GEE Group Inc. - Quarter Report: 2009 June (Form 10-Q)

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x

Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2009

or

o

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 1-05707

GENERAL EMPLOYMENT ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

Illinois

36-6097429

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

One Tower Lane, Suite 2200, Oakbrook Terrace, Illinois 60181

(Address of principal executive offices)

(630) 954-0400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required 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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o

No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o

No x

The number of shares outstanding of the registrant’s common stock as of June 30, 2009 was 13,365,265.

 

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GENERAL EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEET
		June 30				September 30
		2009				2008
(In Thousands)		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	3,081			$	4,165
Accounts receivable, less allowances			1,104				1,314
(June 2009 – $128; Sept. 2008 – $151)
Other current assets			498				313
Total current assets			4,683				5,792
Property and equipment, net			629				791
Deferred compensation plan assets			––				419
Total assets		$	5,312			$	7,002
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accrued compensation		$	1,103			$	1,001
Other current liabilities			833				506
Total current liabilities			1,936				1,507
Long-term obligations			665				419
Shareholders’ equity:
Preferred stock, authorized – 100 shares;
issued and outstanding – none			––				––
Common stock, no-par value; authorized – 20,000 shares;
issued and outstanding – 13,365 shares in June 2009 and
5,165 shares in September 2008			6,781				4,987
Retained earnings (accumulated deficit)			(4,070	)			89
Total shareholders’ equity			2,711				5,076
Total liabilities and shareholders’ equity		$	5,312			$	7,002

GENERAL EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
		Three Months  Ended June 30								Nine Months Ended June 30
(In Thousands, Except Per Share Amounts)		2009				2008				2009				2008
Net revenues:
Contract services		$	1,490			$	1,805			$	4,433			$	5,665
Placement services			1,030				1,817				3,446				5,810
Net revenues			2,520				3,622				7,879				11,475
Cost of contract services			1,040				1,207				3,093				3,816
Selling, general and administrative expenses			3,809				3,011				8,895				9,055
Loss from operations			(2,329	)			(596	)			(4,109	)			(1,396	)
Investment income (loss)			34				14				(50	)			64
Net loss		$	(2,295	)		$	(582	)		$	(4,159	)		$	(1,332	)
Average number of shares – basic and diluted			5,165				5,165				5,165				5,163
Net loss per share – basic and diluted			(.44	)		$	(.11	)			(.81	)		$	(.26	)
Cash dividends declared per share		$	––			$	––			$	––			$	.10

GENERAL EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
						Nine Months
						Ended June 30
(In Thousands)		2009				2008
Operating activities:
Net loss		$	(4,159	)		$	(1,332	)
Depreciation and amortization			210				196
Deferred compensation and stock compensation expense			1,027				49
Changes in current assets and current liabilities-
Accounts receivable			210				378
Accrued compensation			102				(472	)
Other current items, net			142				(273	)
Net cash used by operating activities			(2,468	)			(1,454	)
Investing activities:
Acquisition of property and equipment			(48	)			(116	)
Financing activities:
Issuance of common stock, net of issuance costs			1,432				––
Exercises of stock options			––				10
Cash dividends declared			––				(517	)
Net cash provided (used) by financing activities			1,432				(507	)
Decrease in cash and cash equivalents			(1,084	)			(2,077	)
Cash and cash equivalents at beginning of period			4,165				6,344
Cash and cash equivalents at end of period		$	3,081			$	4,267

GENERAL EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (Unaudited)
		Nine Months
		Ended June 30
(In Thousands)		2009				2008
Common shares outstanding:
Number at beginning of period			5,165				5,153
Issuance of common stock			8,200				––
Exercises of stock options			––				12
Number at end of period			13,365				5,165
Common stock:
Balance at beginning of period		$	4,987			$	4,912
Issuance of common stock, net of issuance costs			1,432				––
Stock compensation expense			362				49
Exercises of stock options			––				10
Balance at end of period		$	6,781			$	4,971
Retained earnings (accumulated deficit):
Balance at beginning of period		$	89			$	2,412
Net loss			(4,159	)			(1,332	)
Cash dividends declared			––				(517	)
Balance at end of period		$	(4,070	)		$	563

Investment Income (Loss)

		Three Months Ended June 30								Nine Months Ended June 30
(In Thousands)		2009				2008				2009				2008
Interest income		$	2			$	27			$	30			$	140
Gain (loss) on investments			32				(13	)			(80	)			(76	)
Investment income (loss)		$	34			$	14			$	(50	)		$	64

 

 

 

		June 30				September 30
(In Thousands)		2009				2008
Property and equipment, at cost		$	3,641			$	3,608
Accumulated depreciation and amortization			(3,012	)			(2,817	)
Property and equipment, net		$	629			$	791

 

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Compensation in the operating divisions, which includes commissions earned by the Company’s employment consultants and branch managers on permanent and temporary placements.  It also includes salaries, wages, unrecovered advances against commissions, payroll taxes and employee benefits associated with the management and operation of the Company’s staffing offices.

·	Administrative compensation, which includes salaries, wages, payroll taxes and employee benefits associated with general management and the operation of its finance, legal, human resources and information technology functions.

·	Occupancy costs, which includes office rent, depreciation and amortization, and other office operating expenses.

·	Recruitment advertising, which includes the cost of identifying job applicants.

·	Other selling, general and administrative expenses, which includes travel, bad debt expense, fees for outside professional services and other corporate-level expenses such as business insurance and taxes.

 

There were no credits for 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.

 

Second, the Company implemented a restructuring of its corporate and field operations during the June 2009 quarter.  Sales, recruiting and administrative positions were eliminated, five branch offices were closed, and the payroll for executive officers was reduced.  As a result of this restructuring, together with actions taken earlier in the year, the sales, recruiting and administrative staff as of July 1, 2009 was 55% below the staff level at the beginning of the fiscal year, and the salaries and benefits of its three executive officers in the aggregate had been reduced by $637,000 on an annual basis.  Management believes that these and other actions will reduce the Company’s selling, general and administrative expenses substantially in the fourth quarter.  Management’s current objective is to return the Company to a breakeven level of cash flow as soon as possible and to provide a stable platform for future growth.

As of June 30, 2009, and during the nine months then ended, there were no transactions, agreements or other contractual arrangements to which an unconsolidated entity was a party, under which the Company (a) had any direct or contingent obligation under a guarantee contract, derivative instrument or variable interest in the unconsolidated entity, or (b) had a retained or contingent interest in assets transferred to the unconsolidated entity.

As a matter of policy, the Company does not provide forecasts of future financial performance.  The statements made in this Form 10-Q Quarterly Report which are not historical facts are forward-looking statements.  Such forward-looking statements often contain or are prefaced by words such as “will” and “expect.” As a result of a number of factors, our actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause our actual results to differ materially from those in the forward-looking statements include, without limitation, 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 its contract employees and events affecting its contract employees on client premises, and the ability to attract and retain qualified corporate and branch management.  The Company is under no obligation to (and expressly disclaims any such obligation to) and does not intend to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

Votes cast “For”	2,031,266
Votes cast “Against”	345,887
Abstentions	19,403

The following exhibits are filed as a part of Part I of this report:
No.	Description of Exhibit
31.01	Certifications of the principal executive officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
31.02	Certifications of the principal financial officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
32.01	Certifications of the principal executive officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act and Section 1350 of Title 18 of the United States Code.
32.02	Certifications of the principal financial officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act and Section 1350 of Title 18 of the United States Code.

	GENERAL EMPLOYMENT ENTERPRISES, INC.
	(Registrant)
Date:  August 13, 2009	By: /s/ Kent M. Yauch
	Kent M. Yauch
	Vice President, Chief Financial Officer and Treasurer (Principal financial and accounting officer and duly authorized officer)

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