<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 June 27, 1999.
[ ] 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 33765
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
727-461-5656
----------------------------------------------------
(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 23, 1999.
Common stock, $.05 par value 2,881,038
---------------------------- --------------------
(Class) (Outstanding shares)
1
<PAGE> 2
C.H. HEIST CORP. AND SUBSIDIARIES
Index
<TABLE>
<S> <C>
Part I
Financial Information
Condensed Consolidated Balance Sheets - June 27, 1999 -
(Unaudited) and December 27, 1998 3
Condensed Consolidated Statements of Operations and
Comprehensive Income - (Unaudited) Thirteen and
twenty-six week periods ended June 27, 1999 and
June 28, 1998 4
Condensed Consolidated Statements of Cash Flows -
(Unaudited) Twenty-six week periods ended
June 27, 1999 and June 28, 1998 5
Notes to Condensed Consolidated Financial Statements 6 - 8
Independent Auditors' Review Report 9
Management's Discussion and Analysis of Results of
Operations and Financial Condition 10-12
Part II
Other Information 13
Signatures 14
</TABLE>
* * * * *
2
<PAGE> 3
Part I-Financial Information
C.H. HEIST CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
June 27, December 27,
Assets 1999 1998
----------- ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,510 3,147
Receivables 20,492 19,653
Services in progress 1,453 1,017
Income taxes receivable 592 --
Parts and supplies 1,136 1,174
Prepaid expenses 1,037 317
Deferred income taxes 628 626
-------- --------
Total current assets 26,848 25,934
-------- --------
Property, plant and equipment, at cost 60,069 56,350
Less accumulated depreciation 41,523 38,996
-------- --------
Net property, plant and equipment 18,546 17,354
-------- --------
Deferred income taxes 152 144
Intangible assets, net 10,283 10,471
Other assets 130 118
-------- --------
$ 55,959 54,021
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt $ 194 5
Accounts payable 2,500 3,030
Accrued expenses 5,832 5,788
Income taxes payable -- 1
-------- --------
Total current liabilities 8,526 8,824
Long-term debt, excluding current installments 17,978 16,050
Deferred incentive compensation 900 869
Deferred income taxes 137 137
-------- --------
Total liabilities 27,541 25,880
-------- --------
Stockholders' equity (note 3):
Common stock of $.05 par value. Authorized
8,000,000 shares; issued 3,167,092 shares 158 158
Additional paid-in capital 4,283 4,278
Retained earnings 26,950 27,176
Accumulated other comprehensive losses (1,748) (2,235)
-------- --------
29,643 29,377
Less cost of common stock in treasury: 286,329 and
288,754 shares for 1999 and 1998, respectively (1,225) (1,236)
-------- --------
Total stockholders' equity 28,418 28,141
-------- --------
$ 55,959 54,021
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
C.H. HEIST CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Thirteen Thirteen Twenty-six Twenty-six
week period week period week period week period
Ended ended ended ended
June 27, June 28, June 27, June 28,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net service revenues $ 36,686 34,136 72,787 62,304
Cost of services 26,993 24,064 53,276 44,633
----------- ----------- ----------- -----------
Gross profit 9,693 10,072 19,511 17,671
Selling, general and administrative
expenses 9,702 8,493 19,253 16,812
Amortization of intangible assets 182 141 365 218
----------- ----------- ----------- -----------
Operating income (loss) (191) 1,438 (107) 641
----------- ----------- ----------- -----------
Other income (expense):
Interest income 15 15 36 47
Interest expense (279) (247) (538) (384)
Gain (loss) on disposal of property, plant and
equipment, net 19 (29) 13 (36)
Miscellaneous, net 50 96 38 115
----------- ----------- ----------- -----------
Total other income (expense), net (195) (165) (451) (258)
----------- ----------- ----------- -----------
Earnings (loss) before income taxes (386) 1,273 (558) 383
Income tax expense (benefit) (254) 570 (332) 173
----------- ----------- ----------- -----------
Net earnings (loss) (132) 703 (226) 210
=========== =========== =========== ===========
Basic and diluted net earnings (loss) per share $ (.05) .24 (.08) .07
=========== =========== =========== ===========
Weighted average number of common shares
outstanding 2,880,747 2,877,953 2,880,509 2,877,856
=========== =========== =========== ===========
Net earnings (loss) $ (132) 703 (226) 210
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments 278 (305) 487 (193)
----------- ----------- ----------- -----------
Comprehensive income $ 146 398 261 17
=========== =========== =========== ===========
</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)
(In thousands)
<TABLE>
<CAPTION>
Twenty-six week Twenty-six week
period ended period ended
June 27, 1999 June 28, 1998
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (226) 210
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation of plant and equipment 2,532 2,602
Amortization of intangible assets 365 218
Gain (loss) on disposal of property, plant
and equipment, net (13) 36
Stock compensation awards 16 8
Changes in assets and liabilities (see below) (1,744) (1,284)
-------- --------
Net cash provided by operating activities 930 1,790
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment (2,502) (3,202)
Proceeds from disposal of property, plant and equipment 39 42
Acquisitions and earnout payments, net of cash acquired (1,319) (6,257)
-------- --------
Net cash used in investing activities (3,782) (9,417)
-------- --------
Cash flows from financing activities:
Proceeds from bank line of credit borrowings 12,700 17,250
Repayment of bank line of credit borrowings (11,500) (10,150)
Repayment of other long-term debt (70) (19)
-------- --------
Net cash provided (used) by financing activities 1,130 (7,081)
-------- --------
Effect of exchange rate changes on cash and cash equivalents 85 (27)
-------- --------
Net decrease in cash and cash equivalents (1,637) (573)
Cash and cash equivalents at beginning of period 3,147 2,948
-------- --------
Cash and cash equivalents at end of period $ 1,510 2,375
======== ========
Changes in assets and liabilities providing (using) cash:
Receivables $ (663) (802)
Services in progress (418) (591)
Income taxes receivable/payable, net (595) (724)
Parts and supplies 41 97
Prepaid expenses (715) (224)
Other assets (11) 5
Accounts payable (570) (58)
Accrued expenses 1,159 1,032
Deferred incentive compensation 28 (19)
-------- --------
Total $ (1,744) (1,284)
======== ========
Supplemental schedule of non-cash investing and financing activities:
Leases capitalized $ 988 --
======== ========
</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 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 June 27, 1999 and the
results of its operations for the thirteen and twenty-six week periods ended
June 27, 1999 and June 28, 1998 and cash flows for the twenty-six week
periods ended June 27, 1999 and June 28, 1998. The financial statements have
been prepared using the same accounting policies used in preparation of the
December 27, 1998 statements. The financial statements included herein
should be read in conjunction with those statements and notes thereto.
2. The results of operations for the thirteen and twenty-six week periods ended
June 27, 1999 are not necessarily indicative of the results to be expected
for the full year.
3. The changes in stockholders' equity for the twenty-six week period ended
June 27, 1999 are summarized as follows (in thousands, except shares):
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Common paid-in Retained Comprehensive Treasury Stock stockholders'
stock capital earnings Losses Shares Amount equity
-------- -------- ---------- ------------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 27, 1998 $ 158 $ 4,278 $ 27,176 $ (2,235) 288,754 $ (1,236) $ 28,141
Net loss -- -- (226) -- -- -- (226)
Foreign currency translation
Adjustment -- -- -- 487 -- -- 487
Stock compensation awards -- 5 -- -- (2,425) 11 16
-------- -------- -------- -------- -------- -------- --------
Balance at June 27, 1999 $ 158 $ 4,283 $ 26,950 $ (1,748) 286,329 $ (1,225) $ 28,418
======== ======== ======== ======== ======== ======== ========
</TABLE>
Accumulated other comprehensive losses consist solely of equity adjustments
from foreign currency translation.
4. For the twenty-six week period ended June 27, 1999, 74,117 additional stock
options were granted and no stock options expired. As of June 27, 1999 and
December 27, 1998, the Company had exercisable options outstanding to
employees to purchase 166,088 common shares at prices ranging from $6.94 to
$10.13 per share.
5. In 1999 the Company announced its intention to terminate and settle the
obligations of its qualified noncontributory defined benefit pension plans
covering substantially all of its non-bargaining unit personnel in the
United States, and as such has frozen benefits. Since accurate actuarial
computations are not yet available the Company has yet to record the effect
of the curtailment of the plans. Preliminary estimates from the actuaries
indicate that the Company may recognize pre tax curtailment gains ranging
between $150,000 and $250,000 during 1999. The actual settlement of the
obligations is not expected to be complete before the end of the current
fiscal year. The net assets of the plans will be allocated, as prescribed by
ERISA and its related regulations. At this time management does not foresee
that the plans' settlements will have a material adverse effect on the
Company's financial condition or liquidity.
6. The Company has two professional service segments: staffing and industrial
maintenance services. Staffing services are provided on a temporary and
contract basis to businesses in clerical, light industrial and technology
professional sectors throughout the eastern United States and select
southwestern U.S. markets. Industrial maintenance services a wide range of
industries by providing hydroblasting, painting, sandblasting, and vacuuming
of industrial wastes throughout the eastern United States and Canada.
Operating segment data is as follows (in thousands):
6
<PAGE> 7
C. H. HEIST CORP. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Thirteen Thirteen Twenty-six Twenty-six
week period week period week period week period
Ended ended ended Ended
June 27, June 28, June 27, June 28,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Staffing services:
Net revenues $ 23,262 18,812 44,944 34,498
Intersegment revenues 30 21 61 54
-------- -------- -------- --------
Total revenues 23,292 18,833 45,005 34,552
Cost of services 17,970 14,363 34,739 26,507
Selling, general & administrative:
Operations 3,873 2,754 7,465 5,403
Allocated overhead 733 816 1,575 1,631
-------- -------- -------- --------
Total selling general & administrative 4,606 3,570 9,040 7,034
Amortization 181 133 362 203
Operating income 505 746 803 754
Depreciation 174 99 319 189
Assets 25,155 10,613 25,155 10,613
Capital expenditures and acquisitions 247 6,240 1,888 6,608
======== ======== ======== ========
Industrial maintenance services:
Net revenues $ 13,424 15,324 27,843 27,806
Cost of services 9,023 9,701 18,537 18,126
Selling, general & administrative:
Operations 3,518 3,421 7,100 6,711
Overhead 1,578 1,502 3,113 3,067
-------- -------- -------- --------
Total selling general & administrative 5,096 4,923 10,213 9,778
Amortization 1 8 3 15
Operating income (loss) (696) 692 (910) (113)
Depreciation 1,129 1,223 2,213 2,413
Assets 30,125 41,116 30,125 41,116
Capital expenditures $ 851 1,528 1,933 2,851
======== ======== ======== ========
Corporate assets $ 679 678 679 678
======== ======== ======== ========
Consolidated:
Net revenues $ 36,686 34,136 72,787 62,304
Cost of services 26,993 24,064 53,276 44,633
Selling, general & administrative 9,702 8,493 19,253 16,812
Amortization 182 141 365 218
Operating income (loss) (191) 1,438 (107) 641
Other expense, net (195) (165) (451) (258)
Earnings (loss) before income taxes (386) 1,273 (558) 383
Depreciation 1,303 1,322 2,532 2,602
Assets 55,959 52,407 55,959 52,407
Capital expenditures and acquisitions $ 1,098 7,768 3,821 9,459
======== ======== ======== ========
</TABLE>
7
<PAGE> 8
C. H. HEIST CORP. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
7. 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
Technologies, Inc. ("Milestone") 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 has been assigned to the fair value of the assets and
liabilities acquired with the excess being assigned to goodwill.
Pro Forma Condensed Combined Financial Information - (Unaudited) thirteen
and twenty-six week periods ended June 28, 1998.
The unaudited pro forma condensed combined financial information
reflects the pro forma results of operations of the Company for the
thirteen and twenty-six week periods ended June 28, 1998 assuming the
acquisition of Milestone had been consummated as of the beginning of
the periods presented.
The purchase method of accounting has been used for this acquisition
and in the preparation of the pro forma condensed combined financial
information. Management believes that the assumptions used in
preparing this unaudited pro forma condensed combined financial
information provide a reasonable basis of presenting all of the
significant effects of the acquisition of Milestone. The pro forma
condensed combined financial information does not purport to be
indicative of the actual results that would have occurred had the
acquisition been consummated on or as of the date assumed, and are not
necessarily indicative of the future results of operations which will
be obtained as a result of the acquisition.
Thirteen Twenty-six
week period week period
ended ended
June 28, June 28,
1998 1998
----------- -----------
Net service revenues $ 34,136 65,143
Net earnings 703 270
Basic and diluted earnings per share $ .24 .09
8
<PAGE> 9
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 June 27, 1999 and the related condensed consolidated
statements of operations and comprehensive income and cash flows for the
thirteen and twenty-six week periods ended June 27, 1999 and June 28, 1998.
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 27, 1998, and the related consolidated statements of earnings
and comprehensive income, stockholders' equity and cash flows for the year then
ended (not presented herein); and in our report dated February 12, 1999, 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 27, 1998, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
Buffalo, New York KPMG LLP
July 23, 1999
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Net service revenue increased by $2.6 million or 7.5% to $36.7 million from
$34.1 million and by $10.5 million or 16.8% to $72.8 million from $62.3 million
for the second fiscal quarter and year to date period, respectively.
Net service revenue in the Company's staffing services segment, Ablest Service
Corp., increased by $4.5 million or 23.7% to $23.3 million and by $10.4 million
or 30.3% to $44.9 million for the current fiscal quarter and year to date
periods, compared to the same periods one year ago. Increased revenues from
existing customers, greater market penetration in established offices and new
office openings in the current and prior fiscal years, all contributed to this
increase.
Net service revenues in the Company's industrial maintenance segment decreased
by $1.9 million or 12.4% to $13.4 million from $15.3 million for the current
fiscal quarter as compared to one year ago. Net service revenues for the fiscal
year to date period remained slightly ahead of the prior year by $37,000 or
.1%, at $27.8 million. The decline in service revenues during the Company's
second fiscal quarter was primarily due to the strong demand and higher prices
for gasoline and other petroleum based products. This caused refineries to
operate at capacity and to postpone plant turnarounds and major maintenance
projects until later in the year. The slight increase in year to date service
revenues is primarily the result of the opening of a new office in this
segment's Gulf Coast Region (formerly known as the Southern Region) and
turnarounds during the Company's first fiscal quarter.
Gross profit on a consolidated basis decreased by $379,000 or 3.8% during the
current fiscal quarter, but are ahead of the prior fiscal year to date period
by $1.8 million or 10.4%. Gross profit as a percentage of service revenues
decreased to 26.4% from 29.5% and to 26.8% from 28.4% for the fiscal quarter
and year to date periods, respectively.
Gross profit dollars in the staffing services segment increased while as a
percentage of service revenues, gross profit decreased to 22.8% from 23.7% and
to 22.7% from 23.2% for the current fiscal quarter and year to date periods,
respectively. The decrease in gross profit percentages was primarily the result
of a reduction in the volume of permanent placement fees generated by the
technology staffing division during the current fiscal year as compared to one
year ago.
Gross profit in the industrial maintenance segment decreased by $1.2 million or
21.7% to $4.4 million from $5.6 million and by $374,000 or 3.9% to $9.3 million
from $9.7 million for the current fiscal quarter and year to date periods,
respectively. As a percentage of service revenues, gross profit declined to
32.8% from 36.7% and to 33.4% from 34.8% for the same respective periods.
Contributing to this decline in both gross profit dollars and percentages were
increased costs associated with painting services, primarily in the Company's
Canadian subsidiary, C. H. Heist, Ltd. This increase was partially due to the
requirement that the Company act as a general contractor for outside services,
such as scaffolding, on the major bridge coating services it is performing in
the current year as opposed to prior years where the Company was a
sub-contractor and was only responsible for its respective painting services.
Mark-ups on outside services are normally limited by contract from 5% to 15%.
Also contributing to the decline in gross profit percentages was increased
labor costs in offices covered by collective bargaining agreements.
10
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Continued,
Selling, general and administrative expenses, including amortization expenses,
increased by $1.3 million or 14.3% and by $2.6 million or 15.2% for the current
fiscal quarter and year to date periods, respectively.
Selling, general and administrative expenses in the staffing services segment
increased by $1.1 million or 29.3% and by $2.2 million or 29.9% for the current
fiscal quarter and year to date periods, respectively. Increased costs and
amortization expense associated with prior year acquisitions and costs
associated with new office openings, contributed to this increase. Also
impacting selling, general and administrative expense was a reserve for
approximately $130,000 for a customer that filed for Chapter 11 bankruptcy
protection in the current fiscal quarter.
Selling, general and administrative expenses in the Company's industrial
maintenance divisions increased by approximately $166,000 or 3.4% and by
approximately $423,000 or 4.3% for the current fiscal quarter and year to date
periods, respectively. The increase in selling, general and administrative
expense is predominately the result of increased costs associated with the
opening of a new industrial maintenance service office and with costs
associated with the closing of two offices in Canada.
Other expenses net, increased by approximately $30,000 or 18.2% and by
approximately $193,000 or 74.8% for the current fiscal quarter and year to date
period, respectively. Contributing to this was an increase in interest expense
of approximately $32,000 for the current quarter and approximately $154,000 for
the year to date periods. These increases were the result of the higher level
of borrowings associated with prior year acquisitions.
The effective tax rate for the current fiscal quarter is a benefit of 65.8% and
for the fiscal year to date period is a benefit of 59.5%. The effective tax
rate is the result of the consolidation of effective tax rates from the various
divisions of the Company including the Company's Canadian subsidiary and the U.
S. industrial maintenance division, which is in a loss position for the current
quarter and year to date periods.
Financial Condition
The quick ratio improved to 2.8 to 1 compared to 2.7 to 1 and the current ratio
improved to 3.1 to 1 compared to 2.9 to 1 for the period ended June 27, 1999
and December 27, 1998, respectively. Net working capital improved by $1.2
million of which approximately $1.1 million is attributable to an increase in
receivables, over $700,000 is the result of an increase in prepaid expenses and
approximately $590,000 represents an increase in income taxes receivable. These
increases were partially offset by a decrease in cash and cash equivalents of
approximately $1.6 million. The increase in trade receivables is primarily the
result of the increased service revenues noted previously in the staffing
services segment while the increase in prepaid expenses is the result of the
renewal of insurance programs for 1999. Reference should be made to the
statement of cash flows, which details the sources and uses of cash.
Our credit commitments as of June 27, 1999 were approximately $6.8 million. The
Company also has approximately $341,000 (the U. S. dollar equivalent) available
for C. H. Heist, Ltd., the Company's Canadian subsidiary.
Capital expenditures for the current fiscal quarter were $1.7 million,
including $612,000 in capital leases. Of this amount $1.0 million was for
additions to the mobile equipment fleet, $272,000 was new facilities, $212,000
for computer hardware, software, office automation and communications systems
and the remainder was for other equipment. Open commitments at June 27, 1999
were $181,000, of which $129,000 was for additions to the mobile fleet and the
rest was for other equipment.
11
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Continued,
Impact of Year 2000 Readiness:
Items disclosed herein constitute "Y-2000 Readiness Disclosures" under the Year
2000 Information and Readiness Disclosure Act.
Throughout the past two years, the Company has undertaken an extensive review
of its internal systems and has completed an applications upgrade to its
integrated accounting programs that make them Y2K ready. The term "Y2K ready"
as used in this document means that the relevant hardware, software, embedded
chips or interfaces referenced herein will correctly process, provide and
receive date sensitive data within and between the 20th and 21st centuries. The
Company is currently assessing and upgrading operating systems at all of its
remote locations. The assessment phase has been completed and it is anticipated
that all applicable upgrades or equipment replacements will be completed by the
end of the third quarter of 1999. The upgrade to the various applications did
not result in additional expense, as they were part of the normal maintenance
and support fees that are incurred on an ongoing basis. The Company is also
currently in the process of assessing external and third party compliance for
those suppliers of critical services that the Company relies on.
12
<PAGE> 13
Part II-Other Information
Item 6 Exhibits and Reports on Form 8-K
(A) Exhibit 15 Letter Regarding Unaudited Interim Financial
Information
(B) Exhibit 27.1 Financial Data Schedules
(C) Reports on Form 8-K: No reports on Form 8-K have been filed
during the quarter ended June 27, 1999.
13
<PAGE> 14
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 August 9, 1999 /s/ Mark P. Kashmanian
-------------- ------------------------
Mark P. Kashmanian
Chief Accounting Officer
14
<PAGE> 1
EXHIBIT 15
C.H. Heist Corp.
Clearwater, Florida
Gentlemen:
With respect to the registration statements No. 33-48497 and 333-26007, we
acknowledge our awareness of the use therein of our reports dated April 24,
1999 and July 23, 1999 related to our reviews of interim financial information.
Pursuant to rule 436(c) under the Securities Act of 1933 (the Act), such
reports are not considered part of a registration statement prepared or
certified by an accountant or a report prepared or certified by an accountant
within the meaning of sections 7 and 11 of the Act.
Very truly yours,
KPMG LLP
Buffalo, New York
August 9, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-26-1999
<PERIOD-START> DEC-28-1998
<PERIOD-END> JUN-27-1999
<CASH> 1,510
<SECURITIES> 0
<RECEIVABLES> 20,492
<ALLOWANCES> 0
<INVENTORY> 1,136
<CURRENT-ASSETS> 26,848
<PP&E> 60,069
<DEPRECIATION> 41,523
<TOTAL-ASSETS> 55,959
<CURRENT-LIABILITIES> 8,526
<BONDS> 0
0
0
<COMMON> 158
<OTHER-SE> 28,260
<TOTAL-LIABILITY-AND-EQUITY> 55,959
<SALES> 72,787
<TOTAL-REVENUES> 72,787
<CGS> 53,276
<TOTAL-COSTS> 53,276
<OTHER-EXPENSES> 19,618
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 538
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</TABLE>
