General Employment Enterprises, Inc. (NYSE Amex: JOB) reported consolidated net revenues for the fourth quarter of the company’s 2009 fiscal year.
The quarter ended Sept. 30, 2009 of $2,515,000, which were down 33% compared with consolidated net revenues of $3,760,000 reported for the same period last year.
Contract service revenues for the quarter were $1,847,000, up 2% from the same period last year.
Placement service revenues of $668,000 decreased 66% from last year.
The Company had a net loss of $69,000 or $.01 per share, in the fourth quarter of this year, compared with a net loss of $474,000, or $.09 per share, in the fourth quarter last year.
Commenting on the Company’s performance, Salvatore J. Zizza, CEO said, “It was an extremely challenging environment in the staffing industry, particularly for full-time placement services. Employment conditions in the United States continued to deteriorate during the quarter, as 700,000 Americans lost their jobs and the national unemployment rate rose to 9.8%.”
Mr. Zizza continued, “Despite the 33% decline in consolidated net revenues, we were able to reduce the quarterly net loss by 85% by controlling costs. On July 1st we implemented a major restructuring of corporate and field operations, and throughout the fourth quarter we continued to take actions to reduce and control our cost structure.
As a result, we reduced our selling, general and administrative expenses by 56% from the same quarter last year. As a result, we were able to reduce the quarterly net loss to $69,000.”
Fiscal Year Results
For the year ended Sept. 30, 2009, the Company had a net loss of $4,228,000, or $.58 per share, compared with a net loss of $1,806,000, or $.35 per share, for the same period last year.
Consolidated net revenues for the year were $10,394,000, down 32% compared with $15,235,000 last year.
During the year ended September 30, 2009, the Company recorded additional compensation expense of $1,070,000 under a consulting agreement with the Company’s former Chairman, Chief Executive Officer and President (the “former CEO”) that became effective on July 1, 2009.
Under the consulting agreement, the former CEO resigned from those positions and his employment agreement with the Company was terminated, and the Company became obligated to make monthly payments over a five-year period and to issue 500,000 shares of common stock to the former CEO.
The additional compensation expense is included in selling, general and administrative expenses on the consolidated statement of operations. The results for the year also include a provision for the cost of closing branch offices of $330,000.
During the period, the Company consolidated ten branch offices in four metropolitan areas.
Excluding the provision for additional compensation and the provision for the cost of closing branch offices, the Company’s net loss for the year was $2,828,000, or $.39 per share.
Business Information
General Employment provides professional staffing services, and specializes in information technology, accounting and engineering placements.
The Company’s business is highly dependent on national employment trends in general and on the demand for professional staff in particular. Because long-term contracts are not a significant part of the Company’s business, future results cannot be reliably predicted by considering past trends or by extrapolating past results.
Some of the factors that could affect the Company’s future performance include, but are not limited to, general business conditions, the demand for the Company’s services, competitive market pressures, the ability of the Company to attract and retain qualified personnel for regular full-time placement and contract assignments, the possibility of incurring liability for the Company’s business activities, including the activities of contract employees and events affecting its contract employees on client premises, and the ability of the Company to attract and retain qualified corporate and branch management.
GENERAL EMPLOYMENT ENTERPRISES, INC.
------------------------------------
CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------
(In Thousands, Except Per Share)
Three Months Year
Ended September 30 Ended September 30
------------------ ------------------
2009 2008 2009 2008
------ ------ ------ ------
Net revenues:
Contract services $1,847 $1,811 $6,280 $7,476
Placement services 668 1,949 4,114 7,759
------ ----- ------- -------
Net revenues 2,515 3,760 10,394 15,235
Cost of contract services 1,281 1,221 4,374 5,037
Selling, general and
administrative
expenses(1)(2) 1,303 2,986 10,198 12,041
------ ----- ------- -------
Loss from operations (69) (447) (4,178) (1,843)
Investment income (loss) - (27) (50) 37
------ ----- ------- -------
Net loss(3) $(69) $(474) $(4,228) $(1,806)
====== ===== ======= =======
Average number of shares
-basic and diluted 13,369 5,165 7,232 5,163
====== ===== ======= =======
Net loss per share -
basic and diluted $(.01) $(.09) $(.58) $(.35)
====== ===== ======= =======
(1) During the year ended September 30, 2009, the Company recorded
additional compensation expense of $1,070,000 under a consulting
agreement with the Company's former Chairman, Chief Executive
Officer and President (the "former CEO") that became effective on
July 1, 2009. Under the consulting agreement, the former CEO
resigned from those positions and his employment agreement with the
Company was terminated, and the Company became obligated to make
monthly payments over a five-year period and to issue 500,000
shares of common stock to the former CEO. The additional
compensation expense is included in selling, general and
administrative expenses for the twelve months ended September 30,
2009, and it is comprised of a liability for the future payments in
the amount of $790,000 and additional common stock in the amount of
$280,000.
(2) Selling, general and administrative expenses for the twelve
months ended September 30, 2009 include a provision for the cost of
closing branch offices of $330,000. During the period, the Company
consolidated ten branch offices into four branch offices in four
metropolitan areas.
(3) There were no credits of income taxes as a result of the pretax
losses during the periods, because there was not sufficient
assurance that future tax benefits would be realized.
GENERAL EMPLOYMENT ENTERPRISES, INC.
------------------------------------
NON-GAAP RESULTS OF OPERATIONS AND RECONCILIATION
-------------------------------------------------
(In Thousands, Except Per Share)
The Company's results of operations, excluding the additional compensation
expense under the consulting agreement and excluding the provision for the
cost of closing offices from selling, general and administrative expenses,
are shown in the table below. Management believes that this information
provides a meaningful measurement of the results of operations on an
ongoing basis, without the one-time charges.
Three Months Year
Ended September 30 Ended September 30
------------------ ------------------
2009 2008 2009 2008
---- ---- ---- ----
Net revenues:
Contract services $1,847 $1,811 $6,280 $7,476
Placement services 668 1,949 4,114 7,759
----- ----- ------- -------
Net revenues 2,515 3,760 10,394 15,235
Cost of contract services 1,281 1,221 4,374 5,037
Selling, general and
administrative
expenses(4) 1,404 2,986 8,798 12,041
----- ----- ------- -------
Loss from operations (170) (447) (2,778) (1,843)
Investment income (loss) - (27) (50) 37
----- ----- ------- -------
Net loss $(170) $(474) $(2,828) $(1,806)
===== ===== ======= =======
Average number of shares -
basic and diluted 13,369 5,165 7,232 5,163
====== ===== ======= =======
Net loss per share -basic
and diluted $(.01) $(.09) $(.39) $(.35)
====== ===== ======= =======
(4) A reconciliation of selling, general and administrative expenses
is as follows:
Three Months Year
Ended September 30 Ended September 30
------------------ ------------------
2009 2008 2009 2008
---- ---- ---- ----
Non-GAAP expenses $1,404 $2,986 $8,798 $12,041
Additional compensation under
consulting agreement (55) - 1,070 -
Provision for cost of closing
offices (46) - 330 -
------ ------ ------- -------
As reported $1,303 $2,986 $10,198 $12,041
====== ====== ======= =======
GENERAL EMPLOYMENT ENTERPRISES, INC.
------------------------------------
SUMMARIZED CONSOLIDATED BALANCE SHEET INFORMATION
-------------------------------------------------
(In Thousands)
September 30 September 30
2009 2008
------------ ------------
Assets:
Cash and cash equivalents $2,810 $4,165
Other current assets 1,287 1,627
------ ------
Total current assets 4,097 5,792
Property and equipment, net 570 791
Other assets - 419
------ ------
Total assets $4,667 $7,002
====== ======
Liabilities and shareholders' equity:
Current liabilities $1,488 $1,507
Other liabilities 575 419
Shareholders' equity (5) 2,604 5,076
------ ------
Total liabilities and shareholders' equity $4,667 $7,002
====== ======
(5) During the year ended September 30, 2009, the Company recorded
the sale of 7,700,000 newly-issued shares of common stock to PSQ,
LLC for $1,925,000 in cash, pursuant to a Securities Purchase and
Tender Offer Agreement that had been entered into by the Company on
March 30, 2009. The net proceeds to the Company from the share
issuance , after deducting related costs, were $1,384,000.
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