FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from
Commission File Number 0-14926
Joule Inc.
(Exact name of registrant as specified in its charter)
Delaware 22-2735672
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1245 Route 1 South, Edison, New Jersey 08837
(Address of principal executive officers)
(Zip Code)
(908) 548-5444
(Registrant's telephone number including area code)
Indicate by check mark whether the Registrant (1) has filed all reports 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
As of August 6, 1996 3,660,000 shares of the Registrant's common stock were
outstanding.
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TABLE
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Part I - Financial Information
Item 1. Financial Statements
<CAPTION>
Joule' Inc. and Subsidiaries
Consolidated Balance Sheets
June 30, September 30,
ASSETS 1996 1995
(Audited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 94,000 $70,000
Accounts receivable, less allowance
for doubtful accounts of $163,000
and $140,000 in 1996 and 1995,
respectively 6,949,000 8,514,000
Prepaid expenses and other current
assets 87,000 318,000
Total Current Assets 7,130,000 8,902,000
PROPERTY AND EQUIPMENT, NET OF
ACCUMULATED DEPRECIATION 1,988,000 1,698,000
GOODWILL AND OTHER INTANGIBLES 114,000 132,000
OTHER ASSETS 64,000 70,000
$9,296,000 $10,802,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable to bank $1,998,000 $4,105,000
Current portion of long term debt 25,000 25,000
Accounts payable and accrued expenses 908,000 1,137,000
Accrued payroll and related taxes 1,011,000 1,083,000
Income taxes 42,000 77,000
Total Current Liabilities 3,984,000 6,427,000
LONG TERM DEBT 437,000 456,000
Total Liabilities 4,421,000 6,883,000
STOCKHOLDERS' EQUITY:
Preferred stock,$.01 par value:
Authorized 500,000 shares,
none outstanding ---- ----
Common stock,$.01 par value:
Authorized 10,000,000
shares-issued 3,807,000 and
3,760,000 shares in 1996 and
1995,respectively 38,000 38,000
Paid-in capital 3,567,000 3,502,000
Retained earnings 1,678,000 787,000
5,283,000 4,327,000
LESS: Cost of 150,000 shares of
common stock held in treasury 408,000 408,000
Total Stockholders' Equity 4,875,000 3,919,000
$9,296,000 $10,802,000
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
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Joule' Inc. and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
REVENUES $11,003,000 $10,969,000 $36,491,000 $31,842,000
COSTS, EXPENSES, AND OTHER:
COST OF SERVICES 9,146,000 9,094,000 30,232,000 26,641,000
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,453,000 1,367,000 4,608,000 3,938,000
INTEREST EXPENSE 47,000 97,000 248,000 289,000
OTHER (INCOME)/EXPENSE (2,000) 23,000 (22,000) 27,000
INCOME BEFORE INCOME TAXES 359,000 388,000 1,425,000 947,000
INCOME TAXES 108,000 147,000 534,000 360,000
NET INCOME $251,000 $241,000 $891,000 $587,000
NET INCOME PER COMMON SHARE $0.07 $0.07 $0.24 $0.16
AVERAGE NUMBER OF COMMON
SHARES AND EQUIVALENTS
OUTSTANDING 3,651,000 3,629,000 3,647,000 3,626,000
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
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Joule' Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended
June 30, June 30,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $891,000 $587,000
Adjustments to reconcile net income
to net cash flows from operating
activities:
Depreciation and amortization 276,000 244,000
Loss from disposal of equipment 0 4,000
Provision for losses on accounts
receivable 40,000 45,000
Changes in operating assets and
liabilities:
Accounts receivable 1,525,000 (898,000)
Prepaid expenses and other assets 234,000 405,000
Accounts payable and accrued expenses (229,000) 215,000
Accrued payroll and related taxes (72,000) 127,000
Income taxes (35,000) (215,000)
Net cash flows from operating activities 2,630,000 514,000
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisitions of property and equipment (545,000) (649,000)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Increase (Decrease) in loans payable to bank (2,107,000) 82,000
Payment of long term debt (19,000) (12,000)
Additions to long term debt 0 76,000
Proceeds from exercise of stock
options 65,000 14,000
Net cash flows from (used in)
financing activities (2,061,000) 160,000
NET CHANGE IN CASH 24,000 25,000
CASH, BEGINNING OF PERIOD 70,000 49,000
CASH, END OF PERIOD $ 94,000 $74,000
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $239,000 $284,000
Income taxes paid $569,000 $579,000
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
PAGE
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JOULE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
(1)The consolidated balance sheet at the end of the preceding fiscal year has
been derived from the audited consolidated balance sheet included in the
Company's Form 10-K and is presented for comparative purposes. All other
financial statements are unaudited. All unaudited amounts are subject to year
end adjustments, consisting only of normal and recurring adjustments, necessary
to present fairly the financial position, results of operations and changes in
cash flows for all interim periods presented have been made. The results of
operations for interim periods are not necessarily indicative of the operating
results for the full year.
Footnote disclosures normally included in finacial statements prepared in
accordance with generally accepted accounting principles have been omitted in
accordance with the published rules and regulations of the Securities and
Exchange Commission. These consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Form 10-K and Annual Reports to Stockholders for the most recent
fiscal year.
<PAGE>JOULE INC. AND SUBSIDIARIES
ITEM 2. Managment's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The Company's revenues are derived from providing labor outsourcing services
to its customers. Revenues amounted to $11.0 million during the three months
ended June 30, 1996, unchanged from a year earlier. Revenue for the first nine
months of fiscal 1996 amounted to $36.5 million, a 15% increase over the prior
year. The Company's outsourcing services include staffing services and indus-
trial contracting. Staffing services revenue increased 12% to $6.4 million, and
27% to $19.7 million, for the respective three and nine monht periods ended
June 30, 1996 compared to the same periods a year ago. Industrial contracting
revenue declined 12% to $4.6 million in the current quarter, while for nine
months revenuew increased 3% to $16.8 million compared to $16.3 million in the
prior year. Cost of services were 83.1% of revenue in the current quarter,
while for the nine months ended June 30, 1996 these costs were 82.9% of revenue
compared to 83.7% a year earlier. These expenses consist primarily of compensa-
tion to employees on assignment to clients and related costs, including social
security, unemployment taxes, general liability and workers' compensation
insurance, and other costs of services.
Selling, general and administrative expenses amounted to $1,453,000 and
$4,608,000 in the three and nine months ended June 30, 1996 compared to
$1,367,000 and $3,938,000 a year earlier. These expenses amounted to 13.2% of
revenue in the current three month period compared to 12.5% in the prior year,
and 12.6% of revenue in the nine months ended June 30, 1996 compared to 12.4%
a year earlier, as the Company's overhead personnel costs increased to support
the higher level of business it is pursuing. These expenses also included
provision for the allowance for doubtful accounts, advertising, professional
fees and other costs related to maintaining the Company's branch offices.
Interest expense amounted to $47,000 and $248,000 in the current three and
nine months periods compared to $97,000 and $289,000 in the prior year. The
improvements were due to lower rates and lower borrowing. The effective income
tax rate decreased to 30% and 37.5% in the current year three and nine month
periods from 38% in the prior year periods due to loss carry forwards. As a
result of the above, net income amounted to $251,000 or $0.07 per sahre in the
current three month period compared to $241,000 or $0.07 per share a year ago;
for the nine months ended June 30, 1996, net income increased to $891,000 or
$0.24 per share from $587,000 or $0.16 per share in the prior year.
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JOULE INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
Liquidity and Capital Resources
Working capital at June 30, 1996 was $3,146,000 compared to
$2,475,000 at September 30, 1995. Employees typically are paid on a weekly
basis. Clients generally are billed on a weekly basis. The Company has generally
utilized bank borrowings to meet its working capital needs. The Company has a
$4,500,000 bank line of credit; loans thereunder are secured principally by
recievables. $1,998 was outstanding under this line as of June 30, 1996.
The Company believes that internally generated funds and available borrowings
will provide sufficient cash flow to meet its requirements for the next 12
months.
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JOULE INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
JOULE INC.
(Registrant)
August 13, 1996 E. N. Logothetis
E. N. Logothetis, Chairman
(Principal Executive Officer)
August 13, 1996 Bernard G. Clarkin
Bernard G. Clarkin, Vice President and
Chief Financial Officer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 94
<SECURITIES> 0
<RECEIVABLES> 7,112
<ALLOWANCES> 163
<INVENTORY> 0
<CURRENT-ASSETS> 7,130
<PP&E> 4,712
<DEPRECIATION> 2,724
<TOTAL-ASSETS> 9,296
<CURRENT-LIABILITIES> 3,984
<BONDS> 437
0
0
<COMMON> 38
<OTHER-SE> 4,837
<TOTAL-LIABILITY-AND-EQUITY> 9,296
<SALES> 0
<TOTAL-REVENUES> 36,491
<CGS> 0
<TOTAL-COSTS> 30,232
<OTHER-EXPENSES> 4,546
<LOSS-PROVISION> 40
<INTEREST-EXPENSE> 248
<INCOME-PRETAX> 1,425
<INCOME-TAX> 534
<INCOME-CONTINUING> 891
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 891
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
