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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
April 2, 1995
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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 April 2, 1995.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 0-7907
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C. H. HEIST CORP.
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(Exact name of registrant as specified in its charter)
New York 16-0803301
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
810 North Belcher Road
Clearwater, Florida 34625
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(Address of principal executive offices) (Zip Code)
813-461-5656
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(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
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date - April 25, 1995.
Common stock, $.05 par value 2,870,273
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(Class) (Outstanding shares)
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C. H. HEIST CORP. AND SUBSIDIARIES
Index
Page No.
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Part I
Financial Information
Condensed Consolidated Balance Sheets -
April 2, 1995 and December 25, 1994 2
Condensed Consolidated Statements of Operations -
fourteen-week period ended April 2, 1995 and the
thirteen-week period ended March 27, 1994 3
Condensed Consolidated Statements of Cash Flows -
fourteen-week period ended April 2, 1995 and the
thirteen-week period ended March 27, 1994 4
Notes to Condensed Consolidated Financial Statements 5
Independent Auditors' Review Report 6
Management's Discussion and Analysis of the
Condensed Consolidated Balance Sheets and
Statements of Operations 7 - 8
Part II
Other Information 9
Signatures 10
* * * * *
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Part I - Financial Information
C. H. HEIST CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
April 2 December 25
Assets 1995 1994
------ ---- ----
(Unaudited)
Current assets:
Cash and cash equivalents $ 2,485,763 1,533,015
Receivables 11,793,048 14,915,198
Services in progress 2,648,981 1,840,429
Income taxes receivable 252,397 -
Parts and supplies 2,102,180 2,058,424
Prepaid expenses 833,679 28,826
Deferred income taxes 829,366 795,623
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Total current assets 20,945,414 21,171,515
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Property, plant and equipment, at cost 42,390,114 41,029,349
Less accumulated depreciation 26,896,358 26,065,152
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Net property, plant and equipment 15,493,756 14,964,197
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Deferred income taxes 128,592 128,592
Other assets 419,907 491,749
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$ 36,987,669 36,756,053
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Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current installments of long-term debt $ 37,667 37,667
Accounts payable 1,738,668 1,675,260
Accrued expenses 4,417,488 4,768,279
Income taxes payable - 334,114
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Total current liabilities 6,193,823 6,815,320
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Long-term debt, excluding current installments 6,308,302 5,120,863
Deferred income taxes 306,849 306,849
Stockholders' equity (note 3):
Common stock of $.05 par value. Authorized
8,000,000 shares; issued 3,162,692 shares 158,135 158,135
Additional paid-in capital 4,235,689 4,235,689
Retained earnings 22,340,529 22,688,158
Equity adjustment from foreign currency translation (1,303,755) (1,317,058)
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25,430,598 25,764,924
Less cost of common stock in treasury - 292,419 shares (1,251,903) (1,251,903)
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Total stockholders' equity 24,178,695 24,513,021
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$ 36,987,669 36,756,053
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See accompanying notes to condensed consolidated financial statements.
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C. H. HEIST CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Fourteen- Thirteen-
week week
period period
ended ended
April 2 March 27
1995 1994
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Net sales $ 24,543,886 23,199,329
Cost of sales 21,744,816 22,775,759
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Gross profit 2,799,070 423,570
Selling, general and administrative expenses 3,282,268 2,728,767
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Operating loss (483,198) (2,305,197)
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Other income (expense):
Interest income 32,233 22,746
Interest expense (111,333) (79,253)
Gain (loss) on disposal of property, plant
and equipment, net 17,406 (938)
Amortization of other assets (29,207) (76,639)
Miscellaneous 1,398 4,220
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Total other expense, net (89,503) (129,864)
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Loss before income taxes (572,701) (2,435,061)
Income tax benefit 225,072 658,592
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Net loss $ (347,629) (1,776,469)
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Net loss per share $ (.12) (.62)
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Weighted average number of common shares outstanding 2,870,273 2,875,273
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See accompanying notes to condensed consolidated financial statements.
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C. H. HEIST CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Fourteen- Thirteen-
week week
period period
ended ended
April 2 March 27
1995 1994
---- ----
Cash flows from operating activities:
Net loss $ (347,629) (1,776,469)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation of plant and equipment 942,118 1,000,692
Amortization of other assets 29,207 76,639
Loss (gain) on disposal of property, plant
and equipment, net (17,406) 938
Deferred income taxes (33,743) 17,276
Changes in assets and liabilities (see below) 642,289 (2,580,854)
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Net cash provided (used) by operating activities 1,214,836 (3,261,778)
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Cash flows from investing activities:
Additions to property, plant and equipment (1,569,975) (635,064)
Proceeds from disposal of property, plant and equipment 118,038 16,459
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Net cash used in investing activities (1,451,937) (618,605)
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Cash flows from financing activities:
Proceeds from bank line of credit borrowings 2,950,000 3,800,000
Repayments on bank line of credit borrowings (1,750,000) (1,100,000)
Current installments and repayment of other long-term debt (12,561) (47,556)
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Net cash provided by financing activities 1,187,439 2,652,444
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Effect of exchange rate changes on cash and cash equivalents 2,410 (86,395)
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Net increase (decrease) in cash and cash equivalents 952,748 (1,314,334)
Cash and cash equivalents at beginning of period 1,533,015 2,659,040
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Cash and cash equivalents at end of period $ 2,485,763 1,344,706
========= =========
Changes in assets and liabilities providing (using) cash:
Receivables $ 3,119,252 (2,019,460)
Services in progress (808,555) (546,961)
Income taxes receivable (556,371) (771,369)
Parts and supplies (43,676) (107,367)
Prepaid expenses (804,116) (501,886)
Accounts payable 70,570 993,999
Accrued expenses (350,720) 607,104
Income taxes payable (26,622) (228,200)
Other assets 42,527 (6,714)
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Total $ 642,289 (2,580,854)
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See accompanying notes to condensed consolidated financial statements.
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C. H. HEIST CORP. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. In the opinion of the Company, the accompanying condensed consolidated
financial statements contain all normal recurring adjustments necessary
to present a fair statement of consolidated financial position as of
April 2, 1995 and December 25, 1994, and the results of operations and
cash flows for the fourteen-week period ended April 2, 1995 and the
thirteen-week period ended March 27, 1994.
The Company's fiscal year ends on the last Sunday of December. For fiscal
1995, the Company's operations include 53 weeks. Therefore, the period
ended April 2, 1995 includes fourteen weeks while the period ended
March 27, 1994 includes thirteen weeks.
2. The results of operations for the fourteen-week period ended April 2, 1995
and the thirteen-week period ended March 27, 1994 are not necessarily
indicative of the results to be expected for the full year.
3. The changes in stockholders' equity for the fourteen-week period ended
April 2, 1995 are summarized as follows:
Equity
adjustment
Additional from foreign Treasury stock Total
Common paid-in Retained currency ---------------------- stockholders'
stock capital earnings translation Shares Amount equity
----- ------- -------- ----------- ------ ------ ------
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 loss - - (347,629) - - - (347,629)
Foreign currency translation
adjustment - - - 13,303 - - 13,303
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Balance at April 2, 1995 $ 158,135 4,235,689 22,340,529 (1,303,755) 292,419 $ (1,251,903) 24,178,695
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4. During the quarter ended April 2, 1995, no additional stock options were
issued and 2,863 options have expired. As of April 2, 1995 and December
25, 1994, the Company had exercisable options outstanding to employees
to purchase 146,290 and 149,153 common shares, respectively, at prices
ranging from $7.25 to $11.14 per share.
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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 April 2, 1995, and the related condensed consolidated
statements of operations and cash flows for the fourteen-week period ended
April 2, 1995 and the thirteen-week period ended March 27, 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 operations,
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 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, 1995
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONDENSED
CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS
Results of Operations
Sales in the temporary staffing segment increased $1,595,000 or 16.9% and
decreased in the industrial maintenance segment $250,000 or 1.8%, resulting
in an overall increase of $1,345,000 or 5.9% The increase in temporary
staffing is due to greater penetration in the market areas served and
overall increased demand for temporary personnel. The decrease in
industrial maintenance sales was due to closing three operating offices
resulting in a sales decrease of $689,000. Sales in Heist Field Services
division (OMSI until May 1, 1995) decreased $1,374,000. In this division,
turnaround work decreased $2,217,000 and field service repair increased
$843,000. The decrease in turnaround work was due to job postponements
until later in the year. The field service repair increase was the result
of a major project at a chemical plant that will be reopened later this
year. The decreases in the Heist Field Services division were offset by
increases in painting sales of $1,460,000, primarily painting canal locks
in Canada, increases in conventional equipment related sales of $745,000,
due to greater demand for these services in existing markets, and an
increase of $108,000 in insulation application and material sales.
Gross profit as a percent of sales increased from 1.8% to 11.4%. The Company
did not have the substantial losses in the current fiscal quarter that were
incurred in the prior year's comparable fiscal quarter at the Heist Field
Services division. The Company has made major changes in the past year to
achieve profitable results, but due to the job postponements and very
competitive pricing, such results have not been achieved. Marketing
efforts are now being focused on target customers, and effective May 1,
1995 the name has been changed to "Heist Field Services" because the Heist
name is more clearly established in the marketplace for quality and
service.
Selling, general and administrative expenses increased $554,000 or 20.3%.
Costs incurred were to upgrade 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 Ablest branch offices and personnel additions to
strengthen the service to our customers.
Interest income increased due to increased amounts of excess cash invested at
higher rates, on those investments in Canada. Interest expense increased
due to higher interest rates on borrowed funds. Sales of fully utilized
equipment resulted in a gain on sale of property, plant and equipment, net.
Intangible assets relating to two acquisitions were fully amortized
resulting in the decrease in amortization of the assets. Collectively the
above caused the decrease in other expense, net.
Income tax benefits as a percent of pre tax loss was 39.3% for the current
fiscal quarter. This represents the anticipated effective rate for 1995.
The effective tax rate in the remaining quarters of the fiscal year may
fluctuate as actual results are recorded.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
CONDENSED CONSOLIDATED BALANCE SHEETS
AND STATEMENTS OF EARNINGS, CONTINUED
Financial Position
The current and quick ratios were 3.4 to 1 and 2.7 to 1 for the current fiscal
quarter compared to 3.1 to 1 and 2.7 to 1 as of December 25, 1994,
respectively. Long-term debt increased $1,187,000 leaving open credit
commitments at Manufacturers and Traders Trust Company of $3,800,000 and
the Royal Bank of Canada of $357,000 (the U.S. dollar equivalent).
Cash and cash equivalents increased by $953,000 during the current fiscal
quarter primarily due to decreases in accounts receivable, depreciation,
and line of credit borrowing offset by the net loss for the period,
expenditures for additions to property, plant and equipment, increases in
prepaid expenses and reduction in accrued expenses.
Capital expenditures for the current fiscal quarter were $1,570,000. Of this
amount $658,000 was for new equipment, $263,000 was for computer equipment
and software and the remainder for replacement equipment. Commitments at
April 2, 1995 were $367,000 of which $75,000 was for computer equipment and
software and $292,000 was for new equipment.
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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 April 2, 1995.
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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 16, 1995 /s/ John L. Rowley
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John L. Rowley
Vice President - Finance
(Chief Financial Officer)
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