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 in the industrial maintenance segment in Canada.
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 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. The services are performed through the use of specialized automated mechanical equipment which is generally regarded as state of the art. The Company also installs, maintains and sells insulation for commercial applications.
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 8.4% of the Company's sales during its fiscal year ended December 29, 1996. 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. 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 29, 1996, December 31, 1995 and December 25, 1994 amounted to $248,046, $154,417 and $182,542 respectively. During the fiscal year ended December 29, 1996, 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. 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 statutes 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 Staffing 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 31 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.
On September 15, 1996, Ablest purchased certain assets of Tech Resource Inc. a Georgia corporation. This acquisition established Ablest in the Information Technology staffing sector. See note 11 to the Consolidated Financial Statements on page 19 of the Company's Annual Report to Shareholders incorporated herein by reference.
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:
* Sales figures do not include intersegment sales of approximately $84,000, $134,000 and $152,000 in 1996, 1995 and 1994, respectively.
The following table sets forth the approximate amounts of total sales and revenues by service activity within the Company's industrial maintenance segment 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 29, 1996, the Company employed approximately 3,700 persons of whom 230 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.
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Executive Officers of Registrant
(a) Identification. The Company's executive officers are:
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(b) Arrangements and Understandings. There are no arrangements or understandings pursuant to which the above officers were elected.
(c) Family Relationships. None of the officers has any family relationship with any other officer of the Company.
(d) Business Experience. Messrs. Charles H. Heist, John L. Rowley, W. David Foster, Duane F. Worthington, Kurt R. Moore, Andrew R. Crowe, Jr., Mark P. Kashmanian and Paul K. Brumfield 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 served as general counsel to the Company until July 1996. Thomas B.Boisture joined the Company on June 28, 1993 with the acquisition of certain assets of Ohmstede Mechanical Services, Inc. (OMSI). Mr. Boisture started with OMSI in 1989 after two years as 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.
ITEM 2.

ITEM 2. PROPERTIES
The Company's subsidiary, Ablest Service Corp., 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, 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" in this form 10-K, the response to which is incorporated herein by reference.
The daily operations of the Company are currently operated out of 27 service facilities and 31 temporary staffing offices as well as eight Regional Centers. The Regional Centers are covered by short term leases. Twenty-one service facilities and 31 temporary staffing 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 fifteen service areas and all of the temporary staffing offices are subject to leases with various expiration dates. The Company considers its service facilities, temporary staffing offices and Regional Centers suitable and adequate for servicing its customers.
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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 of the Company's Annual Report to Shareholders, incorporated herein by reference.
ITEM 3.

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 1996.
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 of the Company's 1996 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 1996 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 1996 Annual Report to Shareholders which appears as Exhibit 13 to this Form 10-K.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements and independent auditors report required in response to this item is hereby incorporated by reference to pages 10 through 20 in the Company's 1996 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 9, 1997, 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 9, 1997; provided, however, that information appearing in the proxy statement 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 9, 1997.
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 9, 1997.
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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.
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- --------------------- * Filed herewith.
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(b) One report on Form 8-K was filed by the Company on September 30, 1996 during the quarter ended December 29, 1996, regarding the Company's acquisition of certain assets of Tech Resource, Inc.
The Company will furnish, without charge to a security holder upon request, a copy of the documents portions of which are incorporated by reference herein 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)
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 14, 1997, 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 1996. 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 consolidation 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 14, 1997
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: February 24, 1997 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/ Ronald K. Leirvik By: /s/ Chauncey D. Leake, Jr. ---------------------- ---------------------------------- Ronald K. Leirvik Chauncey D. Leake, Jr. Director Director
By: /s/ Brian J. Lipke By: /s/ Charles E. Scharlau ---------------------- ---------------------------------- Brian J. Lipke Charles E. Scharlau Director Director
By: /s/ Richard W. Roberson ------------------------- Richard W. Roberson Director
February 24, 1997
EXHIBIT INDEX
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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 period ended December 25, 1994 and incorporated herein by reference.
(4) Filed as part of Registrant's definitive Proxy statement in connection with its annual meeting of shareholders held on May 10, 1996 and incorporated herein by reference.
(5) Filed as an exhibit to the Registrant's form 8-K report dated September 30, 1996 and incorporated herein by reference.
(6) Filed as an exhibit to the Registrant's form 10-K report for the period ended December 31, 1995 and incorporated herein by reference.
(7) Filed as an Exhibit to this report.