<PAGE> 1
C.H. HEIST CORP.
AND SUBSIDIARIES
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
October 1, 1995
<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form l0-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 October 1, 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 - October 30, 1995
Common stock, $.05 par value 2,872,773
---------------------------- ---------
(Class) (Outstanding shares)
1
<PAGE> 3
C. H. HEIST CORP. AND SUBSIDIARIES
Index
<TABLE>
<S> <C>
Part I
Financial Information
Condensed Consolidated Balance Sheets-
October 1, 1995 and December 25, 1994 3
Condensed Consolidated Statements of Earnings-
thirteen week periods ended October 1, 1995 and
September 25, 1994 and forty week period
ended October 1, 1995 and the thirty-nine week
period ended September 25, 1994 4
Condensed Consolidated Statements of Cash Flows-
forty week period ended October 1, 1995
and the thirty-nine week period ended
September 25, 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> 4
Part I-Financial Information
C. H. HEIST CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
October 1 December 25
Assets 1995 1994
------ ---- ----
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,431,876 1,533,015
Receivables 16,823,833 14,915,198
Services in progress 1,612,194 1,840,429
Parts and supplies 2,104,410 2,058,424
Prepaid expenses 647,064 28,826
Deferred income taxes 766,233 795,623
------------ ------------
Total current assets 24,385,610 21,171,515
------------ ------------
Property, plant and equipment, at cost 46,783,161 41,029,349
Less accumulated depreciation 29,053,179 26,065,152
------------ ------------
Net property, plant and equipment 17,729,982 14,964,197
Deferred income taxes 128,592 128,592
Other assets 352,765 491,749
------------ ------------
$ 42,596,949 36,756,053
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current installments of long-term debt $ 37,667 37,667
Accounts payable 1,786,272 1,675,260
Accrued expenses 5,300,932 4,768,279
Income taxes payable 385,384 334,114
------------ ------------
Total current liabilities 7,510,255 6,815,320
Long-term debt, excluding current installments 9,189,474 5,120,863
Deferred income taxes 306,849 306,849
------------ ------------
Total liabilities 17,006,578 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 23,362,425 22,688,158
Equity adjustment from foreign currency translation (932,100) (1,317,058)
------------ ------------
26,842,274 25,764,924
Less cost of common stock in treasury - 292,419 shares (1,251,903) (1,251,903)
------------ ------------
Total stockholders' equity 25,590,371 24,513,021
------------ ------------
$ 42,596,949 36,756,053
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 5
C. H. HEIST CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Unaudited)
<TABLE>
<CAPTION>
Thirteen- Thirteen- Forty Thirty nine
week week week week
period period period period
ended ended ended ended
Oct. 1 Sept.25 Oct. 1 Sept.25
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 27,179,563 26,964,270 77,024,581 75,060,929
Cost of sales 22,958,087 23,030,052 66,079,147 67,462,218
------------ ------------ ------------ ------------
Gross profit 4,221,476 3,934,218 10,945,434 7,598,711
Selling, general and administrative
expenses 2,978,662 2,804,928 9,112,322 8,096,521
------------ ------------ ------------ ------------
Operating income (loss) 1,242,814 1,129,290 1,833,112 (497,810)
------------ ------------ ------------ ------------
Other income (expense):
Interest income 34,698 9,437 105,818 50,492
Interest expense (149,651) (95,775) (390,534) (266,000)
Gain (loss) on disposal of property,
plant and equipment, net (10,050) 98,923 26,066 56,707
Amortization of other assets (31,008) (32,857) (93,022) (166,581)
Miscellaneous 2,450 (4,296) 8,441 11,447
------------ ------------ ------------ ------------
Total other expense, net (153,561) (24,568) (343,231) (313,935)
------------ ------------ ------------ ------------
Earnings (loss) before
income taxes 1,089,253 1,104,722 1,489,879 (811,745)
Income tax expense 489,818 554,595 815,614 9,758
------------ ------------ ------------ ------------
Net earnings (loss) $ 599,435 550,127 674,267 (821,503)
============ ============ ============ ============
Net earnings (loss) per share $ .21 .19 .24 (.29)
------------ ------------ ------------ ------------
Weighted average number of common
shares outstanding 2,872,773 2,870,273 2,871,461 2,872,233
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 6
C. H. HEIST CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Forty Thirty nine
week period week period
ended ended
October 1 September 25
1995 1994
----- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 674,267 (821,503)
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation of plant and equipment 2,970,507 3,033,370
Amortization of other assets 93,022 166,581
Loss (gain) on disposal of property, plant
and equipment, net (26,066) (56,707)
Deferred income taxes 34,938 61,972
Changes in assets and liabilities (see below) (1,482,579) (3,690,477)
------------ ------------
Net cash provided (used) by operating activities 2,264,089 (1,306,764)
------------ ------------
Cash flows from investing activities:
Additions to property, plant and equipment (5,719,278) (2,643,936)
Proceeds from disposal of property, plant and equipment 178,165 167,163
------------ ------------
Net cash used in investing activities (5,541,113) (2,476,773)
------------ ------------
Cash flows from financing activities:
Proceeds from bank line of credit borrowings 7,250,000 6,956,000
Repayments on bank line of credit borrowings (3,150,000) (5,056,000)
Repayment of other long-term debt (31,389) (102,847)
Purchase of common shares for treasury -- (38,125)
Exercised stock options 18,125 --
------------ ------------
Net cash provided by financing activities 4,086,736 1,759,028
------------ ------------
Effect of exchange rate changes on cash and cash equivalents 89,149 (44,200)
------------ ------------
Net increase (decrease) in cash and cash equivalents 898,861 (2,068,709)
Cash and cash equivalent at beginning of period 1,533,015 2,659,040
------------ ------------
Cash and cash equivalents at end of period $ 2,431,876 590,331
============ ============
Changes in assets and liabilities providing (using) cash:
Receivables $(1,773,863) (3,019,518)
Services in progress 246,926 (1,422,295)
Income taxes receivable -- (489,428)
Parts and supplies (38,874) (187,469)
Prepaid expenses (615,328) (282,353)
Other assets 47,428 (69,097)
Accounts payable 88,985 1,236,728
Accrued expenses 518,741 718,695
Income taxes payable 43,406 (175,740)
------------ ------------
Total $ (1,482,579) (3,690,477)
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 7
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 position as of October 1,
1995 and December 25, 1994, and the results of its earnings and cash
flows for the thirteen and forty week periods ended October 1, 1995 and
the thirteen and thirty nine week periods ended September 25, 1994.
The Company's fiscal year ends on the last Sunday of December. For fiscal
1995, the Company's fiscal year will include 53 weeks. Therefore, the
period ended October 1, 1995 includes forty weeks while the period
ended September 25, 1994 includes thirty nine weeks.
2. The results of operations for the thirteen and forty week periods ended
October 1,1995 are not necessarily indicative of the results to be
expected for the full year.
3. The changes in stockholders' equity for the forty week period ended October
1, 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 -- -- 674,267 -- -- -- 674,267
Exercised options 125 18,000 -- -- -- -- 18,125
Foreign currency translation
adjustment -- -- -- 384,958 -- -- 384,958
----------- ----------- ----------- ----------- ----------- ----------- ------------
Balance at October 1,1995 $ 158,260 4,253,689 23,362,425 $( 932,100) 292,419 $(1,251,903) $ 25,590,371
----------- ----------- ----------- ----------- ----------- ----------- ============
</TABLE>
4. During the quarter ended October 1, 1995, no additional stock options were
issued, expired or exercised. As of October 1, 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> 8
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 October 1, 1995, and the related condensed consolidated
statements of earnings and cash flows for the thirteen and forty week periods
ended October 1,1995 and the thirteen and thirty nine week periods ended
September 25, 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
October 30, 1995
7
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND THE FINANCIAL CONDITION
Results of Operations
Sales increased by $215,000 or 0.8% for the quarter and $1,964,000 or 2.6% year
to date. Sales for the temporary staffing segment decreased $830,000 or 6.8%
for the quarter and increased $411,000 or 1.3% year-to-date. The decline in
sales was due to the loss of a few customers that implemented discounted or
national contracts and our decision in some cases not to provide staffing
that was low rate, high refill and requiring high staff hours to service.
Sales in the industrial maintenance segment increased for the quarter
$1,045,000 or 7.1% and $1,553,000 or 3.6% year-to-date. For the quarter,
sales increased in the conventional equipment related services and
insulation sales and application. Year-to-date the increases were due to
painting, primarily the Peace Bridge painting and lead abatement project,
conventional equipment related services and insulation sales and
application.
Gross profit as a percent of sales increased from 14.6% to 15.5% and 10.1% to
14.2% during the current quarter and year to date, respectively. The
improvement in the current quarter gross profit was primarily due to the
Canadian subsidiary margin increase. The Company did not have the
substantial losses, year to date, that were incurred in 1994's comparable
period, by the Heist Field Services division.
Selling, general and administrative expenses increased $174,000 or 6.2% for the
quarter and $1,016,000 or 12.5% for the first nine 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(R)) 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 and higher average debt levels. Sales
of fully utilized equipment resulted in a net loss on sale of property,
plant and equipment during the current quarter and a net gain year to date.
Intangible assets relating to two acquisitions were fully amortized in 1994,
resulting in the decrease in amortization expense in 1995. Collectively the
above caused the increase in other expense, net, compared to 1994 year to
date.
The effective tax rate is 45.0% for the current quarter and 54.7% year to date.
State taxes are owed 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 than U.S. statutory tax
rates, 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 quarter will
move towards 49%.
8
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND THE FINANCIAL CONDITION,
CONTINUED
Financial Condition
The current ratio is 3.2 to 1 for the current fiscal quarter compared to 3.1 to
1 as of December 25, 1994. The quick ratio is 2.8 to 1 compared to 2.7 to 1
as of December 25, 1994. Long-term bank line debt increased $1,600,000, in
this quarter, leaving open credit commitments at Manufacturers and Traders
Trust Company of $900,000 and at the Royal Bank of Canada of $357,000 (the
U.S. dollar equivalent).
Cash and cash equivalents increased by $899,000 primarily due to earnings,
proceeds from the sale of property, plant and equipment, proceeds from
exercised stock options and positive exchange rate changes, less repayment
of long term debt.
Capital expenditures for the current fiscal quarter were $2,087,000. Of this
amount $1,149,000 was for new equipment, $500,000 was for computer equipment
and software and the remainder for replacement equipment. Capital
expenditures, year to date, were funded by the net increase in borrowings,
depreciation and amortization, less financing needed for working capital.
9
<PAGE> 11
Part II-Other Information
Item 6 Exhibits and Reports on Form 8-K
(A) Exhibit 27.1 Financial Data Schedules (for SEC use only)
(B) Reports on Form 8-K: No reports on Form 8-K have been filed
during the quarter ended October 1, 1995.
10
<PAGE> 12
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 October 30, 1995 /s/ Mark R. Pfeil
----------------- --------------------------
Mark R. Pfeil
Chief Accounting Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> DEC-26-1994
<PERIOD-END> OCT-01-1995
<CASH> 2,431,876
<SECURITIES> 0
<RECEIVABLES> 16,823,833
<ALLOWANCES> 0
<INVENTORY> 2,104,410
<CURRENT-ASSETS> 24,385,610
<PP&E> 46,783,161
<DEPRECIATION> 29,053,179
<TOTAL-ASSETS> 42,596,949
<CURRENT-LIABILITIES> 7,510,255
<BONDS> 9,189,474
<COMMON> 158,260
0
0
<OTHER-SE> 25,432,111
<TOTAL-LIABILITY-AND-EQUITY> 42,596,949
<SALES> 27,179,563
<TOTAL-REVENUES> 27,179,563
<CGS> 22,958,087
<TOTAL-COSTS> 22,958,087
<OTHER-EXPENSES> 2,987,662
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 149,651
<INCOME-PRETAX> 1,089,253
<INCOME-TAX> 489,818
<INCOME-CONTINUING> 599,435
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 599,435
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
