FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For The Fiscal Year Ended September 30, 1998
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. [ ]
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 2, 1998, was approximately $ 2,730,000.
As of December 2, 1998, 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, 1998 filed with the Securities and Exchange Commission
(The "Commission") pursuant to Rule 14a-3 under the Securities Exchange Act of
1934 (the "1998 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 1999 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 70%, 71% and 68% of its revenue from services provided to
customers in New Jersey in 1998, 1997 and 1996, 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, 1998, the Company furnished
approximately 9,000 employees to more than 1,200 clients. At September 30, 1998,
approximately 2,000 employees were on assignment to approximately 400 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
ten 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, terminations or
reassignments of the client's full-time employees and, in other cases to
supplement the client's normal work force to meet peak work loads, handle
special projects or provide special expertise. Often clients elect to staff a
portion of their service requirements on a longer term basis with personnel
employed and provided by the Company. The client is charged an hourly rate that
comprises the direct labor rate of the personnel provided, associated costs
(such as fringe benefits and payroll taxes) and a mark-up to cover the Company's
overhead and profit. In 1998, the Company initiated a van transportation program
to transport some of its commercial staffing workers to job sites. Employees who
use this service, which is voluntary, pay a daily fee which currently partially
offsets the cost of the program. During 1998, the number of office and light
industrial workers on assignment per week averaged 1,100, and such services
contributed approximately 37%, 38% and 31% of revenues in 1998, 1997 and 1996,
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
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assignment of these personnel are conducted from Edison, New Jersey. A client
that has an in-house engineering or other technical department, such as a
laboratory, 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. 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 1998, the number of technical
workers on assignment per week averaged over 300, and such services contributed
approximately 30%, 27% and 24% of revenues in 1998, 1997 and 1996, 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. It also sends
crews throughout the United States to install original equipment for
manufacturers. 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. Travel expenses are also billed to customers when appropriate. During
1998, the average number of such skilled industrial service personnel on
assignment per week to clients was approximately 300. Historically, a
substantial percentage of industrial services contracts are renewed. Skilled
industrial services contributed approximately 33%, 35% and 45% of revenues in
fiscal 1998, 1997 and 1996, 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.
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Customers and Marketing
A significant portion of the Company's business represents repeat orders.
For fiscal 1998 over 70% 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 1998, 1997 or 1996.
Personnel Assignment and Recruitment
The Company maintains a computerized data base of information on potential
employees. It uses optical scanning equipment, where appropriate, 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, at job fairs, 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.
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Employees
At September 30, 1998, the Company employed approximately 130 full and
part-time permanent employees in its headquarters and branch offices other than
those on assignment to clients and had approximately 2,000 persons on assignment
to approximately 400 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. The Company's corporate
headquarters are located in Edison, New Jersey and comprise approximately 8,000
square feet. The Company owns that building and also owns a building adjacent to
its corporate headquarters which serves as operational headquarters for some of
the Company's divisions and is linked to other offices by computer network and
communications equipment. Three facilities are leased from Emanuel N.
Logothetis, the Chairman of the Board of the Company, 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. The Company entered into a
three year lease with the purchaser of property formerly owned by an affiliate,
in 1997. Annual rentals under this lease approximate $133,000. The Company
subleases most of this space to the affiliate which reimburses the Company
approximately $118,000 annually. Eleven additional facilities, comprising
approximately 35,000 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.
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. In October 1998, the Company decided to settle a lawsuit. While the
Company felt that the case was without merit, it settled to contain legal
expenses, which began to escalate during the fourth quarter; legal settlement
and related costs provided for and incurred amounted to $285,000 in the fourth
quarter and $323,000 for all of fiscal 1998.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
5
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Executive Officers of the Company
The names, ages and positions of all of the executive officers of the
Company as of December 2, 1998 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 68, 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.
John G. Wellman, Jr., age 50, was elected Executive Vice President and
Chief Operating Officer on May 6, 1998. He was appointed to the same positions
when he joined the Company in March, 1998. Prior to that he was Executive Vice
President of Oxford and Associates, Inc., a technical staffing firm, from 1986
through March, 1998.
Bernard G. Clarkin, age 49, 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 45, 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 44, 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 41, was elected a Vice President on February 4, 1998.
He 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
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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 1998
Annual Report.
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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 1998
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 1998 Annual Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None
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 1998 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
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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 1998 Annual Report.
Report of Independent Public Accountants with respect to the financial
statements for the fiscal years, 1998, 1997 and 1996, respectively.
Consolidated Balance Sheets as of September 30, 1998 and 1997,
respectively.
Consolidated Statements of Income for the Years Ended September 30,
1998, 1997 and 1996, respectively.
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Consolidated Statements of Changes in Stockholders Equity for the
Years Ended September 30, 1998, 1997 and 1996, respectively.
Consolidated Statements of Changes in Cash Flows for the Years Ended
September 30, 1998, 1997 and 1996, 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.
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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, filed as Exhibit 4.1d to the
Company's Annual Report on form 10-K for the year ended September
30, 1997 and incorporated herein by reference.
4.1e -- Seventh Modification and Extension Agreement dated May 31, 1998
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.
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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,
1998.
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 24, 1998 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 24, 1998.
Emanuel N. Logothetis Bernard G. Clarkin
- ------------------------------------ -----------------------------------
Emanuel N. Logothetis Bernard G. Clarkin
Chairman of the Board, President and Vice President and Chief Financial
Director (Principal Executive 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
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 19, 1998. 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 19, 1998
F-1
<PAGE>
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, 1996 $140,000 $109,000 -- $ 32,000 $217,000
September 30, 1997 $217,000 $ 87,000 -- $104,000 $200,000
September 30, 1998 $200,000 $ 93,000 -- $ 26,000 $267,000
</TABLE>
F-2
<PAGE>
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, 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%
SEPTEMBER 30, 1998 BANKS $3,100,000 7.16% $3,271,000 $2,538,000 7.80%
</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
<PAGE>
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 AForm 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, 1997 between Registrant and Summit Bank, filed as
Exhibit 4.1d to the Company's Annual Report on form
10-K for the year ended September 30, 1997 and
incorporated herein by reference.
4.1e Seventh Modification and Extension Agreement dated May 18
31, 1998, between registrant and Summit bank.
<PAGE>
Page
----
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.
10.2 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 35
September 30, 1998.
21 List of Subsidiaries 52
23 Consent of Independent Public Accountants 54
27 Financial Data Schedule (in EDGAR Filing only)
* Incorporated by Reference
** Compensatory Plan
Page
EXHIBIT 4.1(e)
<PAGE>
- --------------------------------------------------------------------------------
SEVENTH AMENDMENT AND MODIFICATION 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, 1998
- --------------------------------------------------------------------------------
<PAGE>
SEVENTH AMENDMENT AND MODIFICATION AGREEMENT
THIS SEVENTH AMENDMENT AND MODIFICATION AND AGREEMENT (including all
amendments, modifications and supplements is hereinafter referred to as the
"Seventh Modification Agreement"), is made this as of this 31st day of May,
1998, 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
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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, 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
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<PAGE>
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
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
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<PAGE>
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
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,
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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 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
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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 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
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 New York, Inc. was merged with Joule Technical Services, Inc.;
and
WHEREAS, Tiger Maintenance is no longer doing business and its charter has
been revoked; and
WHEREAS, as of May 31, 1997, the Borrower, the Corporate Guarantors and the
Lender entered into a certain Sixth Modification and Extension Agreement
(hereinafter referred to as the "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, as of May 31, 1997, the Borrower as the maker, 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, as the maker, has executed
and delivered to the Lender, as the payee, a certain Seventh Allonge to
$4,000,000.00 Revolving
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Note for the purposes of (i) extending the maturity date of the Revolving Note
from the existing maturity date of "May 31, 1998" to a new maturity date of "May
31, 1999" (hereinafter referred to as the "Seventh Allonge"); and
WHEREAS, as of even date herewith, the Borrower, the Corporate Guarantors
and the Lender have agreed to enter into this Seventh Modification Agreement for
the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, amending
and modifying the definition of "Loan Documents" to provide for the Extension
Agreement #1, the Extension Agreement #2, the Extension Agreement #3, the
Extension Agreement #4, the First Modification Agreement, the First Allonge, the
Second Modification, the Second Allonge, the Third Modification Agreement, the
Third Allonge, the Fourth Modification Agreement, the Fourth Allonge, Fifth
Modification Agreement, the Fifth Allonge, the Sixth Modification Agreement, the
Sixth Allonge, the Seventh Allonge and this Seventh Modification Agreement; (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, 1998" to a
new Termination Date of "May 31, 1999"; (iii) in Article I, Section 1.1 of the
Loan Agreement, providing for the new definitions of "Sixth Allonge" and
"Seventh Modification Agreement"; (iv) in Article II, Section 2.4 of the Loan
Agreement, amending and modifying the interest rate options from the existing
interest rate options of (a) Base Rate or (b) two and one-quarter percent
(2.25%) over the Eurodollar Rate to the new interest rate options of (1) Base
Rate minus one quarter percent (0.25%) or (2) one and one-half percent (1.5%)
over the Eurodollar Rate; (v) in Article II, Section 2.11 of the Loan Agreement,
deleting the unused commitment fee; (vi) in the Loan Documents, deleting any and
all references to the existing maturity date of "May 31, 1998" and inserting a
new maturity date of "May 31, 1999" in its place and stead; (vii) in Article V
of the Loan Agreement, providing for a new Section 5.23; (viii) in the Loan
Documents, providing that any and all references to the "Revolving Note" shall
be deemed to refer to the Revolving Note as amended and modified up through and
including the Seventh Allonge; and (ix) in the Loan Documents, providing that
any and all references to the "Loan Agreement" shall be deemed to refer to the
Loan Agreement as amended and modified up through and including this Seventh
Modification Agreement; and
WHEREAS, all words and terms not defined here shall have the meaning as
contained in the Loan Agreement, as amended and modified up through and
including the Seventh 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, the Sixth Modification Agreement and
this Seventh 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 31, 1998, presently due and owing on the Revolving
Note the principal sum $3,150,000.00, 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) $3,150,000.00 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 Seventh
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 Seventh 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 Seventh 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 shall be amended and modified as follows:
(i) Subsection (cc) shall be amended and modified by inserting a
reference to "Seventh Allonge" and "Seventh Modification Agreement".
(ii) Subsection (ll) shall be amended and modified by deleting
the existing Termination Date of "May 31,1998" and inserting a new
Termination Date of "May 31, 1999" in its place and stead.
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(iii) The following new definitions shall have the meaning
assigned to each respective document in the Seventh Modification
Agreement: the Extension Agreement #1, the Extension Agreement #2, the
Extension Agreement #3, the Extension Agreement #4, the First
Modification Agreement, the First Allonge, the Second Modification,
the Second Allonge, the Third Modification Agreement, the Third
Allonge, the Fourth Modification Agreement, the Fourth Allonge, Fifth
Modification Agreement, the Fifth Allonge, the Sixth Modification
Agreement, the Sixth Allonge, the Seventh Allonge and the Seventh
Modification Agreement.
(b) Article II, Section 2.4 shall be amended and modified by deleting
the existing interest rate options and inserting the following new interest
rate options:
"Interest Rate Options for Advances.
(1) Base Rate: A fluctuating interest rate per annum equal to
the Base Rate of the Lender for such day, in effect from
time to time (such interest rate to change immediately upon
any change in the Base Rate) minus one quarter percent
(0.25%).
(2) Eurodollar Rate: A fixed rate per annum for the applicable
Eurodollar Interest Period equal to one and one-half percent
(1.5%) over the Eurodollar Rate for such day. The Lender
shall give prompt notice to the Borrower of the Eurodollar
Rate determined or adjusted in accordance with the
provisions hereof, which determination or adjustment shall
be conclusive if made in good faith."
(c) Article II, Section 2.11 shall be deleted in its entirety.
(d) Article V shall be amended and modified by inserting the following
new section:
"5.23 Computer Systems. The advent of the year 2000 shall not
adversely affect the Borrower's operations or the performance of
its information technology. Without limiting the generality of
the foregoing, (i) the hardware and software utilized by Borrower
are designed to be used prior to, during, and after calendar year
2000 A.D. and such hardware and software will operate during each
such time period without error relating to date data,
specifically including any error relating to, or the conduct of,
date data which represents or references different centuries or
more than one century, (ii) the hardware and software utilized by
Borrower will not abnormally end or provide invalid or incorrect
results as a result of date data, and (iii) the hardware and
software utilized by Borrower have been designed to ensure year
2000 A.D. compatibility, including date data, century
recognition, leap year, calculations which accommodate same
10
<PAGE>
century and multicentury formulas and date values, and date data
interface values that reflect the century."
5. The Loan Documents, as previously amended and modified, are hereby
further amended and modified as follows:
(a) Any and all references to the existing maturity date of "May 31,
1998" shall be deleted and a new maturity date of "May 31, 1999" shall be
inserted in its place and stead.
(b) Any and all references to the "Revolving Note" shall be deemed to
refer to the Revolving Note as amended and modified up through and
including the Seventh Allonge.
(c) Any and all references to the "Loan Agreement" shall be deemed to
refer to the Loan Agreement as amended and modified up through and
including the Seventh Modification Agreement.
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 Seventh 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 and the Corporate Guarantors expressly confirm and affirm
that 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 Seventh 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 Seventh Modification
Agreement.
9. It is the intention of the parties hereto that this Seventh 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 Seventh
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 Seventh
Modification Agreement are prejudiced hereby, if any, this Seventh 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
11
<PAGE>
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 Seventh 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
(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.
12
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Seventh 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 ATTEST:
CORPORATION
___________________________ 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
SUMMIT BANK
By: ____________________________
Bonnie Gershon
Vice President
13
<PAGE>
STATE OF NEW JERSEY :
: ss.
COUNTY OF MIDDLESEX :
BE IT REMEMBERED, that on this ____ day of June, 1998, 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, 1998, 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
14
-----------
Joule
-----------
1998 Annual Report
<PAGE>
Selected Financial Information Joule Inc. and Subsidiaries
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------------------------------
1998 1997 1996 1995 1994
================================================
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Revenues ............................. $55,301 $48,590 $48,449 $43,641 $36,216
Net Income ........................... 706 1,066 1,026 938 710
Net Income Per Share Basic and Diluted 0.19 0.29 0.28 0.26 0.20
Total Assets ......................... 12,913 10,843 10,809 10,802 8,576
Long Term Debt ....................... 381 406 431 456 424
Total Liabilities .................... 6,021 4,657 5,710 6,883 5,609
================================================
</TABLE>
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
Revenues
(In millions)
Year
----
'94 $ 36.2
'95 $ 43.6
'96 $ 48.4
'97 $ 48.6
'98 $ 55.3
<PAGE>
To Our Stockholders:
Fiscal 1998 was once again a year of increasing revenues for Joule Inc. We
achieved sales growth for the seventh consecutive year, increasing sales by 14%
and passing the $50 million milestone. In an industry where much of the revenue
growth being reported is a result of consolidations and acquisitions, 100% of
Joule's growth comes from internal, organic growth--real growth of Joule in its
marketplace. Our organization is healthy and expanding--based on our service
performance and our strong, positive reputation in an expanding marketplace.
Revenues for fiscal 1998 reached $55.3 million, an increase of $6.7 million
over fiscal 1997. All segments of our Company contributed positively to this
growth. Technical Staffing generated the greatest increase in revenue, up 26%
from $13.1 million in 1997 to $16.5 million in 1998. Commercial Staffing's
revenues grew by almost $2 million and Industrial Services increased $1.4
million in revenue over 1997. This trend in sales growth continues into fiscal
1999.
These increases in revenue are the direct result of our Company's program
to aggressively grow in each of our product areas through a combination of staff
expansion, service additions, and expansion of our geographic markets and market
penetration.
o Staff Expansion: To capitalize on the positive economic climate in
1998, all three segments of our Company increased their recruiting,
sales and operations staff in order to capture and service our
expanding customer requirements. As a result of the increasing
productivity of new team members over time, Joule's financial results
should continue to improve.
o Additional Services: During 1998 significant steps were taken in each
Product Group to expand and diversify service offerings. Industrial
Services installed equipment for Original Equipment Manufacturers in
28 states in 1998 and plans to expand into more states during 1999.
Technical Staffing added additional technical/scientific disciplines
and client services during 1998. Most significantly, Commercial
Staffing's new Shuttle Transportation Services were a major component
of 1998's investment that will give Joule a major competitive
advantage in providing increased temporary personnel resources to our
clients. We anticipate this will accelerate this segment's revenue
growth in 1999 and beyond.
o Geographic Expansion: Joule continued to maintain its leadership in
its traditional geographic market by opening 4 new
Sales/Recruiting/Operations locations in fiscal 1998. Enhanced
telemarketing programs expanded our client base regionally and
nationally. Successes in new service programs, such as Industrial's
installation support programs for Original Equipment Manufacturers,
point the way toward our anticipated growth in other segments.
These programs represent significant investments for the future success of
our Company and were the major reason for the lower operating margins
experienced in 1998. We are pleased to report that the impact of these
investments on earnings has come to an end as we close fiscal 1998. As a result
our Company will be in a stronger earnings position once again in 1999 and
beyond. We also incurred the financial costs relating to a legal matter that we
decided to bring to closure during the last quarter of fiscal 1998, even though
we believe it was without merit. 1998's final net income of $0.19 per share was
disappointing compared to $0.29 per share in 1997, but we are confident that the
decisions and investments made in 1998 will prove to be the foundation for a
stronger Joule in 1999.
Perhaps the most important investment made by Joule this year was the March
1998 announcement of Jack Wellman as our new Chief Operating Officer. Jack and
his Senior Management Team have brought a new level of enthusiasm and aggressive
optimism to Joule. There is a new spirit and vitality in our Company, and as we
enter fiscal 1999, you will hear more about the "New Joule." I have enjoyed
working with Jack and his team these past eight months, and I am convinced that
they will guide and direct Joule to new levels in the years ahead.
Very truly yours,
/s/ Emanuel N. Logothetis
-------------------------
Emanuel N. Logothetis
Chairman and President
page
---------
one
<PAGE>
Joule solutions
staffing services
on-site coordination
project management
- ----------------------------------------
Commercial
Services ranging from
clerical, administrative,
customer service and light
industrial staffing to work
force management.
Administrative--
Office automation support, customer
service personnel, general clerical
and incoming call support.
Light Industrial--
Assembly line/production personnel,
freight forwarding handlers, and
production supervision.
- ----------------------------------------
- ----------------------------------------
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 Technology--
Programmers, system analysts,
network engineers, PC techs, computer
operators, database administrators,
database analysts.
- ----------------------------------------
- ----------------------------------------
Industrial
On demand, project and work
force management solutions
of craft 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.
- ----------------------------------------
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 its branches, using the trademarks "JOULE Staffing Services,"
"JOULE Technical Staffing Services," and "JOULE Industrial Services."
JOULE's specialized approach in providing staffing solutions greatly
enhances its value and effectiveness in the present competitive environment.
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.
page
- ---------
two
<PAGE>
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
Revenue Growth
(In millions)
Year
----
'94 $ 10.9
'95 $ 13.6
'96 $ 15.0
'97 $ 18.5
'98 $ 20.4
[3 PHOTOS]
[PHOTO]
"Market expansion has played an integral role in Commercial Staffing's growth.
But as we grow, we remain mindful of the importance of personalized solutions
for our business partners. Real growth begins with building genuine
relationships of shared values, teamwork, integrity and commitment."
--Anthony Trotter
Vice President
Commercial Staffing
JOULE's growing network of Commercial Staffing branch offices work together
to satisfy our clients' staffing needs with a wide range of skilled personnel in
administrative, customer service and light industrial positions. By aligning the
branch offices, each with its own recruiting strengths, JOULE is maximizing the
company-wide recruitment results. This alignment strategy serves as a
competitive advantage in bringing qualified personnel to our clients. To further
enhance our recruiting efforts, as well as our client services, JOULE now offers
transportation services to and from job sites. The division's growth continues
to be based upon providing highly qualified associates and delivering the
highest level of service possible to our personnel and clients.
page
---------
three
<PAGE>
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
Revenue Growth
(In millions)
Year
----
'94 $ 6.5
'95 $ 8.8
'96 $ 11.6
'97 $ 13.1
'98 $ 16.5
[4 PHOTOS]
[PHOTO]
"Technical Staffing continued to achieve record sales and earnings for the
fourth consecutive year. This achievement is a testament to the entire staff's
dedication and commitment to quality and customer service. Our management team
continues to direct significant resources to the ongoing hiring, training and
development of our recruiting and sales personnel in order to guarantee our
clients a prompt staffing solution with a quality product at a competitive
price."
--Stephen Demanovich
Vice President
Joule's
success is driven by proactive
- ----------------------
Technical Staffing
JOULE Technical Staffing's reputation for high-quality staffing solutions
in Engineering, Science and Information Technology continues to facilitate our
expansion. This year, our key account development and niche marketing strategies
led to the division's 26 percent sales growth over fiscal 1997 and sales growth
over the past four years of over 150 percent. In an effort to offer our clients
a total technical staffing solution, we have expanded upon our core competencies
into permanent placement for scientific professionals and nationwide placement
of engineering services. These two new business units are natural extensions
that capitalize on the growing demand for technical professionals and are
supported by our established database of qualified technical professionals and
our state-of-the-art recruiting technology. Through these initiatives and our
continued focus on customer service, we expect continued growth in client
acceptance and revenue in the future.
page
- ---------
four
<PAGE>
[PHOTO]
"Collectively we offer our clients more than 50 years of industrial contracting,
staffing, and maintenance experience. We have worked together to build a solid
reputation for fulfilling customers' requirements with skilled craftsmen in a
timely, safe manner and at a competitive price. Whether the project is moving a
plant to a new location, installing new equipment or maintaining a petrochemical
plant, we strive for total customer satisfaction."
[PHOTO] [PHOTO]
--Joseph Vendetti --John Porch
Director of Operations, Hudson Valley Director of Operations, Delaware Valley
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
Revenues
(In millions)
Year
----
'94 $ 18.8
'95 $ 21.2
'96 $ 21.9
'97 $ 17.0
'98 $ 18.4
recruiting programs
- --------------------------------------------------------------------------------
including state-of-the-art resume scanning and applicant screening and
qualification.
Industrial Staffing
JOULE Industrial Staffing is a leading regional provider of skilled craft
workers and project support services necessary for the installation or
retrofitting of equipment and facilities. Our services, clients and geographic
reach has grown with the continued trend toward outsourcing. To ensure
high-quality industrial staffing solutions for our clients, JOULE invests
heavily in every facet of our business, including recruiting, training, safety,
and project management. This year, we began applying our expertise to assist
Original Equipment Manufacturers install their machinery in new and upgraded
industrial facilities around the country. Acting as the Field Service Agent for
these clients, JOULE's personnel install and maintain specialized equipment at
facilities nationwide. These are just a few of the ways JOULE strives to offer
our clients a breadth of solutions and the highest level of service.
page
---------
five
<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:
Year Ended September 30,
-----------------------------------
1998 1997 1996
===================================
Revenues ................................ 100.0% 100.0% 100.0%
Costs, expenses and other
Cost of services ...................... 81.9 81.3 83.2
Selling, general &
administrative expenses ............. 15.0 14.6 12.9
Provision for legal settlement
and related costs ................... 0.6 -- --
Interest expense ...................... 0.4 0.4 0.6
Income before income tax provision ...... 2.1 3.7 3.3
Income tax provision .................... 0.8 1.5 1.2
Net income .............................. 1.3 2.2 2.1
===================================
The Company's revenues are derived from providing staffing services to its
customers. Such services include providing commercial (office and light
industrial) workers, technical (engineering, scientific and information
technology) personnel, and industrial (skilled craft industrial plant and
facility maintenance) labor. Over 90% of revenue each year is billed on a direct
cost plus markup basis. Revenue increased 14% to $55.3 million in fiscal 1998
from $48.6 million in 1997. Revenue for 1996 amounted to $48.4 million.
Commercial staffing revenue increased 10% to $20.4 million in 1998 from $18.5
million in 1997, following a 23% increase in 1997 over 1996 revenue of $15.0
million. Technical staffing revenue increased 26% to $16.5 million in 1998,
compared to 1997 revenue of $13.1 million following a 13% increase over 1996
revenue of $11.6 million. Industrial staffing revenue in 1998 amounted to $18.4
million, an 8% increase over 1997 revenues of $17.0 million; 1997 revenue
declined 22% from $21.9 million in 1996, reflecting the adverse impact of the
wind down and completion of certain long term contracts.
Cost of services were 81.9% and 81.3% of revenue in fiscal 1998 and 1997,
respectively, compared to 83.2% in 1996. 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, including a van transportation service
initiated in 1998 to transport some commercial staffing workers to job sites.
Selling, general and administrative expenses amounted to $8.3 million in 1998,
compared to $7.1 million in 1997 and $6.2 million in 1996. Such expenses were
15.0%, 14.6% and 12.9% of revenues in 1998, 1997 and 1996, respectively. The
1998 and 1997 increases in selling, general and administrative expenses
principally reflect higher staff employee payroll related expenses reflecting
the Company's investment in additional staff in order to grow the business, as
well as current labor market conditions. Selling, general and administrative
expenses also include advertising, professional fees, depreciation, provision
for the allowance for doubtful accounts, rent, and other costs related to
maintaining the Company's branch offices. The provision for legal settlement and
related costs of $323,000 in 1998 relate to the Company's decision in October
1998 to settle a lawsuit. While the Company felt that the lawsuit was without
merit, it settled to contain legal expenses, which began to escalate during the
fourth quarter; total legal settlement and related costs provided for and
incurred in the fourth quarter amounted to $285,000.
Interest expense increased to $250,000 in 1998 after decreasing to $214,000
in 1997 from $311,000 in 1996. Effective tax rates for fiscal 1998, 1997 and
1996 were 40%, 40% and 37%. As a result of the above, net income was $706,000 or
$0.19 per share basic and diluted in 1998 compared with $1,066,000 or $0.29 per
share basic and diluted in 1997 and $1,026,000 or $0.28 per share basic and
diluted in 1996.
Liquidity and Capital Resources
Current assets at September 30, 1998 were $9,125,000 as compared to
$7,105,000 at September 30, 1997 and current liabilities were $5,640,000
compared to $4,251,000 as of September 30, 1997. 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 with interest at LIBOR plus one and one-half percent
with a prime rate, less one quarter percent option; $3,100,000 was outstanding
under this line as of September 30, 1998.
The Company believes that internally generated funds and available
borrowings will provide sufficient cash flow to meet its requirements for the
next 12 months.
Year 2000 Compliance
The Company is a staffing company that provides employees to its customers.
The Company utilizes computer systems to track employee availability, to
generate and track sales, and for accounting purposes, including payroll and
billing. All of the Company's systems and hardware were purchased in recent
years. The Company has been assured by its providers that they are all Year 2000
compliant. The Company will continue to review its existing and new hardware and
software for Year 2000 compliance in the coming year. The financial impact of
ensuring Year 2000 compliance is not expected to be material to the Company's
financial condition. However, the failure of major customers or government
entities to remediate their systems on a timely basis could have a material
adverse effect on the Company.
Forward-Looking Information
Certain parts of this document include forward-looking statements within
the meaning of the federal securities laws that are subject to risks and
uncertainties. Factors that could cause the Company's actual results and
financial condition to differ from the Company's expectations include, but are
not limited to, a change in economic conditions that adversely affects the level
of demand for the Company's services, competitive market and pricing pressures,
the availability of qualified temporary workers, the ability of the Company to
manage growth through improved information systems and the training and
retention of new staff, and government regulation.
page
- ---------
six
<PAGE>
Consolidated Balance Sheets Joule Inc. and Subsidiaries
<TABLE>
<CAPTION>
September 30,
---------------------------
1998 1997
===========================
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash ....................................................................... $ 233,000 $ 139,000
Accounts receivable, less allowance for doubtful accounts of
$267,000 and $200,000 in 1998 and 1997, respectively ..................... 8,549,000 6,820,000
Prepaid expenses and other current assets .................................. 343,000 146,000
---------------------------
Total Current Assets ................................................... 9,125,000 7,105,000
PROPERTY AND EQUIPMENT, NET .................................................. 3,707,000 3,633,000
GOODWILL AND OTHER ASSETS .................................................... 81,000 105,000
---------------------------
$12,913,000 $10,843,000
===========================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable to bank ...................................................... $ 3,100,000 $ 1,295,000
Accounts payable and accrued expenses ...................................... 682,000 1,472,000
Accrued payroll and related taxes .......................................... 1,833,000 1,291,000
Income taxes ............................................................... -- 168,000
Current portion of long term debt .......................................... 25,000 25,000
---------------------------
Total Current Liabilities .............................................. 5,640,000 4,251,000
---------------------------
LONG TERM DEBT ............................................................... 381,000 406,000
---------------------------
Total Liabilities ...................................................... 6,021,000 4,657,000
---------------------------
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 shares in 1998 and 1997 ... 38,000 38,000
Additional paid-in capital ................................................. 3,658,000 3,658,000
Retained earnings .......................................................... 3,585,000 2,879,000
---------------------------
7,281,000 6,575,000
LESS: Cost of 146,000 shares of common stock held in treasury in 1998 and 1997 389,000 389,000
---------------------------
Total Stockholders' Equity ............................................. 6,892,000 6,186,000
---------------------------
$12,913,000 $10,843,000
===========================
</TABLE>
See accompanying notes to consolidated financial statements.
page
----------
seven
<PAGE>
Consolidated Statements of Income Joule Inc. and Subsidiaries
<TABLE>
<CAPTION>
Years Ended September 30,
--------------------------------------------
1998 1997 1996
============================================
<S> <C> <C> <C>
REVENUES ........................................................ $ 55,301,000 $ 48,590,000 $ 48,449,000
--------------------------------------------
COSTS, EXPENSES, AND OTHER:
Cost of services .............................................. 45,273,000 39,485,000 40,293,000
Selling, general and administrative expenses .................. 8,262,000 7,113,000 6,231,000
Provision for legal settlement and related costs .............. 323,000 -- --
Interest expense .............................................. 250,000 214,000 311,000
Other ......................................................... 17,000 2,000 (13,000)
--------------------------------------------
Income before income tax provision .............................. 1,176,000 1,776,000 1,627,000
Income tax provision ............................................ 470,000 710,000 601,000
--------------------------------------------
Net income ...................................................... $ 706,000 $ 1,066,000 $ 1,026,000
============================================
Basic and diluted earnings per share ............................ $ 0.19 $ 0.29 $ 0.28
============================================
Average common shares outstanding--basic ........................ 3,670,000 3,664,000 3,648,000
Average common shares and common equivalents outstanding--diluted 3,672,000 3,666,000 3,651,000
============================================
</TABLE>
See accompanying notes to consolidated financial statements.
Consolidated Statements of
Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Shares of Additional
Common Common Paid-in Retained Treasury
Stock Stock Capital Earnings Stock
======================================================================
<S> <C> <C> <C> <C> <C>
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)
Net Income......................................... -- -- -- 706,000 --
----------------------------------------------------------------------
Balances, September 30, 1998......................... 3,816,000 $38,000 $3,658,000 $3,585,000 $(389,000)
======================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
page
- ---------
eight
<PAGE>
Consolidated Statements of Cash Flows Joule Inc. and Subsidiaries
<TABLE>
<CAPTION>
Years Ended September 30,
--------------------------------------------
1998 1997 1996
============================================
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ...................................................... $ 706,000 $ 1,066,000 $ 1,026,000
Adjustments to reconcile net income to net
cash flows provided by (used in) operating activities:
Depreciation and amortization ............................... 558,000 453,000 400,000
Provision for losses on accounts receivable ................. 93,000 87,000 109,000
Changes in operating assets and liabilities:
Accounts receivable ....................................... (1,822,000) (231,000) 277,000
Prepaid expenses and other assets ......................... (203,000) 206,000 7,000
Accounts payable and accrued expenses ..................... (790,000) (642,000) 680,000
Accrued payroll and related taxes ......................... 542,000 197,000 11,000
Income taxes .............................................. (168,000) 168,000 (77,000)
--------------------------------------------
Net cash flows provided by (used in) operating activities (1,084,000) 1,304,000 2,433,000
--------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment .......................... (602,000) (288,000) (695,000)
--------------------------------------------
Net cash flows used in investing activities ............. (602,000) (288,000) (695,000)
--------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in loans payable to bank .................... 1,805,000 (1,048,000) (1,762,000)
Payment of long term debt ....................................... (25,000) (25,000) (25,000)
Proceeds from exercise of stock options ......................... -- 21,000 154,000
--------------------------------------------
Net cash flows provided by (used in) financing activities 1,780,000 (1,052,000) (1,633,000)
--------------------------------------------
NET CHANGE IN CASH ................................................ 94,000 (36,000) 105,000
CASH, BEGINNING OF PERIOD ......................................... 139,000 175,000 70,000
--------------------------------------------
CASH, END OF PERIOD ............................................... $ 233,000 $ 139,000 $ 175,000
============================================
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid ................................................... $ 244,000 $ 223,000 $ 318,000
============================================
Income taxes paid ............................................... $ 714,000 $ 374,000 $ 763,000
============================================
NON-CASH TRANSACTIONS:
During fiscal 1997, the Company acquired land and buildings
in settlement of a $1,750,000 receivable.
</TABLE>
See accompanying notes to consolidated financial statements.
page
---------
nine
<PAGE>
Notes to Consolidated Financial Statements Joule Inc. and Subsidiaries
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 primarily by the straight-line method, 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 utilizing 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 as 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.
Earnings Per Share--Statement of Financial Accounting Standards No. 128,
"Earnings per Share," which became effective for fiscal 1998, establishes new
standards for computing and presenting earnings per share (EPS). The new
standard requires the presentation of basic EPS and diluted EPS and the
restatement of previously reported EPS amounts. 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. Income available to
common shareholders used in determining basic and diluted EPS was $706,000 in
1998, $1,066,000 in 1997 and $1,026,000 in 1996. The weighted average number of
shares of common stock used in determining basic EPS was 3,670,000 in 1998,
3,664,000 in 1997 and 3,648,000 in 1996. Diluted EPS is calculated by dividing
income available to common shareholders by the weighted average number of shares
of common stock outstanding plus additional common shares that could be issued
in connection with potentially dilutive securities. Income available to common
shareholders used in determining diluted EPS was $706,000 in 1998, $1,066,000 in
1997 and $1,026,000 in 1996. The weighted average number of shares of common
stock used in determining diluted EPS was 3,672,000 in 1998, 3,666,000 in 1997
and 3,651,000 in 1996 and reflects additional shares in connection with stock
option plans (2,000 shares in 1998, 2,000 shares in 1997 and 3,000 shares in
1996). During 1998, 1997 and 1996, 152,000, 27,000, and 9,000 shares have been
excluded from the above calculations because they were antidilutive.
Goodwill--Goodwill is being amortized over a period of approximately ten
years. Amortization of goodwill amounted to $24,000 in 1998, 1997 and 1996,
respectively.
Long-Lived Assets--The provisions of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets" (SFAS
121) 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 such changes have occurred.
Note 2--Property and Equipment:
Property and equipment consists of:
September 30,
----------------------------
1998 1997
============================
Machinery and equipment ...................... $2,740,000 $2,494,000
Furniture and fixtures ....................... 565,000 550,000
Automotive equipment ......................... 1,316,000 1,062,000
Building and leasehold improvements .......... 361,000 292,000
Buildings .................................... 1,834,000 1,834,000
Land ......................................... 671,000 671,000
----------------------------
7,487,000 6,903,000
Less: Accumulated depreciation
and amortization ........................... 3,780,000 3,270,000
----------------------------
$3,707,000 $3,633,000
============================
Note 3--Loans Payable to Bank and Long Term Debt:
The Company has an annual renewable line of credit of $4,500,000 that bears
interest at LIBOR plus one and one-half percent, with a prime rate less
one-quarter percent option. The average interest rate at September 30, 1998 was
7.16%. At September 30, 1998, $1,400,000 of the line of credit was unused, all
of which was available for use. Related borrowings are collateralized
principally by accounts receivable.
There is a mortgage loan for $406,000 on the Company's staffing operations
building. At September 30, 1998, $25,000 was due within one year and classified
as a current liability. 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 prime rate plus 1 1/2%.
Note 4--Stock Option Plans:
The Company's 1991 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, 1998, there were 215,000
stock options outstanding at prices ranging from $3.50 to $5.38 of which 15,000
options are exercisable. There were also 4,000 stock options outstanding at
September 30, 1998 from a previous stock option plan at a price of $2.63. In
1997 and 1996, 5,000 and 47,000 options were exercised, respectively and, in
1998, 15,000 options were cancelled. In 1998 and 1997, 110,000 options were
granted in each year at prices ranging from $4.00 to $5.38.
page
- ---------
ten
<PAGE>
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," became effective for the fiscal year beginning
October 1, 1996, and permits an entity to continue to account for employee
stock-based compensation under APB Opinion No. 25, "Accounting for Stock 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:
1998 1997 1996
=============================================
Net income
As reported................ $706,000 $1,066,000 $1,026,000
Pro forma.................. 671,000 1,062,000 1,023,000
Net income per share,
basic and diluted
As reported................ 0.19 0.29 0.28
Pro forma.................. 0.18 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 1998, 1997 and 1996 were $5.25, $4.23 and $4.00,
respectively, based upon the following weighted average assumptions: expected
volatility (50% in 1998, and 25% in 1997 and 1996), risk-free interest rate
(7.5% in 1998, and 6.5% in 1997 and 1996), expected life (3 years in 1998, 1997
and 1996), and expected dividend yield (0% in 1998, 1997 and 1996).
Note 5--Income Taxes:
Comparative analyses of the provision for income taxes follows:
September 30,
---------------------------------------------
1998 1997 1996
=============================================
Current:
Federal...................... $364,000 $551,000 $454,000
State and Local.............. 106,000 159,000 147,000
---------------------------------------------
$470,000 $710,000 $601,000
=============================================
The provision for income taxes varied from the tax computed at the U.S.
Federal statutory rates of 34% in fiscal 1998, 1997 and 1996 for the following
reasons:
September 30,
---------------------------------------------
1998 1997 1996
=============================================
U.S. Federal Tax at
statutory rates....... $400,000 $604,000 $553,000
State income taxes, net of
Federal tax benefit... 70,000 106,000 98,000
Utilization of operating loss
carryforward.......... -- -- (52,000)
Other................... -- -- 2,000
---------------------------------------------
$470,000 $710,000 $601,000
=============================================
Note 6--Commitments and Contingencies:
The Company's facilities are leased under noncancellable terms expiring
through 2001. Rent expense was $181,000, $286,000, and $273,000 for the years
ended September 30, 1998, 1997 and 1996, respectively.
Aggregate rentals for the remaining lease terms at September 30, 1998 are
as follows:
Year Ending September 30,
- --------------------------------------------------------------------------------
1999 ................................................................ 130,000
2000 ................................................................ 104,000
2001 ................................................................ 57,000
---------
$291,000
=========
The provision for legal settlement and related costs of $323,000 in 1998
relate to the Company's decision in October 1998 to settle a lawsuit. While the
Company felt that the case was without merit, it settled to contain legal
expenses, which began to escalate during the fourth quarter; total related
litigation costs provided for and incurred in the fourth quarter amounted to
$285,000,
Note 7--Transactions with Major Stockholders and Affiliates:
The Company rented facilities from certain of its stockholders and their
affiliates for approximately $50,000, $199,000 and $199,000 for each of the
years ended September 30, 1998, 1997 and 1996. At September 30, 1998 the Company
had related lease commitments of $16,000 and $1,000 for the years ending
September 30, 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 the affiliate which reimbursed the Company approximately $118,000.
The Company paid certain major stockholders Board of Director's fees of
$15,000, $16,000 and $21,000 for the years 1998, 1997 and 1996; accounts
receivable include amounts due from a major stockholder of $33,000, $22,000 and
$67,000 at September 30, 1998, 1997 and 1996, respectively.
During the year ended September 30, 1997 the Company acquired land and
building 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 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 70%, 71% and 68%, of its
revenues from services provided to customers in New Jersey in 1998, 1997 and
1996, respectively.
page
---------
eleven
<PAGE>
Report of Independent 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, 1998 and 1997 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,
1998. 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, 1998 and 1997, and the results of their operations and their
cash flows for each of the three years in the period ended September 30, 1998 in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Roseland, New Jersey
November 19, 1998
Stock Market Information Joule Inc. and Subsidiaries
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 1996
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................................. 6 1/4 4 1/2
--------------------------
Calendar 1998
First Quarter.................................. 5 3/4 4 1/2
Second Quarter................................. 5 1/2 3 1/2
Third Quarter.................................. 4 1/8 2 7/8
Fourth Quarter (through December 2)............ 3 3/8 2 5/8
==========================
As of December 7, 1998, there were approximately 600 holders of the
Company's Common Stock. No cash dividends have been declared on the Common
Stock.
page
- ---------
twelve
<PAGE>
Corporate Data Joule Inc. and Subsidiaries
Board of Directors
Richard P. Barnitt
Financial Consultant
Paul L. DeBacco
President
Michael Christopher Group, Inc.
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
John G. Wellman, Jr.
Executive Vice President and
Chief Operating Officer
Bernard G. Clarkin
Vice President, Chief Financial Officer
and Secretary
John F. Logothetis
Vice President
Stephen Demanovich
Vice President
Anthony W. 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
E-Mail Address: [email protected]
or
Visit our web site at www.Jouleinc.com.
Auditors
Arthur Andersen LLP
101 Eisenhower Parkway
Roseland, New Jersey 07068
Transfer Agent & Registrar
Continental Stock Transfer & Trust Co.
2 Broadway
New York, New York 10275-0491
JOULE Common Stock is traded on the
American Stock Exchange under the
symbol JOL.
Annual Meeting
The annual meeting of JOULE Inc. will
be held on Wednesday, February 3, 1999
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
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
Northfield, New Jersey 08225
(609) 383-1433
2333 Whitehorse-Mercerville Road
Trenton, New Jersey 08619
(609) 588-5900
77 Main Street
P.O. Box 7
Fishkill, New York 12524
(914) 897-3900
2400 West Cypress Creek Road
Suite 100
Ft. Lauderdale, Florida 33309
(954) 492-1110
4300-A Ridge Road
Baltimore, Maryland 21236
(410) 284-3400
1722 Route 70 East
Cherry Hill, New Jersey 08003
(609) 489-3002
411 38th Street
Union City, New Jersey 07087
(201) 330-0333
359 Passaic Street
Passaic, New Jersey 07055
(973) 458-1771
47 Commercial Avenue--Unit #3
New Brunswick, New Jersey 08901
(732) 846-4810
3214 River Road
Camden, New Jersey 08105
(609) 614-0199
Box 216, Route 1
2205 15th Street
Lawrenceville, Illinois 62439
(618) 943-7344
Designed by Curran & Connors, Inc.
<PAGE>
- -----------
Joule
- -----------
1245 Route 1 South
Edison, New Jersey 08837
732-548-5444
EXHIBIT 21
<PAGE>
EXHIBIT 21
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
JOULE Transportation, Inc. New Jersey
EXHIBIT 23
<PAGE>
EXHIBIT 23
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 28, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 233
<SECURITIES> 0
<RECEIVABLES> 8816
<ALLOWANCES> 267
<INVENTORY> 0
<CURRENT-ASSETS> 9125
<PP&E> 7487
<DEPRECIATION> 3780
<TOTAL-ASSETS> 12913
<CURRENT-LIABILITIES> 5640
<BONDS> 381
0
0
<COMMON> 38
<OTHER-SE> 6854
<TOTAL-LIABILITY-AND-EQUITY> 12913
<SALES> 0
<TOTAL-REVENUES> 55301
<CGS> 0
<TOTAL-COSTS> 45273
<OTHER-EXPENSES> 8509
<LOSS-PROVISION> 93
<INTEREST-EXPENSE> 250
<INCOME-PRETAX> 1176
<INCOME-TAX> 470
<INCOME-CONTINUING> 706
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 706
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
