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, 1996
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, 1996 3,615,000 shares of the Registrant's common stock were
outstanding.
Part I - Financial Information
Item 1. Financial Statements
Joule' Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, September 30,
ASSETS 1996 1995
CURRENT ASSETS:
Cash $122,000 $70,000
Accounts receivable, less allowance
for doubtful accounts of $159,000
and $140,000 in 1996 & 1995
respectively 7,593,000 8,514,000
Prepaid expenses and other current assets 91,000 318,000
Total Current Assets 7,806,000 8,902,000
PROPERTY AND EQUIPMENT, NET OF
ACCUMULATED DEPRECIATION 1,890,000 1,698,000
GOODWILL AND OTHER INTANGIBLES 120,000 132,000
OTHER ASSETS 67,000 70,000
$9,883,000 $10,802,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable to bank $2,198,000 $4,105,000
Current portion of long term de 25,000 25,000
Accounts payable and accrued expenses 1,424,000 1,137,000
Accrued payroll and related taxes 1,001,000 1,083,000
Income taxes 225,000 77,000
Total Current Liabilities 4,873,000 6,427,000
LONG TERM DEBT 444,000 456,000
Total Liabilities 5,317,000 6,883,000
STOCKHOLDERS' EQUITY:
Preferred stock,$.01 par value:
Authorized 500,000 shares,
none outstanding ---- ----
Common stock,$.01 par value:
Authorized 10,000,000
shares-issued 3,760,000 38,000 38,000
Paid-in capital 3,509,000 3,502,000
Retained earnings 1,427,000 787,000
4,974,000 4,327,000
LESS: Cost of 150,000 shares of common
stock held in treasury 408,000 408,000
Total Stockholders' Equity 4,566,000 3,919,000
$9,883,000 $10,802,000
<FN>
<F1>
See accompanying notes to consolidated financial statements.
</FN>
/TABLE
Joule' Inc. and Subsidiaries
Consolidated Statements of Income
Three Months Ended Six Months Ended
March 31 March 31, March 31, March 31,
1996 1995 1996 1995
REVENUES $12,088,000 $9,806,000 $25,488,000 $20,873,000
COSTS, EXPENSES, AND OTHER:
COST OF SERVICES 10,057,000 8,336,000 21,086,000 17,547,000
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,496,000 1,265,000 3,155,000 2,572,000
INTEREST EXPENSE 89,000 94,000 201,000 191,000
OTHER (INCOME)/EXPENSE (26,000) (3,000) (20,000) 5,000
INCOME BEFORE INCOME TAXES 472,000 114,000 1,066,000 558,000
INCOME TAXES 188,000 43,000 426,000 212,000
NET INCOME $284,000 $ 71,000 $640,000 $346,000
NET INCOME PER COMMON SHARE $0.08 $0.02 $0.18 $0.10
AVERAGE NUMBER OF SHARES AND
EQUIVALENTS OUTSTANDING 3,646,000 3,629,000 3,645,000 3,625,000
<FN>
<F1>
See accompanying notes to consolidated financial statements.
</FN>
/TABLE
Joule' Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Six Months Ended
March 31, March 31,
1996 1995
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $640,000 $346,000
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 184,000 152,000
Loss from disposal of equipment O 4,000
Provision for losses on accounts receivable 36,000 30,000
Changes in operating assets and liabilities:
Accounts receivable 885,000 (106,000)
Prepaid expenses and other assets 230,000 297,000
Accounts payable and accrued expenses 287,000 88,000
Accrued payroll and related taxes (82,000) 201,000
Income taxes 148,000 (215,000)
Net cash flows from operating activities 2,328,000 797,000
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisitions of property and equipment (364,000) (528,000)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Decrease in loans payable to bank (1,907,000) (368,000)
Payment on long term debt (12,000) (6,000)
Additions to long term debt 0 76,000
Proceeds from exercise of stock options 7,000 14,000
Net cash flows from (used in) financing
activities (1,912,000) (284,000)
NET CHANGE IN CASH 52,000 (15,000)
CASH, BEGINNING OF PERIOD 70,000 49,000
CASH, END OF PERIOD $122,000 $34,000
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $191,000 $189,000
Income taxes paid $278,000 $486,000
<FN>
<F1>
See accompanying notes to consolidated financial statements.
</FN>
/TABLE
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 principles 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.
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 labor outsourcing
services to its customers. Revenues increased 23% to $12.1 million during the
three months ended March 31, 1996 from $9.8 million a year earlier. Revenue
for the first six months of fiscal 1996 amounted to $25.5 million, a 22%
increase over the prior year. These increases reflected an expanded corporate
customer base and better penetration of existing markets as demand for such
services grew. The Company's outsourcing services include staffing services
and industrial contracting. Staffing services revenue increased 30% to $6.4
million, and 36% to $13.3 million, for the respective three and six months
ended March 31, 1996 compared to the same periods a year ago. Industrial
contracting revenue increased to $5.7 million in the current quarter, which
was 16% higher than a year earlier. Six month revenues increased 10% to $12.2
million from $11.1 million in the prior year period. Cost of services
improved to 83.2% of revenue in the current three months from 85.0% in the
prior year and to 82.7% in the current six months compared to 84.1% 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 $1,496,000 and
$3,155,000 in the three and six months ended March 31, 1996 compared to
$1,265,000 and $2,572,000 a year earlier. These expenses amounted to 12.4% of
revenue in the current three month period compared to 12.9% in the prior year,
and 12.4% of revenue in the six months ended March 31, 1996 compared to 12.3%
a year earlier, as the Company continued to focus on cost containment. 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. Interest
expense amounted to $89,000 and $201,000 in the current three and six months
periods compared to $94,000 and $191,000 in the prior year. The effective
income tax rate was 40% in the current periods, an increase from 38% in the
respective three and six month periods a year earlier because of the use of
job tax credits in fiscal 1995. As a result of the above, net income improved
to $284,000 or $0.08 per share in the current three month period from $71,000
or $0.02 per share a year ago; for the six months ended March 31, 1996, net
income increased to $640,000 or $0.18 per share from $346,000 or $0.10 a share
in the prior year.
JOULE' INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
Liquidity and Capital Resources
Working capital at March 31, 1996 was $2,933,000 compared to $2,475,000
at September 30, 1995. 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. The Company's bank agreed to lower the interest rate it charged
the Company in February, 1996. The rate had been the bank's prime rate plus
one percent. It was lowered to the prime rate, with a LIBOR plus two and
one-quarter percent option; $2,198,000 was outstanding under this line as of
March 31, 1996.
The Company believes that internally generated funds and available
borrowings will provide sufficient cash flow to meet its requirements for the
next 12 months.
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 10, 1996
E. N. Logothetis
E. N. Logothetis, Chairman
(Principal Executive Officer)
May 10, 1996
Bernard G. Clarkin
Bernard G. Clarkin, Vice President and
Chief Financial Officer
(Principal Financial Officer)