<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 March 30, 1997.
[ ] 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 of other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
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 - April 18, 1997.
Common stock, $.05 par value 2,876,873
---------------------------- ---------
(Class) (Outstanding shares)
1
<PAGE> 2
C.H. HEIST CORP. AND SUBSIDIARIES
Index
<TABLE>
<S> <C>
Part I
Financial Information
Condensed Consolidated Balance Sheets-
March 30, 1997 and December 29, 1996 3
Condensed Consolidated Statements of Operations-
thirteen-week periods ended March 30, 1997 and
March 31, 1996 4
Condensed Consolidated Statements of Cash Flows-
thirteen-week periods ended March 30, 1997 and
March 31, 1996 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 8-9
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>
March 30 December 29
Assets 1997 1996
------ ---- ----
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,591,433 2,691,908
Receivables 14,022,563 14,533,685
Services in progress 1,071,011 1,117,235
Income taxes receivable 519,937 -
Parts and supplies 1,559,629 1,604,470
Prepaid expenses 1,243,881 324,114
Deferred income taxes 1,010,219 1,010,376
------------- -------------
Total current assets 21,018,673 21,281,788
------------- -------------
Property, plant and equipment, at cost 50,835,204 49,635,229
Less accumulated depreciation 33,158,012 32,229,168
------------- -------------
Net property, plant and equipment 17,677,192 17,406,061
------------- -------------
Deferred income taxes 139,994 141,367
Other assets 1,678,668 2,073,881
------------- -------------
$ 40,514,527 40,903,097
============= =============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current installments of long-term debt $ 537,667 537,667
Accounts payable 1,624,566 1,579,775
Accrued expenses 4,710,776 4,470,646
Income taxes payable - 197,753
------------- -------------
Total current liabilities 6,873,009 6,785,841
Long-term debt, excluding current installments 6,932,974 6,492,390
Deferred income taxes 551,285 551,285
------------- -------------
Total liabilities 14,357,268 13,829,516
------------- -------------
Stockholders' equity (note 3):
Common stock of $.05 par value. Authorized
8,000,000 shares; issued 3,167,092 shares 158,355 158,355
Additional paid-in capital 4,274,057 4,267,798
Retained earnings 24,140,609 24,984,062
Equity adjustment from foreign currency translation (1,173,275) (1,084,731)
------------- -------------
27,399,746 28,325,484
Less cost of common stock in treasury: 290,219 and
292,419 shares for 1997 and 1996, respectively (1,242,487) (1,251,903)
------------- -------------
Total stockholders' equity 26,157,259 27,073,581
------------- -------------
$ 40,514,527 40,903,097
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
C.H. HEIST CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Thirteen- Thirteen-
week week
period period
ended ended
March 30 March 31
1997 1996
------------- -----------
<S> <C> <C>
Net Sales $24,960,983 25,769,004
Cost of sales 22,261,371 22,508,737
----------- -----------
Gross profit 2,699,612 3,260,267
Selling, general and administrative 3,464,401 3,331,314
----------- -----------
Operating (loss) (764,789) (71,047)
----------- -----------
Other income (expense):
Interest income 11,274 13,535
Interest expense (122,449) (80,427)
Gain on disposal of property, plant
and equipment, net 3,137 62,409
Amortization of other assets (35,945) (31,007)
Miscellaneous (303,769) 5,551
----------- -----------
Total other income (expense) net (447,752) (29,939)
----------- -----------
(Loss) before income taxes (1,212,541) (100,986)
Income tax benefit 369,088 39,086
----------- -----------
Net (loss) $ (843,453) (61,900)
=========== ===========
Net (loss) per share $ (.29) (.02)
=========== ===========
Weighted average number of common shares outstanding 2,875,519 2,872,773
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
C. H. HEIST CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Thirteen- Thirteen-
week week
period period
ended ended
March 30 March 31
1997 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net Loss $ (843,453) (61,900)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation of plant and equipment 1,268,853 1,195,284
Amortization of other assets 35,945 31,007
Gain on disposal of property, plant
and equipment, net (3,137) (62,409)
Deferred income taxes - -
Changes in assets and liabilities (see below) (420,602) (551,673)
------------ ------------
Net cash provided by operating activities 37,606 550,309
------------ ------------
Cash flows from investing activities:
Additions to property, plant and equipment (1,682,449) (620,302)
Proceeds from disposal of property, plant and equipment 99,197 116,541
------------ ------------
Net cash used in investing activities (1,583,252) (503,761)
------------ ------------
Cash flows from financing activities:
Proceeds from bank line of credit borrowing 1,300,000 2,700,000
Repayment on bank line of credit borrowing (850,000) (1,900,000)
Repayment of other long-term debt (9,416) (6,278)
Proceeds from reissuance of treasury shares 15,675 -
------------ ------------
Net cash provided by financing activities 456,259 793,722
------------ ------------
Effect of exchange rate changes on cash and cash equivalents (11,088) 10,055
------------ ------------
Net (decrease) increase in cash and cash equivalents (1,100,475) 850,325
Cash and cash equivalents at beginning of period 2,691,908 3,040,815
------------ ------------
Cash and cash equivalents at end of period $ 1,591,433 3,891,140
============ ===========
Changes in assets and liabilities providing (using) cash:
Receivables $ 478,373 562,152
Services in progress 45,928 (994,711)
Income taxes receivable (519,937) (8,904)
Parts and supplies 43,361 (33,879)
Prepaid expenses (924,038) (755,861)
Accounts payable 49,677 1,446,136
Accrued expenses 245,000 (211,345)
Income taxes payable (198,356) (544,135)
Other assets 359,390 (11,126)
------------ ------------
Total $ (420,602) (551,673)
============ ============
</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 Management, the accompanying condensed consolidated
financial statements contain all adjustments necessary (consisting of
normal recurring items) to present a fair statement of consolidated
financial position as of March 30, 1997, and the results of operations
and cash flows for the thirteen-week period ended March 30, 1997 and the
thirteen-week period ended March 31, 1996. These condensed consolidated
financial statements should be read in conjunction with the Company's
Audited Consolidated Financial Statements for 1996 and the notes thereto.
The Company's fiscal year ends on the last Sunday of December. For fiscal
1996, the Company's operations included 52 weeks. Therefore, the period
ended March 30, 1996 includes thirteen weeks. The first quarter of 1997 (a
52 week year) includes thirteen weeks.
2. The results of operations for the thirteen-week period ended March 30, 1997
and the thirteen-week period ended March 31, 1996 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 30, 1997 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 29, 1996 $158,355 $4,267,798 $24,984,062 $(1,084,731) 292,419 $(1,251,903) $27,073,581
Net Loss - - (843,453) - - - (843,453)
Foreign currency - - - - - -
translation adjustment (88,544) - - (88,544)
Reissue Treasury Stock - 6,259 - - (2,200) 9,416 15,675
-------- ---------- ----------- ----------- ------- ----------- -----------
Balance at March 30, 1997 $158,355 $4,274,057 $24,140,609 $(1,173,275) 290,219 $(1,242,487) $26,157,259
======== =========== =========== =========== ======= =========== ===========
</TABLE>
4. During the quarter ended March 30, 1997, 33,583 additional stock options
were issued and none have expired. As of March 30, 1997 and December 29,
1996, the Company had exercisable options outstanding to employees to
purchase 182,389 common shares, at prices ranging from $6.94 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 March 30, 1997, and the related condensed consolidated
statements of operations and cash flows for the thirteen-week periods ended
March 30, 1997 and March 31, 1996. 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 inquires 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 29, 1996, and the related consolidated statements of operations,
stockholders' equity and cash flows for the year ended (not presented herein);
and in our report dated February 14, 1997, 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
29, 1996, is fairly presented, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
KPMG Peat Marwick LLP
Buffalo, New York
April 28, 1997
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS
Results of Operations
Sales decreased by $808,000 or 3.1% during the current fiscal quarter compared
to the same fiscal quarter one year ago. Sales in the industrial
maintenance segment declined by $3.2 million or 21.6%. This decline was
primarily attributable to the lack of major plant cleanup work during the
current fiscal quarter compared to the prior period. Sales in the
temporary staffing segment increased $2.4 million or 21.5%. These increases
were the result of contributions from offices opened after the first
quarter of the prior fiscal year and during the current fiscal quarter,
greater market penetration from established offices in the Midwest and in
the Mid Atlantic region and sales of information technology staffing
generated by the Tech Resource Group which was acquired in September 1996.
Gross profit decreased by $561,000 or 17.2% and as a percentage of sales from
12.7% to 10.8% for the current fiscal quarter compared to the same period
one year ago. Gross profit decreased in the industrial maintenance segment
primarily as a result of increases in non-billable time associated with
safety training of the field workforce, guaranteed weekly minimum hours to
key field personnel to promote stability in the workforce and the addition
of management staff in selected markets. The decrease in gross profit as a
percent of sales for the temporary staffing segment was due to costs
associated with new office openings including the Tech Resource group which
was formed after the acquisition of Tech Resource, Inc., in September 1996.
Interest expense increased during the current fiscal quarter compared to the
same period one year ago. Higher interest rates on the Company's revolving
line of credit and interest expense accrued on the promissory note issued
in conjunction with the acquisition of certain assets of Tech Resources,
Inc. in September 1996 caused this increase. Legal, accounting and travel
costs, deferred in fiscal 1996, associated with the preparation of
documents for the spin-off and initial public offering of Ablest Service
Corp., were written off due to a delay in the timing of the initial public
offering in 1997. Management of the Company anticipates that the spin-off
will occur later in the current fiscal year with a public offering of
additional shares during fiscal 1998.
The effective tax rate for the current fiscal quarter is a benefit of 30.4%.
The lower than normal effective benefit rate is due to the tax benefit of
operating losses in the industrial maintenance segment being not fully
realizable for state tax purposes.
Financial Condition
The quick ratio was 2.6 to 1 as of March 30, 1997 compared to 2.8 to 1 as of
December 29, 1996. The current ratio was 3.1 as of March 30, 1997 and
December 29, 1996. Net working capital decreased by $350,000, primarily due
to a $1.1 million reduction in cash and cash equivalents and $500,000
reduction in accounts receivable. These decreases were partially offset by
an increase in prepaid expenses of $920,000 which represents the balance
remaining on renewal of the Company's insurance program at the beginning of
the fiscal year, as well as increases in income taxes receivable and
accrued expenses. Reference should be made to the cash flow statement which
details the sources and uses of cash.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITION,
Continued
Open credit commitments as of March 30, 1997 were $3.1 million for C.H. Heist
Corp., and $5.0 million for Ablest Service Corp. The Company also has
$362,000 (the U.S. dollar equivalent) available for C. H. Heist Ltd., the
Company's Canadian subsidiary.
Capital expenditures for the current fiscal quarter were approximately $1.7
million. Of this amount; $759,000 was for additions to the mobile equipment
fleet, $319,000 was for computer equipment of which $257,000 was for an
office automation system for Ablest, $147,000 for computerized machining
equipment for the Company's Methods and Development facility with the
balance for other equipment and facilities. Open credit commitments at
March 30, 1997 were $290,000, $270,000 of which was for additions to the
mobile equipment fleet and the remainder for other equipment.
Recent Development
In a press release dated April 28, 1997, the Company announced that Ablest
Service Corp., the Company's temporary staffing subsidiary, acquired certain
assets of Atlanta based Solution Source, Inc. Solution Source is an
Information Technology staffing provider with 1996 annualized sales of
approximately $3.2 million. It will be combined with Ablest's Tech Resource
Group, which was formed after the September 1996 acquisition of Atlanta
based Tech Resource, Inc.
9
<PAGE> 10
Part II-Other Information
Item 6 Exhibits and Reports on Form 8-K
(A) Reports on Form 8-K: No reports on Form 8-K have been filed
during the quarter ended March 30, 1997.
Exhibit 27 Financial Data Schedule (for SEC use only)
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 May 7, 1997 /s/ Mark P. Kashmanian
------------------------------
Mark P. Kashmanian
Chief Accounting Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> MAR-30-1997
<CASH> 1,591,433
<SECURITIES> 0
<RECEIVABLES> 14,022,563
<ALLOWANCES> 0
<INVENTORY> 1,559,629
<CURRENT-ASSETS> 21,018,673
<PP&E> 50,835,204
<DEPRECIATION> 33,158,012
<TOTAL-ASSETS> 40,514,527
<CURRENT-LIABILITIES> 6,873,009
<BONDS> 6,932,974
0
0
<COMMON> 158,355
<OTHER-SE> 25,998,904
<TOTAL-LIABILITY-AND-EQUITY> 40,514,527
<SALES> 24,960,983
<TOTAL-REVENUES> 24,960,983
<CGS> 22,261,371
<TOTAL-COSTS> 22,261,371
<OTHER-EXPENSES> 3,464,401
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 122,449
<INCOME-PRETAX> (1,212,541)
<INCOME-TAX> (369,088)
<INCOME-CONTINUING> (843,453)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (843,453)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> (.29)
</TABLE>
