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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, 2002
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:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
Common Stock, par value $.01 per share American Stock Exchange
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 (the
"Act") during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b.2 of the Act). Yes |_| No |X|.
The aggregate market value of the Common Stock held by non-affiliates of the
registrant, based upon the closing price of the Common Stock on the American
Stock Exchange on March 31, 2002, was approximately $ 1,545,000.
As of December 19, 2002, there were 3,684,000 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, 2002 filed with the Securities and Exchange Commission
(the "Commission") pursuant to Rule 14a-3 under the Securities Exchange Act of
1934 (the "2002 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 2003 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.
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.
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, substantially
all revenue is billed based on direct cost plus a mark-up to cover the Company's
overhead and profit. At September 30, 2002, approximately 1,800 employees were
on assignment to more than 300 clients for periods ranging in duration from one
day to several years.
The Company was incorporated in New Jersey in 1967 as the successor
to a business organized in 1965 and was reincorporated in Delaware on July 28,
1986.
Description of Services
The Company supplies commercial (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 are conducted through
ten offices in New Jersey and Pennsylvania. 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. The Company has 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 partially offsets the cost of
the program. During 2002, the number of
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office and light industrial workers on assignment per week averaged more than
1,200, and such services contributed approximately 30%, 32% and 35% of revenues
in 2002, 2001 and 2000, respectively.
The Company's technical employees include engineers, designers,
draftsmen, information technology personnel, scientists and lab technicians, who
are often furnished on a project basis. Recruitment and assignment of these
personnel are conducted through three offices in New Jersey, Pennsylvania and
Alabama. 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, permanent personnel with similar backgrounds and experience and
have a greater opportunity for overtime compensation. During 2002, the number of
technical workers on assignment per week averaged 400, and such services
contributed approximately 35%, 33% and 31% of revenues in 2002, 2001 and 2000,
respectively.
The Company also provides skilled craft industrial plant and
facility maintenance labor services personnel 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. Recruitment and assignment of such personnel
are done from offices in New Jersey, Florida, New York, and Illinois. The
Company provides the services of stationary engineers, 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 re-assembly 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. During 2002,
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 35%, 35% and 34% of revenues in fiscal 2002,
2001 and 2000, respectively.
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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.
Customers and Marketing
The majority of the Company's business orders each year were with
clients that it 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. In 2002, one customer accounted for
approximately 10% of revenues; no customer accounted for more than 10% of
revenues in 2001 and 2000.
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.
4
Employees
At September 30, 2002, the Company employed approximately 170 full
and part-time employees in its headquarters and branch offices other than those
on assignment to clients and had approximately 1,800 persons on assignment. The
Company is a party to collective bargaining agreements covering approximately
135 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 as well as a building adjacent to
its corporate headquarters which serves as operational headquarters for one of
the Company's divisions and a building in Gibbstown, New Jersey housing an
industrial services unit. Eighteen additional facilities, comprising
approximately 48,000 square feet of space, are leased 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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
Executive Officers of the Company
The names, ages and positions of all of the executive officers of the
Company as of December 19, 2002 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 72, 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. In February
1999, he relinquished the Presidency but continues as Chairman of the Board and
Chief Executive Officer.
John G. Wellman, Jr., age 54, was elected President and Chief
Operating Officer in February 1999. He 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 February 1998.
5
Bernard G. Clarkin, age 53, 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 49, 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 48, 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.
Joseph Vendetti, age 55, was elected a Vice President in August
2000. He had been a General Manager of Joule Technical Services since 1994.
Prior to that he was Regional Director for Joule Technical Services since
joining the Company in 1990.
John Porch, age 50, was elected Vice President in August 2000. He
had been a General Manager of Joule Industrial Contractors since 1996. Mr. Porch
has been employed by Joule since 1980 holding a series of increasingly more
responsible positions.
Judith Bryant, age 47, was appointed Vice President in October 2000
when she joined the Company to head its Commercial Staffing business unit. Prior
to that she worked for Office Specialists, currently a part of Randstad North
America (a large staffing company) as a Market Manager. She joined Office
Specialists in 1994.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this Item is incorporated by reference
to the information under the caption "Stock Market Information" on the inside
back cover of the 2002 Annual Report.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated by reference
to the "Selected Financial Information," included on the inside front cover of
the 2002 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 pages 6 to 7 of the 2002 Annual
Report.
6
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this Item is incorporated by reference
to the information under the same subcaption on page 7 of the 2002 Annual
Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is incorporated by reference
to the Consolidated Financial Statements appearing on pages 8 to 15 of the 2002
Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
A Form 8-K, dated May 23, 2002, was filed with respect to the
dismissal of Arthur Andersen LLP as the Company's independent auditors. Form
8-K/A, dated May 28, 2002, was filed amending the Form 8-K dated May 23, 2002. A
Form 8-K, dated June 21, 2002, was filed with respect to the engagement of KPMG
LLP as its new independent auditors.
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.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
the Common Stock, to file reports of ownership and changes in ownership of the
Common Stock with the Securities and Exchange Commission and to provide copies
to the Company. Based upon a review of the copies of the forms furnished to the
Company and upon written representations from certain reporting persons that no
forms were required, the Company believes that all Section 16(a) filing
requirements were complied with during fiscal 2002.
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.
7
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
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.
The Company's 1991 Stock Option Plan and 2001 Stock Option Plan were
each approved by the stockholders. The Company has no other equity compensation
plan. The number of stock options outstanding under the stock option plans, the
weighted average exercise price of outstanding options and the number of shares
remaining available for issuance, in each case as of September 30, 2002, were as
follows:
Number of shares
remaining available for
Number of shares to Weighted average future issuance under
be issued upon exercise exercise price of plans (excluding shares
Plan category of outstanding options outstanding options reflected in column (a))
------------- ---------------------- ------------------- ------------------------
Stock Option Plans
approved by stockholders 188,188 $3.83 487,500
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.
ITEM 14. CONTROLS AND PROCEDURES
Within the 90-day period preceding the filing date of this report,
an evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures was carried out under the supervision and
with the participation of the Company's management, including the Chairman of
the Board and Chief Executive Officer and the Vice President and Chief Financial
Officer (the "Certifying Officers"). Based on that evaluation, the Certifying
Officers concluded that the Company's disclosure controls and procedures are
effective to bring to the attention of the Company's management the relevant
information necessary to permit an assessment of the need to disclose material
developments and risks pertaining to the Company's business in its periodic
filings with the Securities and Exchange Commission. There have been no
significant changes to the Company's internal controls or in other factors that
could significantly affect these controls subsequent to the date of the
evaluation.
8
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements
The following Financial Statements of JOULE Inc. and subsidiaries and
Independent Auditors' Report are incorporated in Part IV by reference to
the 2002 Annual Report.
Independent Auditors' Report with respect to the consolidated
financial statements for the fiscal year 2002.
Consolidated Balance Sheets as of September 30, 2002 and 2001.
Consolidated Statements of Operations for the Years Ended September
30, 2002, 2001 and 2000.
Consolidated Statements of Changes in Stockholders' Equity for the
Years Ended September 30, 2002, 2001 and 2000.
Consolidated Statements of Cash Flows for the Years Ended September
30, 2002, 2001 and 2000.
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
15(a) by reference:
Independent Auditor's Report as to 2002 Schedules...............F-1
Financial Statement Schedules:
VIII - Valuation and Qualifying Accounts...................F-2
IX - Short-term Borrowings...............................F-3
All other schedules are omitted since they are not required or are not
applicable or since the information is furnished elsewhere in the
financial statements or notes thereto.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
9
(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, filed as Exhibit 4.1e to the
Company's Annual Report on Form 10-K for the year ended September
30, 1998 and incorporated herein by reference.
4.1f Eighth Modification and Extension Agreement, dated February 5, 1999,
between registrant and Summit Bank, filed as Exhibit 4.1f to the
Company's Annual Report on Form 10-K for the year ended September
30, 1999 and incorporated herein by reference.
4.1g Ninth Modification and Extension Agreement, dated May 10, 1999,
between registrant and Summit Bank, filed as Exhibit 4.1g to the
Company's Annual Report on Form 10-K for the year ended September
30, 1999 and incorporated herein by reference.
4.1h Tenth Modification and Extension Agreement, dated November 15, 1999,
between registrant and Summit Bank, filed as Exhibit 4.1h to the
Company's Annual Report on Form 10-K for the year ended September
30, 2000 and incorporated herein by reference.
10
4.1i Letter Amendment, dated May 26, 2000, between registrant and Summit
Bank, filed as Exhibit 4.1i to the Company's Annual Report on Form
10-K for the year ended September 30, 2000 and incorporated herein
by reference.
4.1j Letter Amendment dated May 31, 2001 between registrant and Fleet
Bank, filed as Exhibit 4.1j to the Company's Annual Report on Form
10-K for the year ended September 30, 2001 and incorporated herein
by reference.
4.1k Thirteenth Amendment and Modification Agreement, dated September 15,
2001, between registrant and Fleet Bank, filed as Exhibit 4.1k to
the Company's Annual Report on Form 10-K for the year ended
September 30, 2001 and incorporated herein by reference.
4.1l Fourteenth Amendment and Modification Agreement, dated May 31, 2002,
between registrant and Fleet Bank.
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.
10.5* 2001 Stock Option Plan, filed as Exhibit 10.5 to the Company's
Annual Report on Form 10-K for the year ended September 30, 2001 and
incorporated herein by reference.
10.6* Joule Inc. Deferred Compensation Plan filed as Exhibit 10.6 to the
Company's Annual Report on Form 10-K for the year ended September
30, 2001 and incorporated herein by reference.
13 Annual Report to Stockholders for the year ended September 30, 2002.
21 List of Subsidiaries.
23 Consent of KPMG LLP.
99.1 Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 -- Chief Executive
Officer.
99.2 Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 -- Chief Financial
Officer.
99.3 Report of Independent Public Accountants of Arthur Andersen LLP
dated November 9, 2001 with respect to the consolidated financial
statements for the fiscal years 2001, 2000 and 1999.
99.4 Report of Independent Public Accountants of Arthur Andersen LLP
dated November 9, 2001 as to 2001, 2000 and 1999 schedules.
- ----------
* Compensatory Plan
11
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 26, 2002 /s/ Emanuel N. Logothetis
---------------------------
Emanuel N. Logothetis,
Chairman of the Board
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 26, 2002.
/s/ Emanuel N. Logothetis /s/ Bernard G. Clarkin
- ----------------------------- ------------------------------------------
Emanuel N. Logothetis Bernard G. Clarkin
Chairman of the Board and Vice President and Chief Financial Officer
Director (Principal Executive and (Principal Financial Officer and
Officer) Principal Accounting Officer)
/s/ Nick M. Logothetis
- ----------------------------- ------------------------------------------
Nick M. Logothetis - Director Steven Logothetis - Director
/s/ Richard Barnitt /s/ Andrew Spohn
- ----------------------------- ------------------------------------------
Richard Barnitt - Director Andrew Spohn - Director
- -----------------------------
Robert W. Howard - Director
12
CERTIFICATIONS
I, Emanuel N. Logothetis, Principal Executive Officer of Joule, certify that:
1. I have reviewed this annual report on Form 10-K of Joule Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: December 26, 2002
/s/ Emanuel N. Logothetis
----------------------------
Emanuel N. Logothetis
Chairman of the Board and
Chief Executive Officer
CERTIFICATIONS
I, Bernard C. Clarkin, Principal Financial Officer of Joule, certify that:
1. I have reviewed this annual report on Form 10-K of Joule Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: December 26, 2002
/s/ Bernard G. Clarkin
---------------------------------------
Bernard G. Clarkin
Vice President, Chief Financial Officer
and Secretary
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
Joule Inc.:
We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements as of September 30, 2002
and for the year then ended, 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 24, 2002. 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, as of September 30, 2002 and for the year
then ended, are the responsibility of the Company's management and are presented
for purposes of complying with the Securities and Exchange Commission's rules
and are not part of the basic 2002 consolidated 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 2002 consolidated financial
statements taken as a whole.
The basic 2001 and 2000 consolidated financial statements of Joule Inc. and
subsidiaries were audited by other auditors who have ceased operations. Those
auditors indicated in their report dated November 9, 2001 that the schedule
listed in the above index as of September 30, 2001 and 2000 and for the years
then ended 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.
/s/ KPMG LLP
Short Hills, New Jersey
November 24, 2002
F-1
SCHEDULE VIII
JOULE INC. AND SUBSIDIARIES
VALUATION AND QUALIFICATION ACCOUNTS AND RESERVES
BALANCE CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ----------- --------- -------- -------- ---------- ------
Allowance for
doubtful accounts:
Years Ended:
September 30, 2000 $384,000 $250,000 -- $120,000 $514,000
September 30, 2001 $514,000 $358,000 -- $308,000 $564,000
September 30, 2002 $564,000 $57,000 -- $118,000 $503,000
F-2
SCHEDULE IX
JOULE INC AND SUBSIDIARIES
SHORT-TERM BORROWINGS
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*
---------- ----------- ---- ---- ----- -----
YEARS ENDED
SEPTEMBER 30, 2000 BANKS $4,980,000 7.99% $8,750,000 $6,985,000 7.87%
SEPTEMBER 30, 2001 BANKS $5,250,000 4.41% $6,000,000 $5,179,000 6.89%
SEPTEMBER 30, 2002 BANKS $3,980,000 3.38% $5,700,000 $4,323,000 4.02%
*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
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
- ------ ---------------------- ----
3.1 Certificate of Incorporation, filed as Exhibit *
3.1 to the Company's Registration Statement on
Form S-1 (File No. 33-7617) under the Securities
Act of 1933, as amended (the "Form S-1"), and
incorporated herein by reference.
3.2 By-laws, as amended, filed as Exhibit 3.2 to the *
Form S-1 and incorporated herein by reference.
4.1 Loan and Security Agreement, dated as of *
February 20, 1991, between registrant and United
Jersey Bank Central, N.A., filed as Exhibit 4.1
to the Company's Annual Report on Form 10-K for
the year ended September 30, 1991 and
incorporated herein by reference.
4.1a Third Modification and Extension Agreement, *
dated August 23, 1995, between registrant and
United Jersey Bank, filed as Exhibit 4.1a to the
Company's Annual Report on Form 10-K for the
year ended September 30, 1995 and incorporated
herein by reference.
4.1b Fourth Modification and Extension Agreement, *
dated February 6, 1996, between registrant and
United Jersey Bank, filed as Exhibit 4.1b to the
Company's Annual Report on form 10-K for the
year ended September 30, 1996 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, filed as Exhibit 4.1e to the
Company's Annual Report on Form 10-K for the
year ended September 30, 1998 and incorporated
herein by reference.
4.1f Eighth Modification and Extension Agreement, *
dated February 5, 1999, between registrant and
Summit Bank, filed as Exhibit 4.1f to the
Company's Annual Report on Form 10-K for the
year ended September 30, 1999 and incorporated
herein by reference.
4.1g Ninth Modification and Extension Agreement, *
dated May 10, 1999, between registrant and
Summit Bank, filed as Exhibit 4.1g to the
Company's Annual Report on Form 10-K for the
year ended September 30, 1999 and incorporated
herein by reference.
4.1h Tenth Modification and Extension Agreement, *
dated November 15, 1999, between registrant and
Summit Bank, filed as Exhibit 4.1h to the
Company's Annual Report on Form 10-K for the
year ended September 30, 2000 and incorporated
herein by reference.
4.1i Letter Amendment, dated May 26, 2000, between *
registrant and Summit Bank, filed as Exhibit
4.1i to the Company's Annual Report on Form 10-K
for the year ended September 30, 2000 and
incorporated herein by reference.
4.1j Letter Amendment dated May 31, 2001 between *
registrant and Fleet Bank, filed as Exhibit 4.1j
to the Company's Annual Report on Form 10-K for
the year ended September 30, 2001 and
incorporated herein by reference.
4.1k Thirteenth Amendment and Modification Agreement, *
dated September 15, 2001, between registrant and
Fleet Bank, filed as Exhibit 4.1k to the
Company's Annual Report on Form 10-K for the
year ended September 30, 2001 and incorporated
herein by reference.
4.11 Fourteenth Amendment and Modification Agreement, 23
dated May 31, 2002, between registrant and Fleet
Bank.
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.
10.5 2001 Stock Option Plan, filed as Exhibit 10.5 to *
the Company's Annual Report on Form 10-K for the
year ended September 30, 2001 and incorporated
herein by reference.
10.6 Joule Inc. Deferred Compensation Plan filed as *
Exhibit 10.6 to the Company's Annual Report on
Form 10-K for the year ended September 30, 2001
and incorporated herein by reference.
13 Annual Report to Stockholders for the year ended 28
September 30, 2002.
21 List of Subsidiaries 49
23 Consent of KPMG LLP. 50
99.1 Certification pursuant to 18 U.S.C. Section 1350 51
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 -- Chief Executive
Officer.
99.2 Certification pursuant to 18 U.S.C. Section 1350 52
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 -- Chief Financial
Officer.
99.3 Report of Independent Public Accountants of 53
Arthur Andersen LLP dated November 9, 2001 with
respect to the consolidated financial statements
for the fiscal years 2001, 2000 and 1999.
99.4 Report of Independent Public Accountants of 54
Arthur Andersen LLP dated November 9, 2001 as to
2001, 2000 and 1999 schedules.