ITEM 1. BUSINESS
General. C.H. Heist Corp. and its subsidiaries (the "Company") are engaged in two industry segments; industrial maintenance and temporary staffing. The Company operates in both segments in the United States and indusrial maintenance in Canada. Other than the opening or closing of certain service facilities and temporary staffing offices in the normal course of business, the Company expects to continue its operations as presently conducted.
Industrial Maintenance Services
The Company performs high-pressure water maintenance cleaning services, primarily by the use of mobile high-pressure water pumping units, on industrial and chemical equipment and facilities. The Company's services also include sandblasting, industrial painting, and the vacuuming of wet and dry industrial wastes. The Company installs, maintains and sells insulation for commercial applications. The Company also engages in the business of exchanger extraction and insertion, shell side cleaning, tube cleaning and field service repairs of heat exchangers for the same client base as the Company. The services are performed through the use of specialized automated mechanical equipment which is generally regarded as state of the art. business.
The Company's principal customers include oil refineries, petrochemical, chemical, ferrous and non-ferrous metal plants, mining installations, governmental authorities, nuclear and fossil fuel electric generating plants and pulp and paper mills.
Sales of industrial maintenance services to one customer, E. I. Dupont De Nemours and Company, accounted for approximately 12.9% of the Company's sales during its fiscal year ended December 31, 1995. The total amount of services purchased by this customer is an aggregate of services provided at a number of separate plants. Plant managers at the respective plants generally make the decisions as to whether or not to use the Company's services, and no single plant accounts for 10% or more of the Company's sales. If the contracts with this customer were not renewed, it would have a substantial impact on the Company's operations.
Many of the Company's industrial maintenance services are performed outdoors, but the Company does not consider its business to be seasonal. However, due in part to weather factors, the first quarter of the Company's fiscal year has historically produced the lowest levels of revenue and profitability.
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The Company from time to time investigates and develops new equipment components, tools and methods for use in the conduct of its operations. Most of the components in its equipment are designed to the Company's specification. The amounts expended for such activities, all of which were performed at a Company facility, during the fiscal years ended December 31, 1995, December 25, 1994 and December 26, 1993 amounted to $182,542, $154,417 and $235,065 respectively. During the fiscal year ended December 31, 1995, these services were performed primarily by seven individuals who were employed by the Company on a full-time basis.
The Company competes with numerous other companies engaged in high-pressure water maintenance cleaning services, industrial painting, maintenance-cleaning of heavy industrial equipment through the use of mechanical, chemical and other methods, the vacuum removal of dry and wet industrial waste, and the installation and maintenance of insulation. The Company does not believe that any single competitor is dominant in any of these services.
The Company is not aware of any material changes in the competitive condition in this industry segment which occurred during the 1995 fiscal year. Competition is primarily based upon quality of services and price.
The Company is subject to various statutes and regulations respecting control of noise, air, water and land pollution. In addition, its customers may be subject to other environmental protection statues and regulations relating to some of the industrial maintenance services rendered by the Company. From time to time modifications or improvements have been required in the Company's equipment in order to comply with government regulations, including those relating to safety and noise reductions. Such modifications or improvements have not resulted in any material capital expenditures nor are any anticipated for such purpose in the foreseeable future.
Temporary Help Services
The Company also supplies temporary employees in the U.S. through Ablest Service Corp. ("Ablest"), a wholly owned subsidiary of the Company. Ablest is a temporary staffing organization with 25 offices located in the Eastern United States with the capability to supply temporary employees for the clerical, industrial and technical needs of their customers. Ablest does not have any principal customers, nor does it service any specific industry or field. Instead, its services are provided to a broad based customer list.
The temporary staffing business is highly competitive. There are numerous local, regional and national firms principally engaged in offering such services. The primary competitive factors in the temporary staffing field are reliability, personnel and price.
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Industry Segments and Service Activities. The following table is a summary of information relating to the Company's operations in its two industry segments for each of the Company's last three fiscal years:
* These sales figures do not include intersegment sales of approximately $134,000, $152,000 and $141,000 in 1995, 1994 and 1993, respectively.
The following table sets forth the approximate amounts of total sales and revenues by service activity within the Company's dominant industry segment (industrial maintenance) for each of the Company's last three fiscal years:
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Working Capital. By virtue of the nature of the Company's business segments and the size and financial status of its customers, the attainment and maintenance of high levels of working capital is not required, other than to meet debt requirements as disclosed in Note 4 to the Consolidated Financial Statements on page 15 of the Company's Annual Report to Shareholders which is incorporated herein by reference.
Backlog. In view of the fact that the Company's services are primarily furnished pursuant to purchase orders or on a call basis, backlog is not material.
Employees. On December 31, 1995, the Company employed approximately 3,600 persons of whom 251 persons were employed on a full-time basis and the remainder were part-time and temporary employees. Some of the Company's industrial maintenance employees are represented by unions. The Company considers its employee relations to be good.
Canadian Operations. The following table sets forth the relative contributions in U.S. dollars to sales, operating income and identifiable assets attributable to the Company's Canadian operations for the last three fiscal years:
There were no export sales during any period. Reference is made to the "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Part II Item 7 hereof, for a discussion of the decline in operating income for 1993. The operating loss was due to a loss on a contract painting job.
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Executive Officers of Registrant
(a) Identification. The Company's executive officers are:
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(b) Family Relationships. None of the officers has any family relationship with any other officer of the Company.
(c) Arrangements and Understandings. There are no arrangements or understandings pursuant to which the above officers were elected.
(d) Business Experience. Messrs. Charles H. Heist, John L. Rowley, W. David Foster, Frank C. Trotter, Duane F. Worthington, Andrew R. Crowe, Jr. and John D. Biehl have been employees of the Company for more than five years. Mr. Snitzer is a partner in the Buffalo, New York, law firm of Borins, Setel, Snitzer & Brownstein, and its predecessors, which firm has served as general counsel to the Company, for more than five years. Kurt R. Moore joined Ablest Service Corp. in June of 1991. From May 1989 through May 1991, Mr. Moore was an area Vice President of Talent Tree, a temporary help company in Houston, Texas, and for the seven years prior thereto, he was a District Manager for Norrell Corp., a temporary help company in Atlanta, Georgia. Thomas Boisture joined the Company on June 28, 1993 when OMSI was acquired. Mr. Boisture from 1987 to joining Ohmstede Mechanical Services, Inc., in 1989 was a manager for a mechanical contracting company in Houston, Texas. For thirteen years prior to that Mr. Boisture served in management at Exxon, a major U.S. oil refining company, in mechanical, operational, environmental and technical positions.
(e) Involvement in Certain Legal Proceedings. None.
ITEM 2.
ITEM 2. PROPERTIES
The Company's Ablest Service Corp. subsidiary owns the executive office facilities for C.H. Heist Corp. and Ablest Service Corp. in Clearwater, Florida. The Company owns and leases properties in Buffalo, New York which house its administrative offices, warehouse and Methods and Development facilities. The leased facilities in Buffalo are leased from persons who are affiliates of certain officers and directors. See Part III, Item 13 "Certain Relationships and Related Transactions", below, the response to which is incorporated by reference.
The daily operations of the Company are currently operated out of 24 service facilities and 25 temporary help offices as well as six Regional Centers. The Regional Centers are covered by short term leases. Eighteen service facilities and 25 temporary help offices are located in the continental United States and six service facilities are located within Canada. With respect to the service facilities, 12 are owned by the Company, and twelve service areas and all of the temporary help offices are subject to leases with various expiration dates. The Company considers its service facilities, temporary help offices and Regional Centers suitable and adequate for servicing its customers. Two additional owned service facilities are vacant and for sale.
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In meeting the requirements of its industrial maintenance customers, the Company relies on its extensive, specially designed and equipped (to Company's specifications) mobile equipment, which must be kept in good repair and replaced from time to time. The Company considers this equipment adequate for current operations. Each of the Company's active service facilities has mobile equipment permanently assigned to it by the Company.
Certain of the properties owned by the Company are subject to mortgages. Reference is made to Note 4 to the Consolidated Financial Statements on page 15 in the Company's Annual Report to Shareholders, which is incorporated herein by reference.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the Company during the fourth quarter of fiscal 1995.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information in response to this item is hereby incorporated by reference to the information presented on page 20 and 21 of the Company's 1995 Annual Report to Shareholders which appears as Exhibit 13 to this Form 10-K.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The information in response to this item is hereby incorporated by reference to the information presented at page 8 in the Company's 1995 Annual Report to Shareholders which appears as Exhibit 13 to this Form 10-K.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information in response to this item is hereby incorporated by reference to the information presented at pages 9 through 10 in the Company's 1995 Annual Report to Shareholders which appears as Exhibit 13 to this Form 10-K.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information and independent auditors report required in response to this item is hereby incorporated by reference to pages 10 through 20 in the Company's 1995 Annual Report to Shareholders which appears as Exhibit 13 to this Form 10-K.
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ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information in response to this item is hereby incorporated by reference to the information under the caption "Nominees for Directors" presented in the Company's definitive proxy statement to be filed with the Securities and Exchange Commission and used in connection with the solicitation of proxies for the Company's annual meeting of shareholders to be held on May 10, 1996, except insofar as information with respect to executive officers is presented in Part I hereof.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information in response to this item is hereby incorporated by reference to the information under the caption "Compensation of Executive Officers" presented in the Company's definitive proxy statement to be filed with the Securities and Exchange Commission and used in conjunction with the solicitation of proxies for the Company's annual meeting of shareholders to be held on May 10, 1996; provided, however, that information appearing under the headings "Report on Executive Compensation by the Compensation Committee and Board of Directors" and "Common Stock Performance" is not incorporated herein and should not be deemed to be included in this document for any purposes.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information in response to this item is hereby incorporated by reference to the information under the caption "Security Ownership of Certain Beneficial Owners and Management" presented in the Company's definitive proxy statement to be filed with the Securities and Exchange Commission and used in connection with the solicitation of proxies for the Company's annual meeting of shareholders to be held on May 10, 1996.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information in response to this item is hereby incorporated by reference to the information under the caption "Certain Transactions" presented in the Company's definitive proxy statement to be filed with the Securities and Exchange Commission and used in connection with the solicitation of proxies for the Company's annual meeting of shareholders to be held on May 10, 1996.
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PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
(1) Financial Statements and Schedules
See Index to Financial Statements and Schedules at page 13.
(2) Exhibits
Exhibits identified below are filed herewith or incorporated herein by reference to the documents indicated in parentheses.
Exhibit Number Description
3.1 Restated Certificate of Incorporation of Registrant dated January 19, 1983. (Exhibit to the Company's Form 10-K Report for the year ended June 25, 1989).
3.2 Certificate of Amendment of Certificate of Incorporation of the Company (Appendix A to the Company's definitive Proxy Statement in connection with its Annual Meeting held on May 11, 1992).
3.3 Amended By-laws of the Registrant adopted August 27, 1990 (Exhibit to the Company's Form 10-K Report for the year ended June 24, 1990).
10.1 Lease Agreement dated December 1, 1974, and related Amendment of Lease, dated March 1, 1985, between the Company and the Trust under the Will of Helen J. Heist relating to property located at Cheektowaga, New York. (Exhibit to the Company's Form 10-K Report for the year ended June 25, 1989).
10.2 Lease, dated November 15, 1983, and related Extension Agreement dated February 18, 1987, between the Company and certain Officers, Directors and Security holders of the Company relating to property located at Marietta, Ohio. (Exhibit to the Company's Form 10-K Report for the year ended June 25, 1989).
10.3 Lease, dated December 1, 1970, and related Extension Agreement, dated December 18, 1985, between certain Officers, Directors and Security holders of the Company and the Company relating to property located at Oregon, Ohio. (Exhibit to the Company's Form 10-K Report for the year ended June 25, 1989).
10.4 Business Loan Agreement with Manufacturers and Traders Trust Company dated April 2, 1979, together with related extensions and renewals. (Exhibit to the Company's Form 10-K Report for the year ended June 1989).
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10.5 Letter Agreement with Manufacturers and Traders Trust Company dated December 22, 1987 (Exhibit to the Company's Form 10-K for the year ended June 26, 1988).
10.6 Consulting Agreement, dated November 15, 1988, between the Company and Willard F. Foster. (Exhibit to the Company's Form 10-K Report for the year ended June 25, 1989).
10.7 Purchase Agreement, dated as of May 19, 1989, with Pipe & Boiler Insulation, Inc. (Exhibit to the Company's Form 8-K Report dated July 31, 1989).
10.8 Letter Agreement, dated October 22, 1990, with Manufacturers and Traders Trust Company. (Exhibit to the Company's Form 10-K Report for the Transition Period ended December 30, 1990).
10.9 Letter Agreement, dated April 24, 1992, with Manufacturers and Traders Trust Company. (Exhibit to the Company's Form 10-K Report for the year ended December 27, 1992.)
10.10 Management Incentive Plan of the Company dated August 17, 1992. (Exhibit to the Company's Form 10-K Report for the year ended December 27, 1992.)
10.11 Amendment to Business Loan Agreement dated October 29, 1993. (Exhibit to the Company's Form 10-K Report for the year ended December 28, 1993) 10.12 Business loan agreement with Manufacturers and Traders Trust Company dated December 28, 1993. (Exhibit to the Company's Form 10-K Report for the year ended December 28, 1993.)
10.13 Purchase agreement, dated June 28, 1993, with Ohmstede Mechanical Services, Inc. (Exhibit to the Company's Form 8-K Report dated June 28, 1993.)
10.14 Business Loan Agreement with Manufacturers and Traders Trust Company dated December 22, 1994.
10.15 * Corporate Revolving Term Loan Agreement with Manufactures and Traders Trust Company dated August 21, 1995.
13 * 1995 Annual Report to Shareholders.
21 Subsidiaries of the Registrant. (Exhibit to the Company's Form 10-K Report for the Transition Period ended December 30, 1990).
23 * Consent of KPMG Peat Marwick LLP to incorporation of reports into Form S-8 No. 33-48497.
27.1 * Financial Data Schedule (for SEC use only) - --------------------
* Filed herewith.
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(b) No reports on Form 8-K were filed by the Company during the quarter ended December 31, 1995.
The Company will furnish, without charge to a security holder upon request, a copy of the documents portions of which are incorporated by reference (1995 Annual Report to Security Holders) and will furnish any other exhibit at cost.
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C.H. HEIST CORP. AND SUBSIDIARIES
Index to Financial Statements and Schedules
Form 10-K Items 8, 14(a)(1) and (2)
Schedules other than those listed above are omitted because the conditions requiring their filing do not exist or because the required information is provided in the consolidated financial statements, including the notes thereto.
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Independent Auditors' Report
The Board of Directors C.H. Heist Corp.:
Under date of February 16, 1996, we reported on the consolidated financial statements of C.H. Heist Corp. and subsidiaries as listed in the accompanying index. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1995. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedule as listed in the accompanying index. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
Buffalo, New York February 16, 1996
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Schedule II
C.H. HEIST CORP. AND SUBSIDIARIES
Valuation Account
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 4, 1996
C. H. HEIST CORP.
By: /s/ John L. Rowley ------------------------ John L. Rowley Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and as of the date indicated:
C. H. HEIST CORP.
By: /s/ Charles H. Heist By: /s/ John L. Rowley --------------------- --------------------------------- Charles H. Heist John L. Rowley, Director and Vice Chairman of the Board President-Finance-Chief Financial and President Officer-Asst. Secretary
By: /s/ Willard F. Foster By: /s/ Chauncey D. Leake, Jr. --------------------- --------------------------------- Willard F. Foster Chauncey D. Leake, Jr. Director Director
By: /s/ Richard J. O'Neil By: /s/ Charles E. Scharlau --------------------- --------------------------------- Richard J. O'Neil Charles E. Scharlau Director Director
March 4, 1996
EXHIBIT INDEX
10.13 Purchase agreement dated June 28, 1993 with (6) Ohmstede Mechanical Services, Inc.
10.14 Business Loan Agreement with Manufacturers and (8) Trades Trust Company dated December 22, 1994.
10.15 Corporate Revolving Term Loan Agreement with (9) Manufactuers and Traders Trust Company dated August 21, 1995.
13 1995 Annual Report to Shareholders (9)
21 Subsidiaries of the Registrant (4)
23 Consent of KPMG Peat Marwick LLP to incorporation of reports into Form S-8 No. 33-48497 (9)
27 Financial Data Schedule (for SEC use only)
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(1) Filed as an Exhibit to the Registrant's Form 10-K Report for the year ended June 25, 1989 and incorporated herein by reference.
(2) Filed as Appendix A to the Registrant's definitive Proxy Statement in connection with its Annual Meeting of Shareholders held on May 11, 1992.
(3) Filed as an Exhibit to the Registrant's Form 10-K Report for the year ended June 26, 1988 and incorporated herein by reference.
(4) Filed as an Exhibit to the Registrant's Form 10-K Report for the Transition Period ended December 30, 1990 and incorporated herein by reference.
(5) Filed as an Exhibit to the Registrant's Form 10-K Report for the period ended December 27, 1992 and incorporated herein by reference.
(6) Filed as an Exhibit to the Registrant's Form 8-K Report dated June 28, 1993 and incorporated herein by reference.
(7) Filed as an Exhibit to the Registrant's Form 10-K Report for the period ended December 26, 1993 and incorporated herein by reference.
(8) Filed as an exhibit to the registrant form 10-K report for the period ended December 25, 1994 and incorporated herein by reference.
(9) Filed as an Exhibit to this report.