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, 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
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(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 February 9, 2001, 3,679,000 shares of the Registrant's common stock were
outstanding.
1
Part I - Financial Information Joule Inc. And Subsidiaries
Item 1. Financial Statements Consolidated Balance Sheets
December 31, September 30,
2000 2000
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ASSETS (Unaudited)
CURRENT ASSETS:
Cash $ 241,000 $ 237,000
Accounts receivable, less allowance
for doubtful accounts of $567,000 at December 31
and $514,000 at September 30, respectively 8,842,000 9,749,000
Prepaid expenses and other current assets 949,000 848,000
------------- -------------
Total Current Assets 10,032,000 10,834,000
PROPERTY AND EQUIPMENT, NET 4,175,000 4,013,000
GOODWILL 1,180,000 1,201,000
OTHER ASSETS 176,000 304,000
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$ 15,563,000 $ 16,352,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable to bank $ 4,800,000 $ 4,980,000
Accounts payable and accrued expenses 1,057,000 1,269,000
Accrued payroll and related taxes 1,198,000 1,585,000
Income taxes -- 43,000
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Total Current Liabilities 7,055,000 7,877,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value:
Authorized 500,000 shares, none outstanding -- --
Common stock, $.01 par value:
Authorized 10,000,000 shares-issued 3,820,000 shares 38,000 38,000
Additional paid-in capital 3,669,000 3,669,000
Retained earnings 5,183,000 5,150,000
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8,890,000 8,857,000
LESS: Cost of 144,000 shares of common
stock held in treasury 382,000 382,000
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Total Stockholders' Equity 8,508,000 8,475,000
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$ 15,563,000 $ 16,352,000
============= =============
See accompanying notes to consolidated financial statements.
2
Joule Inc. And Subsidiaries
Consolidated Statements of Income
Three Months Ended
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December 31, December 31
2000 1999
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(Unaudited) (Unaudited)
REVENUES $ 18,524,000 $ 20,117,000
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COSTS, EXPENSES AND OTHER:
Cost of services 14,932,000 16,456,000
Selling, general & administrative expenses 3,471,000 3,152,000
Interest expense 107,000 150,000
Interest income (35,000) --
Other -- 6,000
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INCOME BEFORE INCOME TAX PROVISION 49,000 353,000
INCOME TAX PROVISION 16,000 136,000
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NET INCOME $ 33,000 $ 217,000
============ ============
BASIC AND DILUTED EARNINGS PER SHARE $ 0.01 $ 0.06
============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING-BASIC 3,677,000 3,674,000
============ ============
WEIGHTED AVERAGE COMMON SHARES AND
COMMON EQUIVALENTS OUTSTANDING - DILUTED 3,677,000 3,674,000
============ ============
See accompanying notes to consolidated financial statements.
3
Joule Inc. And Subsidiaries
Consolidated Statements of Cash Flows
Three Months Ended
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December 31, December 31
2000 1999
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(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 33,000 $ 217,000
Adjustments to reconcile net income to
net cash flows provided by (used in) operating
activities:
Depreciation and amortization 216,000 187,000
Provision for losses on accounts receivable 53,000 60,000
Changes in operating assets and liabilities:
Accounts receivable 854,000 125,000
Prepaid expenses and other assets 27,000 (155,000)
Accounts payable and accrued expenses (212,000) (410,000)
Accrued payroll and related taxes (387,000) (214,000)
Income taxes (43,000) 117,000
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Net cash flows provided by (used in) operating activities 541,000 (73,000)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (357,000) (165,000)
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Net cash flows used in investing activities (357,000) (165,000)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in loans payable to bank (180,000) 300,000
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Net cash flows (used in) provided by financing activities (180,000) 300,000
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NET CHANGE IN CASH 4,000 62,000
CASH, BEGINNING OF PERIOD 237,000 152,000
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CASH, END OF PERIOD $ 241,000 $ 214,000
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 112,000 $ 147,000
============ ============
Income taxes paid $ 194,000 $ 25,000
============ ============
See accompanying notes to consolidated financial statements.
4
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
December 31,
--------------------
2000 1999
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REVENUES
Commercial ............. $ 6,064 $ 8,552
Technical .............. 6,203 5,569
Industrial ............. 6,257 5,996
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$ 18,524 $ 20,117
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INCOME BEFORE TAX PROVISION
Commercial ............. $ 297 $ 398
Technical .............. 589 385
Industrial ............. 164 487
Corporate (unallocated,
including interest) (1,001) (917)
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$ 49 $ 353
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5
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. Virtually all revenue is billed on a direct cost
plus markup basis. Revenue was $ 18.5 million during the first three months of
fiscal 2001 compared to $20.1 million for the year earlier period. Commercial
staffing revenue decreased 29% to $6.1 in 2001 from $8.6 million in 2000,
reflective of the topline softness in this segment as well as a decision not to
pursue certain lower margin business. Technical staffing revenue increased 11%
to $6.2 million in the current period from $5.6 million in the year earlier
period. Industrial staffing revenue rose 3% to $6.2 million in 2001 from $6.0
million in 2000.
Cost of services were 80.6% of revenue in the 2001 first quarter
compared to 81.8% for the 2000 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. Selling, general and administrative expenses were $3.5 million, or 18.9%
of revenues for the 2001 period compared to $3.2 million, or 15.9% of revenues
for the 2000 period. This percentage increase was principally due to lower
revenues in the current quarter while staff employee payroll and other branch
related expenses increased modestly. Selling, general and administrative
expenses include staff payroll and related expenses in addition to 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 decreased $43,000 in the 2001 quarter over the 2000
quarter, reflecting a decrease in average borrowings. The interst income of
$35,000 relates to a note receivable, which is principally included in accounts
receivable. After giving effect to the utilization of certain tax credits the
effective tax rates for the 2001 and 2000 periods were 33% and 39%,
respectively. As a result of the above, net income was $33,000 or $0.01 per
share, basic and diluted, in fiscal 2001 compared with net income of $217,000 or
$0.06 per share, basic and diluted, for the 2000 period.
6
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, 2000 were $10,032,000 as compared to
$10,834,000 at September 30, 2000 and current liabilities were $7,055,000
compared to $7,877,000 as of September 30, 2000. The decrease in current assets
principally relates to a reduction in accounts receivable of $ 900,000 as a
result of a significant improvement in days sales outstanding as of December 31,
2000, compared to September 30, 2000. The improvement in days sales outstanding
was due to increased emphasis on credit and collections in 2000 which continued
to yield improvement in the current period. The increase in prepaid expense
principally relates to prepayment of income taxes. The decrease in current
liabilities of $800,000 included a $180,000 decrease in notes payable and a
$400,000 decrease in accrued payroll and related taxes due to a lower level of
business in the final week of the current period as well as lower payroll taxes
due. The decrease in accounts payable and accrued expenses reflected the normal
cyclical nature of such accounts. While the Company's capital expenditures are
relatively modest due to the nature of its business, it is anticipated that
approximately $300,000 to $400,000 will be expended within the current fiscal
year in connection with the installation of a major new information technology
system, of which $130,000 was incurred in the current quarter.
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; $4,800,000 was outstanding under this line as of December 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
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 7, 2001
(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 3,511,489 144,100
Robert W. Howard 3,511,789 143,800
Emanuel N. Logothetis 3,511,789 143,800
Nick M. Logothetis 3,510,789 144,800
Steven Logothetis 3,510,789 144,800
Andrew G. Spohn 3,524,689 130,900
(b) Approval of the 2001 Stock Option Plan with the votes as
indicated:
VOTES FOR VOTES AGAINST
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2,914,152 233,359
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 13, 2001
/s/ E. N. LOGOTHETIS
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E. N. Logothetis, Chairman and Chief
Executive Officer (Principal Executive
Officer)
February 13, 2001 /s/ BERNARD G. CLARKIN
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Bernard G. Clarkin, Vice President and
Chief Financial Officer(Principal
Financial Officer)
8