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 March 31, 1997
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from_________________ to _________________
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 May 6, 1997 3,660,000 shares of the Registrant's common stock were
outstanding.
<PAGE>
Part I - Financial Information
<TABLE>
Item 1. Financial Statements
<CAPTION>
Joule' Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, September 30,
ASSETS 1997 1996
<S> <C> <C>
CURRENT ASSETS:
Cash $129,000 $175,000
Accounts receivable, less
allowance for doubtful
accounts of $244,000 and
$217,000 respectively 8,247,000 8,128,000
Prepaid expenses and other
current assets 177,000 320,000
Total Current Assets 8,553,000 8,623,000
PROPERTY AND EQUIPMENT, NET OF
ACCUMULATED DEPRECIATION 1,924,000 2,019,000
GOODWILL AND OTHER INTANGIBLES 96,000 108,000
OTHER ASSETS 46,000 59,000
$10,619,000 $10,809,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable to bank $2,150,000 $2,343,000
Current portion of long term
debt 25,000 25,000
Accounts payable and accrued
expenses 1,344,000 1,817,000
Accrued payroll and related
taxes 1,141,000 1,094,000
Income taxes 29,000 ---
Total Current Liabilities 4,689,000 5,279,000
LONG TERM DEBT 419,000 431,000
Total Liabilities 5,108,000 5,710,000
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 38,000 38,000
Paid-in capital 3,637,000 3,637,000
Retained earnings 2,225,000 1,813,000
LESS: Cost of 146,400 shares
of common stock held in
treasury 389,000 389,000
Total Stockholders' Equity 5,511,000 5,099,000
$10,619,000 $10,809,000
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Joule' Inc. and Subsidiaries
Consolidated Statements of Income
Three Months Ended Six Months Ended
March 31, March 31, March 31, March 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES $12,471,000 $12,088,000 $23,414,000 $25,488,000
COSTS, EXPENSES, AND OTHER:
COST OF
SERVICES 10,113,000 10,057,000 19,200,000 21,086,000
SELLING,
GENERAL AND
ADMINISTRATIVE
EXPENSES 1,796,000 1,496,000 3,434,000 3,155,000
INTEREST EXPENSE 52,000 89,000 114,000 201,000
OTHER (INCOME)/
EXPENSE (19,000) (26,000) (20,000) (20,000)
INCOME BEFORE
INCOME TAXES 529,000 472,000 686,000 1,066,000
INCOME TAXES 211,000 188,000 274,000 426,000
NET INCOME $318,000 $284,000 $412,000 $640,000
NET INCOME PER
COMMON SHARE $0.09 $0.08 $0.11 $0.18
AVERAGE NUMBER OF
SHARES AND EQUIVALENTS
OUTSTANDING 3,663,000 3,646,000 3,663,000 3,645,000
<FN>
<F1>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Joule' Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<CAPTION>
Six Months Ended
March 31, March 31,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $412,000 $640,000
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 223,000 184,000
Provision for losses on accounts receivable 44,000 36,000
Changes in operating assets and liabilities:
Accounts receivable (163,000) 885,000
Prepaid expenses and other assets 154,000 230,000
Accounts payable and accrued expenses (473,000) 287,000
Accrued payroll and related taxes 47,000 (82,000)
Income taxes 29,000 148,000
Net cash flows provided by operating
activities 273,000 2,328,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (114,000) (364,000)
Net cash flows used in investing activities (114,000) (364,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in loans payable to bank (193,000) (1,907,000)
Payment of long term debt (12,000) (12,000)
Proceeds from exercise of stock options --- 7,000
Net cash flows used in financing activities (205,000) (1,912,000)
NET CHANGE IN CASH (46,000) 52,000
CASH, BEGINNING OF PERIOD 175,000 70,000
CASH, END OF PERIOD $129,000 $122,000
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $114,000 $191,000
Income taxes paid $80,000 $278,000
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
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 contained 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 and audit, but the Company believes all 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 financial statements prepared in
accordance with generally accepted accounting principals 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 Report to Stockholders for the most
recent fiscal year.
<PAGE>
Joule' Inc. and Subsidiaries
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The Company's revenues are derived from providing staffing services to its
customers. Such services include providing office and light industrial
workers, engineering and technical personnel, and skilled craft industrial plant
and facility maintenance labor. Over 90% of revenue in each period was billed
on a direct cost plus markup basis. Revenues increased 3% to $12.5 million
during the three months ended March 31, 1997 from $12.1 million for the year
earlier period. Revenues for the first six months of fiscal 1997 amounted to
$23.4 million, an 8% decrease from the prior year. Office and light
industrial revenue increased 24% to $4.4 million, and 11% to $8.4 million for
the respective three and six month periods ended March 31, 1997 as compared
to the same periods a year ago. Engineering and technical staffing revenues
rose 11% to $3.2 million, for the current quarter as compared to the prior
year's quarter, and improved 4% to $5.9 million for the 1997 six month period
over the 1996 six month period. Due largely to the adverse impact of the
conclusion of certain long term contracts, principally in the first quarter of
fiscal 1997, and to a lesser degree, the following quarter, skilled craft
sales declined 13% to $4.9 million and 25% to $9.1 million from the
respective comparable 1996 periods. The Company continues to strive to
replace this business with new business. Cost of services improved to 81.1%
of revenue in the current three months from 83.2% in the prior year and to
82.0% in the current six months compared to 82.7% a year earlier. These
expenses consist primarily of compensation 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 $1,796,000 and
$3,434,000 in the three and six months ended March 31, 1997 compared to
$1,496,000 and $3,155,000 a year earlier. These expenses amounted to 14.4% of
revenue in the current three month period and 14.7% of revenue in the six
months ended March 31,1997 compared to 12.4% for both prior year periods.
These expenses included the salaries and related costs of staff employees,
provision for the allowance for doubtful accounts, advertising, professional
fees and other costs related to maintaining the Company's branch offices.
The 1997 percentage increases in selling, general and administrative expenses
reflect the anticipation of higher sales levels which have not yet fully
materialized. Interest expense amounted to $52,000 and $114,000 in the
current three and six months periods compared to $89,000 and $201,000 in the
prior year, as both average borrowings and interest rates decreased. The
effective income tax rate was 40% for all periods presented. As a result of
the above, net income improved to $318,000 or $.09 per share in the current
three month period from $284,000 or $.08 per share a year ago; for the six
months ended March 31, 1997, net income was $412,000 or $0.11 per share compared
to $640,000 or $0.18 a share in the prior year.
<PAGE>
Joule' Inc. and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
Liquidity and Capital Resources
Current assets at March 31, 1997 were $8,553,000 as compared to $8,623,000 at
September 30, 1996 and current liabilities were $4,689,000 compared to
$5,279,000 as of September 30, 1996. 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 receivables and bear interest at LIBOR plus two and one quarter
percent or the bank's base rate, at the Company's option; $2,150,000 was
outstanding under this line as of March 31, 1997.
The Company believes that internally generated funds and available borrowings
will provide sufficient cash flow to meet its requirements for the next 12
months.
<PAGE>
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)
May 12, 1997
E. N. Logothetis
E. N. Logothetis, Chairman
(Principal Executive Officer)
May 12, 1997
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-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 129
<SECURITIES> 0
<RECEIVABLES> 8,491
<ALLOWANCES> 244
<INVENTORY> 0
<CURRENT-ASSETS> 8,553
<PP&E> 4,975
<DEPRECIATION> 3,051
<TOTAL-ASSETS> 10,619
<CURRENT-LIABILITIES> 4,689
<BONDS> 419
0
0
<COMMON> 38
<OTHER-SE> 5,473
<TOTAL-LIABILITY-AND-EQUITY> 10,619
<SALES> 0
<TOTAL-REVENUES> 23,414
<CGS> 0
<TOTAL-COSTS> 19,200
<OTHER-EXPENSES> 3,320
<LOSS-PROVISION> 44
<INTEREST-EXPENSE> 114
<INCOME-PRETAX> 686
<INCOME-TAX> 274
<INCOME-CONTINUING> 412
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 412
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
