-----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, NOxCq0raaprW5AqgxVoDjYNZpi90P285Q9QDuVg9mov+a9mRGmhLDFeU7Nim7Xtg oiVdvjO/x8Gbi3yq+OT/Wg== 0000950144-99-009852.txt : 19990812 0000950144-99-009852.hdr.sgml : 19990812 ACCESSION NUMBER: 0000950144-99-009852 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990627 FILED AS OF DATE: 19990811 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: 1227 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10893 FILM NUMBER: 99683825 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 10-Q 1 C.H. HEIST CORP. 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 2 C.H. HEIST CORP. AND SUBSIDIARIES Index 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
* * * * * 2 3 Part I-Financial Information C.H. HEIST CORP. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share data)
June 27, December 27, Assets 1999 1998 ----------- ------------ (Unaudited) 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 ======== ========
See accompanying notes to condensed consolidated financial statements. 3 4 C.H. HEIST CORP. AND SUBSIDIARIES Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) (In thousands, except share and per share data)
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 ----------- ----------- ----------- ----------- 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 =========== =========== =========== ===========
See accompanying notes to condensed consolidated financial statements. 4 5 C. H. HEIST CORP. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands)
Twenty-six week Twenty-six week period ended period ended June 27, 1999 June 28, 1998 --------------- --------------- 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 -- ======== ========
See accompanying notes to condensed consolidated financial statements 5 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):
Accumulated Additional Other Total Common paid-in Retained Comprehensive Treasury Stock stockholders' stock capital earnings Losses Shares Amount equity -------- -------- ---------- ------------- ----------- --------- ------------- 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 ======== ======== ======== ======== ======== ======== ========
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 7 C. H. HEIST CORP. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (In thousands)
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 ----------- ----------- ----------- ----------- 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 ======== ======== ======== ========
7 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 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 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 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 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 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 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 EX-15 2 LETTER REGARDING UNAUDITED INTERIM FINANCIAL INFO 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 EX-27.1 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-26-1999 DEC-28-1998 JUN-27-1999 1,510 0 20,492 0 1,136 26,848 60,069 41,523 55,959 8,526 0 0 0 158 28,260 55,959 72,787 72,787 53,276 53,276 19,618 0 538 (558) (332) (226) 0 0 0 (226) (.08) (.08)
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