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, 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 Identification No.)
incorporation or organization)
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, 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
June 30, September 30,
ASSETS 1997 1996
<C> <C>
CURRENT ASSETS:
Cash $222,000 $175,000
Accounts receivable, less allowance
for doubtful accounts of $256,000
and $217,000 respectively 7,543,000 8,128,000
Prepaid expenses and other current assets 151,000 320,000
Total Current Assets 7,916,000 8,623,000
PROPERTY AND EQUIPMENT, NET OF ACCUMULATED
DEPRECIATION 1,873,000 2,019,000
GOODWILL AND OTHER INTANGIBLES 90,000 108,000
OTHER ASSETS 34,000 59,000
$9,913,000 $10,809,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable to bank $1,800,000 $2,343,000
Current portion of long term debt 25,000 25,000
Accounts payable and accrued expenses 665,000 1,817,000
Accrued payroll and related taxes 1,138,000 1,094,000
Income taxes 47,000 ---
Total Current Liabilities 3,675,000 5,279,000
LONG TERM DEBT 412,000 431,000
Total Liabilities 4,087,000 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 2,540,000 1,813,000
LESS: Cost of 146,400 shares of common stock held
in treasury 389,000 389,000
Total Stockholders' Equity 5,826,000 5,099,000
$9,913,000 $10,809,000
<FN>
See accompanying notes to consolidated financial statements.
<FN>
</TABLE>
<PAGE>
<TABLE>
Joule Inc. and Subsidiaries
Consolidated Statements of Income
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
<C> <C> <C> <C>
REVENUES $12,762,000 $11,003,000 $36,176,000 $36,491,000
<S>
COSTS, EXPENSES, AND OTHER:
COST OF SERVICES 10,355,000 9,146,000 29,555,000 30,232,000
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,842,000 1,453,000 5,276,000 4,608,000
INTEREST EXPENSE 54,000 47,000 168,000 248,000
OTHER (INCOME) (14,000) (2,000) (34,000) (22,000)
INCOME BEFORE INCOME TAXES 525,000 359,000 1,211,000 1,425,000
INCOME TAXES 210,000 108,000 484,000 534,000
NET INCOME $315,000 $251,000 $727,000 $891,000
NET INCOME PER COMMON SHARE $0.09 $0.07 $0.20 $0.24
AVERAGE NUMBER OF SHARES AND
EQUIVALENTS OUTSTANDING 3,663,000 3,651,000 3,663,000 3,647,000
<FN>
See accompanying notes to consolidated financial statements.
<FN>
</TABLE>
<PAGE>
<TABLE>
Joule Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Nine Months Ended
June 30, June 30,
1997 1996
<C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>
Net income $ 727,000 $ 891,000
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 344,000 276,000
Provision for losses on accounts receivable 71,000 40,000
Changes in operating assets and liabilities:
Accounts receivable 514,000 1,525,000
Prepaid expenses and other assets 190,000 234,000
Accounts payable and accrued expenses (1,152,000) (229,000)
Accrued payroll and related taxes 44,000 (72,000)
Income taxes 47,000 (35,000)
Net cash flows provided by operating activities 785,000 2,630,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (176,000) (545,000)
Net cash flows used in investing activities (176,000) (545,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in loans payable to bank (543,000) (2,107,000)
Payment of long term debt (19,000) (19,000)
Proceeds from exercise of stock options --- 65,000
Net cash flows used in financing activities ( 562,000) (2,061,000)
NET CHANGE IN CASH 47,000 24,000
CASH, BEGINNING OF PERIOD 175,000 70,000
CASH, END OF PERIOD $ 222,000 $ 94,000
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 172,000 $ 239,000
Income taxes paid $ 272,000 $ 569,000
<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
[CAPTION]
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 16% to $12.8
million during the three months ended June 30, 1997 from $11.0 million for
the year earlier period. Revenues for the first nine months of fiscal 1997
amounted to $36.2 million, approximating revenues for the nine months of the
prior year. Office and light industrial revenue increased 63% to $5.5
million, and 27% to $13.9 million for the respective three and nine month
periods ended June 30, 1997, as compared to the same periods a year ago.
Engineering and technical staffing revenues rose 16% to $3.5 million for the
current quarter as compared to the prior year's quarter, and improved 8% to
$9.4 million for the 1997 nine month period over the 1996 nine 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 quarters, skilled craft sales declined 19% to $3.7
million and 24% to $12.8 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 83.1% in the prior year and to 81.7% in the current nine months compared
to 82.8% 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 $1,842,000 and
$5,276,000 in the three and nine months ended June 30, 1997 compared to
$1,453,00 and $4,608,000 a year earlier. These expenses amounted to 14.4% of
revenue in the current three month period and 14.6% of revenue in the nine
months ended June 30, 1997 compared to 13.2% and 12.6% respectively for the
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 $54,000
and $168,000 in the current three and nine months periods compared to $47,000
and $248,000 in the prior year as average borrowings decreased in the nine
month 1997 period. The effective income tax rate was 40% for both 1997
periods as compared with 30% and 37.5% for the prior year's three and nine
month periods, reflective of tax loss carry forward utilization in the 1996
periods. As a result of the above, net income improved to $315,000 or $0.09
per share in the current three month period from $251,000 or $0.07 per share
a year ago; for the nine months ended June 30, 1997, net income was $727,000
or $0.20 per share compared to $891,000 or $0.24 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 June 30, 1997 were $7,916,000 as compared to 8,623,000
at September 30, 1996 and current liabilities were $3,675,000 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;
$1,800,000 was outstanding under this line as of June 30, 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
[CAPTION]
(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 12, 1997
E. N. Logothetis
E. N. Logothetis, Chairman
(Principal Executive Officer)
August 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> JUN-30-1997
<CASH> 222
<SECURITIES> 0
<RECEIVABLES> 7799
<ALLOWANCES> 256
<INVENTORY> 0
<CURRENT-ASSETS> 7916
<PP&E> 5038
<DEPRECIATION> 3165
<TOTAL-ASSETS> 9913
<CURRENT-LIABILITIES> 3675
<BONDS> 412
0
0
<COMMON> 38
<OTHER-SE> 5788
<TOTAL-LIABILITY-AND-EQUITY> 9913
<SALES> 0
<TOTAL-REVENUES> 36176
<CGS> 0
<TOTAL-COSTS> 29555
<OTHER-EXPENSES> 5171
<LOSS-PROVISION> 71
<INTEREST-EXPENSE> 168
<INCOME-PRETAX> 1211
<INCOME-TAX> 484
<INCOME-CONTINUING> 727
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 727
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
