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 December 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 1-9477
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)
(732) 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 February 6, 1998 3,670,000 shares of the Registrant's common stock were
outstanding.
<PAGE>
Part I - Financial Information
Item 1. Financial Statements
Joule Inc. And Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, September 30,
ASSETS 1997 1997
------ ------------ -------------
(Unaudited)
CURRENT ASSETS:
<S> <C> <C>
Cash $ 140,000 $ 139,000
Accounts receivable, less allowance
for doubtful accounts of $231,000 and $200,000
for December 31 and September 30, respectively 6,815,000 6,820,000
Prepaid expenses and other current assets 541,000 146,000
----------- -----------
Total Current Assets 7,496,000 7,105,000
PROPERTY AND EQUIPMENT, NET OF
ACCUMULATED DEPRECIATION 3,715,000 3,633,000
GOODWILL AND OTHER ASSETS 102,000 105,000
----------- -----------
$11,313,000 $10,843,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable to bank $ 2,200,000 $ 1,295,000
Accounts payable and accrued expenses 1,484,000 1,472,000
Accrued payroll and related taxes 841,000 1,291,000
Income taxes -- 168,000
Current portion of long term debt 25,000 25,000
----------- -----------
Total Current Liabilities 4,550,000 4,251,000
LONG TERM DEBT 400,000 406,000
----------- -----------
Total Liabilities 4,950,000 4,657,000
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value:
Authorized 500,000 shares, none outstanding -- --
Common stock, $.01 par value:
Authorized 10,000,000 shares-issued 3,816,000
shares 38,000 38,000
Additional paid-in capital 3,658,000 3,658,000
Retained earnings 3,056,000 2,879,000
----------- -----------
6,752,000 6,575,000
LESS: Cost of 146,000 shares of common
stock held in treasury 389,000 389,000
----------- -----------
Total Stockholders' Equity 6,363,000 6,186,000
----------- -----------
$11,313,000 $10,843,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
Joule Inc. And Subsidiaries
Consolidated Statements of Income
Three Months Ended
December 31, December 31,
1997 1996
------------ ------------
(Unaudited) (Unaudited)
REVENUES $ 12,304,000 $ 10,943,000
------------ ------------
COSTS, EXPENSES AND OTHER:
Cost of services 10,035,000 9,087,000
Selling, general & administrative expenses 1,921,000 1,638,000
Interest expense 52,000 62,000
Other -- (1,000)
------------ ------------
INCOME BEFORE INCOME TAX PROVISION 296,000 157,000
INCOME TAX PROVISION 118,000 63,000
------------ ------------
NET INCOME $ 178,000 $ 94,000
============ ============
BASIC AND DILUTED EARNINGS PER SHARE $ 0.05 $ 0.03
============ ============
AVERAGE COMMON SHARES OUTSTANDING 3,670,000 3,661,000
============ ============
AVERAGE COMMON SHARES AND COMMON
EQUIVALENTS OUTSTANDING 3,673,000 3,663,000
============ ============
See accompanying notes to consolidated financial statements.
3
<PAGE>
Joule Inc. And Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended
December 31, December 31,
1997 1996
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 178,000 $ 94,000
Adjustments to reconcile net income to
net cash flows provided by (used in) operating
activities:
Depreciation and amortization 122,000 118,000
Provision for losses on accounts receivable 31,000 18,000
Changes in operating assets and liabilities:
Accounts receivable (26,000) 1,107,000
Prepaid expenses and other assets (400,000) 26,000
Accounts payable and accrued expenses 12,000 (606,000)
Accrued payroll and related taxes (450,000) (557,000)
Income taxes (168,000) 12,000
----------- -----------
Net cash flows provided by (used in) operating activities (701,000) 212,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (197,000) (46,000)
----------- -----------
Net cash flows used in investing activities (197,000) (46,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in loans payable to bank 905,000 (45,000)
Payment of long term debt (6,000) (6,000)
----------- -----------
Net cash flows provided by (used in) financing activities 899,000 (51,000)
----------- -----------
NET CHANGE IN CASH 1,000 115,000
CASH, BEGINNING OF PERIOD 139,000 175,000
----------- -----------
CASH, END OF PERIOD $ 140,000 $ 290,000
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 48,000 $ 62,000
=========== ===========
Income taxes paid $ 335,000 $ 53,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<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.
(2) During the first quarter ended December 31, 1997, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 128, "Earnings per
Share" (SFAS 128). The new standard requires the presentation of basic EPS and
diluted EPS. Basic EPS is calculated by dividing income available to common
shareholders by the weighted average number of shares of common stock
outstanding during the period. Diluted EPS is calculated by dividing income
available to common shareholders by the weighted average number of common shares
outstanding adjusted to reflect potentially dilutive securities.
5
<PAGE>
10
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 commercial (office and light
industrial) workers, technical (engineering, scientific and information
technology) personnel, and industrial (skilled craft industrial plant and
facility maintenance) labor. Over 90% of revenue in each period is billed on a
direct cost plus markup basis. Revenues increased approximately 12% to $12.3
million during the first three months of fiscal 1998 from $10.9 million for the
year earlier period. Commercial staffing revenue increased 10% to $4.4 million
in 1998 from $4.0 million in 1997. Technical staffing revenue was $3.6 million
in 1998, a 29% increase over 1997 revenue of $2.8 million. Industrial revenue
increased to $4.3 million in 1998 from $4.2 million in 1997, a 2% increase. Cost
of services improved to 81.6% of revenue in the 1998 first quarter compared to
83.0% for the 1997 first quarter. 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 were $1.9 million, or 15.6% of
revenues for the 1998 period compared to $1.6 million, or 15.0% of revenues for
the 1997 period. Selling, general and administrative expenses principally
include staff employees' salaries and related costs, advertising, professional
fees, depreciation, provision for the allowance for doubtful accounts and other
costs related to maintaining the Company's branch offices. The current period
increase was principally due to higher staff employee related expenses
necessitated by current market conditions.
Interest expense was $52,000 for the 1998 quarter, a 16.1% decrease from
1997, reflecting a decrease in average borrowings. The effective tax rate
approximated 40% in both periods. As a result of the above, net income increased
to $178,000 or $0.05 per share, basic and diluted, in 1998 compared with net
income of $94,000 or $0.03 per share, basic and diluted, for the 1997 period.
6
<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 December 31, 1997 were $7,496,000 as compared to $7,105,000 at
September 30, 1997 and current liabilities were $4,550,000 compared to
$4,251,000 as of September 30, 1997. 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 the bank's prime rate with a LIBOR plus two and
one quarter percent option; $2,200,000 was outstanding under this line as of
December 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.
7
<PAGE>
JOULE INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders was held on February 4, 1998.
(b) The following directors were elected at the annual meeting with the votes
as indicated:
VOTES FOR VOTES WITHHELD
--------- --------------
Richard Barnitt 3,630,559 1,120
Paul DeBacco 3,630,559 1,120
Robert W. Howard 3,630,559 1,120
Emanuel N. Logothetis 3,630,559 1,120
Nick M. Logothetis 3,630,559 1,120
Steven Logothetis 3,630,559 1,120
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)
February 11, 1998 /s/ E. N. Logothetis, Chairman
-------------------------------------
E. N. Logothetis, Chairman
(Principal Executive Officer)
February 11, 1998
/s/ 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> DEC-31-1997
<CASH> 140
<SECURITIES> 0
<RECEIVABLES> 7046
<ALLOWANCES> 231
<INVENTORY> 0
<CURRENT-ASSETS> 7496
<PP&E> 7100
<DEPRECIATION> 3385
<TOTAL-ASSETS> 11313
<CURRENT-LIABILITIES> 4550
<BONDS> 400
0
0
<COMMON> 38
<OTHER-SE> 6325
<TOTAL-LIABILITY-AND-EQUITY> 11313
<SALES> 0
<TOTAL-REVENUES> 12304
<CGS> 0
<TOTAL-COSTS> 10035
<OTHER-EXPENSES> 1890
<LOSS-PROVISION> 31
<INTEREST-EXPENSE> 52
<INCOME-PRETAX> 296
<INCOME-TAX> 118
<INCOME-CONTINUING> 178
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 178
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
