FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
( X ) THE SECURITIES EXCHANGE ACT OF 1934
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
For the transition period from ......... to ................
Commission File Number - 1-9477
JOULE' INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2735672
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1245 U.S. Route 1 South, Edison, New Jersey 08837
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 908-548-5444
Securities registered pursuant to Section 12(b) of the Act: Common Stock, par va
lue $.01 per share
Securities registered pursuant to Section 12(g) of the Act: None
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 .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. [x]
The aggregate market value of the Common Stock held by non-affiliates of the
registrant, based upon the closing price of the Common Stock on the American
Stock Exchange on December 4, 1995, was approximately $ 3,607,000.
As of December 1, 1995, there were 3,610,000 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Company's 1995 Annual Report to Stockholders filed with
the Commission pursuant to Rule 14a-3 under the Securities Exchange Act of 1934
are incorporated by reference in Part II, Items 5-8, and Part IV of this Annual
Report on Form 10-K.
Certain portions of the Company's Proxy Statement to be filed with the
Commission pursuant to Rule 14a-6 under the Securities Exchange Act of 1934 in
connection with the Company's 1996 Annual Meeting of Stockholders are
incorporated by reference in Part III: Items 10-13, of this Annual Report on
Form 10-K.
<PAGE>
PART I
ITEM 1. BUSINESS
General
Joule' Inc. and its subsidiaries are engaged in the business of
personnel outsourcing, as a supplier to industry of staffing service
personnel and as a contractor (industrial contracting). The staffing
services group focuses on supplying skilled office workers, light
industrial workers, and engineering professionals primarily to business
and industry on a temporary basis. As an industrial contractor, the
Company provides facilities maintenance and plant operations services to
industrial companies. The Company derived 67%, 70% and 69% of its
revenue from services provided to customers in New Jersey in 1995, 1994,
and 1993, respectively.
All employees on assignment to the Company's clients are on
the Company's payroll only during the periods of their assignments. By
prior understanding, their employment is continued after completion of
an assignment only if another suitable assignment is available. During
the fiscal year ended September 30, 1995, the Company furnished
approximately 6,500 employees to approximately 1,100 clients. At
September 30, 1995, approximately 1,500 employees were on assignment to
approximately 300 clients for periods ranging in duration from one day
to several years.
The Company was incorporated in New Jersey in 1967 as the
successor to a business organized in 1965 and was reincorporated in
Delaware on July 28, 1986.
Staffing Services
The staffing services group of the Company supplies skilled
workers and engineering professionals to business and industry. The
skilled workers are comprised of word processing, data entry and other
office service personnel as well as light industrial workers.
Recruitment and assignment of office personnel are conducted through
eight offices in New Jersey and one in Florida. Such assignments last
from one day to several months or longer. Assignments are sometimes
made to fill vacancies in a client's work force caused by vacations,
illnesses, termination or reassignments of the client's full-time
employees or to supplement the client's normal work force to meet peak
work loads, handle special projects or provide special expertise. Often
clients elect to staff a portion of their service requirements on a
longer term basis with personnel employed and provided by the Company.
The client is charged an hourly rate that comprises the direct labor
rate of the personnel provided, associated costs (such as fringe
benefits and payroll taxes) and a mark-up to cover the Company's
overhead and profit.
In addition, the staffing services operation furnishes
engineering personnel, including designers, draftsman and technicians,
on a project basis. Recruitment and assignment of these personnel are
conducted from Edison, New Jersey. A client that has an in-house
engineering department is able to supplement its permanent staff in a
particular skill or for a specific project by utilizing engineering and
technical personnel provided by the Company to implement the client's
design and programs. Generally, several candidates are interviewed by
the client before an assignment is made. The work is performed at the
client's facility under the client's supervision. The Company is
neither an independent consultant nor an engineer of record. The client
is charged at an hourly rate that comprises the direct labor rate of the
personnel provided, associated costs (such as fringe benefits and
payroll taxes) and a mark-up to cover the Company's overhead and profit.
There are many engineers and technical personnel who choose to work on
temporary assignments rather than hold permanent positions because of
the opportunity to work on diverse projects and to choose times of
employment. While they are not guaranteed steady employment, are not
eligible for promotion and receive lesser fringe benefits than their
full-time counterparts, such persons frequently are compensated at
higher rates than full-time personnel with similar backgrounds and
experience and have a greater opportunity for overtime compensation.
The use by clients of staffing services personnel provided by
the Company allows them to hire only such permanent employees as are
required for their regular work loads. Clients are thus able to shift
to the Company the cost and inconvenience associated with the employment
of such personnel, including advertising, interviewing, screening,
testing, training, fringe benefits, record keeping, payroll taxes and
insurance. The Company is able to absorb such costs more effectively
than its clients because its employees, once recruited, are generally
assigned to a succession of positions with different clients. During
fiscal 1995, the average number of staffing services personnel on
assignment per week was approximately 900. The furnishing of staffing
services personnel to clients contributed approximately 51% , 48% and
49% of revenues in fiscal 1995, 1994 and 1993, respectively.
Industrial Contracting
The Company provides industrial contracting services at oil
refineries; utilities; chemical, pharmaceutical and industrial plants;
and office buildings. These contracts often encompass more
responsibility for performance of discrete functions for customers on an
ongoing basis. The Company provides the services of welders,
electricians, millwrights, insulators, pipefitters and other tradesman
as well as the necessary supervisory personnel and certain materials and
equipment. The Company may furnish a base crew of tradesmen that is
assigned to the client's facility on a full-time basis that can be
supplemented as needed to provide additional services requested by the
client. The Company also undertakes specific projects, such as oil and
chemical plant repairs, shutdowns, dismantling, and relocation and
reassembly of plant equipment.
The Company provides industrial contracting services under
contracts for specified periods, or for specified dollar amounts. The
Company generally charges clients at hourly rates for the different
classifications of tradesmen and supervisory personnel and on a cost-plus basis
for materials and equipment. During fiscal 1995, the average
number of project service personnel on assignment per week to clients
was approximately 350. Historically, a substantial percentage of
industrial contracting contracts are renewed. Industrial contracting
contributed approximately 49%, 52%, and 51% of revenues in fiscal 1995,
1994, and 1993, respectively.
Customers and Marketing
A significant portion of the Company's business represents
repeat orders. For fiscal 1995 over 65 % of the Company's revenues were
derived from assignments to clients with which the Company had done
business for more than two years.
The Company markets its services primarily through sales calls
by its own sales personnel and through direct mail solicitation,
participation in trade exhibitions and advertising. No customer
accounted for more than 10% of revenues in 1995, 1994, or 1993.
<PAGE>
Personnel Assignment and Recruitment
The Company maintains a computerized data base of information
on potential employees. It uses optical scanning equipment to enhance
its data base retrieval system. The data base contains information on
office services personnel, engineering services personnel and facilities
maintenance personnel, classified by skill, residence, experience and
current availability for assignment. When called upon to fill an
assignment, the Company's recruiting specialists match the client's
specifications with the information in the data base on these potential
employees. The ability to update, expand and rapidly access the data
base is important to the Company's success. The Company's branch
offices have direct, on-line access to the data base. Direct access is
especially important in the office services area where immediate
response to client orders is required. In addition, it is important in
the engineering services operation because of the diversity of skills
involved.
The Company recruits personnel through advertisements in local
media and trade journals and through referrals by current and past
employees. Personnel listed in the Company's data base generally do not
work exclusively for the Company. Compensation and location of the
assignment are the principal factors considered by such personnel when
choosing from competing assignments. The Company considers its pay
scale to be competitive.
Competition
The Company faces intense competition in both staffing
services and industrial contracting from a large number of local and
regional firms as well as national firms. The Company competes with
these firms for potential employees as well as for clients. Many of the
regional firms and all of the national firms with which it competes are
substantially larger and possess substantially greater operating,
financial and personnel resources than the Company. The Company
competes in both staffing services and industrial contracting primarily
on the basis of price, quality and reliability of service. Its primary
geographic market is New Jersey and, to a lesser extent, the nearby
states.
Employees
At September 30, 1995, the Company employed approximately 77
full and part-time permanent employees in its headquarters and branch
offices other than those on assignment to clients and had approximately
1,500 persons on assignment to approximately 300 clients. The Company
is a party to collective bargaining agreements covering approximately
200 employees engaged in industrial contracting. The Company considers
its relationships with all its employees to be satisfactory.
<PAGE>
ITEM 2. PROPERTIES
The Company leases most of its facilities. At September 30,
1995, the Company was party to 14 leases comprising approximately 30,000
square feet. The Company's corporate headquarters are located in
Edison, New Jersey and comprise approximately 8,000 square feet. The
Company also owns a building adjacent to its corporate headquarters that
was completed and occupied in November, 1994. It serves as operational
headquarters for the Company's staffing services divisions and is linked
to other offices by computer network and communications equipment. The
corporate headquarters and five additional facilities are leased from
Emanuel N. Logothetis, the Chairman of the Board of the Company, and
corporations that are owned by him and the members of his family, at an
aggregate annual rent of $199,000, plus applicable real estate taxes,
under terms and conditions that, in the opinion of management, are not
less favorable than would have been available from unaffiliated parties.
Eight additional facilities, comprising approximately 10,000 square feet
of space, are leased from unaffiliated parties at rentals and under
terms and conditions prevailing in the various locations. The Company's
facilities are appropriate and adequate for its current needs. For
information concerning the Company's lease obligations, see Note7 of
Notes to Consolidated Financial Statements.
ITEM 3. LEGAL PROCEEDINGS
During the course of a long term contract with a U.S.
Government Agency and prior to September 30, 1993 the company recorded
claims and related interest receivables which amounted to $5,981,000.
The claims were made under a contract, completed in 1990, to provide
maintenance services at a government facility. The Government Agency's
Contracting Officer rejected the claims; however, the Company filed
appeals with the U.S. Court of Federal Claims. After the submission of
the Company's case, the Government made a motion for dismissal of the
Company's case. The Court on August 31, 1993 issued an opinion and
entered a judgement that all claims be dismissed. The Company appealed
the decision to the United States Court of Appeals for the Federal
Circuit. In June 1994, the United States Court of Appeals for the
Federal Circuit vacated the judgement of the United States Court of
Federal Claims that had dismissed the Company's claims. The case was
remanded to the lower court for findings of fact and conclusions of law.
In August 1994, the lower court issued a new opinion which again
dismissed the Company's claims. The Company then appealed the new
opinion. On July 17, 1995, the United States Court of Appeals for the
Federal Circuit affirmed the decision of the lower court dismissing the
Company's claims. This decision had no financial statement impact since
the carrying value of the claims and related costs were eliminated in
the Company's financial statements for the fiscal year ended September
30, 1993.
In the opinion of management, other than ordinary routine
litigation incidental to the business, there are no material pending
legal proceedings to which the Company is a party or of which any of its
property is the subject.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
Executive Officers of the Company
The names, ages and positions of all of the executive officers of
the Company as of December 4, 1995 are listed below along with their
business experience during the past five years. Officers are elected
annually by the Board of Directors and serve at the pleasure of the
Board. There are no arrangements or understandings between any officer
and any other person pursuant to which the officer was selected.
Emanuel N. Logothetis and John Logothetis are second cousins.
Emanuel N. Logothetis, age 65, founded the Company in 1965 and
was President and Chief Executive Officer until August 10, 1987, when he
was elected Chairman of the Board. He was reelected President on August
3, 1988.
Bernard G. Clarkin, age 46, was elected Vice President in
February 1994 and Chief Financial Officer, Treasurer, and Secretary in
February, 1990. He was Controller, Treasurer and Secretary of the
Company from February 1989 until February 1990. Prior to that he was
Reporting and Compliance Officer with Anchor Savings Bank for two years
and Manager of Financial Reporting at Kidde, Inc. for nine years.
Richard Flaherty, age 49, was elected a Vice President on July
1, 1986 after serving as General Manager of the Engineering Operation
since June 1984. Prior thereto, he had been Branch Manager since
joining the Company in July 1968.
John Logothetis, age 42, was elected a Vice President on July
1, 1986. He had been General Manager of the Facilities Maintenance
Operation since June 1984 and prior thereto had been Manager of
Supplemental Services since joining the Company in December 1976.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required by this Item is incorporated by
reference to the information under the same caption on page 12 of
JOULE's Annual Report to Stockholders for the year ended September 30,
1995.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated by
reference to the five-year Selected Financial Information included on
page 1 of JOULE's Annual Report to Stockholders for the year ended
September 30, 1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item is incorporated by
reference to the information under the same caption on pages 4 to 5 of
JOULE's Annual Report to Stockholders for the year ended September 30,
1995.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is incorporated by
reference to the Consolidated Financial Statements appearing on pages 6
to 12 of JOULE's Annual Report to Stockholders for the year ended
September 30, 1995.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information with respect to the directors of the Company
required to be included pursuant to this Item 10 will be included under
the caption "Election of Directors - Director Compensation" in the
Company's Proxy Statement relating to the 1996 Annual Meeting of
Stockholders (the "Proxy Statement"), to be filed with the Securities
and Exchange Commission (the "Commission") pursuant to Rule 14a-6 under
the Securities Exchange Act of 1934, as amended, and is incorporated in
this Item 10 by reference. The information with respect to the
executive officers of the Company required to be included pursuant to
this Item 10 is included under the caption "Executive Officers of the
Company" in Part I of this Annual Report on Form 10-K.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The information with respect to executive compensation
required to be included pursuant to this Item 11 will be included under
the caption "Compensation of Executive Officers -- Certain Transactions"
in the Proxy Statement and is incorporated in this Item 11 by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information regarding security ownership of certain
beneficial owners and management that is required to be included
pursuant to this Item 12 will be included under the captions "Beneficial
Ownership of More than 5% of the Outstanding Common Stock" and
"Beneficial Ownership of Management" in the Proxy Statement and is
incorporated in this Item 12 by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information with respect to any reportable transaction,
business relationship or indebtedness between the Company and the
beneficial owners of more than 5% of the Common Stock, the directors or
nominees for director of the Company, the executive officers of the
Company or the members of the immediate families of such individuals
that is required to be included pursuant to this Item 13 will be
included under the caption "Compensation of Executive Officers --
Certain Transactions" in the Proxy Statement and is incorporated in this
Item 13 by reference.
PART IV
ITEM 14. EXHIBITS,FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements
The following Financial Statements of JOULE Inc. and subsidiaries
and Report of Independent Public Accountants are incorporated in
Part IV by reference to the Company's 1995 Annual Report to
Stockholders filed with the Commission pursuant to Rule 14a-3 under
the Securities Exchange Act of 1934.
Report of Independent Public Accountants with respect to the
financial statements for the fiscal years 1995 and 1994.
Consolidated Balance Sheets of September 30, 1995 and 1994,
respectively.
Consolidated Statements of Operations for the Years Ended
September 30, 1995, 1994 and 1993, respectively.
Consolidated Statements of Changes in Stockholders Equity for
the Years Ended September 30, 1995, 1994 and 1993,
respectively.
Consolidated Statements of Changes in Cash Flows for the Years
Ended September 30, 1995, 1994 and 1993, respectively.
Notes to Consolidated Financial Statements.
Independent Auditor's Report with respect to the financial
statements for the year ended September 30, 1993 is included at
page F-1 of this Annual Report on Form 10-K and incorporated in
this item 14(a) by reference.
The following financial statement schedules are included at the
indicated page in this Annual Report on Form 10-K and incorporated
in this Item 14(a) by reference:
Report of Independent Public Accountants as to Schedules F-2
Independent Auditors' Report on Financial Statement Schedules F-3
Financial Statement Schedules:
VIII - Valuation and Qualifying Accounts F-4
IX - Short-term Borrowings . . . . . .F-5
All other schedules are omitted since they are not required or are
not applicable or since the information is furnished elsewhere in
the financial statements or notes thereto.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
<PAGE>
(c) Exhibits
3.1 -- Certificate of Incorporation, filed as Exhibit 3.1
to the Company's Registration Statement on Form S-1
(File No. 33-7617) under the Securities Act of 1933,
as amended (the "Form S-1"), and incorporated herein
by reference.
3.2 -- By-laws, as amended, filed as Exhibit 3.2 to the
Form S-1 and incorporated herein by reference.
4.1 -- Loan and Security Agreement, dated as of February
20, 1991, between Registrant and United Jersey Bank
Central, N.A., filed as Exhibit 4.1 to the Company's
Annual Report on Form 10-K for the year ended
September 30, 1991 and incorporated herein by
reference.
4.1a -- Third Modification and Extention Agreement, dated
August 23, 1995, between Registrant and United
Jersey Bank.
The Company hereby agrees to furnish to the Commission
upon its request any instrument defining the rights of
holders of long-term debt of the Company and its
consolidated subsidiaries and for any of its
unconsolidated subsidiaries for which financial
statements are required to be filed with respect to long-term
debt which does not exceed 10 percent of the total
assets of the registrant and its subsidiaries on a
consolidated basis.
10.1 -- Lease Agreement, dated July 1, 1986, between Registrant
and Eisler Engineering Corp. ("Eisler") for premises at
1245 Route 1 South, Edison, New Jersey, filed as Exhibit
10.1 to the Form S-1 and incorporated herein by
reference.
10.2 -- Lease Agreement, dated April 1, 1986, between Registrant
and Emanuel N. Logothetis for premises at 362 Parsippany
Road, Parsippany, New Jersey, filed as Exhibit 10.5 to
the Form S-1 and incorporated herein by reference.
10.3 -- Lease Agreement, dated December 1, 1986, between
Registrant and Pentacle Corporation for premises at 50
South Center Street, Orange, New Jersey, filed as Exhibit
10.8 to the Company's Annual Report on Form 10-K for the
year ended September 25, 1987 and incorporated herein by
reference.
10.4 -- Lease Agreement, dated January 15, 1992, between JOULE
Maintenance of Gibbstown Inc. and 429 Broad Street
Corporation for premises at 429 East Broad Street,
Gibbstown, New Jersey, filed as Exhibit 10.4 to the
Company's Annual Report on Form 10-K for the year ended
September 30, 1993 and incorporated herein by reference.
<PAGE>
10.6 -- Lease Agreement, dated January 1, 1987, between
Registrant and E. N. Logothetis for Unit G, Mercerville
Professional Park Condominiums, 2333 Whitehorse -
Mercerville Road, Hamilton Township, New Jersey, filed as
Exhibit 10.12 to the Company's Annual Report on Form 10-K
for the year ended September 25, 1987 and incorporated
herein by reference.
10.7 -- Lease Agreement, dated December 30, 1991 between
registrant and Pentacle Corporation for 5000 square feet
of storage space at Orange Commons in Orange, New Jersey,
filed as Exhibit 10.7 to the Company's Annual Report on
Form 10-K for the year ended September 30, 1993 and
incorporated herein by reference.
10.8* -- 1988 Non-qualified Stock Option Plan, filed as
Exhibit 10.13 to the Company's Annual Report on Form
10-K for the year ended September 30, 1991 and
incorporated herein by reference.
10.9* -- 1991 Stock Option Plan, filed as Exhibit 10.11 to
the Company's Annual Report on Form 10-K for the
year ended September 30, 1991 and incorporated
herein by reference.
13 -- Annual Report to Stockholders for the year ended
September 30, 1995.
21 -- List of Subsidiaries.
23.1 -- Consent of Independent Public Accountants
23.2 -- Consent of Independent Auditors
27 -- Financial Data Schedule (in EDGAR filing only)
* Compensatory Plan
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
JOULE INC.
Dated: December 20, 1995 Emanuel N. Logothetis
Emanuel N. Logothetis,
Chairman of the Board and President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities indicated on December 20,
1995.
Emanuel N. Logothetis Bernard G. Clarkin
Emanuel N. Logothetis Bernard G. Clarkin
Chairman of the Board, President Vice President and Chief Financial
Director (Principal Executive Officer (Principal Financial
Officer and Principal and Accounting Officer)
Officer)
Nick M. Logothetis Steven Logothetis
Nick M. Logothetis - Director Steven Logothetis - Director
William C. Dackis Paul DeBacco
William C. Dackis - Director Paul DeBacco - Director
Robert W. Howard Peter J. Gianacakes
Robert W. Howard - Director Peter J. Gianacakes - Director
<PAGE>
<PAGE>
EXHIBIT INDEX <PAGE>
Exhibit
Number<PAGE>
Description of Exhibit<PAGE>
Page<PAGE>
3.1<PAGE>
Certificate of Incorporation, filed as
Exhibit 3.1 to the Company's Registration
Statement on Form S-1 (File No. 33-7617)
under the Securities Act of 1933, as
amended (the "Form S-1"), and incorporated
herein by reference.<PAGE>
*<PAGE>
3.2<PAGE>
By-laws, as amended, filed as Exhibit 3.2
to the Form S-1 and incorporated herein by
reference. <PAGE>
*<PAGE>
4.1<PAGE>
Loan and Security Agreement, dated as of
February 20, 1991, between Registrant and
United Jersey Bank Central, N.A., filed as
Exhibit 4.1 to the Company's Annual Report
on Form 10-K for the year ended September
30, 1991 and incorporated herein by
reference.<PAGE>
*<PAGE>
4.1a Third Modification and Extention Agreement,
dated August 23, 1995, between Registrant
and United Jersey Bank.
The Company hereby agrees to furnish to the
Commission upon its request any instrument
defining the rights of holders of long-term
debt of the Company and its consolidated
subsidiaries and for any of its
unconsolidated subsidiaries for which
financial statements are required to be
filed with respect to long-term debt which
does not exceed 10 percent of the total
assets of the registrant and its
subsidiaries on a consolidated basis.
<PAGE>
21<PAGE>
10.1 Lease Agreement, dated July 1, 1986,
between Registrant and Eisler Engineering
Corp. ("Eisler") for premises at 1245 Route
1 South, Edison, New Jersey, filed as
Exhibit 10.1 to the Form S-1 and
incorporated herein by reference.<PAGE>
*<PAGE>
10.2 Lease Agreement, dated April 1, 1986,
between Registrant and Emanuel N.
Logothetis for premises at 362 Parsippany
Road, Parsippany, New Jersey, filed as
Exhibit 10.5 to the Form S-1 and
incorporated herein by reference.<PAGE>
*<PAGE>
10.3 Lease Agreement, dated December 1, 1986,
between Registrant and Pentacle
Corporation for premises at 50 South Center
Street, Orange, New Jersey, filed as
Exhibit 10.8 to the Company's Annual Report
on Form 10-K for the year ended September
25, 1987 and incorporated herein by
reference.<PAGE>
*<PAGE>
10.4 Lease Agreement, dated January 15, 1992,
between JOULE' Maintenance of Gibbstown Inc.
and 429 Broad Street Corporation for
premises at 429 East Broad Street,
Gibbstown, New Jersey, filed as Exhibit
10.4 to the Company's Annual Report on Form
10-K for the year ended September 30, 1993
and incorporated herein by reference.<PAGE>
*<PAGE>
10.6 Lease Agreement, dated January 1, 1987,
between Registrant and E. N. Logothetis for
Unit G, Mercerville Professional Park
Condominiums, 2333 Whitehorse - Mercerville
Road, Hamilton Township, New Jersey, filed
as Exhibit 10.12 to the Company's Annual
Report on Form 10-K for the year ended
September 25, 1987 and incorporated herein
by reference.<PAGE>
*<PAGE>
10.7 Lease Agreement, dated December 30, 1991
between registrant and Pentacle Corporation
for 5000 square feet of storage space at
Orange Commons in Orange, New Jersey, filed
as Exhibit 10.7 to the Company's Annual
Report on Form 10-K for the year ended
September 30, 1993 and incorporated herein
by reference.<PAGE>
*<PAGE>
10.8** 1988 Non-qualified Stock Option Plan, filed
as Exhibit 10.13 to the Company's Annual
Report on Form 10-K for the year ended
September 30, 1991 and incorporated herein
by reference. <PAGE>
*<PAGE>
10.9** 1991 Stock Option Plan, filed as Exhibit
10.11 to the Company's Annual Report on
Form 10-K for the year ended September 30,
1991 and incorporated herein by reference.
<PAGE>
*<PAGE>
13 Annual Report to Stockholders for the year
ended September 30, 1995<PAGE>
<PAGE>
21 List of Subsidiaries<PAGE>
37<PAGE>
23.1 Consent of Independent Public Accountants<PAGE>
54<PAGE>
23.2 Consent of Independent Auditors<PAGE>
56<PAGE>
27 Financial Data Schedule (in EDGAR Filing
only)<PAGE>
58<PAGE>
* Incorporated by Reference
** Compensatory Plan
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of JOULE', Inc.
We have audited the consolidated balance sheet of JOULE', Inc.
and subsidiaries as of September 30, 1993 (not presented herein),
and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the year then ended.
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 financial
position of JOULE', Inc. and subsidiaries at September 30,1993,
and the results of their operations and cash flows for the year
then ended in conformity with generally accepted accounting
principles.
WISS & COMPANY, LLP
Livingston, New Jersey
November 18, 1993
F-1
<PAGE>
Arthur Andersen LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Joule, Inc.:
We have audited in accordance with generally accepted auditing
standards, the financial statements included in Joule, Inc.'s
annual report to shareholders incorporated by reference in this
Form 10-K, and have issued our report thereon dated November 13,
1995. Our audit was made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The schedules
listed in the index to financial statements are presented for
purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial
statements. These scheduled have been subjected to the auditing
procedures applied in the audit of the basic financial
statements, and in our opinion, fairly state in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
November 13, 1995
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Stockholders of JOULE', Inc.
Our audit of the consolidated financial statements referred to in our report
dated November 18, 1993 appearing in the 1995 annual report to shareholders
of JOULE', Inc. (which report and consolidated financial statements are
incorporated by reference in this annual report on Form 10-K) also included
an audit of the 1993 Financial Statement Schedules listed in Item 14(a) of
this Form 10-K. In our opinion, these Financial Statement Schedules present
fairly the information set forth therein when read in conjunction with the
related consolidated financial statements.
WISS & COMPANY, LLP
Livingston, New Jersey
November 18, 1993
F-3
<PAGE>
<TABLE>
SCHEDULE VIII
JOULE INC. AND SUBSIDIARIES
VALUATION AND QUALIFICATION ACCOUNTS AND RESERVES
<CAPTION>
BALANCE CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
Allowance for
doubtful accounts:
Years Ended:
<S> <C> <C> <C> <C> <C>
September 30, 1993 $149,000 $123,000 ----- $59,000 $213,000
September 30, 1994 $213,000 $ 65,000 ----- $92,000 $186,000
September 30, 1995 $186,000 $120,000 ----- $166,000 $140,000
</TABLE>
F-4<PAGE>
<TABLE>
<CAPTION>
SCHEDULE IX
JOULE INC AND SUBSIDIARIES
SHORT-TERM BORROWINGS
<PAGE>
CATEGORY OF
AGGREGATE
SHORT-TERM
BORROWINGS<PAGE>
BALANCE AT
END OF YEAR<PAGE>
WEIGHTED
AVERAGE
INTEREST RATE
AT END OF
YEAR <PAGE>
MAXIMUM
AMOUNT OF
BORROWINGS
DURING THE
YEAR
<PAGE>
AVERAGE
AMOUNT
OUTSTANDING
DURING THE
YEAR*
<PAGE>
WEIGHTED
AVERAGE
INTEREST RATE
DURING THE
YEAR* <PAGE>
S><PAGE>
<C> <C> <C> <C> <C> <C
<PAGE>
YEARS ENDED: <PAGE>
<PAGE>
SEPTEMBER 30, 1993<PAGE>
BANKS $2,796,000 7.50% $3,150,000 $2,775,000 7.6%<PAGE>
SEPTEMBER 30, 1994<PAGE>
BANKS $3,363,000 9.25% $3,896,000 $3,275,000 8.2%<PAGE>
SEPTEMBER 30, 1995<PAGE>
BANKS $4,105,000 9.75% $4.,155,000 $3,472,000 $10.0%<PAGE>
<FN>
<F1>
* Average amount outstanding is based on daily averages. Weighted average interest rate during each
year is calculated by dividing interest expense on short term borrowings by the average amount
outstanding.
</FN>
</TABLE>
<PAGE>
EXHIBIT 4.1a
________________________________________________________________________
THIRD MODIFICATION AND EXTENSION AGREEMENT
by and among
JOULE, INC.,
as the Borrower
and
JOULE MAINTENANCE CORP.,
JOULE MAINTENANCE OF GIBBSTOWN, INC.,
JOULE ENGINEERING CORP.,
JOULE TECHNICAL CORPORATION,
JOULE TEMPORARIES CORPORATION,
JOULE MAINTENANCE OF NEW YORK, INC.,
JOULE MAINTENANCE OF MARYLAND, INC.,
TIGER MAINTENANCE, INC., and
JOULE MAINTENANCE OF BAYONNE, INC.,
collectively, as the Corporate Guarantors
and
UNITED JERSEY BANK,
as the Lender
Dated: August 23, 1995
_________________________________________________________________________
THIRD MODIFICATION AND EXTENSION AGREEMENT
THIS THIRD MODIFICATION AND EXTENSION AGREEMENT (including all
amendments, modifications and supplements is hereinafter referred to as
the "Third Modification Agreement"), is made this 23rd day of August,
1995, by and among
JOULE, INC., a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, having its principal
executive offices located at 1245 Route 1 South, Edison, New Jersey 08837
(hereinafter referred to as the "Borrower"),
AND
JOULE MAINTENANCE CORP., a corporation duly organized, validly existing
and in good standing under the laws of the State of New Jersey, having its
principal office located at 1245 Route 1 South, Edison, New Jersey 08837
(hereinafter referred to as "Joule Maintenance Corp.")
AND
JOULE MAINTENANCE OF GIBBSTOWN, INC., a corporation duly organized,
validly existing and in good standing under the laws of the State of New
Jersey, having its principal office located at 1245 Route 1 South, Edison,
New Jersey 08837 (hereinafter referred to as "Joule Maintenance of
Gibbstown, Inc.")
AND
JOULE ENGINEERING CORP., a corporation duly organized, validly existing
and in good standing under the laws of the State of New Jersey, having its
principal office located at 1245 Route 1 South, Edison, New Jersey 08837
(hereinafter referred to as "Joule Engineering Corp.")
AND
JOULE TECHNICAL CORPORATION, a corporation duly organized, validly
existing and in good standing under the laws of the State of Virginia,
having its principal office located at 1245 Route 1 South, Edison, New
Jersey 08837 (hereinafter referred to as "Joule Technical Corporation")
AND
JOULE TEMPORARIES CORPORATION, a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey,
having its principal office located at 1245 Route 1 South, Edison, New
Jersey 08837 (hereinafter referred to as "Joule Temporaries Corporation")
AND
JOULE MAINTENANCE OF NEW YORK, INC., a corporation duly organized,
validly existing and in good standing under the laws of the State of New
York, having its principal office located at 1245 Route 1 South, Edison,
New Jersey 08837 (hereinafter referred to as "Joule Maintenance of New
York, Inc.")
AND
JOULE MAINTENANCE OF MARYLAND, INC., a corporation duly organized,
validly existing and in good standing under the laws of the State of
Maryland, having its principal office located at 1245 Route 1 South,
Edison, New Jersey 08837 (hereinafter referred to as "Joule Maintenance of
Maryland, Inc."),
AND
TIGER MAINTENANCE, INC., a corporation duly organized, validly existing
and in good standing under the laws of the State of New Jersey, having its
principal office located at 1245 Route 1 South, Edison, New Jersey 08837
(hereinafter referred to as "Tiger Maintenance, Inc."),
AND
JOULE MAINTENANCE OF BAYONNE, INC., a corporation duly organized,
validly existing and in good standing under the laws of the State of New
Jersey, having its principal office located at 1245 Route 1 South, Edison,
New Jersey 08837 (hereinafter referred to as "Joule Maintenance of
Bayonne, Inc." and hereinafter Joule Maintenance Corp., Joule Maintenance
of Gibbstown, Inc., Joule Engineering Corp., Joule Technical Corporation,
Joule Temporaries Corporation, Joule Maintenance of New York, Inc., Joule
Maintenance of Maryland, Inc., Tiger Maintenance, Inc. and Joule
Maintenance of Bayonne, Inc. shall be collectively referred to as the
"Corporate Guarantors"),
AND
UNITED JERSEY BANK, having an office located at Raritan Plaza II,
Fieldcrest Avenue, Edison, New Jersey 08837, being a banking corporation
duly organized and validly existing under the laws of the State of New
Jersey (hereinafter referred to as the "Lender").
W I T N E S S E T H:
WHEREAS, on or about February 20, 1991, the Borrower requested and the
Lender agreed to make a revolving credit loan in the aggregate principal
amount of up to Four Million and 00/100 ($4,000,000.00) Dollars for the
purposes of (i) refinancing certain of the Borrower's then existing
indebtedness to First Fidelity Bank, National Association and (ii)
financing the general working capital requirements of the Borrower
(hereinafter referred to as the "Revolving Credit Loan"), all as more
fully provided for in that certain Loan and Security Agreement dated
February 20, 1991, executed by and between the Borrower and the Lender
(hereinafter referred to as the "Loan Agreement"); and
WHEREAS, the Revolving Credit Loan is evidenced by a certain Revolving
Note dated February 20, 1991, executed by the Borrower, as maker, and
delivered to the Lender, as payee, in the original aggregate principal
amount of the Revolving Credit Loan (hereinafter referred to as the
"Revolving Note"); and
WHEREAS, pursuant to the Loan Agreement, the Borrower and each of the
Corporate Guarantors granted to the Lender a valid first lien security
interest in and to certain Collateral, as more fully and accurately
described in the Loan Agreement; and
WHEREAS, as of February 20, 1991, Emanuel N. Logothetis, as guarantor
(hereinafter referred to as the "Individual Guarantor"), executed and
delivered to the Lender, as lender, a certain Individual Guaranty,
pursuant to which the Individual Guarantor agreed to guaranty the full,
prompt and unconditional payment of when due of any and all present and
future obligations or liabilities of any kind of the Borrower owing to the
Lender, including, without limitation, repayment in full of the Revolving
Credit Loan (hereinafter referred to as the "Individual Guaranty"); and
WHEREAS, as of February 20, 1991, each Corporate Guarantor, as
guarantor, executed and delivered to the Lender, as lender, a separate
Corporate Guaranty, pursuant to which each Corporate Guarantor agreed to
guaranty the full, prompt and unconditional payment when due of any and
all present and future obligations or liabilities of any kind of the
Borrower owing to the Lender, including, without limitation, repayment in
full of the Revolving Credit Loan (hereinafter referred to as the
"Corporate Guaranty"); and
WHEREAS, on January 17, 1991, the Borrower, as assignor, delivered to
the Lender, as assignee, a certain Assignment of Life Insurance Policy as
Collateral with respect to that certain life insurance policy no.
U01426631 issued by the Hartford Insurance Company upon the life of the
Individual Guarantor (hereinafter referred to as "Assignment #1"), as
collateral security for the Borrower's obligations under the Loan
Agreement; and
WHEREAS, on February 20, 1991, Joule Maintenance Corporation, as
assignor, executed and delivered to the Lender, as assignee, a certain
Collateral Assignment of Contract Proceeds with respect to that certain
contract between Joule Maintenance Corporation and the United States
Government identified as Contract No. DAHC21-85-C-0021 (hereinafter
referred to as the "Assignment #2"), as collateral security for the
repayment of the liabilities and obligations of Joule Maintenance
Corporation to the Lender under the Loan Agreement and the Corporate
Guaranty; and
WHEREAS, on September 1, 1991, January 15, 1992, January 31, 1993 and
January 31, 1994, the Borrower, as maker executed and delivered to the
Lender, as payee, certain Promissory Notes and/or Master Advance Notes,
for the purposes of extending the maturity dates of the Revolving Credit
Loan; and
WHEREAS, on March 31, 1994, the Borrower, the Corporate Guarantors, the
Individual Guarantor and the Lender entered into a certain First
Modification and Extension Agreement for the purposes of (i) extending the
"Termination Date" of the Revolving Note from the old Termination Date of
"March 31, 1994" to the Termination Date date of "January 31, 1995", (ii)
amending and modifying the Lender's address from the old address of "630
Franklin Boulevard, Somerset, New Jersey 08875" to the new address of
"4365 Route 1 South, Princeton, New Jersey 08540", (iii) providing for a
mutual waiver of jury trial and (iv) providing for semi-annual audits of
Collateral (hereinafter referred to as the "First Modification
Agreement"); and
WHEREAS, on March 31, 1994, the Borrower, as maker, executed and
delivered to the Lender, as payee, a certain First Allonge to
$4,000,000.00 Revolving Note for the purposes of (i) extending the
maturity date of the Revolving Note from the old maturity date of "March
31, 1994" to the new maturity date of "January 31, 1995" and (ii) amending
and modifying the Lender's address from the old address of "630 Franklin
Boulevard, Somerset, New Jersey 08875" to the new address of "4365 Route 1
South, Princeton, New Jersey 08540" (hereinafter referred to as the "First
Allonge"); and
WHEREAS, as of January 31, 1995, the Borrower, the Corporate
Guarantors, the Individual Guarantor and the Lender entered into a certain
Second Modification and Extension Agreement (hereinafter referred to as
the "Second Modification Agreement") for the purposes of (i) extending the
Termination Date of the Revolving Note from the old Termination Date of
"January 31, 1995" to the new Termination Date of "January 31, 1996"; (ii)
decreasing the interest rate from the old interest rate of "Base Rate plus
one and one-half percent (1.5%) per annum" to the new interest rate of
"Base Rate plus one percent (1.0%) per annum"; (iii) amending and
modifying the Lender's audits of Collateral from semi-annual audits of
Collateral to annual audits of Collateral and (iv) amending and modifying
the name of the Lender from the old name of "United Jersey Bank/Central,
N.A." to the new name of "United Jersey Bank".
WHEREAS, as of January 31, 1995, the Borrower, as maker, executed and
delivered to the Lender, as payee, a certain Second Allonge to
$4,000,000.00 Revolving Note for the purpose of (i) extending the maturity
date of the Revolving Note from the old maturity date of "January 31,
1995" to the new maturity date of "January 31, 1996"; (ii) decreasing the
interest rate from the old interest rate of "Base Rate plus one and one-half
percent (1.5%) per annum" to the new interest rate of "Base Rate plus
one percent (1.0%) per annum" and (iii) amending and modifying the name of
the Lender from the old name of "United Jersey Bank/Central, N.A." to the
new name of "United Jersey Bank" (hereinafter referred to as the "Second
Allonge"); and
WHEREAS, of even date herewith, the Borrower, as maker, executed and
delivered to the Lender, as payee, a certain Third Allonge to
$4,000,000.00 Revolving Note for the purposes of (i) increasing the
aggregate principal amount of the Revolving Credit Loan from the old
aggregate principal amount of "$4,000,000.00" to the new aggregate
principal amount of "$4,500,000.00"; (ii) extending the maturity date of
the Revolving Credit Note from the old maturity date of "January 31, 1996"
to the new maturity date of "May 31, 1996" and (iii) amending and
modifying the Lender's address from the old address of "4365 Route 1
South, Princeton, New Jersey 08540" to the new address of "Raritan Plaza
II, Fieldcrest Avenue, Edison, New Jersey 08837" (hereinafter referred to
as the "Third Allonge"); and
WHEREAS, of even date herewith, the Borrower and the Corporate
Guarantors have agreed to enter into this Third Modification Agreement for
the purposes of (i) in Section 1.1 of the Loan Agreement increasing the
aggregate principal amount of the Revolving Credit Loan from the old
aggregate principal amount of "$4,000,000.00" to the new aggregate
principal amount of "$4,500,000.00"; (ii) in Section 1.1 of the Loan
Agreement extending the Termination Date of the Revolving Credit Note from
the old Termination Date of "January 31, 1996" to the new Termination Date
of "May 31, 1996"; (iii) in Section 2.2 of the Loan Agreement, providing
for the issuance of Letters of Credit (as such term is hereinafter
defined); (iv) providing for a new Section 5.23 of the Loan Agreement,
setting forth the Borrower's Maximum Debt to Tangible Net Worth Ratio (as
such terms are defined herein) of 2.0 to 1.0; (v) providing for a new
Section 5.24 of the Loan Agreement, setting forth the Borrower's Minimum
Debt Service Coverage Ratio (as such term is defined herein) of 1.5 to
1.0; (vi) providing for a release of the Individual Guarantor from the
Individual Guaranty and (vii) amending and modifying the Lender's address
from the old address of "4365 Route 1 South, Princeton, New Jersey 08540"
to the new address of "Raritan Plaza II, Fieldcrest Avenue, Edison, New
Jersey 08837".
WHEREAS, all words and terms not defined herein shall have the meaning
as contained in the Loan Agreement, as amended and modified; and
WHEREAS, the aforesaid Revolving Note, the Loan Agreement, the
Corporate Guaranty, the Assignment #1, the Assignment #2, the First
Allonge, the First Modification Agreement, the Second Allonge, the Second
Modification Agreement, the Third Allonge and the Third Modification
Agreement and any and all of the documents, agreements, certificates and
instruments executed in connection therewith shall be hereinafter
collectively referred to as the "Loan Documents"; and
NOW, THEREFORE, in consideration of these premises and the mutual
representations, covenants and agreements of the Borrower and the
Corporate Guarantors and the Lender, each party binding itself and its
successors and assigns, does hereby promise, covenant and agree as
follows:
1. There is, as of August 23, 1995, presently owing on
the Revolving Note the principal sum of $3,945,146.37, without defense,
offset or counterclaim, all of which are hereby expressly waived by the
Borrower and the Corporate Guarantors as of the date hereof. The
foregoing principal balance is allocated as follows: (a) $3,945,146.37 for
outstanding Advance of direct loans under the Note and (b) $ -0- for
Letters of Credit.
2. By execution hereof, the Borrower and the Corporate
Guarantors acknowledge and agree that the Lender's consent to enter into
this Third Modification Agreement is contingent upon the following:
(a) the payment by the Borrower of all costs,
expenses and fees of the transaction contemplated by this Third
Modification Agreement, including, but not limited to (i) all search costs
and expenses, (ii) all fees and expenses of the Lender's attorneys and
(iii) all accrued and unpaid interest up to and including the date hereof;
(b) the confirmation by the Lender that the
security interests granted by the Borrower and the Corporate Guarantors to
the Lender pursuant to the Loan Agreement, continue to be a valid first
lien security interest in and to the Collateral, as evidenced by the UCC
and related judgment searches to be delivered by the Borrower to the
Lender in form and substance satisfactory to the Lender; and
(c) the delivery by the Borrower to the Lender of
copies of all valid insurance certificates with respect to worker's
compensation, general liability, umbrella liability and other insurance
required pursuant to the Loan Agreement, all of which name the Lender as
lender loss payee with respect to Accounts Receivable, Inventory,
Equipment and other corporate assets.
3. The Borrower and each Corporate Guarantor represent
that the liens on the Collateral granted to the Lender under the Loan
Agreement continue to be valid and enforceable first liens on the
Collateral.
4. The Loan Agreement is hereby modified and amended as
follows:
(a) Article I, Section 1.1(m) shall be amended and
modified by deleting the old Commitment amount of "four million
($4,000,000.00) dollars" and inserting the new Commitment amount of "Four
Million Five Hundred Thousand and 00/100 ($4,500,000.00) Dollars" in its
place and stead.
(b) Article I, Section 1.1(ll) shall be amended and
modified by deleting the old Termination Date of "January 31, 1996" and
inserting the new Termination Date of "May 31, 1996" in its place and
stead.
(c) Article I shall be amended and modified by
inserting the following new definitions:
(nn)"Debt Service Coverage Ratio" shall mean, at the
time of such determination, a ratio of (i) the sum of (a) Net Income before
taxes plus
(b) interest, depreciation and amortization expense deducted in
determining such Net Income -to- and (ii) the sum of (a) the current
portion of all long term Indebtedness, plus (b) interest expense on all
Indebtedness for the period of such determination.
(oo)"Letter of Credit" shall mean any standby and/or
commercial letter of
credit issued pursuant to Section 2.2 of this Agreement.
(pp)"Letter of Credit Obligations" shall mean, at
any time, the sum of (i) the
Reimbursement Obligations and (ii) the aggregate maximum amount then
available for drawing under the Letters of Credit Sublimit.
(qq)"Letter of Credit Reimbursement Agreement"
shall
an, with respect to any
Letter of Credit, such form of application therefor and form of continuing
Letter of Credit Reimbursement Agreement therefor as the Lender may employ
in the ordinary course of its business.
(rr)"Letters of Credit Sublimit" shall mean the
maximum outstanding principal
amount of Five Hundred Thousand and 00/100 ($500,000.00) Dollars.
(ss)"Net Income" shall mean as of any date of
determination for any test
period, all amounts which, in accordance with GAAP, would be included
under net income on an income statement of the Borrower for such test
period.
(tt)"Net Worth" shall mean, as at any date of
determination, all items which,
in accordance with GAAP, would be included on a balance sheet of the
Borrower as "stockholders equity"at such date.
(uu)"Reimbursement Obligation" shall mean the unpaid
reimbursement or
repayment obligations of the Borrower owed to the Bank pursuant to this
Agreement in connection with Letters of Credit which have been drawn upon.
(vv)"Tangible Net Worth" shall mean, as at any date
of determination, Net
Worth minus the following: (i) goodwill; (ii) patents, trademarks and
copyrights; (iii) improvements not recoverable at the expiration of a
lease and (iv) deferred charges (including, without limitation,
unamortized debt discount and expense, organization expenses and
experimental and development expenses, but excluding prepaid expenses) all
as determined in accordance with GAAP.
(ww)"Uniform Customs" shall mean the Uniform Customs
and Practice for
Documentary Credits (1993 Revisions), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time."
(d) Article II, Section 2.1 shall be amended and
modified by inserting the following new provisions:
"Subject to the terms and conditions of this
Agreement, the Bank agrees to issue for the account of the Borrower,
Letters of Credit up to an aggregate face amount at any one time
outstanding equal to the Letters of Credit Sublimit. The Letter of Credit
Obligations shall constitute financial accommodations to be added to the
outstanding principal amount of the Advances theretofore made and shall
reduce the availability for Advances by the amount of such Letter of
Credit Obligations." The Borrower shall furnish the Bank with at least
five (5) Business Days prior written notice of the request for a Letter of
Credit.
(e) Article II, Section 2.2 shall be amended and
modified by inserting the following new provisions:
"Each Letter of Credit shall be denominated in
Dollars and shall be either (a) a standby letter of credit or (b) a
commercial letter of credit and shall expire no later than up to one (1)
year from the date of issuance of each Letter of Credit. Each Letter of
Credit shall be subject to the Uniform Customs and, to the extent not
inconsistent therewith, the laws of the State of New Jersey. In no event
shall the Bank be obligated to issue a Letter of Credit, if as a result of
such issuance, the aggregate of all Letter of Credit Obligations would
exceed the Letter of Credit Sublimit or would cause the outstanding
principal Advances theretofore made to exceed the lesser of (i) the
Commitment or (ii) the Borrowing Base. In addition to being subject to
the conditions set forth in this Section 2.2, the obligation of the Bank
to issue any Letter of Credit is subject to the following conditions:
(1)the Borrower shall have delivered to the Bank at
such times and in such
manner as the Lender may prescribe, a Letter of Credit Reimbursement
Agreement and such other documents and materials as may be reasonably
required pursuant to the terms thereof;
(2)the Borrower shall unconditionally reimburse the
Bank for drawings under
each Letter of Credit no later than the time specified in each Letter of
Credit Reimbursement Agreement irrespective of any claim, setoff, defense
or other right which the Borrower or any third party may have against the
Lender;
(3)the Borrower may renew any standby letter of
credit issued by the Bank
upon sixty (60) days prior express written notice to the Bank prior to the
date of expiration set forth in the Reimbursement Agreement.
(f) Article II shall be amended and modified by
providing for the following new section:
"2.11 Letter of Credit Annual Fee. The
Borrower shall pay to the Bank in connection with the issuance of Letters
of Credit the Bank's customary fees as established from time to time and
generally applicable to customers of the Bank.
(g) Article V shall be amended and modified by
providing for the following new sections:
"5.23 Maximum Indebtedness to Tangible Net
Worth Ratio. The Borrower shall maintain (which covenant shall be tested
semi-annually by the financial statements which are provided to the Bank
pursuant to Section 5.8 of this Agreement) a maximum Indebtedness to
Tangible Net Worth ratio of not more than 2.0 to 1.0.
5.24 Minimum Debt Service Coverage Ratio. The
Borrower shall maintain (which covenant shall be tested semi-annually by
the financial statements which are provided to the Bank pursuant to
Section 5.8 of this Agreement) a minimum Debt Service Coverage Ratio of
1.50 to 1.0."
(h) Any and all references to the Bank's old
address of "4365 Route 1 South, Princeton, New Jersey 08540" shall be
deleted and the Bank's new address of "Raritan Plaza II, Fieldcrest
Avenue, Edison, New Jersey 08837" shall be inserted in its place and
stead.
5.The Loan Documents are hereby amended and modified as follows:
(a) Any and all references to the old aggregate
principal amount of the Revolving Credit Loan of "Four Million and 00/100
($4,000,000.00) Dollars" shall be deleted and the new increased aggregate
principal amount of "Four Million Five Hundred Thousand and 00/100
($4,500,000.00) Dollars" shall be inserted in its place and stead.
(b) Any and all references to the old maturity date
of the Revolving Credit Loan of "January 31, 1996" shall be deleted and
the new maturity date of "May 31, 1996" shall be inserted in its place and
stead.
(c) Any and all references to the Bank's old
address of "4365 Route 1 South, Princeton, New Jersey 08540" shall be
deleted and the Bank's new address of "Raritan Plaza II, Fieldcrest
Avenue, Edison, New Jersey 08837" shall be inserted in its place and
stead.
6.The Bank, the Borrower and the Corporate Guarantors expressly confirm
and
affirm that the Individual Guarantor is hereby released and discharged
from any and all obligations under the Individual Guaranty, and the
Individual Guaranty has been returned to the Individual Guarantor and
canceled with the execution of this Third Modification Agreement.
7.All representations and warranties contained in the Loan Documents, as
modified through this Third Modification Agreement are true, accurate and
complete as of the date hereof and shall be deemed continuing
representations and warranties so long as the Revolving Credit Loan shall
remain outstanding.
8. All other terms and conditions of the Loan
Documents, as modified through this Third Modification Agreement remain in
full force and effect, except as modified herein, and the parties hereto
hereby expressly confirm and reaffirm all of their respective liabilities,
obligations, duties and responsibilities under and pursuant to said Loan
Documents, including, without limitation, the obligations of the Corporate
Guarantors under the Corporate Guaranty, as modified by this Third
Modification Agreement.
9. It is the intention of the parties hereto that this
Third Modification Agreement shall not constitute a novation and shall in
no way adversely affect or impair the lien priority of the Loan Documents.
In the event this Third Modification Agreement, or any portion hereof, or
any of the instruments executed in connection herewith shall be construed
or shall operate to affect the lien priority of the Loan Documents, then
to the extent such instrument creates a charge upon the Loan Documents in
excess of that contemplated and permitted thereby, and to the extent third
parties acquiring an interest in the Loan Documents between the time of
recording of the Loan Documents and the recording of this Third
Modification Agreement are prejudiced hereby, if any, this Third
Modification Agreement shall be void and of no force and effect; provided,
however, that notwithstanding the foregoing, the parties hereto, as
between themselves, shall be bound by all terms and conditions hereof
until all indebtedness evidenced by the Revolving Note shall have been
paid in full and the Revolving Credit Loan terminated.
10.The Borrower and the Corporate Guarantors do hereby:
(a) ratify, confirm and acknowledge that, as
amended and modified hereby, the Loan Documents continue to be valid,
binding and in full force and effect;
(b) covenant and agree to perform all of their
respective obligations contained in the Loan Documents, as amended and
modified hereby;
(c) represent and warrant that, after giving effect
to the transactions contemplated by this Third Modification Agreement, no
Event of Default (as such term is defined in the Loan Agreement), exists
or will exist upon the delivery of notice, passage of time, or both;
(d) acknowledge and agree that nothing contained
herein and no actions taken pursuant to the terms hereof are intended to
constitute a novation of the Revolving Note and the Revolving Credit Loan,
or any waiver of the other Loan Documents, and do not constitute a
release, termination or waiver of any of the liens, security interests or
rights or remedies granted to the Lender under the Loan Documents, all of
which liens, security interests, rights or remedies are hereby ratified,
confirmed, extended and continued as security for the Revolving Credit
Loan, as amended and modified hereby; and
(e) acknowledge and agree that the failure by the
Borrower and/or the Corporate Guarantors to comply with or perform any of
their respective covenants, agreements or obligations contained herein
shall constitute an Event of Default under the Loan Agreement.
IN WITNESS WHEREOF, the parties have caused this Third Modification
Agreement to be duly executed, sealed and attested and/or witnessed, as
appropriate, and delivered, all as of the day and year first above
written.
[SEAL] JOULE, INC.
ATTEST:
____________________________ By:____________________________
Bernard G. Clarkin Emanuel N. Logothetis
Secretary President
[SEAL] JOULE MAINTENANCE CORP.
ATTEST:
____________________________ By:____________________________
Bernard G. Clarkin Emanuel N. Logothetis
Secretary President
[SEAL] JOULE MAINTENANCE OF GIBBSTOWN,
ATTEST: INC.
____________________________ By:____________________________
Bernard G. Clarkin Emanuel N. Logothetis
Secretary President
[SEAL] JOULE ENGINEERING CORP.
ATTEST:
____________________________ By:____________________________
Bernard G. Clarkin Emanuel N. Logothetis
Secretary President
[SEAL] JOULE TECHNICAL CORPORATION
ATTEST:
____________________________ By:____________________________
Bernard G. Clarkin Emanuel N. Logothetis
Secretary President
[SEAL] JOULE TEMPORARIES CORPORATION
ATTEST:
____________________________ By:____________________________
Bernard G. Clarkin Emanuel N. Logothetis
Secretary President
[SEAL] JOULE MAINTENANCE OF NEW YORK,
ATTEST: INC.
____________________________ By:____________________________
Bernard G. Clarkin Emanuel N. Logothetis
Secretary President
[SEAL] JOULE MAINTENANCE OF MARYLAND,
ATTEST: INC.
____________________________ By:____________________________
Bernard G. Clarkin Emanuel N. Logothetis
Secretary President
[SEAL] TIGER MAINTENANCE, INC.
ATTEST:
____________________________ By:____________________________
Bernard G. Clarkin Emanuel N. Logothetis
Secretary President
[SEAL] JOULE MAINTENANCE OF BAYONNE, INC.
ATTEST:
____________________________ By:____________________________
Bernard G. Clarkin Emanuel N. Logothetis
Secretary President
[SEAL] UNITED JERSEY BANK
ATTEST
____________________________ By:____________________________
Craig A. Pasko
Vice President
<PAGE>
STATE OF NEW JERSEY :
: ss.
COUNTY OF MIDDLESEX :
BE IT REMEMBERED, that on this 23rd day of August, 1995, before me, the
subscriber, an officer duly authorized pursuant to N.J.S.A. 46:14-6 to
take acknowledgments for use in the State of New Jersey, personally
appeared Craig A. Pasko, who, I am satisfied is the person who executed
the within Instrument, as the Vice President of United Jersey Bank, the
corporation named therein, and I having first made known to him the
contents thereof, he did thereupon acknowledge that the said Instrument
made by the said corporation and sealed with its corporate seal and
delivered by him as such officer, is the voluntary act and deed of said
corporation, made by virtue of authority from its Board of Directors, for
the uses and purposes therein expressed.
______________________________
Notary Public of New Jersey
STATE OF NEW JERSEY :
: ss.
COUNTY OF MIDDLESEX :
BE IT REMEMBERED, that on this 23rd day of August, 1995, before me, the
subscriber, an officer duly authorized pursuant to N.J.S.A. 46:14-6 to
take acknowledgments for use in the State of New Jersey, personally
appeared Emanuel N. Logothetis, who, I am satisfied is the person who
executed the within Instrument as the President of Joule, Inc., Joule
Maintenance Corp., Joule Maintenance of Gibbstown, Inc., Joule Engineering
Corp., Joule Technical Corporation, Joule Temporaries Corporation, Joule
Maintenance of New York, Inc., Joule Maintenance of Maryland, Inc., Tiger
Maintenance, Inc. and Joule Maintenance of Bayonne, Inc., the corporations
named therein, and I having first made known to him the contents thereof,
he did thereupon acknowledge that the said Instrument made by the said
corporations and sealed with their corporate seals and delivered by him as
such officer, is the voluntary act and deed of said corporation, made by
virtue of authority from the respective Board of Directors, for the uses
and purposes therein expressed.
______________________________
Notary Public of New Jersey
<PAGE>
EXHIBIT 13
Joule Inc.
1995 Annual Report
1245 Route 1 South
Edison, New Jersey 08837
908-548-5444
Joule Inc. and Subsidiaries
Company and Industry Overview
Joule is a publicly owned American Stock Exchange technical staffing services
company,
founded 30 years ago, that specializes in changing the "fixed overhead of
Fortune 500
companies into "variable overhead through outsourcing.
Outsourcing allows a company to turn over various support functions to
specialized
outside vendors so that it can concentrate on building and managing its core
business. At
the same time it enjoys the benefit of a more variable cost structure along with
improved
quality since the outsourcing vendor must be competitive as well as specialized
in its
field. Today's global economy demands that companies constantly strive to become
more
efficient and flexible in order to survive and prosper.
JOULe accomplishes this by supplying thousands of employees each year to its
customers through two business units, a lower overhead "Staffing Services
Business Unit which ndles hourly billing contracts and a higher overhead
"Industrial Contracting Business Unit which can handle functions for the
customer on a turnkey basis.
The staffing services business unit markets its office services through ten
branches in the New Jersey area, using the trademarks "JOULE Technical
Staffing Services and "People Providers .
The higher overhead industrial contracting business unit furnishes supervision,
equipment and tools, in addition to labor. It markets nationally using the
trademark "JOULE Industrial Contractors from two locations in the Hudson
Valley and Delaware Valley regions.
As companies have downsized and re-engineered their operations, sales
opportunities have continued to develop for JOULE. More and more companies in
an increasing number of industries are seeking the advantages of outsourcing,
thereby improving the quality of their support services while also better
controlling their costs. JOULE believes this trend toward outsourcing will offer
still greater growth opportunities for us in the future.
Contents
1 Selected Financial Information
2 Letter to Stockholders
4 Management's Discussion and Analysis of Financial Condition and
Results of Operations
6 Financial Statements
12 Accountants' Report and Stock Market Information
IBC Corporate Data
<PAGE>
<TABLE>
<CAPTION>
Joule Inc. and Subsidiaries
Selected Financial Information
Year Ended September 30,
1995 1994 1993 1992 1991
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Revenues $43,641 $36,216 $32,123 $29,377(2) $26,503
Net Income (Loss) 938 710 (3,376)(1) 461 293
Net Income (Loss)_Per Share 0.26 0.20 (0.93)(1) 0.13 0.08
Total Assets 10,802 8,576 6,508 11,636 10,124
Long-Term Debt 456 424
Total Liabilities 6,883 5,609 4,251 6,003 4,952
<FN>
<F1>
(1) _Includes a non-recurring net charge of $3,955,000 or $1.10 per share (after a
related tax benefit of $2,026,000) to eliminate the carrying value of claims with a _U.S.
Government Agency. See Note 2 of Notes to Consolidated Financial Statements for further
information.
<F2>
(2) _Includes revenues of $1,510,000 from an acquisition in early 1992.
</FN>
</TABLE>
Joul Inc.
Revenues
In Millions of Dollars
Joul Inc.
Income*
In Thousands of Dollars
1
<PAGE>
Joul Inc. and Subsidiaries
To Our Stockholders:
I am pleased to report that fiscal 1995 was a year of outstanding accomplishment
for Joule. Revenues achieved record levels; productivity improved; new markets
were penetrated; management was strengthened; and the Company has well
positioned itself for growth in fiscal 1996 and beyond.
Revenues in 1995 increased to $43,641,000 from $36,216,000 in 1994, a 21%
increase, and net income increased at a faster rate, 32%, to $938,000 or $0.26
per share, from $710,000 or $0.20 per share for fiscal 1994. Both operating
groups of the Company, Staffing Services and Industrial Contracting Services,
contributed significantly to this overall improvement with stellar 1995
performances. The final quarter of 1995 was particularly strong and provides
significant positive momentum entering fiscal 1996.
The Company also begins fiscal 1996 with an extremely sound financial position.
During 1995 working capital increased to $2,475,000 from $1,838,000 in 1994 and
shareholders' equity rose 32% to $3,919,000. There is ample credit availability
for future growth and financial opportunity; in fact, during 1995 we increased
our bank line of credit to $4,500,000.
The major operating improvement in fiscal 1995 was posted by Staffing Services
as revenues in 1995 increased 29% with a similar increase in operating income.
This group is comprised of our People Providers office temporaries and Technical
Staffing Services groups. People Providers made significant progress in 1995.
Three new offices were recently opened to increase the number of New Jersey
locations to ten. This geographic expansion brought Joul to Bridgewater, to
exploit the fast developing Somerset County area; to Union City, to tap the rich
personnel resources in the Hudson County area; and to Cherry Hill, which
extends us further through the growing southwest New Jersey corridor from our
presence in Trenton, where revenues doubled in 1995. As the Cherry Hill
customer base is developed, a further expansion to the Philadelphia area is
contemplated.This division gained recognition in 1995 as a primary supplier to
two major corporations, a national retailer and a major medical diagnostic
service, and continued to add to its portfolio of blue chip corporate customers.
The Technical Staffing Services division experienced explosive growth in 1995
with revenues improving 37%, and operating income at a substantially greater
rate; significant to this success were the contributions of Stephen
Demanovich, who was appointed division manager at mid-year. During the year,
the division launched an entry into an important new niche market, research
science and laboratory services and became primary supplier to a major
chemical company and a large pharmaceutical company; this line accounted for a
substantial part of the division's growth in 1995 and future prospects are
excellent. New markets continue to be explored, and the Company has positioned
itself for entry into computer services through the placement of computer
programming technicians. Particularly important to technical services growth
were the "Target 2000 skill marketing and recruiting programs, which are
intensely focused saturation mailings to specific customer and manpower
groups, as well as the division's unique computerized applicant scanning and
retrieval system, which has proved vital to the recruiting process. During
the year this division also made significant progress gaining market access to
the lucrative southwest New Jersey corridor.
During 1995, the new Staffing Services headquarters facility became fully
operational.This 6,000 sq. ft. addition has greatly enhanced productivity and
has given the group administrative support capability necessary to sustain
expected growth. The new center includes state-of-the-art recruiting and
training areas and highly sophisticated telephone and computer networks which
allow immediate branch access to supervisory personnel and centralized
recruiting data bases at headquarters; these telecommunication systems add a
critical instant response capability to serve both customer and recruiting
needs.
A major 1995 improvement was also recorded in the Industrial Contracting
Services group.1995 revenues increased 13% and operating profits 28%. This
group achieved gains in each of its principal activities: outsourcing
services, which includes on-going plant and facilities maintenance; plant
shutdowns and relocations; and the installation and maintenance of intricate
process piping systems. In outsourcing, a major contract was awarded for
complete annual plant maintenance for an installation of a large heavy
equipment manufacturer, and we were engaged to install and maintain cryogenic
systems for a domestic gas producer. Important annual contracts were renewed
with a national pharmaceutical company, a manufacturer of photographic products,
and a regional public utility. We continue to expand our presence in this
dynamic growth area of outsourcing and the outlook is excellent. Successful
relocations were completed for four well-known corporations and important
growth was witnessed in the Company's expanding specialty of periodic plant
maintenance shutdown, particularly for the canning industry. The Company
has developed expertise and has achieved success in the niche of installing,
maintaining, and cleaning intricate in-plant process piping systems for the
petroleum, petrochemical and food process industries and in 1995 won an award
to maintain a very complex phosphoric acid system.
During 1995, the management of this division's Delaware Valley operation was
restructured as John Porch was appointed operating manager and Philip Rozewski
administrative and financial officer. Their combined efforts have been very
significant to the success of this division. We are also pleased to report that
we have reached agreement to retain an outstanding executive to oversee the
entire Industrial Contracting Services division. Mr.Philip DelVecchio, a
seasoned professional with a record of accomplishment both as an entrepreneur
and a senior manager for an international petroleum company, will join us in
February 1996. Mr. DelVecchio's talents are expected to accelerate the growth
of this division and his presence will allow me to devote more time to the
overall strategic objectives of the Company.
During the year, a Federal Appeals Court denied our claim against the U.S.
Government for unreimbursed efforts under a prior year contract. Although
somewhat disappointing and totally unfair, there was no material adverse effect
on financial position in 1995, as this matter was accounted for in fiscal 1993.
Despite this distraction, the Company proceeded to have a truly outstanding
year of performance in fiscal 1995.
We are pleased with the Company's 1995 results. Our revenue base has expanded,
profitability has improved and we have developed the corporate resources
necessary for future growth. The Company's results in the latter part of 1995
were remarkable, giving us extreme optimism for 1996. Our success is
attributable to the efforts of many, and we express our gratitude to our
employees, stockholders, bankers and Board of Directors, whose efforts and
loyalty we deeply appreciate. I would also like to extend particular
gratitude to Peter J. Gianacakes and William C. Dackis, two highly valued
members of our Board, who will be retiring in February 1996.
Emanuel N. Logothetis
Chairman and President
3
<PAGE>
Joul Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of
Operations
<TABLE>
Results of Operations
__The following table sets forth the percentage relationship of certain items in the
Company's consolidated statements _of operations:
<CAPTION>
Year Ended September 30,
1995 1994 1993
<S> <C> <C> <C>
Revenues 100.0% 100.0% 100.0%
Costs, expenses and other
__Cost of services 83.1 84.1 83.9
___Selling, general & administrative expenses 12.5 12.4 13.8
___Elimination of carrying value of claims with U.S. Government Agency 18.7
__Interest expense 0.9 0.7 0.6
__Other 0.1 (0.7)
Income (loss) before income tax provision (benefit) 3.4 2.8 (16.3)
Income tax provision (benefit) 1.3 0.8 (5.8)
Net income (loss) 2.1 2.0 (10.5)
</TABLE>
The Company's revenues are derived from providing labor outsourcing services to
its customers. Revenues increased 21% to $43.6 million in fiscal 1995, from
$36.2 million in 1994. 1994 revenues were 13% higher than in 1993 when they
amounted to $32.1 million.Labor outsourcing services include industrial
contracting and staffing services.Industrial contracting revenue increased
13% to $21.2 million in 1995 following a 15% increase to $18.8 million in 1994
from $16.3 million in 1993. Staffing services revenue increased 29% to $22.4
million in fiscal 1995, after growing 9% to $17.4 million in 1994 from $15.8
million in 1993. The increases in revenue during these years were attributable
to an expanded large company customer base as the demand for such outsourcing
services grew.
Cost of services improved to 83.1% of revenue in fiscal 1995 compared to
$84.1% of revenue in 1994 and 83.9% in 1993. 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.
Selling, general and administrative expenses amounted to $5.4 million in 1995,
compared to $4.5 million in 1994 and $4.4 million in 1993. Such expenses were
12.5%, 12.4% and 13.8% of revenues in 1995, 1994 and 1993, respectively. The
Company is committed to controlling these costs which include the salaries and
related costs of staff employees, provision for the allowance for doubtful
accounts, advertising, professional fees, depreciation and other costs related
to maintaining the Company's branch offices. Other income and expense included
interest income of $275,000 in 1993, accrued on claims filed by the Company
with a United States government agency. During the course of the audit of
the Company's financial statements for the fiscal year ended September 30,
1993, the Company's independent auditors advised the Company that the carrying
value of the aforementioned government claims and related assets should be
eliminated and a non-recurring pre-tax accounting charge of $5,981,000 was
recorded in the accompanying statement of operations for the year ended
September 30, 1993. After reversing related deferred taxes of $2,026,000, this
adjustment reduced net income by $3,955,000 or $1.10 per share.
Interest expense increased to $396,000 in 1995 from $269,000 in 1994 and
$211,000 in 1993 as average borrowings, as well as interest rates, increased
over these periods. The effective tax rate was 38% in 1995, 30% in 1994 and 36%
in 1993. The lower rate in 1994 was principally due to utilization of loss carry
forwards and job tax credits.
As a result of the above, net income increased to $938,000 or $0.26 per share in
1995.Net income was $710,000 or $0.20 per share in 1994 compared to a net loss
of $3,376,000 or $0.93 per share in 1993, after including the after tax effect
of the aforementioned non-recurring charge of $3,955,000 or $1.10 per share.
Liquidity and Capital Resources
Current assets at September 30, 1995 were $8,902,000 as compared to $7,023,000
at September 30, 1994 and current liabilities were $6,427,000 compared to
$5,185,000 as of September 30, 1994. 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
$4,500,000 bank line of credit; loans thereunder are secured principally by
receivables and bear interest at the bank's base rate plus 1 percent;
$4,105,000 was outstanding under this line as of September 30, 1995.
The Company completed construction of a new building next to its existing
headquarters in early fiscal 1995. It serves as the operations center for the
staffing services divisions of the Company. It was financed by a $500,000
mortgage, with an interest rate of the bank's base rate plus 11/2 percent. The
Company also invested approximately $350,000 in new telephone and computer
network systems as well as $200,000 in vehicles during 1995.These investments
allowed the Company to increase productivity to accommodate current and
future growth.
The Company believes that internally generated funds and available borrowings
will provide sufficient cash flow to meet its requirements for the next 12
months.
<PAGE>
<TABLE>
Joul Inc. and Subsidiaries
Consolidated Balance Sheets
<CAPTION>
September 30,
Assets 1995 1994
CURRENT ASSETS:
<S> <C> <C>
__Cash $___ 70,000 $__ 49,000
___Accounts receivable, less allowance for doubtful accounts of ___$140,000 and $186,000
in 1995 and 1994, respectively (Note 8) 8,514,000 6,293,000
__Prepaid expenses and other current assets 318,000 681,000
______Total Current Assets 8,902,000 7,023,000
PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION OF ___$2,470,000 AND $2,154,000 1,698,000 1,282,000
GOODWILL 132,000 156,000
OTHER ASSETS 70,000 115,000
$10,802,000 $8,576,000
Liabilities and Stockholders' Equity
CURRENT LIABILITIES:
__Loans payable to bank $_4,105,000 $3,363,000
__Accounts payable and accrued expenses 1,137,000 906,000
__Accrued payroll and related taxes 1,083,000 701,000
__Income taxes 77,000 215,000
__Current portion of long term debt 25,000 0
______Total Current Liabilities 6,427,000 5,185,000
LONG TERM DEBT 456,000 424,000
______Total Liabilities 6,883,000 5,609,000
STOCKHOLDERS' EQUITY:
__Preferred stock, $.01 par value:
____Authorized 500,000 shares, none outstanding
__Common stock, $.01 par value:
____Authorized 10,000,000 shares issued 3,760,000 and 3,750,000 shares respectively 38,000 38,000
__Paid-in capital 3,502,000 3,488,000
__Retained earnings (deficit) 787,000 (151,000)
4,327,000 3,375,000
LESS: Cost of 150,000 shares of common stock held in treasury 408,000 408,000
______Total Stockholders' Equity 3,919,000 2,967,000
$10,802,000 $8,576,000
<FN>
<F1>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Joul Inc. and Subsidiaries
Consolidated Statements of Operations
<CAPTION>
Year Ended September 30,
1995 1994 1993
<S> <C> <C> <C>
REVENUES $43,641,000 $36,216,000 $32,123,000
COSTS, EXPENSES, AND OTHER:
__Cost of services 36,245,000 30,456,000 26,970,000
__Selling, general and administrative expenses 5,434,000 4,496,000 4,424,000
___Elimination of carrying value of claims with ___U.S. Government Agency (Note 2) 5,981,000
__Interest expense 396,000 269,000 211,000
__Other 53,000 (19,000) (212,000)
INCOME (LOSS) BEFORE INCOME TAX PROVISION (BENEFIT) 1,513,000 1,014,000 (5,251,000)
INCOME TAX PROVISION (BENEFIT) (Note 6) 575,000 304,000 (1,875,000)
NET INCOME (LOSS) (Note 2) $__ 938,000 $__ 710,000 $ (3,376,000)
NET INCOME (LOSS) PER COMMON SHARE (Note 2) $_____ 0.26 $_____ 0.20 $_____(0.93)
AVERAGE NUMBER OF SHARES AND EQUIVALENTS ___OUTSTANDING 3,628,000 3,623,000 3,611,000
<FN>
<F1>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Joule Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
<CAPTION>
No. of Retained
Shares of Common Paid-in Earnings Treasury
Common Stock Stock Capital (Deficit) Stock
(in thousands)
<S> <C> <C> <C> <C> <C>
BALANCES, 9/30/92 3,750 $38 $3,488 $ 2,515 $(408)
YEAR ENDED 9/30/93:
__Net loss (3,376)
BALANCES, 9/30/93 3,750 38 3,488 (861) (408)
YEAR ENDED SEPT 30, 1994:
__Net income 710
BALANCES, 9/30/94 3,750 38 3,488 (151) (408)
YEAR ENDED SEPTEMBER 30, 1995:
__Net income 938
__Stock Options
Exercised 100 14
BALANCES, 9/30/95 3,760 $38 $3,502 $__787 $(408)
<FN>
<F1>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Joule Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<CAPTION>
Year Ended September 30,
1995 1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
__Net income (loss) $__938,000 $__710,000 $(3,376,000)
___Adjustments to reconcile net income to net cash flows ___used in operating activities:
_____Elimination of carrying value of claims with ___U.S. Government Agency (Note 2) 5,981,000
____Depreciation and amortization 346,000 232,000 201,000
____Loss from disposal of equipment 4,000
____Provision for losses on accounts receivable 120,000 65,000 123,000
____Deferred income taxes (1,936,000)
__Changes in operating assets and liabilities:
____Accounts receivable (2,341,000) (1,322,000) (772,000)
____Claims and other receivables with U.S. Government Agencies (454,000)
____Prepaid expenses and other assets 404,000 (295,000) 15,000
____Accounts payable and accrued expenses 231,000 (8,000) 205,000
____Accrued payroll and related taxes 382,000 210,000 (34,000)
____Income taxes (138,000) 165,000 28,000
______Net cash flows used in operating activities (54,000) (243,000) (19,000)
CASH FLOWS USED IN INVESTING ACTIVITIES:
__Acquisitions of property and equipment (738,000) (741,000) (214,000)
______Net cash flows used in investing activities (738,000) (741,000) (214,000)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
__Increase (decrease) in loans payable to bank 742,000 567,000 (15,000)
__Payment of long term debt (19,000)
__Additions to long term debt 76,000 424,000
__Proceeds from exercise of stock options 14,000
____Net cash flows from (used in) financing activities 813,000 991,000 (15,000)
NET CHANGE IN CASH 21,000 7,000 (248,000)
CASH, BEGINNING OF PERIOD 49,000 42,000 290,000
CASH, END OF PERIOD $___70,000 $___49,000 $___42,000
SUPPLEMENTAL CASH FLOW INFORMATION:
__Interest paid $__410,000 $__262,000 $__210,000
__Income taxes paid $__722,000 $__149,000 $___33,000
<FN>
<F1>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
Joule Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 Summary of Significant Accounting Policies:
Basis of Presentation The consolidated financial statements include the accounts
of JOULE INC. and its wholly-owned subsidiaries. All significant inter-
company transactions have been eliminated in consolidation.
Property and Equipment Property and equipment are stated at cost. Depreciation
has been provided by use of various methods, primarily straight line, at rates
based upon estimated useful lives of 3 to 5 years for automotive equipment and 5
to 10 years for machinery, equipment, furniture and fixtures. Improvements to
leasehold property are amortized on the straight-line method over the remaining
lease term or useful lives of related property, whichever is shorter. Buildings
are depreciated over 30 years.Revenue Recognition Revenue is recorded after
services are rendered.
Income Taxes The Company adopted SFAS No. 109 "Accounting for Income Taxes in
fiscal 1994. It had no significant impact on the Company's financial statements.
Net Income (Loss) Per Share Net income (loss) per share is based upon the
weighted average number of shares and common stock equivalents outstanding
during each year. Common stock equivalents consist of outstanding stock
options using the treasury stock method, if dilutive.
Goodwill Goodwill is being amortized over a period of approximately ten years.
Amortization of goodwill amounted to $24,000, in 1995, 1994 and 1993,
respectively.
Note 2 Claims and Other Receivables with a U. S. Government Agency:
During the course of a long term contract with a U. S. Government Agency and
prior to September 30, 1993 the Company recorded claims and related interest
receivables which amounted to $5,981,000. The claims were made under a contract,
completed in 1990, to provide maintenance services at a government facility.
The Government Agency's Contracting Officer rejected the claims; however, the
Company filed appeals with the U.S. Court of Federal Claims. On August 31, 1993,
the U.S. Court of Federal Claims issued an opinion dismissing all claims that
the Company had against the U.S. Government Agency. Accordingly, a pre-tax
charge of $5,981,000 was recorded in the 1993 statement of operations; after
reversing related deferred taxes of $2,026,000, this adjustment reduced
1993 net income by $3,955,000 or $1.10 per share. The Company appealed the
decision to the United States Court of Appeals for the Federal Circuit. In June
1994, the United States Court of Appeals for the Federal Circuit vacated the
judgment of the United States Court of Federal Claims that had dismissed the
Company's claims. The case was remanded to the lower court for findings of fact
and conclusions of law. In August 1994, the lower court issued a new opinion
which again dismissed the Company's claims. The Company then appealed the new
opinion. On July 17, 1995, the United States Court of Appeals for the Federal
Circuit affirmed the decision of the lower court dismissing the Company's
claims.This decision had no financial statement impact since the carrying value
of the claims and related costs were eliminated in the Company's financial
statements for the fiscal year ended September 30, 1993.
Note 3 Property and Equipment:
<TABLE>
Property and equipment consists of:
<CAPTION>
September 30,
1995 1994
<S> <C> <C>
Machinery and equipment $1,902,000 $1,478,000
Furniture and fixtures 529,000 501,000
Automotive equipment 733,000 537,000
Building and Leasehold improvements 250,000 207,000
Buildings 584,000 543,000
Land 170,000 170,000
4,168,000 3,436,000
Less: Accumulated depreciation and amortization 2,470,000 2,154,000
$1,698,000 $1,282,000
</TABLE>
Note 4 Loans Payable to Bank and Long Term Debt:
The Company has an annual renewable line of credit of $4,500,000 with interest
at its bank's base rate plus 1%. At September 30, 1995 $395,000 of the line of
credit was unused. Related loans are collateralized principally by accounts
receivable.
There is a mortgage loan for $481,000 on the Company's new staffing operations
building.At September 30, 1995 $25,000 was due within one year and classified
as a current liability. Additional principal payments approximating $25,000 per
year will be made until December 1999, when there will be a balloon payment due
for the balance. The interest rate is the bank's base rate plus 11/2%.
Note 5 Stock Option Plan:
In 1992 the Company adopted a Stock Option Plan. The plan provides for the grant
of non-qualified or incentive stock options covering up to an aggregate of
500,000 shares of common stock to directors, officers, and other employees of
the Company. The option price cannot be less than the fair market value of the
stock at the time the options are granted. At September 30, 1995, there were
47,000 stock options outstanding at a price of $1.375. All of these are
exercisable. There were also 6,500 stock options outstanding at September 30,
1995 from a previous stock option plan at prices ranging from $2.63 to
$6.13. In 1995, 10,000 options were exercised and none were granted or canceled.
No options were granted, canceled or exercised in 1994 or 1993.
Note 6 Income Taxes:
<TABLE>
Comparative analysis of the provisions (benefit) for income taxes follows:
<CAPTION>
September 30,
1995 1994 1993
<S> <C> <C> <C>
Current:
Federal $446,000 $213,000 $ 16,000
State and Local 129,000 91,000 45,000
Deferred:
Federal (1,512,000)
State and Local (424,000)
$575,000 $304,000 $(1,875,000)
</TABLE>
Deferred taxes in 1993 were principally due to the difference in reporting
income on government claims.
The provision for income taxes varied from the tax computed at the U.S. Federal
statutory rates of 34% in fiscal 1995, 1994 and 1993 for the following reasons:
<TABLE>
<CAPTION>
September 30,
1995 1994 1993
<S> <C> <C> <C>
U.S. Federal at statutory rates $514,000 $345,000 $(1,785,000)
State income taxes, net of Federal tax benefit 85,000 61,000 (250,000)
Elimination of tax benefit previously used to reduce deferred income taxes 150,000
Tax benefit of operating loss (16,000)
Job Tax Credits (16,000) (90,000)
Other (8,000) 4,000 10,000
$575,000 $304,000 $(1,875,000)
</TABLE>
Note 7 Commitments and Contingencies:
The Company's facilities are leased under noncancellable terms expiring through
1999.Rent expense was $275,000, $295,000 and $299,000 for the years ended
September 30, 1995, 1994 and 1993, respectively.
Aggregate rentals for the remaining lease terms at September 30, 1995 are as
follows:
<TABLE>
<CAPTION>
Year Ending September 30,
<S> <C>
1996 $_83,000
1997 45,000
1998 17,000
1999 17,000
$162,000
</TABLE>
Note 8 Transactions with Major Stockholders and Affiliates:
The Company rented facilities from certain of its stockholders and their
affiliates for approximately $199,000, $208,000 and $208,000 for the years ended
September 30, 1995,1994 and 1993, respectively. At September 30, 1995 the
Company had lease commitments of $37,000, $16,000, $16,000 and $17,000 for the
years ending September 30, 1996, 1997, 1998 and 1999, respectively _for these
facilities.
The Company paid various major stockholders legal and consulting fees of
$16,000, $13,000 and $21,000 for the years 1995, 1994 and 1993; and accounts
receivable include amounts due from affiliates and stockholders of
$1,038,000, $885,000 and $675,000 at September 30, 1995, 1994 and 1993,
respectively; substantially all of the amount receivable at September 30,
1995, representing amounts owing from Kahle Engineering Corp., has been
guaranteed by the Company's principal shareholder.
Note 9 Geographic Information:
The Company is engaged in the outsourcing services business, providing
personnel to business and industry. The Company derived 67%, 70% and 69%, of
its revenues from services provided to customers in New Jersey in 1995, 1994
and 1993, respectively.
<PAGE>
Report of Independent Public Accountants
To the Stockholders and Board of Directors of Joule Inc.
We have audited the accompanying consolidated balance sheets of Joule Inc. (a
Delaware corporation) and subsidiaries as of September 30, 1995 and 1994 and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for the years then ended. 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. The financial
statements of Joule, Inc. and subsidiaries for the year ended September 30,
1993, were audited by other auditors whose report thereon dated
November 18, 1993 expressed an unqualified opinion on those statements.
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 financial statements referred to above present fairly, in
all material respects, the financial position of Joule Inc. and subsidiaries as
of September 30, 1995 and 1994, and the results of their operations and their
cash flows for the years then ended in conformity with generally accepted
accounting principles.
Roseland, New Jersey
November 13, 1995
Stock Market Information
Market for Registrant's Common Equity and Related Stockholder Matters
The Company's Common Stock is traded on the American Stock Exchange under the
symbol JOL.The high and low sales prices for the Common Stock as reported by
the American Stock Exchange were as follows:
<TABLE>
<CAPTION>
High Low
<S> <C> <C>
Calendar 1993
Fourth Quarter 23/16 11/2
Calendar 1994
First Quarter 31/8 15/16
Second Quarter 37/16 23/4
Third Quarter 33/16 13/4
Fourth Quarter 23/4 13/4
Calendar 1995
First Quarter 3 13/4
Second Quarter 3 2
Third Quarter 43/4 2
Fourth Quarter
(through 12/4) 41/2 31/2
</TABLE>
As of November 30, 1995, there were approximately 1,200 holders of the
Company's Common Stock. No cash dividends have been declared on the Common
Stock.
12
<PAGE>
Joule Inc. and Subsidiaries
Corporate Data
Board of Directors
William C. Dackis
Group President
Crane Co. (Retired)
Paul L. DeBacco
President
Michael Christopher Group
Peter J. Gianacakes
President
Burlington Enterprises
Robert W. Howard
Chairman of the Board
Reisen Lumber Industries, Inc.
Emanuel N. Logothetis
Chairman of the Board, President and Chief Executive Officer
Nick M. Logothetis
President
Chartwell Consulting Group
Steven Logothetis
Attorney
Officers
Emanuel N. Logothetis
Chairman of the Board, President and Chief Executive Officer
Bernard G. Clarkin
Vice President, Chief Financial Officer and Secretary
Richard P. Flaherty
Vice President
John F. Logothetis
Vice President
Corporate Information
For a copy of Form 10-K or other information about the Corporation, contact:
Investor RelationsSecretary
JOULE Inc.
1245 Route 1 South
Edison, New Jersey 08837
(908) 548-5444
Auditors
Arthur Andersen LLP
101 Eisenhower Parkway
Roseland, New Jersey 07068
Transfer Agent and Registrar
Continental Stock Transfer & Trust Company
2 Broadway_New York, New York 10275-0491
JOULE Common Stock is traded on the American Stock Exchange under the symbol
JOL.
Annual Meeting
The annual meeting of JOULE Inc. will be held on Wednesday, February 7, 1996 at
10:30 a.m., at the Pines Manor, Edison, New Jersey.
Joule Inc. Offices
Headquarters
1245 Route 1 South,Edison, New Jersey 08837, (908) 548-5444, Fax (908) 494-6346
1235 Route 1 South, Edison, NJ 08837, (908) 906-0906
362 Parsippany Road, Parsippany, New Jersey 07054, (201) 428-8100
225 Route 46, Totowa, New Jersey 07512, (201) 256-8700
1271 Paterson Plank Road, Secaucus, New Jersey 07094, (201) 348-3677
The Atrium, 80 Route 4 East, 1st Floor, Suite 105, Paramus, New Jersey 07652,
(201)845-0900
429 East Broad Street, Gibbstown, New Jersey 08027, (609) 423-7500,
(215) 342-3300
1638 Tilton Road, Northfield, New Jersey 08225, (609) 383-1433
2333 Whitehorse-Mercerville Road, Trenton, New Jersey 08619, (609) 588-5900
77 Main Street, P.O. Box 7, Fishkill, New York 12524, (914) 897-3900
2400 West Cypress Creek Road, Suite 100, Ft. Lauderdale, Florida 33309,
(305) 492-1110
981 Route 22, Suite 2000, Bridgewater, New Jersey 08807, (908) 575-1800
Designed by Curran & Connors, Inc.
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF
JOULE INC.
Subsidiary State of Incorporation
JOULE Maintenance Corp. New Jersey
JOULE Maintenance of Bayonne, Inc. New Jersey
JOULE Maintenance of Gibbstown, Inc. New Jersey
JOULE Engineering Corp. New Jersey
JOULE Technical Services, Inc. New Jersey
JOULE Temporaries Corp. New Jersey
JOULE Maintenance of New York, Inc. New York
JOULE Maintenance of Maryland, Inc. Maryland
Eisler Engineering Corp. New Jersey
20 Orchard St., Inc. New Jersey
<PAGE>
EXHIBIT 23.1
Arthur Andersen LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report incorporated by reference in this Form 10-K, into the
Company's previously filed Registration Statement File No. 33-57996.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
December 19, 1995
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement No.
33-57996 of Joule', Inc. on Form S-8 of our report dated November 18, 1993
relating to the consolidated financial statements of Joule', Inc. and
subsidiaries as of September 30, 1993 and for the year then ended
incorporated by reference in Part IV of the Annual Report on Form 10-K of
Joule', Inc. for the year ended September 30, 1995
WISS & COMPANY, LLP
Livingston, New Jersey
December 18, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000798168
<NAME> JOULE INC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 70
<SECURITIES> 0
<RECEIVABLES> 8,654
<ALLOWANCES> 140
<INVENTORY> 0
<CURRENT-ASSETS> 8,902
<PP&E> 4,168
<DEPRECIATION> 2,470
<TOTAL-ASSETS> 10,802
<CURRENT-LIABILITIES> 6,427
<BONDS> 456
0
0
<COMMON> 38
<OTHER-SE> 3,881
<TOTAL-LIABILITY-AND-EQUITY> 10,802
<SALES> 0
<TOTAL-REVENUES> 43,641
<CGS> 0
<TOTAL-COSTS> 36,245
<OTHER-EXPENSES> 5,367
<LOSS-PROVISION> 120
<INTEREST-EXPENSE> 396
<INCOME-PRETAX> 1,513
<INCOME-TAX> 575
<INCOME-CONTINUING> 938
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 938
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
