<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 - KA
CURRENT REPORT
Current Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 13, 1998
---------------------
C.H. Heist Corp.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
New York 0-7907 16-0803301
- ---------------------- ---------------- ----------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
810 North Belcher Road, Clearwater, Florida 33765
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (813) 461-5656
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Exhibit Index: 3
<PAGE> 2
Item 2: Acquisition or Disposition of Assets
On April 13, 1998, Ablest Service Corp. ("Ablest"), a wholly owned
subsidiary of C.H. Heist Corp. ("Company"), acquired Milestone Technologies,
Inc., an Arizona corporation, ("Milestone") pursuant to a Stock Purchase
Agreement ("Purchase Agreement"). Ablest intends to continue to operate
Milestone as a separate company.
Pursuant to the Purchase Agreement, Ablest purchased 100% of the
common stock of Milestone from its shareholders for approximately $6.6 million
paid in cash at closing and agreed to pay additional consideration based on the
achievement of certain pre-established earnout targets for 1998. 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. Ablest used funds
available to it under the Company's revolving line of credit to fund the cash
paid at closing.
The two former shareholders of Milestone have entered into two-year
employment agreements with Ablest providing certain base and incentive
compensation. Each shareholder of Milestone has also agreed not to compete with
Ablest for three years from the date of closing.
2
<PAGE> 3
Item 7: Financial Statements, Pro Forma Information and Exhibits Pages
(a) Milestone Technologies, Inc. Financial Statements for the
Years Ended November 30, 1997 and 1996 together with
independent auditors' report thereon 5 - 13
(b) Pro Forma Financial Information:
Unaudited pro forma condensed consolidated
balance sheet as of March 29, 1998. 14
Unaudited pro forma condensed consolidated
statement of operations for the thirteen week
period ended March 29, 1998. 15
Unaudited pro forma condensed consolidated
statement of earnings for the year ended December
28, 1997. 16
Notes to unaudited pro forma condensed
consolidated financial statements. 17 - 18
3
<PAGE> 4
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.
Dated: June 19, 1998
C.H. Heist Corp.
---------------------------
(Registrant)
/s/ Mark P. Kashmanian
---------------------------
Mark P. Kashmanian
Treasurer, Chief Accounting Officer
4
<PAGE> 5
Independent Auditors' Report
The Board of Directors
Milestone Technologies, Inc.:
We have audited the accompanying balance sheet of Milestone Technologies, Inc.
as of November 30, 1997, and the related statements of income and retained
earnings and cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the 1997 financial statements referred to above present fairly,
in all material respects, the financial position of Milestone Technologies,
Inc. as of November 30, 1997, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
March 24, 1998 KPMG Peat Marwick LLP
5
<PAGE> 6
Independent Auditors' Report
The Board of Directors
Milestone Technologies, Inc.:
We have audited the accompanying balance sheet of Milestone Technologies, Inc.
as of November 30, 1996, and the related statements of income and retained
earnings and cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Milestone Technologies, Inc.
as of November 30, 1996, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
Phoenix, Arizona
March 8, 1998 Eide Helmeke PLLP
6
<PAGE> 7
MILESTONE TECHNOLOGIES, INC.
BALANCE SHEETS
NOVEMBER 30, 1997 and 1996
<TABLE>
<CAPTION>
Assets 1997 1996
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,032,263 $ 77,582
Accounts receivable - trade, net 1,002,517 942,045
Accounts receivable - unbilled 226,794 126,142
Other 17,094 20,998
---------------- --------------
Total current assets 2,278,668 1,166,767
---------------- --------------
Equipment, Net
Furniture and office equipment 47,494 58,062
Accumulated depreciation (24,239) (34,612)
---------------- --------------
23,255 23,450
---------------- --------------
Other assets 4,650 3,841
---------------- --------------
$ 2,306,573 $ 1,194,058
================ ==============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Notes payable to bank $ 0 $ 10,680
Accounts payable 2,789 11,367
Accrued payroll and payroll taxes 288,075 215,799
Accrued pension expense 20,000 14,000
Due to former stockholders 0 38,250
Income taxes payable 427,809 0
Deferred income taxes 356,000 350,000
---------------- --------------
Total current liabilities 1,094,673 640,096
---------------- --------------
Stockholders' equity:
Common stock, no par value, authorized 1,000,000 shares;
500,000 shares issued 90,918 90,918
Additional paid-in capital 45,000 45,000
Retained earnings 1,220,482 562,544
---------------- --------------
1,356,400 698,462
Treasury stock, at cost, 120,000 shares (144,500) (144,500)
---------------- --------------
Total stockholders' equity 1,211,900 553,962
---------------- --------------
$ 2,306,573 $ 1,194,058
================ ==============
</TABLE>
See notes to financial statements.
7
<PAGE> 8
MILESTONE TECHNOLOGIES, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenue $ 9,026,323 $ 6,443,971
------------------ ---------------
Operating Expenses
Consulting salaries and associated costs 6,918,676 4,871,766
General and administrative 1,005,001 1,223,613
------------------ ---------------
7,923,677 6,095,379
------------------ ---------------
Operating income 1,102,646 348,592
------------------ ---------------
Other income (expense)
Interest income 2,660 18
Interest expense (922) (12,521)
Loss on disposal of equipment (1,928) 0
Miscellaneous 1,482 3,734
------------------ ---------------
1,292 (8,769)
------------------ ---------------
Income before income taxes 1,103,938 339,823
Income Taxes 446,000 130,000
------------------ ---------------
Net Income 657,938 209,823
Retained earnings, beginning of year 562,544 352,721
------------------ ---------------
Retained earnings, end of year $ 1,220,482 $ 562,544
================== ===============
</TABLE>
See notes to financial statements.
8
<PAGE> 9
MILESTONE TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 657,938 $ 209,823
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 7,010 5,664
Deferred income taxes 6,000 119,000
Loss on disposal of equipment 1,928 0
Change in
Accounts receivable - trade (60,472) (441,477)
Accounts receivable - unbilled (100,652) 65,498
Other assets 3,095 (18,498)
Accounts payable (8,578) 11,367
Accrued payroll and payroll taxes 72,276 89,779
Accrued pension expense 6,000 14,000
Income taxes payable 427,809 (335)
----------------- --------------
Total adjustments 354,416 (155,002)
----------------- --------------
Net cash provided by operating activities 1,012,354 54,821
----------------- --------------
Cash flows from investing activities
Purchase of equipment (8,743) (15,603)
----------------- --------------
Cash flows from financing activities
Increase (decrease) in note payable to bank (10,680) 10,566
Payments to former stockholders (38,250) (35,750)
----------------- --------------
Net cash used in financing activities (48,930) (25,184)
----------------- --------------
Net increase in cash and cash equivalents 954,681 14,034
Cash and cash equivalents, beginning of year 77,582 63,548
----------------- --------------
Cash and cash equivalents, end of year $ 1,032,263 $ 77,582
================= ==============
</TABLE>
See notes to financial statements
9
<PAGE> 10
MILESTONE TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS, CONTINUED
<TABLE>
<CAPTION>
1997 1996
---------------- -------------
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid for interest $ 922 $ 12,521
================ =============
Cash paid for income taxes $ 6,678 $ 17,512
================ =============
Supplemental schedule of non-cash investing and financing
activities
Increase in amount due to former stockholders for purchase of
25,000 shares of treasury stock $ 0 $ 27,500
================ =============
</TABLE>
See notes to financial statements.
10
<PAGE> 11
MILESTONE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Milestone Technologies, Inc. is engaged in the business of providing temporary
computer consultants and programmers to companies primarily in the Phoenix,
Arizona metropolitan area.
CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with a maturity of
three months or less to be cash equivalents.
EQUIPMENT
Equipment is stated at cost. Depreciation is provided using the straight-line
method over the estimated useful lives of the respective assets, which ranges
from 5 to 10 years.
REVENUE AND COST RECOGNITION
Revenue and the associated costs are recognized in the period that the services
are provided. Accounts receivable - unbilled represent revenue for services
provided but not yet billed. Costs associated with this unbilled revenue are
reflected as expenses.
INCOME TAXES
Deferred taxes are provided on the asset and liability method whereby deferred
tax assets are recognized for deductible temporary differences and operating
loss and tax credit carryforwards and deferred tax liabilities are recognized
for taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases.
Cash basis reporting is primarily used for income tax reporting purposes.
Deferred tax assets are reduced by a valuation allowance when, in the opinion
of management, it is more likely than not that some portion or all of the
deferred tax assets will not be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment.
ESTIMATES
Management uses estimates and assumptions in preparing financial statements.
Those estimates and assumptions affect the reported assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenue and
expense. Actual results could differ from these estimates.
11
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - ACCOUNTS RECEIVABLE - TRADE
Accounts receivable - trade consists of the following at November 30,:
<TABLE>
<CAPTION>
1997 1996
------------- -----------
<S> <C> <C>
Accounts receivable - trade $ 1,042,517 $ 982,045
Allowance for doubtful accounts (40,000) (40,000)
------------- -----------
$ 1,002,517 $ 942,045
============= ===========
</TABLE>
NOTE 3 - NOTE PAYABLE TO BANK
At November 30, 1997 the Company has a $400,000 revolving line of credit with a
financial institution. Outstanding borrowings bear interest at prime plus 1%,
are secured by substantially all Company assets and personal guarantees of its
stockholders and have a maturity date of April 30, 1998. At November 30, 1996,
$10,680 was outstanding under this line of credit.
NOTE 4 - PENSION PLAN
The Company has a 401(k) profit sharing plan. The plan, covering substantially
all full-time employees meeting certain minimum requirements, allows for
employees to contribute up to $9,500 of pre-tax covered compensation into their
individual account. The Company will make discretionary contributions to the
plan in an amount to be determined from year to year. Expense under this plan
was $19,345 and $16,365 in fiscal 1997 and 1996, respectively.
NOTE 5 - INCOME TAXES
Income tax expense consists of the following:
<TABLE>
<CAPTION>
Current Deferred Total
------------ ----------- ------------
<S> <C> <C> <C>
For the Year ended November 30, 1997
U.S. Federal $ 348,000 $ (2,000) $ 346,000
State 92,000 8,000 100,000
------------ ----------- ------------
$ 440,000 $ 6,000 $ 446,000
============ =========== ============
For the Year ended November 30, 1996
U.S. Federal $ 6,000 $ 92,000 $ 98,000
State 5,000 27,000 32,000
------------ ----------- ------------
$ 11,000 $ 119,000 $ 130,000
============ =========== ============
</TABLE>
12
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
The provision for income taxes differs from "expected" taxes (computed by
applying the U.S. Federal corporate rate of 34% to income before income taxes)
as follows at November 30,:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Computed "expected" provision $ 375,338 $ 115,540
Increase resulting from
State income taxes 66,000 21,120
Other 4,662 (6,660)
----------- -----------
$ 446,000 $ 130,000
=========== ===========
</TABLE>
At November 30, 1997 and 1996, the tax effects of temporary differences that
give rise to deferred taxes are primarily related to cash basis accounting used
for income tax reporting purposes.
NOTE 6 - MAJOR CUSTOMERS
Approximately 56% and 53% of the Company's revenue in fiscal 1997 and 1996,
respectively, was from three customers. At November 30, 1997 and 1996, $454,742
and $594,904, respectively, was owed to the Company by these customers.
NOTE 7 - OPERATING LEASE COMMITMENTS
The Company leases office space under a noncancelable operating lease. The
lease expires in August 2001. Future minimum lease payments under this
operating lease are as follows at November 30, 1997:
<TABLE>
<S> <C>
Fiscal year ending
- ------------------
1998 $ 43,222
1999 52,775
2000 54,173
2001 41,416
------------
$ 191,586
============
</TABLE>
Rent expense totaled $40,699 and $35,967 for the year ending November 30, 1997
and 1996, respectively.
13
<PAGE> 14
C.H. HEIST CORP. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Balance
Sheet As of March 29, 1998 -
Unaudited
(In thousands)
<TABLE>
<CAPTION>
March 29, Feb. 28, Pro Forma March 29,
1998 1998 Adjustments 1998
Assets C.H. Heist Milestone (note 2) Pro Forma
------- ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 1,902 992 2,894
Receivables 16,062 856 16,918
Services in progress 1,004 262 1,266
Income taxes receivable 497 - (192) (d) 305
Parts and supplies 1,239 - 1,239
Prepaid expenses 865 10 875
Deferred income taxes 807 - (364) (d) 443
--------- -------- --------- --------
Total current assets 22,376 2,120 (556) 23,940
--------- -------- --------- --------
Property, plant and equipment, at cost 54,228 47 54,275
Less accumulated depreciation 37,195 25 37,220
--------- -------- --------- --------
Net property, plant and equipment 17,033 22 17,055
--------- -------- --------- --------
Deferred income taxes 179 - 179
Intangible assets, net 3,309 - 5,453 (a) 8,762
Other assets 219 8 227
--------- -------- --------- --------
$ 43,116 2,150 4,897 50,163
========= ======== ========= ========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current installments of long-term debt $ 33 - 33
Accounts payable 2,726 199 2,925
Accrued expenses 4,078 - 4,078
Income taxes payable - 192 (192) (d) -
Deferred income taxes - 364 (364) (d) -
--------- -------- --------- --------
Total current liabilities 6,837 755 (556) 7,036
Long-term debt, excluding current installments 8,300 - 6,848 (b) 15,148
Deferred incentive compensation 466 - 466
Deferred income taxes 398 - 398
--------- -------- --------- --------
Total liabilities 16,001 755 6,292 23,048
--------- -------- --------- --------
Stockholders' equity:
Common stock 158 91 (91) (c) 158
Additional paid-in capital 4,277 45 (45) (c) 4,277
Retained earnings 25,389 1,403 (1,403) (c) 25,389
Accumulated other comprehensive losses (1,471) - (1,471)
--------- -------- --------- --------
28,353 1,539 (1,539) 28,353
Less cost of common stock in treasury (1,238) (144) 144 (c) (1,238)
--------- -------- --------- --------
Total stockholders' equity 27,115 1,395 (1,395) 27,115
--------- -------- --------- --------
$ 43,116 2,150 4,897 50,163
========= ======== ========= ========
</TABLE>
See notes to unaudited pro forma financial statements.
14
<PAGE> 15
C.H. HEIST CORP. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Operations
For the Thirteen Week Period Ended March 29, 1998 - Unaudited
(In thousands, except share data)
<TABLE>
<CAPTION>
Thirteen week period ended
--------------------------------------------------------------
March 29, Feb. 28, Pro Forma March 29,
1998 1998 Adjustments 1998
C.H. Heist Milestone (note 3) Pro Forma
----------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Net service revenues $ 28,168 2,839 31,007
Cost of services 20,569 2,288 22,857
---------- ---------- --------- --------
Gross profit 7,599 551 8,150
Selling, general and administrative expenses 8,319 255 (19) (a) 8,555
---------- ---------- --------- --------
Operating income (loss) (720) 296 19 (405)
---------- ---------- --------- --------
Other income (expense):
Interest expense, net (105) 9 (109) (b) (205)
Amortization (77) - (72) (c) (149)
Miscellaneous, net 12 - 12
---------- ---------- --------- --------
Total other income (expense) net (170) 9 (181) (342)
---------- ---------- --------- --------
Earnings (loss) before income taxes (890) 305 (162) (747)
Income tax expense (benefit) (397) 122 (39) (d) (314)
Net earnings (loss) $ (493) 183 (123) (433)
========== ========== ========= ========
Basic and diluted loss per share $ (.17) (.15)
========== ========
Weighted average number of common shares
outstanding 2,877,758 2,877,758
========== =========
</TABLE>
See notes to unaudited pro forma financial statements
15
<PAGE> 16
C.H. HEIST CORP. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Earnings
For the Year Ended December 28, 1997 - Unaudited
(In thousands, except share data)
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------------------------
Dec. 28, Nov. 30, Pro Forma Dec. 28,
1997 1997 Adjustments 1997
C.H. Heist Milestone (note 3) Pro Forma
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Net service revenues $ 119,516 9,026 128,542
Cost of services 85,290 6,918 92,208
--------- -------- --------- ----------
Gross profit 34,226 2,108 36,334
Selling, general and administrative expenses 31,153 1,005 (155) (a) 32,003
--------- -------- --------- ----------
Operating income 3,073 1,103 155 4,331
--------- -------- --------- ----------
Other income (expense):
Interest expense, net (650) 1 (399) (b) (1,048)
Amortization (247) - (290) (c) (537)
Miscellaneous, net (172) - (172)
--------- -------- --------- ----------
Total other income (expense) net (1,069) 1 (689) (1,757)
--------- -------- --------- ----------
Earnings before income taxes 2,004 1,104 (534) 2,574
Income tax expense 1,106 446 (116) (d) 1,436
--------- -------- --------- ----------
Net earnings $ 898 658 (418) 1,138
========= ======== ========= ==========
Basic and diluted earnings per share $ .31 .40
========= ==========
Weighted average number of common shares
outstanding 2,876,505 2,876,505
========= ==========
</TABLE>
See notes to unaudited pro forma financial statements
16
<PAGE> 17
C.H. HEIST CORP. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
NOTE 1 - Basis of Presentation
The unaudited pro forma condensed consolidated balance sheet
reflects the historical financial position of C.H. Heist Corp.
(the "Company") as of March 29, 1998, and on a pro forma basis
assuming the acquisition of Milestone Technologies, Inc.
("Milestone") had been consummated on that date.
The unaudited pro forma condensed consolidated statements of
operations reflect the historical results of operations of the
Company for the thirteen week period ended March 29, 1998 and for
the year ended December 28, 1997, and on a pro forma basis assuming
the acquisition of Milestone had been consummated as of the
beginning of the periods presented. The Company has reclassified
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
$15,397,000 for the year ended December 28, 1997. Management
believes that its current presentation is generally more consistent
with the industry practice.
Milestone uses a November 30th fiscal year end and therefore the
accompanying unaudited pro forma financial statements include their
results of operations and financial position for comparable
periods. Those periods include the historical financial position as
of February 28, 1998 and the historical results of operations for
the thirteen weeks ended February 28, 1998 and the year ended
November 30, 1997.
The purchase method of accounting has been used for this
acquisition and in the preparation of the pro forma condensed
consolidated financial statements. The Company records any
contingent consideration as additional goodwill when earned.
Management believes that the assumptions used in preparing these
unaudited pro forma condensed consolidated statements provide a
reasonable basis of presenting all of the significant effects of
the acquisition of Milestone. The pro forma condensed consolidated
financial statements do not purport to be indicative of the actual
results that would have occurred had the acquisition been
consummated on or as of the dates assumed, and are not necessarily
indicative of the future results of operations which will be
obtained as a result of the acquisition.
NOTE 2 - Adjustments to the Pro Forma Condensed Consolidated Balance Sheet
(a) To reflect the goodwill, intangible assets and acquisition
related costs that arise
17
<PAGE> 18
under purchase accounting as a result of the acquisition.
(b) To reflect the total additional long-term debt necessary for
the consummation of the transaction including the consideration
paid to shareholders of Milestone and acquisition related costs.
(c) To reflect the elimination of Milestone's equity.
(d) To reclassify certain liabilities to conform to the consolidated
presentation of the Company.
Note 3 - Adjustments to the Pro Forma Condensed Consolidated Statement of
Operations and Earnings
(a) To reduce compensation expense of the former owners of Milestone
to the level agreed upon in their respective employment agreements
with Ablest Service Corp.
(b) To reflect increased interest expense the Company would have
incurred because of additional long-term debt necessary to
consummate the acquisition at the Company's average borrowing rate
for each period (6.8% for both periods) and to eliminate the
interest income from Milestone's investments that were liquidated
immediately following the acquisition.
(c) To reflect amortization expense over the estimated useful lives of
30 years for goodwill and 3 to 5 years for other intangible assets
(customer and employee lists and non-compete agreements).
(d) To reflect the estimated income tax effects of the acquisition and
the pro forma adjustments.
18
