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, 2000
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
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
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 May 10, 2000, 3,674,000 shares of the Registrant's common stock were
outstanding.
<PAGE>
Part I - Financial Information Joule Inc. And Subsidiaries
Item 1. Financial Statements Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, September 30,
2000 1999
------------- -------------
ASSETS (Unaudited)
- -------
CURRENT ASSETS:
<S> <C> <C>
Cash $ 217,000 $ 152,000
Accounts receivable, less allowance
for doubtful accounts of $513,000 and $384,000
for March 31 and September 30, respectively 12,373,000 12,680,000
Prepaid expenses and other current assets 464,000 142,000
----------- -----------
Total Current Assets 13,054,000 12,974,000
PROPERTY AND EQUIPMENT, NET 4,068,000 4,092,000
GOODWILL 1,243,000 1,285,000
OTHER ASSETS 27,000 25,000
----------- -----------
$18,392,000 $18,376,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------
CURRENT LIABILITIES:
Loans payable to bank $ 6,980,000 $ 7,700,000
Accounts payable and accrued expenses 1,350,000 1,436,000
Accrued payroll and related taxes 1,763,000 1,489,000
Income taxes 307,000 128,000
----------- -----------
Total Current Liabilities 10,400,000 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
shares 38,000 38,000
Additional paid-in capital 3,669,000 3,669,000
Retained earnings 4,674,000 4,305,000
----------- -----------
8,381,000 8,012,000
LESS: Cost of 146,000 shares of common
stock held in treasury 389,000 389,000
----------- -----------
Total Stockholders' Equity 7,992,000 7,623,000
----------- -----------
$18,392,000 $18,376,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
Joule Inc. And Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------- -------------------------
March 31, March 31, March 31, March 31,
2000 1999 2000 1999
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES $19,392,000 $15,568,000 $39,509,000 $30,981,000
----------- ----------- ----------- -----------
COSTS, EXPENSES AND OTHER:
Cost of services 15,828,000 12,601,000 32,284,000 24,971,000
Selling, general & administrative expenses 3,175,000 2,502,000 6,333,000 4,873,000
Interest expense 142,000 70,000 292,000 146,000
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAX PROVISION 247,000 395,000 600,000 991,000
INCOME TAX PROVISION 95,000 143,000 231,000 381,000
----------- ----------- ----------- -----------
NET INCOME $ 152,000 $ 252,000 $ 369,000 $ 610,000
=========== =========== =========== ===========
BASIC AND DILUTED EARNINGS PER SHARE $ 0.04 $ 0.07 $ 0.10 $ 0.17
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING-BASIC 3,674,000 3,674,000 3,674,000 3,674,000
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES AND
COMMON EQUIVALENTS OUTSTANDING - DILUTED 3,674,000 3,674,000 3,674,000 3,674,000
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
Joule Inc. And Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended
--------------------------
March 31, March 31,
2000 1999
----------- -----------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $ 369,000 $ 610,000
Adjustments to reconcile net income to
net cash flows provided by (used in) operating
activities:
Depreciation and amortization 408,000 310,000
Provision for losses on accounts receivable 129,000 56,000
Changes in operating assets and liabilities:
Accounts receivable 178,000 (1,884,000)
Prepaid expenses and other assets (324,000) (20,000)
Accounts payable and accrued expenses (86,000) 317,000
Accrued payroll and related taxes 274,000 (325,000)
Current portion of long term debt -- 369,000
Income taxes 179,000 298,000
----------- -----------
Net cash flows provided by (used in) operating activities 1,127,000 (269,000)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (342,000) (342,000)
----------- -----------
Net cash flows used in investing activities (342,000) (342,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in loans payable to bank (720,000) 950,000
Payment of long term debt -- (381,000)
Proceeds from exercise of stock options -- 11,000
----------- -----------
Net cash flows provided by (used in) financing activities (720,000) 580,000
----------- -----------
NET CHANGE IN CASH 65,000 (31,000)
. .
CASH, BEGINNING OF PERIOD 152,000 233,000
----------- -----------
CASH, END OF PERIOD $ 217,000 $ 202,000
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 297,000 $ 123,000
=========== ===========
Income taxes paid $ 59,000 $ 175,000
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
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) Segment Disclosures
The Company has determined that its reportable segments are those that are based
on the Company's method of internal reporting, which disaggregates its business
by segment. The Company's reportable segments are: (1) Commercial Staffing, (2)
Technical Staffing and (3) Industrial Staffing.
Information concerning operations by operating segment is as follows (in 000's):
Three Months Ended Six Months Ended
March 31, March 31,
-------------------- --------------------
2000 1999 2000 1999
---- ---- ---- ----
REVENUES
Commercial $ 7,023 $ 5,614 $ 15,575 $ 12,100
Technical 5,572 4,244 11,141 8,170
Industrial 6,797 5,710 12,793 _10,711
-------- -------- -------- --------
$ 19,392 $ 15,568 $ 39,509 $ 30,981
-------- -------- -------- --------
INCOME BEFORE TAX PROVISION
Commercial $ 266 $ 134 $ 661 $ 592
Technical 381 376 751 731
Industrial 631 612 1,126 1,175
Corporate (unallocated,
including interest) (1,031) (727) (1,938) (1,507)
-------- -------- -------- --------
$ 247 $ 395 $ 600 $ 991
-------- -------- -------- --------
5
<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 commercial (office and light
industrial) workers, technical (engineering, scientific and information
technology) personnel, and industrial (skilled craft industrial plant and
facility maintenance) labor. Over 95% of revenue is billed on a direct cost plus
markup basis. Revenue increased more than 24% to $19.4 million for the three
months ended March 31, 2000 from $15.6 million for the year earlier period.
Revenue for the first six months of fiscal 2000 amounted to $39.5 million, an
increase of 28% or $8.5 million over the comparable six month period of 1999.
Commercial staffing revenue increased 25% to $7.0 million and 29% to $15.6
million for the respective three and six month periods ended March 31, 2000.
Technical staffing revenue increased 31% to $5.6 million in the current 2000
quarter, and rose 36% to $11.1 million as compared to the 1999 six month period,
reflecting the May 1999 acquisition of Ideal Technical Services (Ideal), which
had revenues of $1.7 million and $3.5 million in the respective three and six
month periods. Industrial Staffing revenue rose 19% to $6.8 million and 19% to
$12.8 million for the 2000 three and six month periods.
Cost of services were 81.6% and 81.7% of revenue in both the current
three month and six month periods compared to 80.9% and 80.6% in the same prior
year periods. 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. Selling, general and administrative
expenses amounted to $3.2 million and $6.3 million for the three and six months
ended March 31, 2000 compared to $2.5 million and $4.9 million for the year
earlier periods, and represented 16.4% and 16.0% of revenue in the 2000 periods,
an increase over the comparable 1999 periods of 16.1% and 15.7% of revenue.
Selling, general and administrative expenses principally 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 operating the Company's branch
offices.
6
<PAGE>
JOULE INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
Interest expense amounted to $142,000 and $292,000 for the 2000 three and
six month periods compared to $70,000 and $146,000 for the respective prior year
periods, 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 rates approximated 38% for the respective three and six month
periods ending March 31, 2000, and 36% and 38% for the respective three and six
month periods ending March 31, 1999. As a result of the above, net income for
the 2000 six month period was $369,000 or $0.10 per share, basic and diluted,
compared with net income of $610,000 or $0.17 per share, basic and diluted, for
the 1999 period; for the 2000 three month period, net income was $152,000 or
$0.04 per share, basic and diluted, compared to $252,000 or $0.07 per share,
basic and diluted.
Liquidity and Capital Resources
Current assets at March 31, 2000 were $13,054,000 as compared to
$12,974,000 at September 30, 1999 and current liabilities were $10,400,000
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; $6,980,000 was outstanding
under this line as of March 31, 2000.
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
<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 11, 2000 /s/ E. N. LOGOTHETIS
---------------------------------------------------
E. N. Logothetis, Chairman and Chief
Executive Officer(Principal Executive Officer)
May 11, 2000 /s/ BERNARD G. CLARKIN
---------------------------------------------------
Bernard G. Clarkin, Vice President and Chief
Financial Officer (Principal Financial Officer)
8
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<NAME> Joule, Inc.
<MULTIPLIER> 1,000
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 217
<SECURITIES> 0
<RECEIVABLES> 12,886
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0
0
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