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, 1997
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: 732-548-5444
Securities registered pursuant to Section 12(b) of the Act: Common Stock, par
value $.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 8, 1997, was approximately $5,627,000.
As of December 8, 1997, there were 3,670,000 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Company's Annual Report to Stockholders for the fiscal
year ended September 30, 1997 filed with the Securities and Exchange Commission
(The "Commission") pursuant to Rule 14a-3 under the Securities Exchange Act of
1934 (The "1997 Annual Report"), 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 1998 Annual Meeting of Stockholders (the "Proxy
Statement") 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. These
services focus on supplying commercial, skilled office and light industrial
workers, technical professionals and skilled craft industrial plant and facility
maintenance personnel to business and industry on a temporary basis. The Company
derived 71%, 68% and 67% of its revenue from services provided to customers in
New Jersey in 1997, 1996 and 1995, 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. Historically, over 90% of revenue is billed
based on direct cost plus a mark-up to cover the Company's overhead and profit.
During the fiscal year ended September 30, 1997, the Company furnished
approximately 6,600 employees to approximately 1,100 clients. At September 30,
1997, approximately 1,300 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.
Description of Services
The Company supplies commercial (skilled office and light industrial
workers) to business and industry. The office workers are comprised of word
processing, data entry, consumer service and other office service personnel.
Light industrial workers may work in warehouse, packaging or light assembly
environments. Recruitment and assignment of such personnel is conducted through
seven offices in New Jersey and one in Florida. The 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.
During 1997, the number of office and light industrial workers on assignment per
week averaged 800, and such services contributed approximately 38%, 31% and 31%
of revenues in 1997, 1996 and 1995, respectively.
The Company's technical employees include engineers, designers, draftsmen,
information technology personnel, scientists and lab technicians, who are often
furnished on a project basis. Recruitment and assignment of these personnel are
conducted from Edison, New Jersey. A client that has an in-house engineering or
other technical department is able to supplement its permanent staff in a
particular skill or for a specific project by utilizing personnel provided by
the Company to implement the client's designs or program
2
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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 professionally
liable. 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 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. During 1997, the
number of technical workers on assignment per week approximated 300, and such
services contributed approximately 27%, 24% and 20% of revenues in 1997, 1996
and 1995, respectively.
The Company also provides skilled craft industrial plant and facility
maintenance labor services at oil refineries, utilities, chemical,
pharmaceutical and industrial plants, and office buildings. These assignments
often encompass 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 tradesmen 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
generally charges clients at hourly rates, which include a mark up for overhead
and profit, for the different classifications of tradesmen and supervisory
personnel and on a cost-plus basis for materials and equipment. During 1997, the
average number of such skilled industrial service personnel on assignment per
week to clients was approximately 250. Historically, a substantial percentage of
industrial services contracts are renewed. Skilled industrial services
contributed approximately 35%, 45% and 49% of revenues in fiscal 1997, 1996 and
1995, respectively.
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 core work loads. Clients are thus able to shift to the Company the cost
and inconvenience associated with the employment of non-core 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.
3
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Customers and Marketing
A significant portion of the Company's business represents repeat orders.
For fiscal 1997 over 80% 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 1997, 1996 or 1995.
Personnel Assignment and Recruitment
The Company maintains a computerized data base of information on potential
employees. It uses optical scanning equipment to enhance its resume' data base
retrieval system. The data base contains information on office services and
light industrial personnel, engineering and other technical and scientific
personnel, and skilled industrial 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 and technical areas where immediate response to client orders is
required. In addition, it is important in the technical 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 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 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.
4
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Employees
At September 30, 1997, the Company employed approximately 100 full and
part-time permanent employees in its headquarters and branch offices other than
those on assignment to clients and had approximately 1,300 persons on assignment
to approximately 300 clients. The Company is a party to collective bargaining
agreements covering approximately 200 employees engaged in skilled craft
industrial and facility maintenance work. The Company considers its
relationships with its employees to be satisfactory.
ITEM 2. PROPERTIES
The Company leases most of its facilities. At September 30, 1997, the
Company was party to eleven leases comprising approximately 36,000 square feet.
The Company's corporate headquarters are located in Edison, New Jersey and
comprise approximately 8,000 square feet. The Company owns that building and two
others, including a building in Gibbstown, N.J. which serves as an office and
depot for its industrial services group and a building adjacent to its corporate
headquarters which serves as operational headquarters of the Company's
commercial and technical staffing groups. Three 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 approximately $50,000, 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 32,000 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 Notes 6 and 7 of Notes to Consolidated Financial
Statements.
ITEM 3. LEGAL PROCEEDINGS
In the opinion of management, there are no material pending legal
proceedings to which the Company is a party or of which any of its property is
the subject.
5
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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 8, 1997 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 67, 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 48, 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.
John Logothetis, age 44, 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.
Stephen Demanovich, age 43, was elected a Vice President in May, 1997. He
had been General Manager of Joule Technical Staffing since March, 1995 and prior
thereto had been Recruiting Manager since joining the Company in February, 1989.
Anthony Trotter, age 40, was appointed Vice President in August, 1997 when
he joined the Company. Prior to that he was employed as Vice President of Staff
Management Services from October, 1995 through July, 1997. He was Vice President
of Best Temporaries from December, 1994 through September, 1995. Prior to that
he was an Area Manager for Novell Services, Inc. from March, 1992 through
August, 1994.
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 caption "Stock Market Information" on page 12 of the 1997
Annual Report.
6
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ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated by reference to the
"Selected Financial Information", included on the inside cover of the 1997
Annual Report.
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 page 6 of the 1997 Annual Report.
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 7 to 11 of the 1997 Annual
Report.
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, 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.
7
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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 1997 Annual Report.
Report of Independent Public Accountants with respect to the financial
statements for the fiscal years, 1997, 1996 and 1995, respectively.
Consolidated Balance Sheets of September 30, 1997 and 1996,
respectively.
Consolidated Statements of Income for the Years Ended September 30,
1997, 1996 and 1995, respectively.
8
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Consolidated Statements of Changes in Stockholders Equity for the
Years Ended September 30, 1997, 1996 and 1995, respectively.
Consolidated Statements of Changes in Cash Flows for the Years Ended
September 30, 1997, 1996 and 1995, respectively.
Notes to Consolidated Financial Statements.
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-1
Financial Statement Schedules:
VIII - Valuation and Qualifying Accounts..................F-2
IX - Short-term Borrowings..............................F-3
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.
9
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(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 Extension Agreement, dated August 23,
1995, between Registrant and United Jersey Bank, filed as
Exhibit 4.1a to the Company's Annual Report on Form 10-k for
the year ended September 30, 1995 and incorporated herein by
reference.
4.1b -- Fourth Modification and Extension Agreement dated February
6, 1996 between Registrant and United Jersey Bank, filed as
Exhibit 4.1b to the Company's Annual Report on form 10-K for
the year ended September 30, 1996 and incorporated herein by
reference.
4.1c -- Fifth Modification and Extension Agreement dated May 31,
1996 between Registrant and United Jersey Bank, filed as
Exhibit 4.1c to the Company's Annual Report on form 10-K for
the year ended September 30, 1996 and incorporated herein by
reference.
4.1d -- Sixth Modification and Extension Agreement dated May 31,
1997 between registrant and Summit 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 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
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10.2 -- 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.
10.3* -- 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.
10.4* -- 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,
1997.
21 -- List of Subsidiaries.
23 -- Consent of Independent Public Accountants
27 -- Financial Data Schedule (in EDGAR filing only)
- ----------
* Compensatory Plan
11
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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 23, 1997 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 23, 1997.
Emanuel N. Logothetis Bernard G. Clarkin
- ------------------------------- ----------------------------------------
Emanuel N. Logothetis Bernard G. Clarkin
Chairman of the Board, President Vice President and Chief Financial
(Principal Executive Director Officer (Principal Financial
Officer) Officer and Accounting Officer)
Nick M. Logothetis
- ------------------------------- ----------------------------------------
Nick M. Logothetis - Director Steven Logothetis - Director
Richard Barnitt Paul De Bacco
- ------------------------------- ----------------------------------------
Richard Barnitt- Director Paul DeBacco - Director
- ------------------------------- ----------------------------------------
Robert W. Howard - Director Anthony Grillo - Director
12
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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. and subsidiaries annual report to
shareholders incorporated by reference in this Form 10-K, and have issued our
report thereon dated November 18, 1997. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The schedules listed in
the index above are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules 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 18, 1997
F-1
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SCHEDULE VIII
JOULE INC. AND SUBSIDIARIES
VALUATION AND QUALIFICATION ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
BALANCE CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ----------- --------- -------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Allowance for
doubtful accounts:
Years Ended:
September 30, 1995 $186,000 $120,000 -- $166,000 $140,000
September 30, 1996 $140,000 $109,000 -- $ 32,000 $217,000
September 30, 1997 $217,000 $ 87,000 $104,000 $200,000
</TABLE>
F-2
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SCHEDULE IX
JOULE INC AND SUBSIDIARIES
SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
WEIGHTED MAXIMUM AVERAGE WEIGHTED
CATEGORY OF AVERAGE AMOUNT OF AMOUNT AVERAGE
AGGREGATE INTEREST RATE BORROWINGS OUTSTANDING INTEREST RATE
SHORT-TERM BALANCE AT AT END OF DURING THE DURING THE DURING THE
BORROWINGS END OF YEAR YEAR YEAR YEAR* YEAR*
----------- ----------- ------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
YEARS ENDED
SEPTEMBER 30, 1995 BANKS $4,105,000 9.75% $4,155,000 $3,472,000 10.0%
SEPTEMBER 30, 1996 BANKS $2,343,000 7.70% $4,305,000 $3,027,000 8.75%
SEPTEMBER 30, 1997 BANKS $1,295,000 7.75% $2,743,000 $2,070,000 7.83%
</TABLE>
*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.
F-3
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
- ------ ---------------------- ----
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 Extension Agreement, dated August 23, *
1995, between Registrant and United Jersey Bank, filed as
Exhibit 4.1a to the Company's Annual Report on Form 10-K for
the year ended September 30, 1995 and incorporated herein by
reference.
4.1b Fourth Modification and Extension Agreement dated February *
6, 1996 between Registrant and United Jersey Bank, filed as
Exhibit 4.1b to the Company's Annual Report on form 10-K for
the year ended September 30, 1996 an incorporated herein by
reference.
4.1c Fifth Modification and Extension Agreement dated May 31, *
1996 between Registrant and United Jersey Bank, filed as
Exhibit 4.1c to the Company's Annual Report on form 10-K for
the year ended September 30, 1996 and incorporated herein by
reference.
4.1d Sixth Modification and Extension Agreement dated May 31, 18
1997, between registrant and Summit 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
<PAGE>
Page
----
exceed 10 percent of the total assets of the registrant and *
its subsidiaries on a consolidated basis.
10.1 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.
10.2 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.
10.3** 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.
10.4** 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 38
30, 1997.
21 List of Subsidiaries 55
23 Consent of Independent Public Accountants 57
27 Financial Data Schedule (in EDGAR Filing only)
* Incorporated by Reference
** Compensatory Plan
EXHIBIT-4.1d
<PAGE>
- --------------------------------------------------------------------------------
SIXTH MODIFICATION AND EXTENSION AGREEMENT
by and among
JOULE, INC.,
as the Borrower
and
JOULE MAINTENANCE CORPORATION,
JOULE TECHNICAL SERVICES, INC. and
JOULE TECHNICAL STAFFING, INC.,
collectively as the Corporate Guarantors
and
SUMMIT BANK
as the Lender
Dated: As of May 31, 1997
- --------------------------------------------------------------------------------
<PAGE>
SIXTH MODIFICATION AND EXTENSION AGREEMENT
THIS SIXTH MODIFICATION AND EXTENSION AGREEMENT (including all amendments,
modifications and supplements is hereinafter referred to as the "Sixth
Modification Agreement"), is made as of this 31st day of May, 1997, 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
office located at 1245 Route 1 South, Edison, New Jersey 08837 (hereinafter
referred to as the "Borrower"),
AND
JOULE MAINTENANCE CORPORATION, a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey, having
its principal executive office located at 1245 Route 1 South, Edison, New Jersey
08837 (hereinafter referred to as "Joule Maintenance Corporation"),
AND
JOULE TECHNICAL SERVICES, INC., as successor-in-interest pursuant to the
merger of JOULE ENGINEERING CORP., JOULE TEMPORARIES CORPORATION, JOULE
MAINTENANCE OF MARYLAND, INC., JOULE TECHNICAL CORPORATION, JOULE MAINTENANCE OF
GIBBSTOWN, INC., JOULE MAINTENANCE OF NEW YORK, INC. AND TIGER MAINTENANCE, a
corporation duly organized, validly existing and in good standing under the laws
of the State of New Jersey, having its principal executive office located at
1245 Route 1 South, Edison, New Jersey 08837 (hereinafter referred to as "Joule
Technical Services, Inc."),
AND
JOULE TECHNICAL STAFFING, INC., a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey, having
its principal executive office located at 1245 Route 1 South, Edison, New Jersey
08837 (hereinafter referred to as "Joule Technical Staffing, Inc." and
hereinafter Joule Maintenance Corporation, Joule Technical Services, Inc. and
Joule Technical Staffing, Inc. shall be collectively be referred to as the
"Corporate Guarantors"),
AND
SUMMIT BANK, as successor-in-interest to UNITED JERSEY BANK, having an
office located at 210 Main Street, Hackensack, New Jersey 07601, being a banking
institution duly organized and validly existing under the laws of the State of
New Jersey (hereinafter referred to as the "Lender").
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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 the maker, and delivered
to the Lender, as the 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, Joule Maintenance
Corporation, Joule Maintenance of Gibbstown, Inc. (hereinafter referred to as
"Joule Maintenance of Gibbstown, Inc."), Joule Engineering Corp. (hereinafter
referred to as "Joule Engineering Corp."), Joule Engineering of California, Inc.
(hereinafter referred to as "Joule Engineering of California, Inc."), Joule
Technical Corporation (hereinafter referred to as "Joule Technical
Corporation"), Joule Temporaries Corporation (hereinafter referred to as "Joule
Temporaries Corporation"), Joule Maintenance of New York, Inc. (hereinafter
referred to as "Joule Maintenance of New York, Inc."), Joule Maintenance of
Maryland, Inc. (hereinafter referred to as "Joule Maintenance of Maryland,
Inc."), Joule Engineering of Pennsylvania, Inc. (hereinafter referred to as
"Joule Engineering of Pennsylvania, Inc."), Joule Constructors, Inc.
(hereinafter referred to as "Joule Constructors, Inc."), Joule Temporaries of
Edison, Inc. (hereinafter referred to as "Joule Temporaries of Edison, Inc."),
Joule Temporaries of Parsippany, Inc. (hereinafter referred to as "Joule
Temporaries of Parsippany, Inc."), Joule Operating Services, Inc. (hereinafter
referred to as "Joule Operating Services, Inc."), Tiger Maintenance, Inc.
(hereinafter referred to as "Tiger Maintenance, Inc.") and Joule Maintenance of
Bayonne, Inc. (hereinafter referred to as "Joule Maintenance of Bayonne, Inc."
and hereinafter Joule Maintenance Corporation, Joule Maintenance of Gibbstown,
Inc., Joule Engineering Corp., Joule Engineering of California, Inc., Joule
Technical Corporation, Joule Temporaries Corporation, Joule Maintenance of New
York, Inc., Joule Maintenance of Maryland, Inc., Joule Engineering of
Pennsylvania, Inc., Joule Constructors, Inc., Joule Temporaries of Edison, Inc.,
Joule Temporaries of Parsippany, Inc., Joule Operating Services, Inc., Tiger
Maintenance, Inc., and Joule Maintenance of Bayonne, Inc. shall be collectively
referred to as the "Original Corporate Guarantors") and 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 the guarantor
(hereinafter referred to as the "Individual Guarantor"), executed and delivered
to the Lender, as the 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 Original Corporate Guarantor,
collectively as the guarantor, executed and delivered to the Lender, as the
lender, a separate Corporate Guaranty, pursuant to which each Original Corporate
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,
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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 the assignor, delivered to
the Lender, as the 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 the "Assignment #1"), as collateral
security for the Borrower's obligations under the Loan Agreement; and
WHEREAS, on February 20, 1991, Joule Maintenance Corporation, as
successor-in-interest to Joule Maintenance Corp., as the assignor, executed and
delivered to the Lender, as the 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, the Borrower, as the maker, executed and
delivered to the Lender, as the payee, a certain Promissory Note for the purpose
of extending the term of the Revolving Credit Loan from the then current
maturity date of "September 1, 1991", to a new maturity date of "January 15,
1992" (hereinafter referred to as the "Extension Agreement #1"); and
WHEREAS, on January 15, 1992, the Borrower, as the maker, executed and
delivered to the Lender, as the payee, a certain Master Advance Note for the
purpose of extending the term of the Revolving Credit Loan from the then current
maturity date of "January 15, 1992" to a new maturity date of "January 31, 1993"
(hereinafter referred to as the "Extension Agreement #2"); and
WHEREAS, on January 31, 1993, the Borrower, as the maker, executed and
delivered to the Lender, as the payee, a certain Master Advance Note for the
purpose of extending the term of the Revolving Credit Loan from the then current
maturity date of "January 31, 1993" to a new maturity date of "January 31, 1994"
(hereinafter referred to as the "Extension Agreement #3"); and
WHEREAS, on January 31, 1994, the Borrower, as the maker, executed and
delivered to the Lender, as the payee, a certain Master Advance Note for the
purpose of extending the term of the Revolving Credit Loan from the then current
maturity date of "January 31, 1994" to a new maturity date of "March 31, 1994"
(hereinafter referred to as the "Extension Agreement #4"); and
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WHEREAS, on March 31, 1994, the Borrower, the Original Corporate
Guarantors, the Individual Guarantor and the Lender entered into a certain First
Modification and Extension Agreement for the purposes of (i) in Article I,
Section 1.1 of the Loan Agreement, extending the Termination Date of the
Revolving Note from the then current Termination Date of "March 31, 1994" to a
new Termination 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 "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 the maker, executed and
delivered to the Lender, as the 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 then current maturity date of "March 31, 1994" to a 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 "4365 Route 1 South, Princeton, New Jersey 08540" (hereinafter
referred to as the "First Allonge"); and
WHEREAS, Joule Engineering of California, Inc., Joule Engineering of
Pennsylvania, Inc., Joule Constructors, Inc., Joule Temporaries of Edison, Inc.,
Joule Temporaries of Parsippany, Inc. and Joule Operating Services, Inc. each
had their respective charters revoked and are no longer doing business; and
WHEREAS, as of January 31, 1995, the Borrower, the Original 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) in Article I, Section
1.1 of the Loan Agreement, extending the Termination Date of the Revolving Note
from the then current Termination Date of "January 31, 1995" to a new
Termination Date of "January 31, 1996"; (ii) in Article II, Section 2.4 of the
Loan Agreement, decreasing the interest rate from the existing interest rate of
"Base Rate plus one and one-half percent (1.5%) per annum" to a 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
Lender's name from the existing name of "United Jersey Bank/Central, N.A." to
the new name of "United Jersey Bank"; and
WHEREAS, as of January 31, 1995, the Borrower, as the maker, executed and
delivered to the Lender, as the payee, a certain Second Allonge to $4,000,000.00
Revolving Note for the purposes of (i) extending the maturity date of the
Revolving Note from the then current maturity date "January 31, 1995" to a new
maturity date of "January 31, 1996"; (ii) decreasing the interest rate from the
existing 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
Lender's existing name of "United Jersey Bank/Central, N.A." to the Lender's new
name of "United Jersey Bank" (hereinafter referred to as the "Second Allonge");
and
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<PAGE>
WHEREAS, on August 23, 1995, the Borrower, the Original Corporate
Guarantors and the Lender entered into a certain Third Modification and
Extension Agreement (hereinafter referred to as the "Third Modification
Agreement") for the purposes of (i) in Article I, Section 1.1 of the Loan
Agreement, increasing the original aggregate principal amount of the Revolving
Credit Loan from the existing aggregate principal amount of "$4,000,000.00" to
the new increased aggregate principal amount of "$4,500,000.00"; (ii) in Article
I, Section 1.1 of the Loan Agreement, extending the Termination Date of the
Revolving Note from the then current Termination Date of "January 31, 1996" to a
new Termination Date of "May 31, 1996"; (iii) in Article II, Section 2.2 of the
Loan Agreement, providing for the issuance of Letters of Credit; (iv) providing
for a new section of the Loan Agreement, Section 5.23, which provides for the
Borrower's Maximum Debt to Tangible Net Worth Ratio of 2.0 -to- 1.0; (v) in
Article V of the Loan Agreement, providing for a new section, Section 5.24,
which provides for the Borrower's Maximum Debt Service Coverage Ratio 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 existing address of "4365 Route 1 South, Princeton, New Jersey 08540" to a
new address of "Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837";
and
WHEREAS, on August 23, 1995, the Borrower, as the maker, executed and
delivered to the Lender, as the payee, a certain Third Allonge to $4,000,000.00
Revolving Note for the purposes of (i) increasing the original aggregate
principal amount of the Revolving Credit Loan from the existing aggregate
principal amount of "$4,000,000.00" to a new increased aggregate principal
amount of "4,500,000.00"; (ii) extending the maturity date of the Revolving Note
from the then current maturity date of "January 31, 1996" to a new maturity date
of "May 31, 1996"; and (iii) amending and modifying the Lender's address from
the existing address of "4365 Route 1 South, Princeton, New Jersey 08540" to a
new address of "Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837"
(hereinafter referred to as the "Third Allonge"); and
WHEREAS, Joule Maintenance Corp. and Joule Maintenance of Bayonne, Inc.
were merged and consolidated and Joule Maintenance Corporation is the
successor-in-interest to both companies; and
WHEREAS, on February 6, 1996, the Borrower, the Original Corporate
Guarantors and the Lender entered into a certain Fourth Modification and
Extension Agreement (hereinafter referred to as the "Fourth Modification
Agreement") for the purposes of (i) in Article I, Section 1.1 of the Loan
Agreement, providing for the definition of "Borrowing"; (ii) in Article I,
Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar
Affiliate"; (iii) in Article I, Section 1.1 of the Loan Agreement, providing for
the definition of "Eurodollar Interest Period"; (iv) in Article I, Section 1.1
of the Loan Agreement, providing for the definition of "Eurodollar Interest
Payment Date"; (v) in Article I, Section 1.1 of the Loan Agreement, providing
for the definition of "Eurodollar Interest Rate Determination Date"; (vi) in
Article I, Section 1.1 of the Loan Agreement, providing for the definition of
"Eurodollar Portion"; (vii) in Article I, Section 1.1 of the Loan Agreement,
providing for the definition of "Eurodollar Rate"; (viii) in Article I, Section
1.1 of the Loan Agreement, providing of the definition of "Eurodollar Rate
Loans"; (ix) in Article I, Section 1.1 of the Loan Agreement, providing for the
definition of "Eurodollar Rate Taxes"; (x) in Article I, Section 1.1 of the Loan
Agreement, providing for the definition of "Eurodollar Reserve Percentage"; (xi)
in Article I, Section 1.1 of the Loan
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Agreement, providing for the definition of "Funding Segment"; (xii) in Article
II, Section 2.4 of the Loan Agreement, deleting the existing Section 2.4 and
inserting a new Section 2.4 which provides that the Borrower may select an
interest rate from the interest rate options between either (1) the Base Rate
option or (2) the Eurodollar Rate Option; (xiii) in a new section of Article II
of the Loan Agreement, Section 2.11, providing for the Borrower's payment of an
unused commitment fee; and (xiv) in a new section of Article II of the Loan
Agreement, Section 2.12, providing for the special provisions governing
Eurodollar Rate Loans; and
WHEREAS, on February 6, 1996, the Borrower, as the maker, executed and
delivered to the Lender, as the payee, a certain Fourth Allonge to $4,000,000.00
Revolving Note for the purpose of deleting the existing Paragraph 2 of the
Revolving Note and inserting a new Paragraph 2 which provides that the interest
rate to be charged on the outstanding aggregate principal amount of the Loan
shall be set forth in Article II, Section 2.4 of the Loan Agreement (hereinafter
referred to as the "Fourth Allonge"); and
WHEREAS, as of May 31, 1996, the Borrower, as the maker, executed and
delivered to the Lender, as the payee, a certain Fifth Allonge to $4,000,000.00
Revolving Note for the purpose of extending the maturity date of the Revolving
Note from the then existing maturity date of "May 31, 1996" to a new maturity
date of "May 31, 1997" (hereinafter referred to as the "Fifth Allonge"); and
WHEREAS, as of May 31, 1996, the Borrower, the Original Corporate
Guarantors and the Lender entered into a certain Fifth Modification and
Extension Agreement (hereinafter referred to as the "Fifth Modification
Agreement") for the purpose of in Article I, Section 1.1 of the Loan Agreement,
extending the Termination Date of the Revolving Note from the then existing
Termination Date of "May 31,1996" to a new Termination Date of "May 31, 1997";
and
WHEREAS, pursuant to a certain Certificate of Merger from the Office of the
Secretary of State of the State of New Jersey dated February 3, 1997, Joule
Engineering Corp. was merged with Joule Technical Services, Inc.; and
WHEREAS, pursuant to a certain Certificate of Merger from the Office of the
Secretary of State of the State of New Jersey dated February 3, 1997, Joule
Temporaries Corporation was merged with Joule Technical Services, Inc.; and
WHEREAS, pursuant to a Certain Certificate of Merger from the Office of the
Secretary of State of the State of New Jersey dated February 3, 1997, Joule
Maintenance of Maryland, Inc. was merged with Joule Technical Services, Inc.;
and
WHEREAS, pursuant to a Certain Certificate of Merger from the Office of the
Secretary of State of the State of New Jersey dated February 3, 1997, Joule
Technical Corporation was merged with Joule Technical Services, Inc.; and
WHEREAS, pursuant to a Certain Certificate of Merger from the Office of the
Secretary of State of the State of New Jersey dated February 3, 1997, Joule
Maintenance of Gibbstown, Inc. was merged with Joule Technical Services, Inc.;
and
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WHEREAS, pursuant to a Certain Certificate of Merger from the Office of the
Secretary of State of the State of New Jersey dated _________, 1997, Joule
Maintenance of New York, Inc. was merged with Joule Technical Services, Inc.;
and
WHEREAS, Tiger Maintenance is no longer doing business and has had its
charter revoked; and
WHEREAS, as of even date herewith, the Borrower as the maker, has executed
and delivered to the Lender, as the payee, a certain Sixth Allonge to
$4,000,000.00 Revolving Note for the purposes of (i) extending the maturity date
of the Revolving Note from the existing maturity date of "May 31, 1997" to a new
maturity date of "May 31, 1998" and (ii) amending and modifying the Lender's
address from the existing address of "Raritan Plaza II, Fieldcrest Avenue,
Edison, New Jersey 08837" to a new address of "210 Main Street, Hackensack, New
Jersey 07601" (hereinafter referred to as the "Sixth Allonge"); and
WHEREAS, as of even date herewith, the Borrower, the Corporate Guarantors
and the Lender have agreed to enter into this Sixth Modification Agreement for
the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, deleting
the existing definition of "Corporate Guarantors" and inserting a new definition
of "Corporate Guarantors" in its place and stead; (ii) in Article I, Section 1.1
of the Loan Agreement, extending the Termination Date of the Revolving Note from
the existing Termination Date of "May 31, 1997" to a new Termination Date of
"May 31,1998"; (iii) in Article V, Section 5.8(d) of the Loan Agreement
providing for the consolidated balance sheet of the Obligors; (iv) in the Loan
Agreement, amending and modifying the Lender's address from the existing address
of "Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837" to a new
address of "210 Main Street, Hackensack, New Jersey 07601"; (v) in the "Loan
Documents" (as such term is hereinafter defined), providing that any and all
references to the "Corporate Guarantors" shall be deemed to refer to the
Corporate Guarantors; (vi) in the Loan Documents, deleting any and all
references to the existing maturity date of "May 31, 1997" and inserting a new
maturity date of "May 31, 1998" in its place and stead and (vii) in the Loan
Documents, amending and modifying the Lender's address from the existing address
of "Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837" to a new
address of "210 Main Street, Hackensack, New Jersey 07601"; and
WHEREAS, all words and terms not defined herein shall have the meaning as
contained in the Loan Agreement, as amended and modified up through and
including the Fifth Modification Agreement; and
WHEREAS, the aforesaid Revolving Note, the Loan Agreement, the Corporate
Guaranty, the Assignment #1, the Assignment #2, the Extension Agreement #1, the
Extension Agreement #2, the Extension Agreement #3, the Extension Agreement #4,
the First Allonge, the First Modification Agreement, the Second Allonge, the
Second Modification Agreement, the Third Allonge, the Third Modification
Agreement, the Fourth Allonge, the Fourth Modification Agreement, the Fifth
Allonge, the Fifth Modification Agreement and any and all of the documents,
agreements, certificates and instruments executed in connection herewith shall
be hereinafter collectively referred to as the "Loan Documents"; and
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NOW, THEREFORE, in consideration of these premises and the mutual
representations, covenants and agreements of the Borrower, 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 May 13, 1997, presently due and owing on the Revolving
Note the principal sum $2,300,000.00, 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) $2,300,000.00 for outstanding Advances 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 Sixth
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 Sixth 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; and
(b) the continued 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, as previously amended and modified, all of which
name the Lender as lender and/or loss payee with respect to Accounts
Receivable, Inventory, Equipment and other corporate assets.
3. To the best of the Borrower's and each Corporate Guarantor's knowledge,
the Borrower and each Corporate Guarantor represent that the liens on the
Collateral granted to the Lender under the Loan Agreement, as amended and
modified up through and including this Sixth Modification Agreement, continue to
be valid and enforceable first lien on the Collateral.
4. The Loan Agreement, as previously amended and modified, is hereby
further amended and modified, as follows:
(a) Article I, Section 1.1 of the Loan Agreement shall be amended and
modified as follows:
(i) Subsection (o) shall be deleted in its entirety and the
following new subsection (o) shall be inserted in its place and stead:
"(o) "Corporate Guarantors" shall mean each subsidiary of
the Borrower now or hereafter existing, including, without
limitation (i) Joule Maintenance Corporation, a corporation
duly organized, validly existing and in good standing under
the laws of the State of New Jersey, having its principal
executive office located at 1245 Route 1, South, Edison, New
Jersey 08837, (ii) Joule Technical Services, Inc., a
corporation duly organized, validly existing and in
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good standing under the laws of the State of New Jersey,
having its principal executive office located at 1245 Route
1 South, Edison, New Jersey 08837 and (iii) Joule Technical
Staffing, Inc., a corporation duly organized, validly
existing and in good standing under the laws of the State of
New Jersey, having its principal executive offices located
at 1245 Route 1 South, Edison, New Jersey 08837."
(ii) Subsection (ll) shall be amended and modified by deleting
the existing Termination Date of "May 31,1997" and inserting a new
Termination Date of "May 31, 1998" in its place and stead.
(b) Article V, Section 5.8(d) shall be amended and modified by
inserting after the existing phrase: "fiscal year) a" the following new
term: "consolidated".
(c) Any and all references to the Lender's existing address of
"Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837" shall be
deleted and a reference to the new address of "210 Main Street, Hackensack,
New Jersey 07601" shall be inserted in its place and stead.
5. The Loan Documents, as previously amended and modified, are hereby
further amended and modified as follows:
(a) Any and all references to "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." and/or "Tiger Maintenance, Inc." shall be deemed to refer
to "Joule Technical Services, Inc." and "Joule Technical Staffing, Inc." in
their place and stead.
(b) Any and all references to the existing maturity date of "May 31,
1997" shall be deleted and a new maturity date of "May 31, 1998" shall be
inserted in its place and stead.
(c) Any and all references to the Lender's existing address of
"Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837" shall be
deleted and a reference to the new address of "210 Main Street, Hackensack,
New Jersey 07601" shall be inserted in its place and stead.
6. To the best of the Borrower's and each of the Corporate Guarantors'
knowledge, all representations and warranties contained in the Loan Documents,
as amended and modified through this Sixth 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.
7. The Borrower, Joule Maintenance Corporation and Joule Technical
Services, Inc. expressly confirm and affirm that the addition of Joule Technical
Staffing, Inc. to the Corporate Guaranty does not affect the enforceability and
validity of the Corporate Guaranty with respect to
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Joule Maintenance Corporation and Joule Technical Services, Inc., and the
Corporate Guaranty remains in full force and effect as a continuing guaranty of
the full, prompt and unconditional payment of all present and future obligations
and/or liabilities of any kind of the Borrower due and owing to the Lender,
including, without limitation, the repayment in full of the Revolving Credit
Loan
8. All other terms and conditions of the Loan Documents, as amended and
modified through this Sixth Modification Agreement remain in full force and
effect, except as amended and 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 amended and modified by this Sixth Modification
Agreement.
9. It is the intention of the parties hereto that this Sixth 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 Sixth
Modification Agreement, or any portion 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 Sixth
Modification Agreement are prejudiced hereby, if any, this Sixth 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 Sixth 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 and
continued as security for the Revolving Credit Loan, as amended and
modified hereby; and
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(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 Sixth Modification
Agreement to be duly executed, sealed and attested and/or witnessed, as
appropriated, 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 CORPORATION
ATTEST:
_____________________________ By: ___________________________________
Bernard G. Clarkin Emanuel N. Logothetis
Secretary President
[SEAL] JOULE TECHNICAL
ATTEST: SERVICES, INC.
_____________________________ By: ___________________________________
Bernard G. Clarkin Emanuel N. Logothetis
Secretary President
[SEAL] JOULE TECHNICAL
ATTEST: STAFFING, INC.
_____________________________ By: ___________________________________
Bernard G. Clarkin Emanuel N. Logothetis
Secretary President
11
<PAGE>
SUMMIT BANK, as successor-in-
interest to UNITED JERSEY
BANK
By: ___________________________________
Bonnie Gershon
Vice President
12
<PAGE>
STATE OF NEW JERSEY :
: ss.
COUNTY OF MIDDLESEX :
BE IT REMEMBERED, that on this ____ day of June, 1997, 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 Bonnie
Gershon, who, I am satisfied is the person who executed the within Instrument,
as the Vice President of Summit Bank, the corporation named therein, and I
having first made know 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 the State of New Jersey
STATE OF NEW JERSEY :
: ss.
COUNTY OF MORRIS :
BE IT REMEMBERED, that on this ____ day of June, 1997, 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 Corporation,
Joule Technical Services, Inc. and Joule Technical Staffing, Inc., the
corporations named therein, and I having first made know to him the contents
thereof, he did thereupon acknowledge that the said Instrument made by said
corporations and sealed with their corporate seals and delivered by him as such
officer, is the voluntary act and deed of said corporations, made by virtue of
authority from their respective Boards of Directors, for the uses and purposes
therein expressed.
________________________________________
Notary Public of the State of New Jersey
13
<PAGE>
SIXTH ALLONGE TO
$4,000,000.00 REVOLVING NOTE
DATED FEBRUARY 20, 1991
THIS SIXTH ALLONGE (hereinafter referred to as the "Sixth Allonge") is made
as of this 31st day of May, 1997, by and between
JOULE, INC., having its principal executive offices located at 1245 Route 1
South, Edison, New Jersey 08837, being a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
(hereinafter referred to as the "Undersigned"),
AND
SUMMIT BANK, as successor-in-interest to UNITED JERSEY BANK, having an
office located at 210 Main Street, Hackensack, New Jersey 07601, being a banking
corporation duly organized and validly existing under the laws of the State of
New Jersey (hereinafter referred to as the "Lender").
BACKGROUND
A. On February 20, 1991, the Lender extended to the Undersigned a revolving
credit loan in the original aggregate principal amount of up to $4,000,000.00
(hereinafter referred to as the "Loan"), pursuant to the terms and conditions of
that certain Loan and Security Agreement dated February 20, 1991, executed by
and between the Undersigned and the Lender (hereinafter referred to as the "Loan
Agreement").
B. On February 20, 1991, the Undersigned, as the maker, executed and
delivered to the Lender, as the payee, a certain Revolving Note in the original
aggregate principal amount of the Loan (hereinafter referred to as the "Note").
C. On September 1, 1991, the Borrower, as the maker, executed and delivered
to the Lender, as the payee, a certain Promissory Note for the purpose of
extending the term of the Loan from the then current maturity date of "September
1, 1991" to a new maturity date of "January 15, 1992" (hereinafter referred to
as the "Extension Agreement #1").
D. On January 15, 1992, the Borrower, as the maker, executed and delivered
to the Lender, as the payee, a certain Master Advance Note for the purpose of
extending the term of the Loan from the then current maturity date of "January
15, 1992" to a new maturity date of "January 31, 1993" (hereinafter referred to
as the "Extension Agreement #2").
E. On January 31, 1993, the Borrower, as the maker, executed and delivered
to the Lender, as the payee, a certain Master Advance Note for the purpose of
extending the term of the Loan from the then current maturity date of "January
31, 1993" to a new maturity date of "January 31, 1994" (hereinafter referred to
as the "Extension Agreement #3").
F. On January 31, 1994, the Borrower, as the maker, executed and delivered
to the Lender, as the payee, a certain Master Advance Note for the purpose of
extending the term of the
<PAGE>
Loan from the then current maturity date of "January 31, 1994" to a new maturity
date of "March 31, 1994" (hereinafter referred to as the "Extension Agreement
#4").
G. As of March 31, 1994, pursuant to a certain First Modification and
Extension Agreement (hereinafter referred to as the "First Modification
Agreement"), executed by and among, inter alia, the Undersigned and the Lender,
the parties agreed, among other things (i) to extend the maturity date of the
Loan from the then current maturity date of "March 31, 1994" to a new maturity
date of "January 31, 1995" and (ii) to amend and modify the Lender's address
from the existing address of "630 Franklin Boulevard, Somerset, New Jersey
08875" to a new address of "4365 Route 1 South, Princeton, New Jersey 08540".
H. As of March 31, 1994, pursuant to the terms of a certain First Allonge
to $4,000,000.00 Revolving Note (hereinafter referred to as the "First
Allonge"), executed by the Undersigned, as the maker, and delivered to the
Lender, as the payee, the Undersigned and the Lender agreed to amend and modify
the terms of the Note, as previously amended and modified, for the purposes of
(i) extending the term of the Loan from the then current maturity date of "March
21, 1994" to the new maturity date of "January 31, 1995" and (ii) amending and
modifying the Lender's address from the existing address of "630 Franklin
Boulevard, Somerset, New Jersey 08875" to a new address of "4365 Route 1 South,
Princeton, New Jersey 08540".
I. As of January 31, 1995, pursuant to the terms of a certain Second
Modification and Extension Agreement (hereinafter referred to as the "Second
Modification Agreement"), executed by and among, inter alia, the Undersigned and
the Lender, the parties agreed, among other things (i) to extend the maturity
date of the Loan from the then current maturity date of "January 31, 1995" to a
new maturity date of "January 31, 1996"; (ii) to amend and modify the interest
rate on the aggregate principal amount of the Loan from the existing interest
rate of "Bank's Base Rate plus one and one-half percent (1.5%) on a floating
basis" to a new interest rate of "Bank's Base Rate plus one percent (1.0%) on a
floating basis"; (iii) to amend and modify the Lender's name from the existing
name of "United Jersey Bank/Central, N.A." to a new name of "United Jersey
Bank".
J. As of January 31, 1995, pursuant to the terms of a certain Second
Allonge to $4,000,000.00 Revolving Note (hereinafter referred to as the "Second
Allonge"), executed by the Undersigned, as the maker, and the Lender, as the
payee, the Undersigned and the Lender agreed to amend and modify the terms of
the Note, as previously amended and modified, for the purposes of (i) extending
the maturity date of the Loan from the then current maturity date of "January
31, 1995" to the new maturity date of "January 31, 1996"; (ii) amending and
modifying the interest rate charged on the outstanding aggregate principal
amount of the Loan from the existing interest rate of "Bank's Base Rate plus one
and one-half percent (1.5%) on a floating basis" to a new interest rate of
"Bank's Base Rate plus one percent (1.0%) on a floating basis"; and (iii)
amending and modifying the Lender's name from the existing name of "United
Jersey Bank/Central, N.A." to the new name of "United Jersey Bank".
K. As of August 25, 1994, pursuant to the terms of a certain Third
Modification and Extension Agreement (hereinafter referred to as the "Third
Modification Agreement"), executed by and among, inter alia, the Undersigned and
the Lender, the parties agreed, among other things (i) to amend and modify the
aggregate principal amount of the Loan from the existing principal amount of
"$4,000,000.00" to the new increased principal amount of "$4,500,000.00"; (ii)
to
-2-
<PAGE>
extend the maturity date of the Loan from the then current maturity date of
"January 31, 1996" to a new maturity date of "May 31, 1996"; and (iii) to amend
and modify the Lender's address from the existing address of "4365 Route 1
South, Princeton, New Jersey 08540" to the Lender's new address of "Raritan
Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837".
L. As of August 23, 1995, pursuant to the terms of a certain Third Allonge
to $4,000,000.00 Revolving Note (hereinafter referred to as the "Third
Allonge"), executed by the Undersigned, as the maker, and delivered to the
Lender, as the payee, the Undersigned and the Lender agreed to amend and modify
the terms of the Note, as previously amended and modified, for the purposes of
(i) amending and modifying the aggregate principal among of "$4,000,000.00" to
the new increased principal amount of "$4,500,000.00"; (ii) to extend the
maturity date of the Loan from the then current maturity date of "January 31,
1996" to a new maturity date of "May 31, 1996"; and (iii) to amend and modify
the Lender's address from the existing address of "4365 Route 1 South,
Princeton, New Jersey 08540" to the Lender's new address of "Raritan Plaza II,
Fieldcrest Avenue, Edison, New Jersey 08837".
M. As of February 6, 1996, pursuant to the terms of a certain Fourth
Modification and Extension Agreement (hereinafter referred to as the "Fourth
Modification Agreement"), executed by and among, inter alia, the Undersigned and
the Lender, the parties agreed, among other things, to delete the existing
Paragraph 2 of the Note and to insert a new Paragraph 2 in its place and stead,
which provides that interest shall be due and payable as set forth in the Loan
Agreement, as previously amended and modified.
N. As of February 6, 1996, pursuant to the terms of a certain Fourth
Allonge to $4,000,000 Note (hereinafter referred to as the "Fourth Allonge"),
executed by the Undersigned, as the maker, and delivered to the Lender, as the
payee, the Undersigned and the Lender agreed to amend and modify the Note, as
previously amended and modified, for the purpose of deleting the existing
Paragraph 2 of the Note and inserting a new Paragraph 2 in its place and stead,
which provides that interest shall be due and payable as set forth in the Loan
Agreement, as previously amended and modified.
O. As of May 31, 1996, pursuant to the terms of a certain Fifth
Modification and Extension Agreement (hereinafter referred to as the "Fifth
Modification Agreement"), executed by and among, inter alia, the Undersigned and
the Lender, the parties agreed, among other things, to extend the maturity date
of the Loan from the then current maturity date of "May 31, 1996" to a new
maturity date of "May 31, 1997".
P. As of May 31, 1996, pursuant to the terms of a certain Fifth Allonge to
$4,000,000 Note (hereinafter referred to as the "Fifth Allonge"), executed by
the Undersigned, as the maker, and delivered to the Lender, as the payee, the
Undersigned and the Lender agreed to amend and modify the Note, as previously
amended and modified, for the purpose of extending the term of the term of the
Loan from the then current maturity date of "May 31, 1996" to a new maturity
date of "May 31, 1997".
Q. As of even date herewith, pursuant to a certain Sixth Modification and
Extension Agreement (hereinafter referred to as the "Sixth Modification
Agreement"), executed by and among, inter alia, the Undersigned and the Lender,
the parties agreed, among other things, (i) to
-3-
<PAGE>
extend the maturity date of the Loan from the current maturity date of "May 31,
1997" to a new maturity date of "May 31, 1998" and (ii) to amend and modify the
Lender's address from the existing address of "Raritan Plaza II, Fieldcrest
Avenue, Edison, New Jersey 08837" to the Lender's new address of "210 Main
Street, Hackensack, New Jersey 07601".
R. The Undersigned and the Lender now desire to further amend and modify
the terms of the Note, as previously amended and modified, to reflect the terms
and conditions of the Sixth Modification Agreement.
NOW, THEREFORE, in consideration of the mutual benefits inuring to the
Undersigned and the Lender and intending to be legally bound hereby, the Note,
as previously amended and modified, is hereby further amended and modified as
follows:
1. Maturity Date. Any and all references to the existing maturity date
of "May 31, 1997" shall be deleted and a new maturity date of "May 31,
1998" shall be inserted in its place and stead.
2. Lender's Address. Any and all references to the Lender's existing
address of "Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837"
shall be deleted and a reference to the new address of "210 Main Street,
Hackensack, New Jersey 07601" shall be inserted in its place and stead.
3. Modification of Note. The Note, as amended and modified hereby, is
the "Note" as defined in the Loan Agreement, as previously amended and
modified by the Extension Agreement #1, the Extension Agreement #2, the
Extension Agreement #3, the Extension Agreement #4, the First Allonge, the
Second Allonge, the Third Allonge, the Fourth Allonge, the Fifth Allonge
and as further amended and modified by this Sixth Allonge. All other
provisions of the Note and of all other agreements and instruments executed
in connection therewith shall not be modified hereby, except as expressly
set forth herein, and this Sixth Allonge shall not be considered as a
waiver of any of the Lender's rights under the Note as heretofore existing
or as hereafter modified by this Sixth Allonge.
4. Construction. Any capitalized terms used in this Sixth Allonge not
otherwise defined herein shall have the meaning as set forth in the Sixth
Modification Agreement.
5. Single Instrument. The Undersigned hereby directs the Lender to
affix this Sixth Allonge to the Note, whereupon the Note, the Extension
Agreement #1, the Extension Agreement #2, the Extension Agreement #3, the
Extension Agreement #4, the First Allonge, the Second Allonge, the Third
Allonge, the Fourth Allonge, the Fifth Allonge and this Sixth Allonge will
become and constitute a single instrument.
IN WITNESS WHEREOF, the Lender and the Undersigned have executed this Sixth
Allonge under the seal on the date first above written.
UNDERSIGNED:
-4-
<PAGE>
[SEAL]
ATTEST: JOULE, INC.
_____________________________ By: ___________________________________
Bernard G. Clarkin Emanuel N. Logothetis
Secretary President
LENDER:
SUMMIT BANK, as successor-in-interest
to UNITED JERSEY BANK
By: ___________________________________
Bonnie Gershon
Vice President
-5-
EXHIBIT-13
<PAGE>
--------------------------
JOULE [LOGO]
--------------------------
WE KEEP AMERICA WORKING...
1997 ANNUAL REPORT
STAFFING SOLUTIONS
-------------------------------------------------------
COMMERCIAL
--------------------------------------------------
TECHNICAL
---------------------------------------------
INDUSTRIAL
<PAGE>
JOULE INC. AND SUBSIDIARIES
----------------------------------
COMPANY VISION
- --------------------------------------------------------------------------------
JOULE is a publicly owned American Stock Exchange technical staffing
services company, founded over 30 years ago, that specializes in changing the
"fixed overhead" of Fortune 500 companies into "variable overhead" through
outsourcing of non-core staffing needs.
Outsourcing allows a company to turn over various support positions 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 who are billed on an hourly basis. The staffing services business
markets through thirteen branches, mainly in the New Jersey area, using the
trademarks "JOULE Technical Staffing Services", "JOULE Industrial Services",
"JOULE Staffing Services" and "People Providers".
As companies have re-engineered their operations, market opportunities have
continued to develop for JOULE. More and more companies in an increasing number
of industries are seeking the advantages of outsourced staffing, thereby
improving the quality of their support services while also better controlling
their costs. JOULE believes this trend toward outsourcing will continue to offer
excellent growth opportunities for it in the future.
----------------------------------
SELECTED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended September 30,
---------------------------------------------------------
1997 1996 1995 1994 1993
=========================================================================================
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Revenues .................... $ 48,590 $ 48,449 $ 43,641 $ 36,216 $ 32,123
Net Income (Loss) ........... 1,066 1,026 938 710 (3,376)(1)
Net Income (Loss)Per Share... 0.29 0.28 0.26 0.20 (0.93)(1)
Total Assets ................ 10,843 10,809 10,802 8,576 6,508
Long Term Debt .............. 406 431 456 424 --
Total Liabilities ........... 4,657 5,710 6,883 5,609 4,251
=========================================================================================
</TABLE>
(1) Includes a non-recurring net charge of $3,955,000 or $1.10 per share (after
a related tax benefit of $2,026,000) to eliminate the carrying value of claims
with a U.S. Government Agency.
[THE FOLLOWING TABLES WERE REPRESENTED BY BAR CHARTS IN THE PRINTED MATERIAL]
-------------- ----------------
Revenues Income*
-------------- ----------------
($ in millions) ($ in thousands)
1993 32.1 1993 729
1994 36.2 1994 1,264
1995 43.6 1995 1,962
1996 48.4 1996 1,925
1997 48.6 1997 1,992
* Revenue less Cost of Services and S, G & A Expenses
<PAGE>
JOULE INC. AND SUBSIDIARIES
- ----------------------------------
TO OUR STOCKHOLDERS:
- --------------------------------------------------------------------------------
Fiscal 1997 was a year in which we worked to further develop and strengthen
Joule's competitive edge in the staffing service industry. As a result of our
efforts, we achieved record revenues for the sixth consecutive year, improved
our gross, operating and net margins, strengthened our management team, and
expanded our customer base in both new and existing markets.
Revenues for fiscal 1997, while a record at $48.6 million, were only
modestly above the year ago figure of $48.4 million. Commercial and Technical
Services continue to benefit from the increased demand for outsourcing services
as well as from marketing initiatives designed to capitalize on opportunities in
these areas. In fiscal 1997, Commercial Staffing's revenues jumped 23 percent to
$18.5 million from $15.0 million in fiscal 1996, and Technical Staffing's
revenues increased to $13.1 million from $11.6 million in fiscal 1996, an
improvement of 19 percent.
The strong performances from the Commercial and Technical Staffing groups
were partially offset by lower sales of Industrial Staffing Services. The
decline in Industrial Staffing revenues stemmed largely from the wind down and
completion of several large contracts between the 1996 and 1997 fiscal years.
With aggressive efforts underway to capture new contracts in this area, we
expect to see improvement in fiscal 1998. Net income for the 1997 fiscal year
rose to $1.1 million, or $0.29 per share, from $1.0 million, or $0.28 per share,
for fiscal 1996. Excluding a non-recurring charge in fiscal 1993, earnings have
grown every year since 1990.
Our primary growth strategy for Commercial Staffing and Technical Staffing
centers on geographic expansion. Commercial Staffing is aggressively exploiting
our footholds beyond New Jersey in Pennsylvania, New York, Maryland and
Delaware, and plans to open multiple offices in some of these areas to further
capitalize on our recent successes in these markets. In particular, we have
targeted the Philadelphia market for 1998. We are also hoping to develop the
Florida market by opening several new facilities to support our existing Ft.
Lauderdale, Florida office. Technical Staffing has achieved initial success in
geographically expanding its client base nationwide from our centralized office.
In fiscal 1997, Technical Staffing added two regional managers with significant
experience at large national competitors to aid the expansion process. We also
significantly increased the number of primary vendor arrangements with our
Technical Staffing clients. We will look for further growth in the next couple
of years by expanding our presence in the fields of science and information
technology.
In July, Joule appointed Anthony Trotter Vice President of Staffing
Services. An important addition to the Company, Tony brings to Joule more than
10 years of management experience in the staffing services industry and an
impressive record of growing businesses. Also in fiscal 1997, Stephen Demanovich
was named Vice President of Technical Services. Since joining Joule in 1989,
Steve, with more than 20 years experience in staffing services, has demonstrated
leadership and vision in his various managerial capacities. Under his direction
for the last three years, the Technical Services division has more than doubled
its revenues.
Tony and Steve are part of a promising senior management team I am creating
to ensure Joule's long-term success and commitment to the individual shareholder
and customer. While I am re-evaluating my role in operations, my goal is to
build a team that offers Joule fresh perspectives and an invigorating desire to
grow this Company. This team will manage the day-to-day operations of Joule and
help develop and implement the short and long-term initiatives of the Company's
growth strategy.
In conclusion, I would like to thank our shareholders, employees and
customers for their continued loyal support. While fiscal 1997 did not exceed
our every expectation, the momentum that our Commercial Staffing and Technical
Staffing groups achieved in fiscal 1997 and the opportunities that lie ahead in
our industry give us a great sense of optimism and enthusiasm as Joule enters
fiscal 1998.
/s/ Emanuel N. Logothetis
Emanuel N. Logothetis
Chairman and President
---
1
<PAGE>
JOULE INC. AND SUBSIDIARIES
JOULE SOLUTIONS
- --------------------------------------------------------------------------------
STAFFING SERVICES / ON-SITE COORDINATION / PROJECT MANAGEMENT
- --------------------------------------------------------------------------------
TECHNICAL
- ----------------------------------
Offers traditional staffing as well as single source management programs in
three core disciplines: Engineering, Scientific and Information Technology.
Engineering Engineers, architects, designers, CAD operators, inspectors,
planners.
Scientific Chemists, biologists, clinical researchers, lab technicians,
food scientists, chemical operators, statistical
programmers, clinical data coordinators.
Information Programmers, system analysts, network engineers, PC techs,
Technology computer operators, database administrators, database
analysts.
- --------------------------------------------------------------------------------
INDUSTRIAL
- ----------------------------------
On demand, project and work force management solutions of craft and trade
skilled personnel.
Industrial Electrician, welder, millwright, mechanical machinist,
mason, rigger, fitter specialist and other trade
specialists.
Project Solutions Nationwide refurbishing and refitting support of industrial
facilities.
Outsourcing Term technical maintenance support of heavy industrial or
manufacturing clients.
- --------------------------------------------------------------------------------
COMMERCIAL
- ----------------------------------
Services ranging from clerical, administrative, customer service and light
industrial staffing to work force management.
Light Industrial Assembly line/production personnel, freight forwarding
handlers, and production supervision.
Administrative Office automation support, customer service personnel,
general clerical and incoming call support.
---
2
<PAGE>
[PHOTO]
Nation's Largest Educational Materials Provider
Joule Solution: On-Site Management Of National Customer Service Center
Mahwah, New Jersey
Total service support illustrates the business solution approach Joule provides
to its clients. When the nation's largest educational materials provider
expanded their nationwide customer service center, Joule distinguished itself
with a total business solution that addressed the critical skill needs and out
of the way recruiting challenges. Today, a Joule on-site account management team
orientates and coordinates a flexible workforce of up to 75 incoming call
specialists. In addition, a Joule's shuttle fleet provides our employees with
free transportation to this rurally located call center facility. This unique
blend of on-site management, stringent employee selection and dedicated
transportation led to the trust and confidence necessary to place Joule in
charge of their company's flexible workforce.
================================================================================
COMMERCIAL [PHOTO]
STAFFING
================================================================================
[THE FOLLOWIG TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
---------------
Revenue Growth
---------------
($ in millions)
1994 10.9
1995 13.6
1996 15.0
1997 18.5
As a long-time provider of temporary placement in Commercial Staffing, Joule's
strength is finding qualified people for our clients using our network of
offices. Through these offices, we readily place with our clients a wide
spectrum of skilled personnel with flexible service contracts, ranging from
one-day light industrial assemblers to full-time executive assistants. Because
of our long-time success in this division and the continued demand for our
personnel, Joule is implementing short and long-term strategic plans to
geographically expand this network of offices through the opening of new service
centers.
---
3
<PAGE>
Global Pharmaceutical Leader
Joule Solution: On-Site Coordination of Scientific and Engineering Staff
Kenilworth, New Jersey
[PHOTO]
Technical Staffing's capabilities were recognized when a major pharmaceutical
company selected Joule over other national staffing service providers to be its
primary technical staffing vendor. During Fiscal 1997 this Vendor On Premise
program was fully implemented and has proven to be a milestone for Joule. The
overwhelming success of this program has generated significant industry
recognition and has helped Joule extend our presence to other companies in the
pharmaceutical and health care sectors.
================================================================================
[PHOTO] TECHNICAL
STAFFING
================================================================================
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL]
-----------------
Technical Revenue
-----------------
engineering 53%
scientific 36%
information
technology 11%
Joule Technical Staffing is a regional leader in providing technical staffing
solutions to clients in several core disciplines: Engineering, Scientific and
Information Technology. We offer our clients a cost-effective method of meeting
peak workloads by supplying highly qualified technical personnel. Our success is
driven by proactive recruiting programs including state of the art resume
scanning and retrieval tools coupled with comprehensive applicant screening and
qualification processes. These methods ensure that our clients receive a prompt
response to their requests for qualified personnel. Joule's service driven
programs have led Technical Staffing to double its 1994 revenues through 1997.
---
4
<PAGE>
[PHOTO]
Nation's Largest Steel Producer
Joule Solution: On-Site Term Agreement Maintaining Equipment and Plant Capital
Resources
Fairless Hills, Pennsylvania
The nation's largest steel producer required a solution to support peak demand
operations and maintenance requirements at their 12 million square foot rolled
steel plant in Fairless Hills. Joule responded with an on-site managed project
team of up to twenty master millwrights, mechanics, riggers and welders to
support critical path operations. This dedicated team of craft technicians
services the imposing primary rolled steel production line extending more than
one mile in length. Joule's project team is an ongoing and integral part of this
plant's strategy to maintain consistent on-line production capability. The
primary Joule/client solution allows the nation's largest steel provider to
maximize production capabilities by having an immediate response to both
unanticipated and planned project work.
================================================================================
INDUSTRIAL [FOUR PHOTOS]
STAFFING
================================================================================
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL]
------------------
Industrial Revenue
------------------
outsourcing 43%
industrial 40%
projects 17%
With the unique application of craft and trade personnel, Joule Industrial
Staffing supports industrial and manufacturing companies with supplemental
staffing, project support and on-site facility management solutions. Under a
flexible, or term arrangement, Joule provides skilled workers, tools and
materials necessary for the installation or retrofitting of equipment, plant and
facilities. To support client requirements for shutdowns (down-time), Joule
augments maintenance teams with the skilled personnel and project supervision
necessary to ensure an efficient and expedient turn around. Joule delivers the
skills and resources to "Keep America Working".
---
5
<PAGE>
JOULE INC. AND SUBSIDIARIES
-----------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Results of Operations
The following table sets forth the percentage relationship of certain items
in the Company's consolidated statements of income:
<TABLE>
<CAPTION>
Year Ended September 30,
----------------------------------
1997 1996 1995
=================================================================================================================
<S> <C> <C> <C>
Revenues.................................................................. 100.0% 100.0% 100.0%
Costs, expenses and other
Cost of services........................................................ 81.3 83.2 83.1
Selling, general & administrative expenses.............................. 14.6 12.9 12.5
Interest expense........................................................ 0.4 0.6 0.9
Other................................................................... -- -- 0.1
Income before income tax provision........................................ 3.7 3.3 3.4
Income tax provision...................................................... 1.5 1.2 1.3
Net income................................................................ 2.2 2.1 2.1
==================================================================================================================
</TABLE>
The Company's revenues are derived from providing staffing services to its
customers. Such services include providing commercial (office and light
industrial) workers, technical personnel, and industrial (skilled craft
industrial plant and facility maintenance) labor. Over 90% of revenue in each
year is billed on a direct cost plus markup basis. Revenues in fiscal 1997
($48.6 million) approximated revenues for fiscal 1996 of $48.4 million, which
revenues were 11% higher than 1995 revenues of $43.6 million. Commercial revenue
increased 23% to $18.5 million in 1997 from $15.0 million in 1996, following a
10% increase in 1996 over 1995 revenue of $13.6 million. Technical staffing
revenue was $13.1 million in 1997, a 13% increase over 1996 revenue of $11.6
million. This followed a 32% increase over 1995 revenue of $8.8 million. While
industrial revenue registered a moderate 3% increase for 1996 over 1995 sales of
$21.2 million, 1997 sales declined 22% to $17.0 million, reflecting the adverse
impact of the wind down and completion of certain long term contracts. The
increases in revenue during these years for commercial and technical services
are attributable to a larger customer base, as the demand for such outsourcing
services grows, and the Company's continuing pursuit of both existing and new
market niches.
Cost of services improved to 81.3% of revenue in fiscal 1997 compared to
83.2% in 1996 and 83.1% in 1995. 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 $7.1 million in 1997, compared to $6.2 million in 1996 and
$5.4 million in 1995. Such expenses were 14.6%, 12.9% and 12.5% of revenues in
1997, 1996 and 1995, respectively. The 1997 percentage increase in selling,
general and administrative expenses principally reflects the anticipation of
higher sales which have not yet fully materialized.
Selling, general and administrative expenses include the salaries and
related costs of staff employees, advertising, professional fees, depreciation,
provision for the allowance for doubtful accounts and other costs related to
maintaining the Company's branch offices.
Interest expense decreased to $214,000 in 1997 from $311,000 in 1996 and
from $396,000 in 1995, due principally to a reduction in average borrowings and
also to lower interest rates. Effective tax rates for fiscal 1997, 1996 and 1995
were 40%, 37% and 38%. As a result of the above, net income increased to
$1,066,000 or $0.29 per share in 1997 compared with net income of $1,026,000 or
$0.28 per share in 1996 and $938,000 or $0.26 per share in 1995.
Liquidity and Capital Resources
Current assets at September 30, 1997 were $7,105,000 as compared to
$8,623,000 at September 30, 1996 and current liabilities were $4,251,000
compared to $5,279,000 as of September 30, 1996. During the year the Company
acquired land and buildings from an affiliate, which the Company had previously
leased for use in its operations, in settlement of a receivable of $1,750,000
due from the affiliate. The appraised and recorded value of the property
approximated the receivable. 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 prime rate with a LIBOR plus two and
one quarter percent option; $1,295,000 was outstanding under this line as of
September 30, 1997.
The Company believes that internally generated funds and available
borrowings will provide sufficient cash flow to meet its requirements for the
next 12 months.
---
6
<PAGE>
JOULE INC. AND SUBSIDIARIES
----------------------------------
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30,
-------------------------
1997 1996
==========================================================================================
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash ....................................................... $ 139,000 $ 175,000
Accounts receivable, less allowance for doubtful accounts of
$200,000 and $217,000 in 1997 and 1996, respectively ..... 6,820,000 8,128,000
Prepaid expenses and other current assets .................. 146,000 320,000
- ------------------------------------------------------------------------------------------
Total Current Assets ................................... 7,105,000 8,623,000
PROPERTY AND EQUIPMENT, NET .................................. 3,633,000 2,019,000
GOODWILL AND OTHER ASSETS .................................... 105,000 167,000
- ------------------------------------------------------------------------------------------
$10,843,000 $10,809,000
==========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable to bank ...................................... $ 1,295,000 $ 2,343,000
Accounts payable and accrued expenses ...................... 1,472,000 1,817,000
Accrued payroll and related taxes .......................... 1,291,000 1,094,000
Income taxes ............................................... 168,000 --
Current portion of long term debt .......................... 25,000 25,000
- ------------------------------------------------------------------------------------------
Total Current Liabilities .............................. 4,251,000 5,279,000
LONG TERM DEBT ............................................... 406,000 431,000
Total Liabilities ...................................... 4,657,000 5,710,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value:
Authorized 500,000 shares, none outstanding .............. -- --
Common stock, $.01 par value:
Authorized 10,000,000 shares-issued 3,816,000
and 3,811,000 shares in 1997 and 1996, respectively .... 38,000 38,000
Additional paid-in capital ................................. 3,658,000 3,637,000
Retained earnings .......................................... 2,879,000 1,813,000
- ------------------------------------------------------------------------------------------
6,575,000 5,488,000
LESS: Cost of 146,000 shares of common stock held in treasury 389,000 389,000
- ------------------------------------------------------------------------------------------
Total Stockholders' Equity ............................. 6,186,000 5,099,000
- ------------------------------------------------------------------------------------------
$10,843,000 $10,809,000
==========================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
---
7
<PAGE>
JOULE INC. AND SUBSIDIARIES
-------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended September 30,
--------------------------------------------
1997 1996 1995
===========================================================================================================
<S> <C> <C> <C>
REVENUES .................................................... $ 48,590,000 $ 48,449,000 $ 43,641,000
- -----------------------------------------------------------------------------------------------------------
COSTS, EXPENSES AND OTHER:
Cost of services .......................................... 39,485,000 40,293,000 36,245,000
Selling, general and administrative expenses .............. 7,113,000 6,231,000 5,434,000
Interest expense .......................................... 214,000 311,000 396,000
Other ..................................................... 2,000 (13,000) 53,000
- -----------------------------------------------------------------------------------------------------------
Income before income tax provision .......................... 1,776,000 1,627,000 1,513,000
Income tax provision ........................................ 710,000 601,000 575,000
- -----------------------------------------------------------------------------------------------------------
Net income .................................................. $ 1,066,000 $ 1,026,000 $ 938,000
===========================================================================================================
Net income per common share ................................. $ 0.29 $ 0.28 $ 0.26
===========================================================================================================
Weighted average number of shares and equivalents outstanding 3,666,000 3,651,000 3,628,000
===========================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
----------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Additional Retained
Shares of Common Paid-in Earnings Treasury
Common Stock Stock Capital (Deficit) Stock
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Balances, September 30, 1994 ................ 3,750,000 $ 38,000 $ 3,488,000 $ (151,000) $ 408,000
Net Income ................................ -- -- -- 938,000 --
Exercise of Stock Options ................. 10,000 -- 14,000 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Balances, September 30, 1995 ................ 3,760,000 38,000 3,502,000 787,000 408,000
Net Income ................................ -- -- -- 1,026,000 --
Issuance of 4,000 Treasury Shares ......... 4,000 -- -- -- (19,000)
Exercise of Stock Options ................. 47,000 -- 135,000 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Balances, September 30, 1996 ................ 3,811,000 38,000 3,637,000 1,813,000 389,000
Net Income ................................ -- -- -- 1,066,000 --
Exercise of Stock Options ................. 5,000 -- 21,000 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Balances, September 30, 1997 ................ 3,816,000 $ 38,000 $ 3,658,000 $ 2,879,000 $ 389,000
===================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
---
8
<PAGE>
JOULE INC. AND SUBSIDIARIES
-------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended September 30,
------------------------------------------------
1997 1996 1995
====================================================================================================================================
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................................. $ 1,066,000 $ 1,026,000 $ 938,000
Adjustments to reconcile net income to net
cash flows provided by (used in) operating activities:
Depreciation and amortization .......................................... 453,000 400,000 346,000
Loss from disposal of equipment ........................................ -- -- 4,000
Provision for losses on accounts receivable ............................ 87,000 109,000 120,000
Changes in operating assets and liabilities:
Accounts receivable .................................................. (231,000) 277,000 (2,341,000)
Prepaid expenses and other assets .................................... 206,000 7,000 404,000
Accounts payable and accrued expenses ................................ (642,000) 680,000 231,000
Accrued payroll and related taxes .................................... 197,000 11,000 382,000
Income taxes ......................................................... 168,000 (77,000) (138,000)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash flows provided by (used in) operating activities ........ 1,304,000 2,433,000 (54,000)
- ------------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment ..................................... (288,000) (695,000) (738,000)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash flows used in investing activities ...................... (288,000) (695,000) (738,000)
- ------------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in loans payable to bank ............................... (1,048,000) (1,762,000) 742,000
Payment of long term debt .................................................. (25,000) (25,000) (19,000)
Additions of long term debt ................................................ -- -- 76,000
Proceeds from exercise of stock options .................................... 21,000 154,000 14,000
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash flows provided by (used in) financing activities ........ (1,052,000) (1,633,000) 813,000
- ------------------------------------------------------------------------------------------------------------------------------------
NET CHANGE IN CASH ........................................................... (36,000) 105,000 21,000
CASH, BEGINNING OF PERIOD .................................................... 175,000 70,000 49,000
- ------------------------------------------------------------------------------------------------------------------------------------
CASH, END OF PERIOD .......................................................... $ 139,000 $ 175,000 $ 70,000
====================================================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid .............................................................. $ 223,000 $ 318,000 $ 410,000
====================================================================================================================================
Income taxes paid .......................................................... $ 374,000 $ 763,000 $ 722,000
====================================================================================================================================
</TABLE>
NON-CASH TRANSACTIONS:
During 1997, the Company acquired land and buildings in settlement of a
$1,750,000 receivable.
See accompanying notes to consolidated financial statements.
---
9
<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
intercompany transactions have been eliminated in consolidation.
Use of Estimates--The preparation of accrual basis financial statements
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
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 the 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 accounts for income taxes pursuant to the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes", which utilizes the liability method and results in the
determination of deferred taxes based on the estimated future tax effects of
differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates currently in effect.
Net Income Per Share--Net income 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.
Statement of Financial Accounting Standards No. 128, "Earnings per Share",
which becomes effective for the fiscal year beginning October 1, 1997,
establishes new standards for computing and presenting earnings per share (EPS).
The new standard requires the presentation of basic EPS and diluted EPS. Basic
EPS is calculated by dividing income available to common shareholders by the
weighted average number of shares of common stock outstanding during the period.
Diluted EPS is calculated by dividing income available to common shareholders by
the weighted average number of common shares outstanding adjusted to reflect
potentially dilutive securities. Previously reported EPS amounts must be
restated under the new standard when it becomes effective.
For the years ended September 30, 1997, 1996 and 1995, basic EPS and
diluted EPS would not have been effected.
Goodwill--Goodwill is being amortized over a period of approximately ten
years. Amortization of goodwill amounted to $24,000 in each of 1997, 1996 and
1995.
Long-Lived Assets--The provisions of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets",
require, among other things, that an entity review its long-lived assets and
certain related intangibles for impairment whenever changes in circumstances
indicate that the carrying amount of an asset may not be fully recoverable. The
Company does not believe that any impairment currently exists related to the
long-lived assets.
NOTE 2--PROPERTY AND EQUIPMENT:
Property and equipment consists of:
September 30,
---------------------------
1997 1996
================================================================================
Machinery and equipment ...................... $2,495,000 $2,268,000
Furniture and fixtures ....................... 550,000 539,000
Automotive equipment ......................... 1,062,000 1,015,000
Building and leasehold improvements .......... 292,000 287,000
Buildings .................................... 1,834,000 584,000
Land ......................................... 670,000 170,000
- --------------------------------------------------------------------------------
6,903,000 4,863,000
Less: Accumulated depreciation and
amortization ................................. 3,270,000 2,844,000
- --------------------------------------------------------------------------------
$3,633,000 $2,019,000
================================================================================
NOTE 3--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 prime rate with a LIBOR plus two and one-quarter percent
option. At September 30, 1997, $3,205,000 of the line of credit was unused,
substantially all of which was available for use. Related loans are
collateralized principally by accounts receivable.
There is a mortgage loan for $431,000 on the Company's staffing operations
building. At September 30, 1997, $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 1 1/2%.
NOTE 4--STOCK OPTION PLAN:
The Company's Stock Option 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, 1997, there were 120,000 stock options
outstanding at prices ranging from $3.50 to $4.25 of which 2,500 options are
exercisable. There are also 6,500 stock options outstanding at September 30,
1997 from a previous stock option plan at prices ranging from $2.63 to $6.13. In
1997, 1996 and 1995, 5,000, 47,000 and 10,000 options were exercised,
respectively. In 1997 and 1996, 110,000 and 15,000 options were granted at
prices ranging from $3.50 to $4.25.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation", which became effective for the fiscal year beginning
October 1, 1996, permits an entity to continue to account for employee
stock-based compensation under APB Opinion No. 25, "Accounting for Stock
----
10
<PAGE>
Issued to Employees", or adopt a fair value based method of accounting for such
compensation. The Company has elected to continue to account for stock-based
compensation under Opinion No. 25. Accordingly, no compensation expense has been
recognized in connection with options granted. Had compensation expense for
options granted subsequent to October 1, 1995 under the Company's stock option
plans been determined based on the fair value at the date of grant in accordance
with Statement No. 123, the Company's net income and net income per share would
have been as follows:
1997 1996
================================================================================
Net income
As reported ...................... $ 1,066,000 $ 1,026,000
Pro forma ........................ 1,062,000 1,023,000
Net income per share
As reported ...................... 0.29 0.28
Pro forma ........................ 0.29 0.28
================================================================================
The fair value of options granted is estimated on the date of grant using
the Black-Scholes option pricing model. The weighted average fair values of
options granted in fiscal 1997 and 1996 were $4.23 and $4.00, respectively,
based upon the following weighted average assumptions: expected volatility (25%
in 1997 and 1996), risk-free interest rate (6.50% in 1997 and 1996), expected
life (3 years in 1997 and 1996), and expected dividend yield (0% in 1997 and
1996).
Because the amounts reported above only reflect pro forma compensation
expense for options granted subsequent to October 1, 1995, they are not
necessarily representative of the effect on pro forma operating results
determined under Statement No. 123.
NOTE 5--INCOME TAXES:
Comparative analyses of the provision for income taxes follows:
September 30,
----------------------------------------
1997 1996 1995
================================================================================
Current:
Federal ...................... $551,000 $454,000 $446,000
State and Local .............. 159,000 147,000 129,000
- --------------------------------------------------------------------------------
$710,000 $601,000 $575,000
================================================================================
The provision for income taxes varied from the tax computed at the U.S.
Federal statutory rates of 34% in fiscal 1997, 1996 and 1995 for the following
reasons:
September 30,
-----------------------------------
1997 1996 1995
================================================================================
U.S. Federal Tax at statutory rates ...... $ 604,000 $ 553,000 $ 514,000
State income taxes, net of
Federal tax benefit .................... 106,000 98,000 85,000
Utilization of operating loss carryforward -- (52,000) --
Job Tax Credits .......................... -- -- (16,000)
Other .................................... -- 2,000 (8,000)
- --------------------------------------------------------------------------------
$ 710,000 $ 601,000 $ 575,000
================================================================================
NOTE 6--COMMITMENTS AND CONTINGENCIES:
The Company's facilities are leased under noncancellable terms expiring
through 2000. Rent expense was $286,000, $273,000 and $275,000 for the years
ended September 30, 1997, 1996 and 1995, respectively.
Aggregate rentals for the remaining lease terms at September 30, 1997 are
as follows:
Year Ending September 30,
================================================================
1998................................................. $157,000
1999................................................. 149,000
2000................................................. 123,000
- ----------------------------------------------------------------
$429,000
================================================================
NOTE 7--TRANSACTIONS WITH MAJOR STOCKHOLDERS AND AFFILIATES:
The Company rented facilities from certain of its stockholders and their
affiliates for approximately $199,000 for each of the three years ended
September 30, 1997. At September 30, 1997 the Company had related lease
commitments of $16,000, $16,000 and $1,000 for the years ending September 30,
1998, 1999 and 2000. Further, in 1997 the Company entered into a three year
lease with the purchaser of property formerly owned by an affiliate. Annual
rentals under this lease approximate $133,000. The Company subleases most of
this space to an affiliate which reimburses the Company approximately $120,000
per year.
The Company paid various major stockholders legal and consulting fees of
$16,000, $21,000 and $16,000 for the years 1997, 1996 and 1995; accounts
receivable include amounts due from a stockholder of $22,000, $67,000 and
$94,000 at September 30, 1997, 1996 and 1995, respectively.
During the year ended September 30, 1997 the Company acquired land and
buildings from Kahle Engineering Corp. (Kahle), an affiliate, which the Company
had previously leased for use in its operations in settlement of a receivable of
$1,750,000 due from Kahle. The appraised and recorded value of the property
approximated the receivable.
NOTE 8--GEOGRAPHIC INFORMATION:
The Company is engaged in the staffing services business, providing
personnel to business and industry. The Company derived 71%, 68% and 67%, of its
revenues from services provided to customers in New Jersey in 1997, 1996 and
1995, respectively.
----
11
<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, 1997 and 1996 and
the related consolidated statements of income, changes in stockholders' equity
and cash flows for each of the three years in the period ended September 30,
1997. 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 financial statements referred to above present fairly,
in all material respects, the financial position of Joule Inc. and subsidiaries
as of September 30, 1997 and 1996, and the results of their operations and their
cash flows for each of the three years in the period ended September 30, 1997 in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Roseland, New Jersey
November 18, 1997
- ----------------------------------
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:
High Low
====================================================================
Calendar 1995
Fourth Quarter............................ 4 1/2 3 1/2
- --------------------------------------------------------------------
Calendar 1996
First Quarter............................. 5 3/4 3 1/4
Second Quarter............................ 8 1/4 3 1/4
Third Quarter............................. 6 3/4 4 1/8
Fourth Quarter............................ 5 1/4 3 5/8
- --------------------------------------------------------------------
Calendar 1997
First Quarter............................. 4 3/4 3 5/8
Second Quarter............................ 3 15/16 3 1/8
Third Quarter............................. 5 1/4 3 7/16
Fourth Quarter (through December 8)....... 6 1/4 3 7/16
====================================================================
As of November 28, 1997, there were approximately 600 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
Richard P. Barnitt
Financial Consultant
Paul L. DeBacco
President
Michael Christopher Group, Inc.
Anthony Grillo
Senior Managing Director
The Blackstone Group, L.P.
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
John F. Logothetis
Vice President
Stephen Demanovich
Vice President
Anthony Trotter
Vice President
CORPORATE INFORMATION
For a copy of Form 10-K or other information
about the Corporation, contact:
Investor Relations
Secretary
JOULE INC.
1245 Route 1 South
Edison, New Jersey 08837
(732) 548-5444
AUDITORS
Arthur Andersen LLP
101 Eisenhower Parkway
Roseland, New Jersey 07068
TRANSFER AGENT & REGISTRAR
Continental Stock Transfer & Trust Co.
2 Broadway
New York, NY 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 4, 1998 at 10:30 a.m., at
the Pines Manor, Edison, New Jersey.
JOULE INC. OFFICES
Headquarters
1245 Route 1 South
Edison, New Jersey 08837
(732) 548-5444
Fax (732) 494-6346
1235 Route 1 South
Edison, New Jersey 08837
(732) 906-0906
362 Parsippany Road
Parsippany, New Jersey 07054
(973) 428-8100
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
1333 New Road
Atlantic City, 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
(954) 492-1110
4300-A Ridge Road
Baltimore, Maryland 21236
(410) 284-3400
1500 N. Kings Highway
Suite 104
Cherry Hill, New Jersey 08034
(609) 216-0301
<PAGE>
------------------------
JOULE [LOGO]
------------------------
1245 Route 1 South
Edison, New Jersey 08837
732-548-5444
EXHIBIT 21
<PAGE>
SUBSIDIARIES OF
JOULE INC.
Subsidiary State of Incorporation
---------- ----------------------
JOULE Maintenance Corporation New Jersey
JOULE Technical Staffing, Inc. New Jersey
JOULE Technical Services, Inc. New Jersey
20 Orchard St., Inc. New Jersey
Exhibit 23
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report incorporated by reference to this Form 10-K, into the Company's
previously filed Registration Statement File No. 33-57996.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
December 30, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 139
<SECURITIES> 0
<RECEIVABLES> 7020
<ALLOWANCES> 200
<INVENTORY> 0
<CURRENT-ASSETS> 7105
<PP&E> 6903
<DEPRECIATION> 3270
<TOTAL-ASSETS> 10843
<CURRENT-LIABILITIES> 4251
<BONDS> 406
0
0
<COMMON> 38
<OTHER-SE> 6148
<TOTAL-LIABILITY-AND-EQUITY> 10843
<SALES> 0
<TOTAL-REVENUES> 48590
<CGS> 0
<TOTAL-COSTS> 39485
<OTHER-EXPENSES> 7028
<LOSS-PROVISION> 87
<INTEREST-EXPENSE> 214
<INCOME-PRETAX> 1776
<INCOME-TAX> 710
<INCOME-CONTINUING> 1066
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1066
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
</TABLE>
