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, 1999
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
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(Exact name of registrant as specified in its charter)
DELAWARE 22-2735672
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1245 ROUTE 1 SOUTH, EDISON, NEW JERSEY 08837
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(Address of principal executive officers)(Zip Code)
(732) 548-5444
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(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 10, 2000, 3,674,000 shares of the Registrant's common stock were
outstanding.
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Part I - Financial Information Joule Inc. And Subsidiaries
Item 1. Financial Statements Consolidated Balance Sheets
December 31, September 30,
1999 1999
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(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 214,000 $ 152,000
Accounts receivable, less allowance
for doubtful accounts of $441,000 and $384,000
at December 31 and September 30, respectively 12,495,000 12,680,000
Prepaid expenses and other current assets 296,000 142,000
----------- -----------
Total Current Assets 13,005,000 12,974,000
PROPERTY AND EQUIPMENT, NET 4,091,000 4,092,000
GOODWILL 1,264,000 1,285,000
OTHER ASSETS 26,000 25,000
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$18,386,000 $18,376,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable to bank $ 8,000,000 $ 7,700,000
Accounts payable and accrued expenses 1,026,000 1,436,000
Accrued payroll and related taxes 1,275,000 1,489,000
Income taxes 245,000 128,000
----------- -----------
Total Current Liabilities 10,546,000 10,753,000
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 3,820,000
and 3,816,000 shares, respectively 38,000 38,000
Additional paid-in capital 3,669,000 3,669,000
Retained earnings 4,522,000 4,305,000
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8,229,000 8,012,000
LESS: Cost of 146,000 shares of common
stock held in treasury 389,000 389,000
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Total Stockholders' Equity 7,840,000 7,623,000
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$18,386,000 $18,376,000
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See accompanying notes to consolidated financial statements.
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Joule Inc. And Subsidiaries
Consolidated Statements of Income
Three Months Ended
-------------------------
December 31, December 31,
1999 1998
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(Unaudited) (Unaudited)
REVENUES $20,117,000 $15,413,000
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COSTS, EXPENSES AND OTHER:
Cost of services 16,456,000 12,370,000
Selling, general & administrative expenses 3,152,000 2,371,000
Interest expense 150,000 76,000
Other 6,000 --
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INCOME BEFORE INCOME TAX PROVISION 353,000 596,000
INCOME TAX PROVISION 136,000 238,000
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NET INCOME $ 217,000 $ 358,000
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BASIC AND DILUTED EARNINGS PER SHARE $ 0.06 $ 0.10
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING-BASIC 3,674,000 3,670,000
=========== ===========
WEIGHTED AVERAGE COMMON SHARES AND
COMMON EQUIVALENTS OUTSTANDING - DILUTED 3,674,000 3,671,000
=========== ===========
See accompanying notes to consolidated financial statements.
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Joule Inc. And Subsidiaries
Consolidated Statements of Cash Flows
Three Months Ended
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December 31, December 31,
1999 1998
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(Unaudited) (Unaudited)
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 217,000 $ 358,000
Adjustments to reconcile net income to
net cash flows provided by (used in) operating
activities:
Depreciation and amortization 187,000 159,000
Provision for losses on accounts receivable 60,000 27,000
Changes in operating assets and liabilities:
Accounts receivable 125,000 (1,137,000)
Prepaid expenses and other assets (155,000) (47,000)
Accounts payable and accrued expenses (410,000) 426,000
Accrued payroll and related taxes (214,000) (555,000)
Current portion of long term debt -- 375,000
Income taxes 117,000 206,000
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Net cash flows (used in) operating activities (73,000) (188,000)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (165,000) (107,000)
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Net cash flows used in investing activities (165,000) (107,000)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in loans payable to bank 300,000 600,000
Payment of long term debt -- (381,000)
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Net cash flows provided by financing activities 300,000 219,000
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NET CHANGE IN CASH 62,000 (76,000)
CASH, BEGINNING OF PERIOD 152,000 233,000
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CASH, END OF PERIOD $ 214,000 $ 157,000
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 147,000 $ 64,000
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Income taxes paid $ 25,000 $ 124,000
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See accompanying notes to consolidated financial statements.
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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.
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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. Approximately 95% of revenue is billed on a direct
cost plus markup basis. Revenue increased 30% to $ 20.1 million during the first
three months of fiscal 2000 from $15.4 million for the year earlier period.
Commercial staffing revenue increased 32% to $8.6 in 2000 from $6.5 million in
1999. Technical staffing revenue increased 44% to $5.6 million in the current
period from $3.9 million a year earlier due to the acquisition of Ideal
Technical Services (Ideal), which had revenue of $1.8 million in this period.
Industrial staffing revenue rose 20% to $6.0 million in 2000 from $5.0 million
in 1999.
Cost of services were 81.8% of revenue in the 2000 first quarter compared
to 80.3% for the 1999 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, including a van transportation service
which transports some commercial staffing workers to job sites, and also the
inclusion of Ideal in the first quarter of 2000. Selling, general and
administrative expenses were $3.2 million, or 15.7% of revenues for the 2000
period compared to $2.4 million, or 15.4% of revenues for the 1999 period.
Selling, general and administrative expenses include staff employees' salaries
and related costs, advertising, professional fees, depreciation and
amortization, provision for the allowance for doubtful accounts, rent and other
costs related to maintaining the Company's branch offices.
Interest expense increased $74,000 in the 2000 quarter over the 1999
quarter reflecting an increase in average borrowings to support the Company's
continuing growth, including the Ideal acquisition, as well as higher interest
rates. After giving effect to the utilization of certain tax credits, the
effective tax for the 2000 period approximated 39% compared with 40% for the
1999 period. As a result of the above, net income was $217,000 or $0.06 per
share, basic and diluted, in fiscal 2000 compared with net income of $358,000 or
$0.10 per share, basic and diluted, for the 1999 period.
6
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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
Current assets at December 31, 1999 were $13,005,000 as compared to
$12,974,000 at September 30, 1999 and current liabilities were $10,546,000
compared to $10,753,000 as of September 30, 1999. 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 $9,000,000 bank line of credit; loans thereunder are secured
principally by receivables with interest at LIBOR plus one and one-half percent
with a prime rate less one-quarter percent option; $8,000,000 was outstanding
under this line as of December 31, 1999.
The Company believes that internally generated funds and available
borrowings will provide sufficient cash flow to meet its requirements for the
next 12 months.
Forward-Looking Information
Certain parts of this document include forward-looking statements within
the meaning of the federal securities laws that are subject to risks and
uncertainties. Factors that could cause the Company's actual results and
financial condition to differ from the Company's expectations include, but are
not limited to, a change in economic conditions that adversely affects the level
of demand for the Company's services, competitive market and pricing pressures,
the availability of qualified temporary workers, the ability of the Company to
manage growth through improved information systems and the training and
retention of new staff, and government regulation.
7
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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 2, 2000
(b) The following directors were elected at the annual meeting with the
votes as indicated:
VOTES FOR VOTES WITHHELD
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Richard Barnitt 3,602,240 32,770
Robert W. Howard 3,602,590 32,420
Emanuel N. Logothetis 3,597,790 37,220
Nick M. Logothetis 3,601,790 33,220
Steven Logothetis 3,601,790 33,220
Andrew G. Spohn 3,602,240 32,770
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, 2000 /s/ E.N. LOGOTHETIS
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E. N. Logothetis, Chairman and
Chief Executive Officer
(Principal Executive Officer)
February 11, 2000 /s/ BERNARD G. CLARKIN
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Bernard G. Clarkin, Vice President and
Chief Financial Officer
(Principal Financial Officer)
8
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