreements.
Increases in painting sales, primarily in Canada, where we have a contract to
paint the Peace Bridge were offset by the industrial maintenance sales
decrease in the Heist Field Services division.
Gross profit as a percent of sales increased from 13.0% to 15.5% and 7.6% to
13.5% during the current quarter and year to date, respectively. The
Company did not have the substantial losses in the current fiscal quarter that
were incurred in the prior year's comparable fiscal quarter at the Heist Field
Services division. The Company has made major changes in the past year to
achieve profitable results, in this division, but due to job postponements and
very competitive pricing, such results have not been achieved.
Selling, general and administrative expenses increased $288,000 or 11.2% for
the quarter and $842,000 or 15.9% for the first six months. The
increases resulted from the upgrade of information systems to accommodate
planned growth, consulting services to design a management reporting system
that follows the Economic Value Added (EVA') model, implementing an automated
retrieval system in temporary staffing offices and personnel additions to
strengthen the service to our customers.
Interest income increased due to excess cash invested at higher rates in the
Canadian subsidiary. Interest expense increased due to higher interest
rates on borrowed funds in the United States. Sales of fully utilized
equipment resulted in a gain on sale of property, plant and equipment, net.
Intangible assets relating to two acquisitions were fully amortized in 1994,
resulting in the decrease in amortization of the assets in 1995. Collectively
the above caused the decrease in other expense, net.
The effective tax rate is 56.6% for the current quarter and 81.3 % year to
date. The difference between the estimated effective rate and the
current quarter and year to date rates is caused by the reverse of the tax
benefit recorded in the first quarter and by the effect of state franchise
taxes. State taxes are owned in many states even when losses are incurred. The
effective rates used in determining income taxes on the condensed consolidated
statements of earnings are higher due to the interaction of actual results
among the Company's domestic and foreign tax jurisdictions compared to the
results estimated for the year. If earning projections do not change
significantly, the Company expects that the year to date effective tax rate
over the next two quarters will move towards the expected 46% rate.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND THE FINANCIAL CONDITION,
CONTINUED
Financial Condition
The current ratio is 3.5 to 1 for the current fiscal quarter compared to 3.1 to
1 as of December 25, 1994. The quick ratio is 2.9 to 1 compared to 2.7
to 1 as of December 25, 1994. Long-term debt increased $2,500,000 leaving open
credit commitments at Manufacturers and Traders Trust Company of $2,400,000
and at the Royal Bank of Canada of $357,000 (the U.S. dollar equivalent).
Cash and cash equivalents increased by $371,000 primarily due to a decrease in
accounts receivable, net earnings, depreciation, increase in accounts
payable and line of credit borrowing, offset by expenditures for additions to
property, plant and equipment, increases in prepaid expenses and reduction in
accrued expenses and income taxes payable.
Capital expenditures for the current fiscal quarter were $2,062,000. Of this
amount $671,000 was for new equipment, $357,000 was for computer
equipment and software and the remainder for replacement equipment.
Commitments at July 2, 1995 were $388,000 of which $36,000 was for computer
equipment and software and $352,000 was for new equipment.
9
<PAGE> 10
Part II-Other Information
Item 6 Exhibits and Reports on Form 8-K
(A) Exhibit 27.1 Financial Data Schedule (for SEC use only)
(B) Reports on Form 8-K: No reports on Form 8-K have been filed
during the quarter ended July 2, 1995.
10
<PAGE> 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 July 31, 1995 /s/ Mark R. Pfeil
------------- ------------------------
Mark R. Pfeil
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> DEC-26-1994
<PERIOD-END> JUL-02-1995
<CASH> 1,903,998
<SECURITIES> 0
<RECEIVABLES> 13,887,372
<ALLOWANCES> 0
<INVENTORY> 2,121,929
<CURRENT-ASSETS> 21,873,124
<PP&E> 44,425,056
<DEPRECIATION> 27,823,607
<TOTAL-ASSETS> 38,960,977
<CURRENT-LIABILITIES> 6,278,511
<BONDS> 7,598,891
<COMMON> 158,260
0
0
<OTHER-SE> 24,618,466
<TOTAL-LIABILITY-AND-EQUITY> 38,960,977
<SALES> 25,301,132
<TOTAL-REVENUES> 25,301,132
<CGS> 21,376,244
<TOTAL-COSTS> 21,376,244
<OTHER-EXPENSES> 2,851,392
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 129,550
<INCOME-PRETAX> 973,329
<INCOME-TAX> 550,868
<INCOME-CONTINUING> 422,461
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 422,461
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
