-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QFx8lKE3WLFtrnGW5srtB8rKJ1KJQgylrUu5nI8VjTY1dKXKwr2bWuYZuQ+zcBwe yK0iHsnTVuTJkfzqlpFjlA== 0000950144-97-007704.txt : 19970710 0000950144-97-007704.hdr.sgml : 19970710 ACCESSION NUMBER: 0000950144-97-007704 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970428 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970709 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEIST C H CORP CENTRAL INDEX KEY: 0000046653 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION SPECIAL TRADE CONTRACTORS [1700] IRS NUMBER: 160803301 STATE OF INCORPORATION: NY FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10893 FILM NUMBER: 97637979 BUSINESS ADDRESS: STREET 1: 810 NORTH BELCHER ROAD CITY: CLEARWATER STATE: FL ZIP: 34625 BUSINESS PHONE: 8134615656 MAIL ADDRESS: STREET 1: 45 ANDERSON ROAD CITY: BUFFALO STATE: NY ZIP: 14225 8-K/A 1 C. H. HEIST CORP. FORM 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A 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 28, 1997 -------------- 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 2 Item 2: Acquisition or Disposition of Assets On April 28, 1997, Ablest Service Corp. ("Ablest") a wholly owned subsidiary of C.H. Heist Corp. ("Company"), acquired the technical staffing business Solution Source, Inc., a Georgia corporation, ("Solution Source") pursuant to an Asset Purchase Agreement ("Purchase Agreement"). Ablest intends to combine the Solution Source business with it's recently established Tech Resource division (collectively the "Tech Resource Group"). The Tech Resource Group will continue to operate in the Atlanta, Georgia market. Pursuant to the Purchase Agreement, Ablest purchased certain assets, primarily customer and employee lists, of Solution Source for $1.3 million paid in cash at closing and agreed to pay additional contingent consideration not to exceed $1.125 million over the next three years based on the achievement of certain goals for earnings before interest and taxes of the Tech Resource Group for fiscal years 1997, 1998 and 1999. Ablest used funds available to it under its revolving line of credit to fund the $1.3 million paid at closing. The purchase price was determined through negotiations and was assigned primarily to the estimated fair value of the intangible assets acquired. The two shareholders of Solution Source and Ablest have entered into three year employment agreements providing for certain base and incentive compensation. Each shareholder of Solution Source has also agreed not to compete with Ablest for five years from the date of closing as well as during the time that he is employed by Ablest. 2 3
Item 7: Financial Statements, Pro Forma Information and Exhibits Pages - ------- -------------------------------------------------------- ----- (a) Solution Source, Inc. Financial Statements as of and for the year 5 - 10 ended December 31, 1996 together with independent auditors' report thereon. (b) Pro Forma Financial Information: Unaudited pro forma condensed consolidated balance sheet as of March 30, 1997. 11 Unaudited pro forma condensed consolidated statement of operations for the thirteen week period ended March 30, 1997. 12 Unaudited pro forma condensed consolidated statement of earnings for the year ended December 29, 1996. 13 Notes to unaudited pro forma condensed consolidated financial statements. 14 - 15
3 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: July 8, 1997 ------------ C. H. Heist Corp. ----------------------------------- (Registrant) /s/ Mark P. Kashmanian ----------------------------------- Mark P. Kashmanian Treasurer, Chief Accounting Officer 4 5 Independent Auditors' Report The Board of Directors Solution Source, Inc.: We have audited the accompanying balance sheet of Solution Source, Inc. as of December 31, 1996, and the related statement of earnings 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 audits. We conducted our audits 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 Solution Source, Inc. as of December 31, 1996, and the results of its operations and cash flows for the year then ended, in conformity with generally accepted accounting principles. Buffalo, New York KPMG Peat Marwick LLP May 16, 1997 5 6 SOLUTION SOURCE, INC. Balance Sheet December 31, 1996 Assets ------ Current assets: Cash $ 27,658 Accounts receivable 417,264 Other 2,000 --------- Total current assets 446,922 --------- Office equipment and furniture 50,590 Less: accumulated depreciation 16,317 --------- Office equipment and furniture, net 34,273 Other 75 --------- $ 481,270 ========= Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Accrued compensation and related taxes $ 3,434 Accounts payable and accrued expenses 986 --------- Total current liabilities 4,420 --------- Stockholders' equity: Common stock, $1.00 par value, 20,000 shares authorized, issued and outstanding 20,000 Receivable from stockholders (19,500) Retained earnings 476,350 --------- Total stockholders' equity 476,850 --------- Commitments (note 4) $ 481,270 =========
See accompanying notes to financial statements. 6 7 SOLUTION SOURCE, INC. Statement of Earnings and Retained Earnings Year ended December 31, 1996 Service revenues $ 3,259,191 Cost of services 2,265,763 ----------- Gross profit 993,428 Selling, general and administrative expenses 515,095 ----------- Net earnings 478,333 Retained earnings: Beginning of year 248,617 Dividends paid (250,600) ----------- End of year $ 476,350 ===========
See accompanying notes to financial statements. 7 8 SOLUTION SOURCE, INC. Statement of Cash Flows Year ended December 31, 1996 Cash flows from operating activities: Net earnings $ 478,333 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 8,676 Changes in operating assets and liabilities: Accounts receivable (173,784) Other (2,000) Accrued compensation and related taxes (28,155) Accounts payable and accrued expenses (28,732) --------- Net cash provided by operating activities 254,338 --------- Cash flows from investing activities: Additions to equipment (15,418) --------- Cash flows from financing activities: Repayment of note payable (10,000) Dividends paid (250,600) --------- Net cash used for financing activities (260,600) --------- Net decrease in cash (21,680) Cash at beginning of year 49,338 --------- Cash at end of year $ 27,658 =========
See accompanying notes to financial statements. 8 9 SOLUTION SOURCE, INC. Notes to Financial Statements December 31, 1996 (1) Summary of Significant Accounting Policies Solution Source, Inc. (the Company) provides temporary data processing, consulting, and placement services primarily in the Atlanta, Georgia regional market. Significant accounting policies of the Company are as follows: (a) Revenue Recognition Service revenue is recognized as staffing services are provided. The temporary worker is the Company's employee and all costs of employing the temporary worker are paid by the Company and included in cost of services. (b) Equipment and Furniture Equipment and furniture are stated at cost. Depreciation is provided over the estimated useful lives of the respective assets on the straight-line method. (c) Use of Estimates Management has made a number of estimates and assumptions in preparing these financial statements to conform with generally accepted accounting principles. Actual results could differ from those estimates. (d) Income Taxes The Company has elected for Federal and state income tax purposes to include its taxable income with that of its stockholders (an S Corporation election). Accordingly, the Company makes no provision for income taxes in its financial statements. (2) Significant Clients The Company's two largest clients accounted for approximately 33% and 15% of the Company's service revenues for 1996. 9 10 (3) Line of Credit The Company has a $50,000 bank line of credit with interest determined at the bank's prime rate plus 2%. No amounts were outstanding at December 31, 1996. (4) Commitments The Company occupies its office facility under a noncancellable operating lease arrangement. Future minimum annual lease payments amount to $65,995 plus a 4% annual increase through December 1999. Expense under this arrangement amounted to $18,792 in 1996. (5) Subsequent Event On April 28, 1997, the Company and its shareholders sold its business and certain assets to Ablest Service Corp. (Ablest), for $1.3 million in cash at closing, plus related acquisition costs, and agreed to receive additional contingent consideration not to exceed $1.125 million over the next three years based on the achievement of certain goals for earnings before interest and taxes. In connection with that acquisition, the Company's business results will be included with those of Ablest from the date of the acquisition. 10 11 C.H. HEIST CORP. AND SUBSIDIARIES Pro Forma Condensed Consolidated Balance Sheet March 30, 1997 (Unaudited)
Pro Forma C.H. Heist Corp. Adjustments Assets and Subsidiaries (note 2) Pro Forma ------ ---------------- ------------ ------------ Current assets: Cash and cash equivalents $ 1,591,433 (120,000) 1,471,433 Receivables 14,022,563 14,022,563 Services in progress 1,071,011 1,071,011 Income taxes receivable 519,937 519,937 Parts and supplies 1,559,629 1,559,629 Prepaid expenses 1,243,881 1,243,881 Deferred income taxes 1,010,219 1,010,219 ------------ ------------ ------------ Total current assets 21,018,673 (120,000) 20,898,673 ------------ ------------ ------------ Property, plant and equipment, at cost 50,835,204 50,000 50,885,204 Less accumulated depreciation 33,158,012 33,158,012 ------------ ------------ ------------ Net property, plant and equipment 17,677,192 50,000 17,727,192 ------------ ------------ ------------ Deferred income taxes 139,994 139,994 Other assets 1,678,668 1,370,000 3,048,668 ------------ ------------ ------------ $ 40,514,527 1,300,000 41,814,527 ============ ============ ============ Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Current installments of long-term debt $ 537,667 537,667 Accounts payable 1,624,566 1,624,566 Accrued expenses 4,710,776 4,710,776 ------------ ------------ ------------ Total current liabilities 6,873,009 -- 6,873,009 Long-term debt, excluding current installments 6,932,974 1,300,000 8,232,974 Deferred income taxes 551,285 551,285 ------------ ------------ ------------ Total liabilities 14,357,268 1,300,000 15,657,268 ------------ ------------ ------------ Stockholders' equity: 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 4,274,057 Retained earnings 24,140,609 24,140,609 Equity adjustment from foreign currency translation (1,173,275) (1,173,275) ------------ ------------ ------------ 27,399,746 -- 27,399,746 Less cost of common stock in treasury: 290,219 shares (1,242,487) (1,242,487) ------------ ------------ ------------ Total stockholders' equity 26,157,259 -- 26,157,259 ------------ ------------ ------------ $ 40,514,527 1,300,000 41,814,527 ============ ============ ============
See notes to unaudited pro forma financial statements. 11 12 C.H. HEIST CORP. AND SUBSIDIARIES Pro Forma Condensed Consolidated Statement of Operations For the Thirteen Week Period Ended March 30, 1997 (Unaudited)
C.H. Heist Corp. Pro Forma and Solution Adjustments Subsidiaries Source, Inc. (note 3) Pro Forma ------------ ------------ ----------- ----------- Net Sales $ 24,960,983 $985,972 25,946,955 Cost of sales 22,261,371 735,045 22,996,416 ------------ -------- ------- ----------- Gross profit 2,699,612 250,927 2,950,539 Selling, general and administrative 3,464,401 169,573 46,487 (a) 3,680,461 ------------ -------- ------- ----------- Operating income (loss) (764,789) 81,354 (46,487) (729,922) ------------ -------- ------- ----------- Other income (expense): Interest income 11,274 11,274 Interest expense (122,449) (21,125)(b) (143,574) Gain on disposal of property, plant and equipment, net 3,137 3,137 Amortization of other assets (35,945) (25,000)(c) (60,945) Miscellaneous (303,769) (303,769) ------------ -------- ------- ----------- Total other income (expense) net (447,752) -- (46,125) (493,877) ------------ -------- ------- ----------- Earnings (loss) before income taxes (1,212,541) 81,354 (92,612) (1,223,799) Income tax benefit (369,088) -- (3,861)(d) (372,949) ------------ -------- ------- ----------- Net earnings (loss) $ (843,453) 81,354 (88,751) (850,850) ============ ======== ======= =========== Net loss per share $ (.29) (.30) ============ =========== Weighted average number of common shares outstanding 2,875,519 2,875,519 ============ ===========
See notes to unaudited pro forma financial statements 12 13 C.H. HEIST CORP. AND SUBSIDIARIES Pro Forma Condensed Consolidated Statement of Earnings For the Year Ended December 29, 1996 (Unaudited)
C.H. Heist Corp. Pro Forma and Solution Adjustments Subsidiaries Source, Inc. (note 3) Pro Forma ------------- ------------ ----------- ----------- Net Sales $ 106,515,038 3,259,191 109,774,229 Cost of sales 90,498,402 2,265,763 92,764,165 ------------- --------- -------- ----------- Gross profit 16,016,636 993,428 17,010,064 Selling, general and administrative 13,783,389 515,095 167,841 (a) 14,466,325 ------------- --------- -------- ----------- Operating income (loss) 2,233,247 478,333 (167,841) 2,543,739 ------------- --------- -------- ----------- Other income (expense): Interest income 62,299 62,299 Interest expense (643,175) (87,100)(b) (730,275) Gain on disposal of property, plant and equipment, net 10,988 10,988 Amortization of other assets (116,919) (100,000)(c) (216,919) Miscellaneous (37,436) (37,436) ------------- --------- -------- ----------- Total other income (expense) net (724,243) -- (187,100) (911,343) ------------- --------- -------- ----------- Earnings (loss) before income taxes 1,509,004 478,333 (354,941) 1,632,396 Income tax expense 818,908 -- 49,171 (d) 868,079 ------------- --------- -------- ----------- Net earnings (loss) $ 690,096 478,333 (404,112) 764,317 ============= ========= ======== =========== Net earnings per share $ .24 .27 ============= =========== Weighted average number of common shares outstanding 2,873,337 2,873,337 ============= ===========
See notes to unaudited pro forma financial statements 13 14 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 30, 1997, and on a pro forma basis assuming the acquisition of certain assets of Solution Source, Inc. 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 30, 1997 and for the year ended December 29, 1996, and on a pro forma basis assuming the acquisition of certain assets of Solution Source, Inc. had been consummated as of January 1, 1996. 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 certain assets of Solution Source, Inc. The pro forma condensed consolidated financial statements do not purport to be indicative of the actual results that would have occured had the acquisition been consummated on January 1, 1996 or 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. To reflect the allocation of the purchase price of the acquired assets of Solution Source, Inc., the additional long-term debt necessary for the consummation of the acquisition and payment of acquisition related costs from available operating funds. The excess of the purchase price over the estimated fair value of tangible and intangible assets (approximately $1,012,500) has been allocated to goodwill. Note 3 - Adjustments to the Pro Forma Condensed Consolidated Statement of Operations and Earnings. (a) To reflect an increase in selling, general and administrative expenses for additional compensation and benefits expected to be paid to the officers of Solution Source, Inc. who were primarily compensated through dividends from Solution Source, Inc. 14 15 (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 (6.5% for 1997 and 6.7% for 1996). (c) To reflect amortization expense of the purchase price allocated to intangible assets and acquisition related costs for each period over estimated useful lives of 5 to 7 years for customer and employee lists, non-compete agreements and acquisition related costs and 30 years for goodwill. (d) To reflect estimated income tax expense arising from the net effect of Solution Source, Inc.'s historical results of operations and the associated pro forma adjustments for each period. Prior to its acquisition by the Company, Solution Source, Inc. had elected S Corporation status and made no provision for income taxes. 15 -----END PRIVACY-ENHANCED MESSAGE-----