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, 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 (IRS Employer
of incorporation or Identification
organization) 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 February 6, 1997 3,660,000 shares of the
Registrant's common stock were outstanding.
Part I - Financial Information
Item 1. Financial Statements
JOULE' Inc. And Subsidiaries
Consolidated Balance Sheets
December 31, September 30,
ASSETS 1996 1996
CURRENT ASSETS:
Cash $290,000 $175,000
Accounts receivable, less allowance
for doubtful accounts of $243,000
and $217,000 respectively 7,003,000 8,128,000
Prepaid expenses and other current assets 282,000 320,000
Total Current Assets 7,575,000 8,623,000
PROPERTY AND EQUIPMENT, NET OF
ACCUMULATED DEPRECIATION 1,954,000 2,019,000
GOODWILL 102,000 108,000
OTHER ASSETS 58,000 59,000
$9,689,000 $10,809,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABLILITIES:
Loans payable to bank $2,298,000 $2,343,000
Accounts payable and accrued expenses 1,211,000 1,817,000
Accrued payroll and related taxes 537,000 1,094,000
Current portion of long term debt 25,000 25,000
Total Current Liabilities 4,071,000 5,279,000
LONG TERM DEBT 425,000 431,000
Total Liabilities 4,496,000 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
shares 38,000 38,000
Paid-in capital 3,637,000 3,637,000
Retained earnings 1,907,000 1,813,000
5,582,000 5,488,000
LESS: Cost of 146,400 shares of common
stock held in treasury 389,000 389,000
Total Stockholders' Equity 5,193,000 5,099,000
$9,689,000 $10,809,000
<FN>
See accompanying notes to consolidated financial statements.
</FN>
JOULE' Inc. And Subsidiaries
Consolidated Statements of Income
Three
Months Ended
December 31, December 31,
1996 1995
REVENUES $10,943,000 $13,400,000
COSTS, EXPENSES, AND OTHER:
Cost of services 9,087,000 11,029,000
Selling, general &
administrative expenses 1,638,000 1,659,000
Interest Expense 62,000 112,000
Other (1,000) 6,000
INCOME BEFORE INCOME TAX PROVISION 157,000 594,000
INCOME TAX PROVISION 63,000 238,000
NET INCOME $94,000 $356,000
NET INCOME PER COMMON SHARE $0.03 $0.10
AVERAGE NUMBER OF SHARES AND
EQUIVALENTS OUTSTANDING $3,663,000 $3,643,000
<FN>
See accompanying notes to consolidated financial
statements.
</FN>
JOULE' Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Three Months Ended
December 31, December 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $94,000 $356,000
Adjustments to reconcile net income to
net cash flows provided by (used in)
operating activities:
Depreciation and amortization 118,000 90,000
Provision for losses on accounts
receivable 18,000 18,000
Changes in operating assets and
liabilities:
Accounts receivable 1,107,000 56,000
Prepaid expenses and other assets 26,000 154,000
Accounts payable and accrued expenses (606,000) (257,000)
Accrued payroll and related taxes (557,000) (48,000)
Income taxes 12,000 (35,000)
Net cash flows provided by operating
activities 212,000 334,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (46,000) (162,000)
Net cash flows used in investing
activities (46,000) (162,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in loans payable to bank (45,000) (157,000)
Payment of long term debt (6,000) (6,000)
Net cash flows used in financing
activities (51,000) (163,000)
NET CHANGE IN CASH 115,000 9,000
CASH, BEGINNING OF PERIOD 175,000 70,000
CASH, END OF PERIOD $290,000 $79,000
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $62,000 $89,000
Income taxes paid $53,000 $274,000
<FN>
See accompanying notes to consolidated financial statements.
</FN>
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.
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 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 decreased approximately
18% to $10.9 million during the first three months of fiscal 1997 from $13.4
million in 1996. Office and light industrial revenue approximated $4.0
million in both three month periods, while engineering and technical staffing
revenue approximated $2.8 million in both three month periods. Skilled craft
sales decreased 36% to $4.2 million largely due to the adverse impact on
the current period from the conclusion of certain long term contracts which
the Company is seeking to replace with new business. Cost of services as
a percentage of revenue was 83.0% in the 1997 first quarter compared to 82.3%
for the 1996 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 approximately $1.6 million
in both three month periods, which represented 15.0% and 12.4% of revenues in
the respective 1997 and 1996 periods. 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 1997 percentage increases in selling, general and administrative
expenses reflect the anticipation of higher sales levels, which have not yet
materialized. Interest expense decreased to $62,000 in 1997 from $112,000 in
1996 as average borrowings, as well as interest rates, decreased. The
effective tax rate approximated 40% in both periods. As a result of the above,
net income declined to $94,000 or $0.03 per share in 1997 compared with net
income of $356,000 or $0.10 per share for the 1996 period.
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, 1996 were $7,575,000 as compared to $8,623,000
at September 30, 1996 and current liabilities were $4,071,000 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; $2,298,000
was outstanding under this line as of December 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 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders was held on February 5, 1997.
(b) The following directors were elected at the annual meeting with
the votes as indicated:
VOTES FOR VOTES WITHHELD
Richard Barnitt 3,588,513 2,710
Paul DeBacco 3,588,513 2,710
Anthony Grillo 3,588,713 2,510
Robert W. Howard 3,588,713 2,510
Emanuel N. Logothetis 3,588,713 2,510
Nick M. Logothetis 3,588,713 2,510
Steven Logothetis 3,588,513 2,710
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, 1997 E. N. Logothetis
E. N. Logothetis, Chairman
(Principal Executive Officer)
February 11, 1997 Bernard G. Clarkin
Bernard G. Clarkin, Vice President and
Chief Financial Officer
(Principal Financial Officer)