UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
[X] Annual Report Under Section 13 or 15 (d) of the Securities
Exchange Act of 1934 [Fee Required]
For the fiscal year ended September 30, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required]
For the transition period from _______________ to
________________
Commission File Number: 1-5707
GENERAL EMPLOYMENT ENTERPRISES, INC.
(Exact name of small business issuer as specified in its charter)
Illinois 36-6097429
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
One Tower Lane, Oakbrook Terrace, IL 60181 (708) 954-0400
(Address of principal executive offices) (Issuer'stelephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Names of each exchange on which registered
Common Stock, no par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No __
Check if disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form and no
disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
The issuer's revenues for the most recent fiscal year were
$16,744,000.
The aggregate market value of the voting stock held by non-
affiliates of the registrant as of November 30, 1995 was
$7,424,000. At that date, there were 2,195,985 shares of Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the General Employment Enterprises, Inc. Proxy
Statement for the 1996 annual meeting of shareholders are
incorporated by reference into Part III of this Form 10-KSB.
PART I
Item 1. Description of Business
General
General Employment Enterprises, Inc. (the "Company") was
incorporated in the State of Illinois in 1962 and is the
successor to employment agencies doing business since 1893. The
Company operated its employment agencies as separate subsidiary
corporations and maintained their separate identities until 1985,
when the subsidiaries were merged into the parent corporation.
In 1988 the Company established Triad Personnel Services, Inc., a
wholly-owned subsidiary, incorporated in the State of Illinois.
The principal executive office of the Company is located at One
Tower Lane, Suite 2100, Oakbrook Terrace, Illinois.
Services Provided
The Company is engaged in providing employment services through a
network of offices located in major metropolitan areas throughout
the United States. The principal services provided are permanent
placements and contract services.
The Company's permanent placement services involve placing
individuals into occupational positions with employers for fees
which are paid by either the employer or the applicant. The
standard placement fee, charged upon acceptance of the position
by the applicant, is 1% per thousand dollars of the applicant's
projected annual salary, with a maximum rate of 30%. The
majority of the Company's placements are for positions in the
data processing, engineering, accounting and office services
fields.
In October 1992 the Company began offering contract services to
its customers. Under contract arrangements, the Company places
its professional and technical employees into medium- to long-
term work assignments. The Company believes that this service
provides a staffing alternative for employers who have a special
need for a limited period of time and who do not need to hire
permanent help.
Marketing and Recruiting
The Company markets its permanent placement and contract services
through 24 offices around the country, using the trade names
General Employment, Craig Agency, Omni One, Business Management
Personnel and Triad Personnel Services. The offices are
generally located in downtown or suburban areas of major U.S.
cities. As of September 30, 1995, the Company's offices were
concentrated in California (7) and Illinois (6), with two
additional agencies in Pennsylvania, and one agency each in
Arizona, Florida, Georgia, Indiana, Massachusetts, Michigan,
Missouri, Ohio and Texas.
The Company markets its services to prospective clients primarily
through telephone marketing by its employment consultants and
through mailing of employment bulletins.
Prospective applicants are recruited through telephone contact by
the Company's employment consultants and through newspaper
advertising. The Company screens and interviews all applicants
who are presented to its clients.
No single client accounts for more than 3% of the Company's
revenues.
Competition
The employment industry is characterized by a large number of
highly competitive sole-proprietorship operations. The Company's
sole product is a service: the placement of people into work
situations. It competes by providing this service through
attention to quality. This is done by providing quality
applicants who are well matched for the open position, by
responding quickly to client requests and by establishing offices
in convenient locations. Pricing is considered to be secondary
to service as a competitive factor.
Being a publicly-owned company with national scope, the Company
believes that it has certain competitive advantages over sole-
proprietorships, including broader name recognition and stronger
capitalization. Geographic diversity helps the Company to
balance local or regional business cycles. Multiple offices in
the Chicago, Los Angeles, San Francisco and Philadelphia markets
help to provide better client services in those areas through
convenient office locations and the sharing of assignments. The
Company has a national training center for the development of its
agency managers and consultants, which enhances service to its
customers. In addition, the Company believes that its
advertising expenditures are greater than for single-office
competitors.
Regulation
The employment agency business is regulated by six of the states
in which the Company operates. Licenses are issued on a year-to-
year basis. As of September 30, 1995, the Company held current
licenses for all agencies that were required to have them.
Employees
As of September 30, 1995, the Company had approximately 210
regular employees and 120 contract service employees.
Item 2. Description of Properties
The Company's policy is to lease all of its office space. The
Company's headquarters are located in a modern 31-story building
in Oakbrook Terrace, Illinois. The Company leases 15,585 square
feet of space at this location, under a lease that will expire on
November 30, 1997.
The employment offices are located in downtown metropolitan and
suburban business centers conducive to the Company's business.
The Company leases offices ranging from 1,000 to 3,400 square
feet, generally for periods of one to five years. Management
believes that existing facilities are adequate for the Company's
current needs.
The Company owns most of the furniture and office equipment which
is used at its headquarters and employment offices, and leases
some office equipment. All of the furniture and office equipment
is considered to be in good condition and is adequately covered
by insurance.
Additional lease information is set forth in "Lease Obligations"
in the notes to consolidated financial statements.
Item 3. Legal Proceedings
As of September 30, 1995, there were no material legal
proceedings pending against the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during
the fourth quarter of the 1995 fiscal year.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company's common stock is traded on the American Stock
Exchange under the trading symbol JOB. There were 1,120 holders
of record of the Company's common stock as of November 30, 1995.
The high and low sales prices per share for the Company's common
stock by quarter for fiscal 1995 and 1994 were as follows:
High Low
1995: 4th quarter $7.50 $5.11
3rd quarter 8.04 4.46
2nd quarter 8.80 4.78
1st quarter 10.11 4.78
1994: 4th quarter $4.44 $2.93
3rd quarter 3.73 1.61
2nd quarter 2.27 1.89
1st quarter 2.08 1.42
The preceding market prices have been adjusted to reflect the
Company's 15% stock dividend paid November 3, 1995.
There were no cash dividends declared during the last two fiscal
years, and at September 30, 1995 there were no restrictions on
the ability of the Company to pay cash dividends. On November
21, 1995, the Company's board of directors declared a special
cash dividend of five cents per share, payable on January 17,
1996.
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Economic Factors and Corporate Strategies
The Company is engaged in providing employment services in major
metropolitan business centers throughout the United States. As
such, the Company's business is strongly affected by the U.S.
economy and national hiring levels.
During the last two years, the national economy has continued to
grow, with the Gross Domestic Product increasing at an average
rate of 3.3% during fiscal 1995 and 4.6% during fiscal 1994.
This had a positive impact on employment levels, as the national
unemployment rate dropped to 5.6% in September 1995, compared
with 5.9% in September 1994 and 6.7% in September 1993. This
trend has had a positive impact on the Company's business.
One of the Company's corporate strategies since October 1992 has
been to market both permanent placement and contract services
through all of its 24 offices, thereby providing the Company's
customers with a choice of staffing alternatives. This strategy
has been a major factor in the Company's revenue growth over the
last two years.
Results of Operations
Fiscal 1995 vs. 1994. For the year ended September 30, 1995,
consolidated revenues were $16,744,000, up $2,548,000 (18%) from
last year's $14,196,000. Permanent placement revenues increased
$1,453,000 (14%), due to a 19% higher average placement fee and
3% fewer placements. Contract service revenues increased
$1,095,000 (27%) primarily due to a 27% higher average hourly
billing rate. The higher fees and billing rates in 1995 are the
result of placing more highly-compensated individuals than last
year.
The consolidated cost of services for the year ended September
30, 1995 was $12,652,000, up $1,596,000 (14%) from $11,056,000 in
1994. Agency manager and consultant compensation increased 14%,
and salaries of contract service workers increased 30%, as a
result of the higher volume of business this year. Payroll taxes
and benefits increased 13%; advertising expenses increased 20%;
and all other operating costs decreased 4% from last year. As a
result, the cost of services as a percent of service revenues
decreased 2.3 points, from 77.9% last year to 75.6% this year.
General and administrative expenses for the year ended September
30, 1995 were $2,874,000, a $397,000 (16%) increase from 1994.
There was a $150,000 provision for income taxes in fiscal 1995,
and there was no provision for income taxes in fiscal 1994. The
effective tax rates differed from statutory tax rates because of
reversals of a previously-recorded deferred income tax valuation
allowance.
Net income was $1,068,000, or $.48 per share, for the year ended
September 30, 1995, a $405,000 improvement compared with net
income of $663,000, or $ .30 per share, last year.
Fiscal 1994 vs. 1993. For the year ended September 30, 1994,
consolidated revenues were $14,196,000, up $3,345,000 (31%) from
last year's $10,851,000. Permanent placement revenues increased
$1,690,000 (20%) on 7% more placements and a 12% higher average
placement fee. Contract service revenues increased $1,655,000
(70%) to $4,031,000 due to 22% more billable hours and a 39%
higher average hourly billing rate.
The consolidated cost of services for 1994 was $11,056,000, up
$2,360,000 (27%) from 1993. Agency manager and consultant
compensation increased 23% and salaries of contract service
workers increased 80% as a result of the higher volume of
business in 1994. Payroll taxes and benefits increased 15%;
advertising expense increased 29%; and all other operating costs
increased by only 2%. As a result, the cost of services as a
percent of service revenues decreased 2.2 points, from 80.1% in
1993 to 77.9% in 1994.
General and administrative expenses for 1994 were $2,477,000, a
$383,000 (18%) increase from 1993, primarily because of a 29%
increase in administrative salaries and benefits. All other
general and administrative expenses were up 3% for the year.
There was no provision for income taxes in either year because of
the availability of operating loss carryforwards. Net income was
$663,000, or $.30 per share in 1994, a $602,000 improvement
compared with net income of $61,000, or $ .03 per share, in 1993.
Financial Condition
During the twelve months ended September 30, 1995, the Company's
cash and cash equivalents increased by $1,382,000 to a balance of
$3,225,000. Net income provided $1,068,000 during the period,
and an increase in accrued compensation and payroll taxes
provided $390,000, while all other operating activities required
$228,000. As a result, the net cash provided by operating
activities was $1,230,000. During the period, the Company used
$173,000 in investing activities, primarily for the acquisition
of computer equipment, and the issuance of common stock in
connection with stock option exercises provided $325,000. The
Company's net working capital was $2,246,000 as of September 30,
1995, compared with $1,218,000 at September 30, 1994, and
shareholders' equity was $2,543,000 at September 30, 1995,
compared with $1,153,000 last September.
In April 1995, the Company entered into a loan agreement that
makes a $1,000,000 line of credit available to the Company for
working capital purposes. As of September 30, 1995, the Company
had no debt outstanding. Management believes that existing
financial resources are adequate to meet the Company's current
operating needs.
As of September 30, 1995, the Company had no commitments for the
acquisition of property and equipment. All of its facilities are
leased, and information about future minimum lease payments is
presented in the notes to consolidated financial statements.
Item 7. Financial Statements
The Company's financial statements are presented in this report.
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
There have been no changes in or disagreements with the Company's
independent accountants during the two most recent fiscal years.
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act.
Information concerning directors of the registrant is set forth
in the registrant's Proxy Statement for the annual meeting of
shareholders under the caption "Election of Directors" and is
incorporated herein by reference.
The executive officers and key employees of the Company, and
their ages as of September 30, 1995, are as follows:
Name Age Position
Herbert F. Imhoff 69 Chairman of the Board and President
John J. Derby 50 Senior Vice President - Triad Personnel
Services, Inc.
Nancy C. Frohnmaier 51 Vice President and Corporate Secretary
Herbert F. Imhoff, Jr. 45 Executive Vice President and General
Counsel
Kent M. Yauch 48 Treasurer and Controller
Herbert F. Imhoff has been Chairman of the Board since 1968 and
President of the Company since 1964. John J. Derby has been
Senior Vice President of Triad since May 1995, and prior to that
was employed by Lincoln Properties, a real estate management firm
in Chicago where, as Senior Vice President, he was responsible
for business development and asset management. Nancy C.
Frohnmaier has been Vice President since February 1995 and
Corporate Secretary since 1985. Herbert F. Imhoff, Jr. has been
Executive Vice President since 1986 and the Company's General
Counsel since 1982. Kent M. Yauch has been Treasurer and
Controller of the Company since 1991. He previously served in
various accounting and financial capacities with UAL Corporation
in Chicago.
Herbert F. Imhoff, Jr. is the son of Herbert F. Imhoff.
Information concerning compliance with Section 16(a) of the
Exchange Act is set forth in the registrant's Proxy Statement for
the annual meeting of shareholders under the caption "Compliance
with Section 16(a) of the Exchange Act," and is incorporated
herein by reference.
Item 10. Executive Compensation
Information concerning executive compensation is set forth in the
registrant's Proxy Statement for the annual meeting of
shareholders under the caption "Compensation of Executive
Officers," and is incorporated herein by reference.
Item 11. Security Ownership of Certain Beneficial Owners and
Management
Information concerning security ownership of certain beneficial
owners and management is set forth in the registrant's Proxy
Statement for the annual meeting of shareholders under the
caption "Security Ownership of Certain Beneficial Owners and
Management," and is incorporated herein by reference.
Item 12. Certain Relationships and Related Transactions
There have been no reportable transactions during the last two
fiscal years.
PART IV
Item 13. Exhibits and Reports on Form 8-K
Reference is made to "Exhibit Index" for a
list of exhibits filed as a part of this report.
There were no reports filed on Form 8-K during the quarter ended
September 30, 1995.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
General Employment Enterprises, Inc.
Oakbrook Terrace, Illinois
We have audited the accompanying consolidated balance sheets of
General Employment Enterprises, Inc. and subsidiary as of
September 30, 1995 and 1994, and the related consolidated
statements of operations and cash flows for each of the three
years in the period ended September 30, 1995. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of General Employment Enterprises, Inc. and
subsidiary at September 30, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the
three years in the period ended September 30, 1995, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
November 17, 1995
GENERAL EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEET
September 30
(Dollars in Thousands) 1995 1994
ASSETS
Current assets:
Cash and cash equivalents $3,225 $1,843
Accounts receivable, less allowances
(1995--$290; 1994--$274) 1,803 1,655
Other current assets 57 63
Total current assets 5,085 3,561
Property and equipment:
Furniture and equipment 2,238 2,156
Leasehold improvements 235 235
Total property and equipment 2,473 2,391
Accumulated depreciation and amortization (2,141) (2,044)
Net property and equipment 332 347
Other assets:
Deferred income taxes 259 14
Other 149 124
Total other assets 408 138
Total assets $5,825 $4,046
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 238 $ 327
Accrued compensation and payroll taxes 2,169 1,779
Accrued income taxes 227 37
Deferred rent due within one year 115 135
Other current liabilities 90 65
Total current liabilities 2,839 2,343
Long-term obligations:
Deferred rent 96 212
Retirement benefits 347 338
Total long-term obligations 443 550
Shareholders' equity:
Common stock, no-par value; authorized --
5,000,000 shares; issued and outstanding --
2,195,985 shares in 1995 and
1,829,823 shares in 1994 22 18
Capital in excess of stated value of shares 3,494 3,173
Accumulated deficit (973) (2,038)
Total shareholders' equity 2,543 1,153
Total liabilities and shareholders equity $5,825 $4,046
See notes to consolidated financial statements.
GENERAL EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended September 30
(In Thousands, Except Per Share) 1995 1994 1993
Net revenues:
Permanent placement services $11,618 $10,165 $ 8,475
Contract services 5,126 4,031 2,376
Net revenues 16,744 14,196 10,851
Costs and expenses:
Cost of services 12,652 11,056 8,696
General and administrative 2,874 2,477 2,094
Income before income taxes 1,218 663 61
Provision for income taxes 150 -- --
Net income $ 1,068 $ 663 $ 61
Net income per share $ .48 $ .30 $ .03
See notes to consolidated financial statements.
GENERAL EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended September 30
(In Thousands) 1995 1994 1993
Operating activities:
Net income $1,068 $ 663 $ 61
Depreciation and amortization 162 170 172
Deferred rent (116) (105) (229)
Deferred income taxes (245) ( 14) --
Other noncash costs 7 66 58
Changes in current assets and
current liabilities -
Accounts receivable (148) (659) (124)
Accrued compensation and payroll taxes 390 833 10
Accrued income taxes 190 22 --
Income tax refunds receivable -- -- 258
Other, net ( 78) 20 17
Net cash provided by operating activities 1,230 996 223
Investing activities:
Acquisition of property and equipment (122) (104) (101)
Other, net (51) (34) ( 13)
Net cash used by investing activities (173) (138) (114)
Financing activities:
Exercises of stock options 325 -- --
Increase in cash and cash equivalents 1,382 858 109
Cash and cash equivalents at beginning
of period 1,843 985 876
Cash and cash equivalents at end
of period $3,225 $1,843 $ 985
Supplementary information:
Income tax refunds (payments) $ (32) $ 22 $ 258
See notes to consolidated financial statements.
GENERAL EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Capital in Total
Excess of Accumu- Share-
Number Common Stated lated holder's
(Dollars in Thousands)of Shares Stock Value Deficit Equity
Balance at
September 30, 1992 1,591,681 $ 16 $3,175 $(2,758) $ 433
1993 net income -- -- -- 61 61
Balance at
September 30, 1993 1,591,681 16 3,175 (2,697) 494
15% stock dividend 238,142 2 (2) (4) (4)
1994 net income -- -- -- 663 663
Balance at
September 30, 1994 1,829,823 18 3,173 (2,038) 1,153
Exercises of
stock options 80,200 1 324 -- 325
15% stock dividend 285,962 3 (3) (3) (3)
1995 net income -- -- -- 1,068 1,068
Balance at
September 30, 1995 2,195,985 $ 22 $3,494 $ (973) $2,543
See notes to consolidated financial statements.
GENERAL EMPLOYMENT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company
General Employment Enterprises, Inc. (the "Company") and its
wholly-owned subsidiary, Triad Personnel Services, Inc., are
engaged in providing employment services through a network of
offices located in major metropolitan areas throughout the United
States. The Company's services include placing individuals with
client-employers on either a permanent or temporary basis.
Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts and
transactions of the Company and its wholly-owned subsidiary. All
significant intercompany accounts and transactions are eliminated
in consolidation.
Cash and Cash Equivalents
The Company considers all highly liquid investments with
maturities of three months or less when purchased to be cash
equivalents.
Property and Equipment
Furniture, equipment and leasehold improvements are stated at
cost. The Company provides for depreciation of furniture and
equipment on a straight-line basis over estimated useful lives of
three to ten years. Leasehold improvements are amortized on a
straight-line basis over the lesser of the terms of the leases or
the estimated useful lives of the assets.
Income Taxes
The Company uses the liability method in accounting for income
taxes. Under this method, deferred tax assets and liabilities
are determined based on differences between financial reporting
and tax bases of assets and liabilities and are measured using
the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
Deferred Rent
Under the terms of certain office leases, the Company makes no
rent payments or reduced rent payments during the initial portion
of the lease periods. In these cases, the Company recognizes
rent expense ratably over the life of the lease, and the excess
of rent expense over rent payments during these initial periods
is recorded as a liability on the balance sheet.
Revenues from Services
Placement fees are recognized as income at the time applicants
accept employment. Provision is made for estimated losses in
realization, principally due to applicants not remaining in
employment for a guarantee period. Contract service revenues are
recognized when work is performed.
Net Income Per Share
Net income per share is based on the average number of common
shares outstanding and dilutive stock option shares -- 2,213,689
shares in 1995, 2,211,599 shares in 1994 and 2,103,755 shares in
1993. All shares and per share amounts have been adjusted to
reflect the 15 % stock dividend paid November 3, 1995.
Line of Credit
In April 1995, the Company entered into a loan agreement with a
bank, renewable annually, that makes a $1,000,000 line of credit
available to the Company for working capital purposes. Under the
terms of the agreement, borrowings would be secured by accounts
receivable and would bear interest at 1/2% above the prime rate.
There were no borrowings outstanding under the line of credit as
of September 30, 1995.
Income Taxes
The components of the provision for income taxes are as follows:
(In Thousands) 1995 1994 1993
Current tax provision $ 395 $ 14 $ --
Deferred taxes related to --
Temporary differences 89 90 135
Loss carryforwards 34 190 (110)
Valuation allowance (368) (294) (25)
Deferred tax credit (245) ( 14) --
Provision for income taxes $ 150 $ -- $ --
The differences between income taxes calculated at the 34%
statutory U.S. federal income tax rate and the Company's
provision for income taxes are as follows:
(In Thousands) 1995 1994 1993
Income tax at statutory federal
tax rate $ 414 $ 225 $ 21
Reduction of valuation allowance
related to federal tax (272) (229) (25)
Other 8 4 4
Provision for income taxes $ 150 $ -- $ --
Deferred tax asset balances as of September 30 related to the
following:
(In Thousands) 1995 1994
Temporary differences --
Accrued vacation $ 52 $ 57
Deferred rent 65 124
Retirement benefits 134 139
Other 1 21
Total temporary differences 252 341
Loss carryforwards 18 52
Valuation allowance (11) (379)
Deferred tax assets $ 259 $ 14
Lease Obligations
The Company leases office space for all of its 24 employment
offices, which are located either in downtown or suburban
metropolitan business centers. In addition, the Company leases
space for its corporate headquarters. The employment offices are
generally leased over periods of one to five years, and the
corporate headquarters is leased for ten years, expiring in 1997.
Certain lease agreements provide for increased rental payments
contingent upon future increases in real estate taxes, building
maintenance costs and the cost of living index. The Company also
leases certain office equipment, having lease periods of two to
five years.
Rent and utility expense for office space and equipment was
$1,028,000 in 1995, $1,065,000 in 1994 and $1,083,000 in 1993.
Future minimum lease payments (including deferred rent payments)
under lease agreements having initial terms in excess of one year
are: 1996 - $993,000, 1997 - $758,000, 1998 - $277,000, 1999 -
$115,000 and 2000 - $48,000.
Retirement Benefits
The Company has a 401(K) retirement plan in which all full time
employees may participate after one year of service. Under the
plan, eligible participants may contribute a portion of their
earnings to a trust, and the Company makes matching
contributions, subject to certain limitations. The Company also
has agreements with an officer and a retiree to provide defined
benefits at the individual's retirement, death, or termination.
The Company's accumulated obligation under these defined benefit
arrangements was $429,000 as of September 30, 1995 and $438,000
as of September 30, 1994, all of which was vested. These
benefits are unfunded, and the Company has recorded a liability
for the present value of the obligations at a discount rate of
7.5% in 1995 and 8.0% in 1994. The total cost of all retirement
plans was $43,000 in 1995, $60,000 in 1994 and $65,000 in 1993.
Preferred Stock
As of September 30, 1995 there were 100,000 shares of preferred
stock authorized, including 50,000 shares that were designated as
Series A Junior Participating Preferred Stock. None of these
shares have been issued.
Common Stock
The Company has stock option plans for directors, officers and
employees which provide for the issuance of incentive and
nonqualified stock options. The option prices are established by
either the Board of Directors or the plans, and may be
exercisable for up to ten years.
A summary of stock options outstanding is as follows:
1995 1994 1993
Number of shares --
Beginning balance 182,505 182,505 185,150
Granted 11,500 -- --
Exercised (92,230) -- --
Terminated -- -- (2,645)
Ending balance 101,775 182,505 182,505
Option prices per share --
Granted $ 5.22 $ -- $ --
Exercised $ 1.70 $ -- $ --
The option prices per share on all outstanding options were equal
to the fair market value at the dates of grant. As of September
30, 1995, 90,275 of the outstanding options were exercisable at a
price of $1.70 per share, and there were 103,500 additional
shares available for grant.
On November 3, 1995, the Company issued 285,962 shares of common
stock in payment of a 15% stock dividend to shareholders and
recorded the dividend as of September 30, 1995.
Share Purchase Rights Plan
The Company adopted a share purchase rights plan in 1990 and
declared a dividend of one Preferred Share Purchase Right
("Right") on each outstanding common share. Each Right may be
exercised to purchase one one-hundredth of a share of Series A
Junior Participating Preferred Stock (the economic equivalent of
one common share) at an exercise price of $12 (which may be
adjusted under certain circumstances). The Rights become
exercisable (and separate from the common shares) when specified
events occur, including the acquisition after December 31, 1989
of 5% or more of the outstanding common shares by a person or
group ("Acquiring Person") that then owns 10% or more of the
outstanding common shares. Upon the occurrence of such an
acquisition (other than pursuant to a tender offer for all of the
outstanding common shares at a price and on other terms deemed
fair and in the best interests of the Company and its
shareholders by a majority of the continuing directors) or if the
Company is acquired in a merger or other business combination
transaction, each Right will entitle the holder (other than an
Acquiring Person) to purchase at the current exercise price,
stock of the Company or the acquiring company having a market
value of twice the exercise price. Each Right is nonvoting,
expires on February 22, 2000 and may be redeemed by the Company
at a price of $ .01 under certain circumstances. At September
30, 1995, 50,000 shares of the Series A Junior Participating
Preferred Stock were reserved for issuance pursuant to the
Rights.
Employment Contracts
The Company has agreements with two of its officers and a
separate plan covering agency managers and key corporate
employees that would become effective if the employment of any of
these officers or employees should terminate under certain
conditions following a change in control of the Company. Under
these circumstances, the Company would be obligated to make lump
sum payments to the two officers equal to two times their annual
salary, to make lump sum payments to covered employees ranging
from $10,000 to $30,000, and to provide continued benefits under
the Company's welfare plans for two years.
EXHIBIT INDEX
No. Description of Exhibit
3(a) Articles of Incorporation and amendments thereto.
Incorporated by reference from Exhibit 3(a) to the
Registrant's Annul Report on Form 10-K for the fiscal year
ended September 30, 1981, File No. 1-5707.
3(b) By-Laws, as amended, as of May 15, 1995. Incorporated by
reference from Exhibit 3 to the Registrant's Quarterly
Report on Form 10-QSB for the quarter ended June 30, 1995,
File No. 1-5707.
10(a) Amended and Restated Defined Benefit Deferred Compensation
and Salary Continuation Agreement with Herbert F. Imhoff.
Incorporated by reference from Exhibit 10(b) to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1990, File No. 1-5707.
10(b) Defined Benefit Deferred Compensation and Salary
Continuation Agreement with John A. Stephenson.
Incorporated by reference from Exhibit 10(g) to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30 1980, File No. 1-5707.
10(c) Employment contract with Herbert F. Imhoff.
Incorporated by reference from Exhibit 10(i) to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1981, File No. 1-5707.
10(d) Senior Executive Agreement with Herbert F. Imhoff
dated May 22, 1990. Incorporated by reference from Exhibit
10(e) to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1990, File No. 1-5707.
10(e) Senior Executive Agreement with Herbert F. Imhoff,
Jr. dated May 22, 1990. Incorporated by reference from
Exhibit 10(f) to the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1990, File No. 1-5707.
10(f) Key Manager Plan, adopted May 22, 1990.
Incorporated by reference from Exhibit 10(h) to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1990, File No. 1-5707.
10(g) Rights Agreement with The First National Bank of Chicago as
Rights Agent, dated as of February 12, 1990. Incorporated
by reference from Exhibit (1) of Registration on Form 8-A
dated February 19, 1990.
10(h) Settlement Agreement with Leonard Chavin dated as of
September 27, 1991. Incorporated by reference from Exhibit
10(j) to the Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1991, File No. 1-5707.
10(i) First Amendment to Rights Agreement with The First National
Bank of Chicago as Rights Agent, dated as of September 27,
1991. Incorporated by reference from Exhibit 10(k) to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1991, File No. 1-5707.
10(j) Agreement with Sheldon Brottman dated October 3, 1991.
Incorporated by reference from Exhibit 10(l) to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1991, File No. 1-5707.
10(k) General Employment Enterprises, Inc. Stock
Option Plan. Incorporated by reference from Exhibit 4.1 to
the Registrant's Form S-8 Registration Statement dated March
3, 1992, Registration No. 33-46124.
10(l) Agreement with Leonard and Marlene Chavin dated as of
October 1, 1993. Incorporated by reference from Exhibit
10(m) to the Registrant's Annual Report on Form 10-KSB for
the fiscal year ended September 30,1993, File No. 1-5707.
10(m) Description of Senior Executive Bonus Pool for the year
ended September 30, 1995. Incorporated by reference from
Exhibit 10(o) to the Registrant's Annual Report on Form 10-
KSB for the fiscal year ended September 30, 1994, File No. 1-
5707.
10(n) General Employment Enterprises, Inc. 1995
Stock Option Plan. Incorporated by reference from Exhibit
4.1 to the Registrant's Form S-8 Registration Statement
dated April 25, 1995, Registration No. 33-91550.
23 Consent of independent accountants.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
GENERAL EMPLOYMENT ENTERPRISES, INC.
(Registrant)
Date: December 21, 1995 By: /s/ Herbert F. Imhoff
Herbert F. Imhoff
Chairman of the Board and President
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
Date: December 21, 1995 By: /s/ Herbert F. Imhoff
Herbert F. Imhoff
Chairman of the Board and President
Principal executive officer
Date: December 21, 1995 By: /s/ Herbert F. Imhoff, Jr.
Herbert F. Imhoff, Jr.
Executive Vice President and Director
Date: December 21, 1995 By: /s/ Kent M. Yauch
Kent M. Yauch
Treasurer and Controller
Date: December 20, 1995 By: /s/ Sheldon Brottman
Sheldon Brottman, Director
Date: December 21, 1995 By: /s/ Leonard Chavin
Leonard Chavin, Director
Date: December 20, 1995 By: /s/ Delain G. Danehey
Delain G. Danehey, Director
Date: December 21, 1995 By: /s/ Walter K. Kerwin, Jr.
Walter T. Kerwin, Jr., Director
Date: By:________________________
Howard S. Wilcox, Director
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statements (Form S-8 No. 33-91550 and No. 33-46124) pertaining to
the General Employment Enterprises, Inc. Stock Option Plans of
our report dated November 17, 1995, with respect to the
consolidated financial statements of General Employment
Enterprises, Inc. and subsidiary included in the Annual Report
(Form 10-KSB) for the year ended September 30, 1995.
/s/ Ernst & Young LLP
December 19, 1995
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