OAKBROOK TERRACE, Ill., July 31 /PRNewswire-FirstCall/ -- General
Employment Enterprises, Inc. (NYSE Amex: JOB) reported consolidated
net revenues for the quarter ended June 30, 2009 of $2,520,000,
compared with consolidated net revenues of $3,622,000 reported for
the same period last year. It was the third quarter of the
Company's 2009 fiscal year. Contract service revenues for the
quarter were $1,490,000, down 17% from the same period last year.
Placement service revenues of $1,030,000 decreased 43% from last
year. The Company had a net loss of $2,295,000 or $.44 per share,
in the third fiscal quarter of this year, compared with a net loss
of $582,000, or $.11 per share, in the third quarter last year. As
of June 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 $1,432,000. In connection with the
completion of the sale of shares, the Company's Chairman, Chief
Executive Officer and President (the "former CEO") resigned from
those positions and his employment agreement with the Company was
replaced by a new consulting agreement. Under the consulting
agreement, the Company is obligated to make monthly payments over a
five-year period and to issue 500,000 newly-issued shares of common
stock to the former CEO. As of June 30, 2009, the Company recorded
additional compensation expense under the consulting agreement in
the amount of $1,125,000, which is included in selling, general and
administrative expenses on the consolidated statement of
operations. The third quarter results also include a provision for
the cost of closing branch offices of $350,000. During the period,
the Company consolidated eight branch offices in three metropolitan
areas. Excluding the provision for additional compensation and the
provision for the cost of closing offices, the Company's net loss
for the third quarter was $820,000, or $.16 per share. Commenting
on the Company's performance, Ronald E. Heineman, CEO and President
said, "On July 1st we implemented a major restructuring of General
Employment's corporate and field operations. This strategic
restructuring will provide us with a stable platform for future
growth. The $1,475,000 of one-time restructuring charges in June
did not require the use of cash. I am looking forward to reporting
on our progress in the future." Nine Months Results For the nine
months ended June 30, 2009, the Company had a net loss of
$4,159,000, or $.81 per share, compared with a net loss of
$1,332,000, or $.26 per share, for the same period last year.
Consolidated net revenues for the nine month period were
$7,879,000, down 31% compared with $11,475,000 last year. 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. Forward-Looking
Statements The statements made in this press release 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, those
factors set forth under the heading "Forward-Looking Statements" in
our annual report on Form 10-KSB for the fiscal year ended
September 30, 2008, and in our other filings with the SEC. General
Employment 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. GENERAL EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (In Thousands, Except Per
Share) Three Months Nine Months Ended June 30 Ended June 30
------------- ------------- 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 (1) (2) 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 (3) $(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) ===== ===== ===== ===== (1) As of June 30,
2009, the Company recorded additional compensation expense of
$1,125,000 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 is 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 three months and nine
months ended June 30, 2009. At that date, the Company recorded a
liability for the future payments in the amount of $845,000
($665,000 due beyond one year) and recorded additional common stock
in the amount of $280,000. (2) Selling, general and administrative
expenses for the three months and nine months ended June 30, 2009
include a provision for the cost of closing branch offices of
$350,000. During the period, the Company consolidated eight branch
offices into three branch offices in three 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 Nine Months Ended June 30 Ended June 30
------------- ------------- 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 2,334 3,011 7,394 9,055 ----- ----- ----- ----- Loss from
operations (854) (596) (2,608) (1,396) Investment income (loss) 34
14 (50) 64 -- -- --- -- Net loss $(820) $(582) $(2,658) $(1,332)
===== ===== ======= ======= Average number of shares - basic and
diluted 5,165 5,165 5,165 5,163 ===== ===== ===== ===== Net loss
per share - basic and diluted $(.16) $(.11) $(.51) $(.26) =====
===== ===== ===== A reconciliation of selling, general and
administrative expenses is as follows: Three Months Nine Months
Ended June 30 Ended June 30 ------------- ------------- 2009 2008
2009 2008 ---- ---- ---- ---- Non-GAAP expenses $2,334 $3,011
$7.394 $9,055 Additional compensation under consulting agreement
1,125 - 1,125 - Provision for cost of closing offices 350 - 376 -
--- - --- - As reported $3,809 $3,011 $8,895 $9,055 ====== ======
====== ====== GENERAL EMPLOYMENT ENTERPRISES, INC. SUMMARIZED
CONSOLIDATED BALANCE SHEET INFORMATION (In Thousands) June 30
September 30 2009 2008 ---- ---- Assets: Cash and cash equivalents
$3,081 $4,165 Other current assets 1,602 1,627 ----- ----- Total
current assets 4,683 5,792 Property and equipment, net 629 791
Other assets - 419 - --- Total assets $5,312 $7,002 ====== ======
Liabilities and shareholders' equity: Current liabilities $1,936
$1,507 Other liabilities 665 419 Shareholders' equity (4) 2,711
5,076 ----- ----- Total liabilities and shareholders' equity $5,312
$7,002 ====== ====== (4) As of June 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 $1,432,000.
DATASOURCE: General Employment Enterprises, Inc. CONTACT: Ronald E.
Heineman, Chief Executive Officer and President of General
Employment Enterprises, Inc., +1-630-954-0416, fax,
+1-630-954-0595, Web Site: http://www.generalemployment.com/
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