Page 1

PROVIDING REAL JOBS FOR CAPABLE PEOPLE

Lead

Collaborate

CHANGE

Transforming Lives Through Leadership

ANNUAL

REPORT

2013


Table of Contents

Transforming Lives Through Leadership

 3

Year in Review

4

Spotlight on Collaboration: Gladis Jarquin

6

Spotlight on Change: Oscar Detrinidad

8

Spotlight on Collaboration: Margaret-Ann PeĂąa

10

Spotlight on Change: Connie Cook

12

Financial Report Independent Author's Report

14

Statement of Financial Position

15

Statement of Functional Expenses (2013)

16

Statement of Functional Expenses (2012)

17

Statement of Cash Flows

18

Statement of Activities and Changes in Net Assets

19

Notes to Financial Statements

19

In Memoriam: Jackie Brown

22

Leadership Team

22

Board of Directors

22

2


Transforming Lives Through Leadership Job Options hires individuals with disabilities, but we don’t hire based on a person’s disabilities but rather their abilities. With appropriate accommodation, this allows them and our company to be successful. Bill Eastwood, M.A. Associate Director and Co-Founder Since our guiding principle was conceived nearly 27 years ago, Job Options’ (JOI) mission has been to provide employment opportunities for people with disabilities by supplying high-quality support services for federal and commercial customers. In short, we provide real jobs for capable people. This report shows how two of our Division Managers work with two remarkable individuals whose lives have been significantly changed through the work they do at Job Options.

F

rom our founders to the Job Options' leadership team today, our actions support our mission to help the disabled be successful in their respective jobs, and provide high-quality support services that can compete with any provider. Collaborating with our employees is at the core of our success. Every individual is evaluated and placed

in a position where they have the best opportunity. Our on-site managers provide the necessary leadership, on-the-job training, conduct regular evaluations and administer rewards. These functions provide our employees with the tools they need to be successful. It's a cliché that “people don't change.” However, every day we witness how

the disabled individuals we employ transform their life situations through their work at Job Options. By having meaningful employment, performing at a high level for a fair wage, our employees gain confidence, selfesteem and a sense of purpose. We invite you to read how two disabled individuals, Oscar Detrinidad and Connie Cook, have changed their lives through their work with Job Options.

Lead

Collaborate 3 Job Options 2013 Annual Report


2013 REVIEW Year in Now entering our

27

th

year of operation

with

$ $

4mil in revenue

GROWTH

over the fiscal year 2012-2013

J

nearing

we’ve

50mil

of annual revenue

GENERATION moving through our second quarter-century of service

ob Options, Inc. (JOI) is the eleventh largest provider of services in the AbilityOne program out of over 550 not-forprofit firms that provide services to the federal government by employing people with disabilities. We now generate revenues approaching $50 million and employ over 1,000 individuals.

Another milestone we completed was the negotiation on a new fiveyear contract at the Naval Medical Center San Diego. This is our largest individual contract and constitutes nearly 20% of our revenue. Finally, our business development should benefit from the newly formed Defense Healthcare Agency, which will oversee all military hospitals.

Last year was a challenge as we continued to operate in an environment in which the federal government and the Department of Defense continued to reduce budgets. Despite this, our revenue grew nearly 10% from the previous year with growth in our Laundry and Hospital Environmental Service (HES) Divisions. HES continues to expand and now encompasses one-third of our revenue with further growth expected.

We also grew significantly in our Food Service Division, with revenues expanding 40%, as meal volume increased with two newly renovated mess halls reopening at Camp Pendleton.

Some of this growth will result from the opening in the next twelve months, of newer, larger, hospitals at Fort Benning, Georgia and Fort Irwin, California where we currently provide service. Growth in fiscal 12/13 resulted from the start-up of a new contract at Weed Army Hospital at Fort Irwin in April 2013. We also improved our bottom line in HES as our operations at Fort Benning achieved profitability during the previous year, putting the division solidly in the black.

A good share of our growth to date results from existing contract expansion—as we take business away from other set-aside contractors who are not providing satisfactory service. Over the past two years, this has resulted in JOI securing over $1.5 million of additional business that helped counteract the effects of budget reductions. Profitability was unfavorably impacted by a write-off of $902,000 of hospital linen inventory that we rented to Hospital Corporation of America (HCA). Outside of this write-off, the net contribution was $209,000. We began a full-service rental contract to three Los Angeles-area HCA

4 Job Options 2013 Annual Report


We believe that the work environment we’ve created over a quarter-century is a place where people with disabilities can thrive through employment while providing high-quality support services. The results of comprehensive employee surveys conducted in July

2013 by AbilityOne confirm this. Over 100 Job Options employees with disabilities were interviewed. The more highly disabled the individual, the more favorable the ratings. These outcomes are more positive compared with results of other surveyed AbilityOne participants.

a comprehensive employee

SATISFACTION SURVEY

Our employment has reached

FOUND THAT Âť

1,013

and

%

83

as of September 30, 2013

% would recommend

98

JOI to others

enjoy their job are proud of their work

%

89

as reported by NISH AbilityOne in June 2013

hospitals in December of 2012. Under this contract we purchased the linen, provided laundry service and rented linen to the hospital for an all-inclusive price per pound. From the onset of the contract, we experienced excessive linen loss at these hospitals. We have not been satisfied that HCA took sufficient and normal actions in the industry to safeguard and protect our product. Being unable to negotiate remedial actions from HCA for reimbursement, we declared a breach of contract in December of 2013 and stopped providing service to HCA in January 2014. The HCA volume will partially be replaced by a new contract with Pomona Valley Hospital, which began in October. We have retained legal counsel to help us explore all of our options with HCA regarding the excessive amount of linen that was lost. Our hospital linen laundry business remains significant. We currently process linen for six hospitals, including three commercial and three military hospitals, with revenues of approximately $5 million annually. We are committed to achieving profitability in our laundry operations through the significant investments we have made in our San Bernardino plant to further automate the facility. Also, we opened a new finishing addition in February 2014.

These investments will substantially improve our productivity and safety. Our expenditures and manpower in laundry have been rationalized for the volume of laundry we now have, and any business additions will be minimal until we attain profitability. Another major challenge we are tackling is our workers’ compensation costs. We are largely self-insured which improves the bottom line through injury control. We are aggressively seeking to control our costs through best practices in claims management, safety training and the incentives we provide our workers and management. Our experience modifier of .83 (a modifier of 1.0 is average for companies in our industry) is indicative of the success of our efforts that we will continue to focus on. We are steadfast with our efforts in providing opportunities by expanding employment for people with disabilities. While sizable challenges remain and trying experiences will always be part of the path forward, we remain committed to demonstrating every day that people with disabilities can provide high-quality, cost-effective support services.

5 Job Options 2013 Annual Report


Oscar is one of my best hires and I can’t imagine him not being part of the staff. I have seen him blossom and come out of his shell over the years. He’s an exceptional human being and one of the kindest people I know. —Gladis about Oscar Detrinidad

A

How do you ensure quality service for the positions at your contract locations?

s the Division Manager for Administrative Services, Gladis has

I take great pride in hiring individuals that I believe will be best suited for the work environment at the SENTRI offices. My goal is to support JOI’s mission and I seek qualified individuals with disabilities that can manage the challenges that the job will often face. Our staff has successfully earned the ISO 9001:2008 certification. While challenging to qualify for, the outcome resulted in detailed documentation of every work process performed at SENTRI. There are numerous checks in place that leave no question as to our employees providing the level of quality required by our customer.

managed the staff working at the SENTRI Enrollment Centers located at the San Ysidro and Otay Mesa

Ports of Entry for nearly thirteen years. The Job Options employees working at these sites provide valuable services to the federal government, the Department of Homeland Security, Customs and Border Protection. Having a well-trained, efficient customer service oriented staff is vital to ensuring

What sort of training and counseling is provided to Job Options employees?

the integrity and reputation of this popular, trusted traveler program. Gladis works closely with her team of supervisors to ensure that both the Job

Training is given on a one-on-one basis to make sure each employee has the information they need to be successful. They are provided with individual counseling sessions if it’s determined that they need additional coaching to address an

Options (JOI) staff and their federal government customer remain highly satisfied. 6

Job Options 2013 Annual Report


Spotlight on

Collaboration

Gladis Jarquin

Administrative Services Division/ Safety Officer/OHSA Outreach Trainer

What local impact does Job Options have in hiring the disabled?

area needing improvement. My employees know that they can call me at any time to discuss not only work issues but also personal challenges they may be facing. I care about each employee’s wellbeing, which extends beyond the eight hours on the job.

The most obvious benefit is employing those who would not otherwise be working and are now contributing to the local and national economy and to their families. They pay taxes rather than collect public assistance. The results of these individuals having meaningful employment cannot be weighed in money alone. The pride they feel in doing productive, meaningful work is beyond words. Our employees become more self-assured and have a greater degree of self-worth and pride in themselves.

Why do you come to work each day? While there may be challenging days, overall I love what I do. I see and hear of the difference made in the lives of some of our employees. They are given an opportunity to be employed when they may have lost hope that they ever would be again–due to past personal challenges. It’s rewarding to be part of the management team that provides this opportunity to so many.

What is your greatest accomplishment as a Division Manager?

How do you inspire employees?

Change that from my greatest accomplishment to our greatest accomplishment—my staff has consistently earned “outstanding” ratings from our Customs and Border Protection customer over the near 13 years of this contract—proof positive that disabled employees can deliver consistent quality and productivity at the highest level.

It’s important to acknowledge people’s efforts to let them know they are appreciated; you see the pride on someone’s face when you do just that. If a customer praises the service given by an employee, they are told, as are their co-workers. We hold Employee Appreciation lunches that a SENTRI manager attends to personally commend them for their contributions. 7

Job Options 2013 Annual Report


Spotlight on

Change

Oscar Detrinidad

Customer Service Representative SENTRI Enrollment Center

N

eearly four years ago, Oscar

What responsibilities does your job require?

Detrinidad began working at the

I have many responsibilities at my job—I process documents, respond to phone calls, collect customer payments and at the end of the day make sure that the proceeds balance with the number of transactions processed. I also handle marketing tasks and greet and assist applicants that come into the SENTRI Office every day.

SENTRI Office at the Otay Mesa Port of Entry as a Customer Service Representative. He

interacts with many applicants who arrive each day seeking assistance in enrolling in the SENTRI program, which provides a speedier border crossing

How do you interact with your supervisors?

through designated lanes. Since Oscar is bilingual,

Gladis Jarquin, my manager, and the Job Options supervisors provide me with extensive training and support to help me be able to perform my job in the best way possible. We all have ongoing training that includes customer service tips, cashiering processes and other skills workshops. They make it easy for us to succeed in our jobs.

he easily handles the many questions people ask regarding this trusted traveler program. His disarming demeanor makes him very effective in his job as he pleasantly, and with gentle authority, communicates with customers. Once very shy and insecure, his work at the SENTRI Office has helped transform his life. 8

Job Options 2013 Annual Report


Gladis is an amazing leader for all of us who work with her. She understands our challenges and helps us to be better at our job every day. —Oscar about Gladis Jarquin

What gives you the most pride in your work at the SENTRI? I take pride in being able to help clients who come to the office every day seeking assistance in enrolling in the SENTRI program. I know how important it is, to so many people, to be able to cross the border quickly every day and I love helping them. Also, I have been blessed with recognition for my work by my supervisors and co-workers—I’ve been voted as being one of the most valuable team members and that makes me feel great!

Are there any personal challenges you had to face in your job? Mostly socializing with people was difficult for me. I must deal with so many customers every day. Sometimes they are upset

and need to speak with someone who can calm them down. I have been able to do so by overcoming my inhibitions and I am proud to say that I’ve been told I have excellent customer services skills.

How has your life changed working for Job Options? I would say I’m a private person. I have had challenges that have made socializing with others difficult. Working at the SENTRI office, I feel comfortable as I have co-workers who have made me feel right at home. In my job I help a lot of people and that has given me the ability to assist clients without the difficulty I would have had earlier in my life. I enjoy my job and that means a lot to me.

9 Job Options 2013 Annual Report


I consider myself responsible for the development of the employees I manage. Working with Connie side-by-side ensures a team environment, and she provides outstanding service to our customers. —Margaret-Ann about Connie

M

How do you ensure quality service for the positions at your contract locations? First of all, we verify that our employees have the ability for the position they will fill, we match the person with the job, not the job to the person. The result is a much higher success rate for each employee and better quality for our customer. After hiring, we have customized training programs to round-out their skills and provide support in many ways.

argaret-Ann has worked for Job

Options (JOI) for twenty-five years. As Facilities Division Manager, her responsibilities are broad,

overseeing six contract locations and managing sixty individuals. The contract sites include San Ysidro Land Port of Entry, MCB Camp Pendleton and NWS

What sort of training and counseling is provided to Job Options employees?

Fallbrook. The Facilities Division is ISO 9001:2008 Certified and CIMS Certified with Honors. Her role

We have one-on-one training, where an employee works with a direct supervisor or even a project manager on a sameday basis to assess abilities and provide direction. In our division we help new employees on a day-to-day basis and offer continued guidance and support. If they have difficulties, we help them build good work habits as well as the ability to stay

as NAVFAC Division Manager includes overseeing operational services for NAVFAC's consolidated contract in which JOI is the "prime."

10 Job Options 2013 Annual Report


Spotlight on

Collaboration

Margaret-Ann Peña, I.C.E., RBSM Facilities Division Manager NAVFAC Division Manager

What local impact does Job Options have in hiring the disabled?

at their job. We want to provide them with state-of-the-art training to make them more effective in their work.

Locally, our program adds to the workforce, and our employees begin to realize their personal goals. We employ people who wish to work. They pay their taxes and become more independent. Also, our employees do not have to rely on public assistance in their lives. It is a positive contribution to the community and gives our valued employees a deep sense of accomplishment.

Why do you come to work each day? I really enjoy my work…it’s the most amazing job I’ve ever had. To see our employees take pride in their work, to nurture them and give them feedback and advice, is just so rewarding. All of what we do helps employees maintain their job and get on their feet. It’s important work that we do. I have a great job and JOI is a great organization.

What is your greatest accomplishment as a Division Manager?

How do you inspire employees? I inspire the people I oversee with monthly recognition for those who go “the extra mile,” above and beyond their position at work. This shows we appreciate their ongoing contributions to Job Options’ customers. We spend time with employees on a one-on-one basis to develop a work dynamic where they feel they are part of a team.

My greatest accomplishment has been developing and implementing new contracts that provide jobs for people with significant disabilities. However, my greatest satisfaction has been mentoring employees and watching them grow in their professional and personal lives.

11 Job Options 2013 Annual Report


Spotlight on

Change

Connie Cook Janitor / Custodian San Ysidro Border Crossing

S

What responsibilities does your job require?

ince coming to work for Job Options

fifteen years ago, Connie has

I am responsible for cleaning the offices at the border. I also remove litter and mop floors and entryways. My job training included responding to situations involving hazardous waste and use of necessary personal protective equipment. I had to learn about biohazardous materials and how to work safely with those materials.

experienced enormous changes in her life. Her dedication to her work and

tireless efforts to succeed have been recognized with a nomination for the Evelyne Villines Award, established to honor Ms. Villines, a national spokesperson for people with disabilities. Working

How do you interact with your supervisors?

at the busiest border crossing in the world, Connie

Margaret-Ann Peña and my supervisor Denise Peña are always there for me if I have any difficulty. I can rely on them for advice, anytime. They help me understand my job and give me confidence.

always has a great attitude. She has overcome many challenges, but is in acceptance of who she is and takes great pride in her accomplishments. Her motto is, “It’s not my business what people think or feel. My business is to be happy.”

12 Job Options 2013 Annual Report


My life has been so much better since joining the Job Options staff…I smile a lot more. I am very responsible, reliable and enjoy my job. My co-workers are friends.

What gives you the most pride in your job?

feel I was worth anything. Now I think things out and ask myself what can I do to make myself happy. My job has made me a better person.

That’s simple. I used to be a negative person, but not anymore. Overcoming personal obstacles with the help of my supervisors has changed my life. I smile a lot more and it makes it easy to work. Denise gives me advice and feedback and this helps me do a great job.

How has your life changed working for Job Options? My co-workers have become friends of mine and that’s really nice. I have a lot of independence now and I take a lot of pride in being recognized for doing a good job. These are all blessings that I have in my life. I think back on things before Job Options and realize I have a nice income and that makes me feel better. People at work give me compliments and tell me I do a good job, and that makes me feel great. I have made a lot of friends at Job Options and I’m grateful for the opportunity everyone has given me.

Are there any personal challenges you had to face in your job? I had some difficulties adjusting to my work situation in the beginning. I have a beautiful voice and I love to sing. I found that it wasn’t appropriate to sing while working in offices where people might be disturbed. Often, I would get mad at myself and didn’t

13 Job Options 2013 Annual Report


Table of Contents Statement of Financial Position

15

Statement of Functional Expenses (2013)

16

Statement of Functional Expenses (2012)

17

Statement of Cash Flows

18

Statement of Activities and Changes in Net Assets

19

Notes to Financial Statements

19

Independent Auditor’s Report Board of Directors Job Options, Inc. San Diego, California

Report on the Financial Statements We have audited the accompanying financial statements of Job Options, Inc. (a nonprofit organization), which comprise the statements of financial position as of September 30, 2013 and 2012, and the related statements of activities and changes in net assets, functional expenses, and cash flows for the fiscal years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibilities Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Job Options, Inc. as of September 30, 2013 and 2012, and the changes in its net assets and its cash flows for the fiscal years then ended in accordance with accounting principles generally accepted in the United States of America.

San Diego, California November 20, 2013

14 Job Options 2013 Annual Report


Statement of Financial Position For the fiscal years ended September 30, 2013 and 2012

Assets

2013

2012

Cash and cash equivalents (Note 3)

$ 660,406

$ 2,576,775

Contracts receivable, net (Note 4)

7,856,695

5,730,280

Other receivables

(5,357)

41,430

Inventory (Note 5)

243,265

311,863

Prepaid expenses

192,748

173,252

8,947,757

8,833,600

Fixed assets, net of depreciation (Note 6)

5,412,267

4,240,283

Investments (Note 7)

5,000

5,000

Deposits

82,310

85,725

Total Assets

$ 14,447,334

$ 13,164,608

Liabilities and Net Assets

2013

2012

Accounts payable and other liabilities

$ 1,999,102

$ 1,036,971

Accrued payroll and payroll related expenses

2,530,798

2,666,597

Current portion of long-term debt (Note 8)

933,604

559,707

5,463,504

4,263,275

2,889,768

2,114,044

2,889,768

2,114,044

8,353,272

6,377,319

Current assets:

Total current assets

Current liabilities:

Total current liabilities Long-term liabilities (Note 8) Long-term liabilities, net of current portion Total long-term liabilities Total liabilities Net assets

Unrestricted Total net assets

Total Liability and Net Assets

15 Job Options 2013 Annual Report

6,094,062

6,787,289

6,094,062

6,787,289

$ 14,447,334

$ 13,164,608


Statement of Functional Expenses For the fiscal years ended September 30, 2013 and 2012

2013 Program Services

Management and General

Salaries and wages

$ 21,641,970

$ 1,913,117

$ 23,555,087

Employee payroll benefits

10,013,959

539,158

10,553,117

Employee related

168,699

76,186

244,885

Supplies and inventory costs

2,343,106

30,099

2,373,205

Minor equipment costs

389,031

93,365

482,396

Auto and truck expenses

516,065

7

516,072

Building repairs and maintenance

13,233

2,004

15,237

Utilities

743,383

33,457

776,840

Telephone

116,153

10,083

126,236

Office supplies

83,754

95,484

179,238

Travel and entertainment

145,603

128,382

273,985

Subcontractors

5,043,946

-

5,043,946

Building rent

306,565

206,941

513,506

NISH Commission

1,549,269

(114)

1,549,155

Insurance

215,178

214,036

429,214

Bank charges

-

34,564

34,564

Licenses and taxes

17,191

17,475

34,666

Professional fees

17,339

153,131

170,470

Dues and subscriptions

3,866

4,945

8,811

Marketing expenses

-

2,511

2,511

Bad debt expense

-

162,267

162,267

Donations

-

2,250

2,250

Late fees and penalties

-

8,894

8,894

Miscellaneous

-

(3,180)

(3,180)

Interest expense

83,620

95,982

179,602

Depreciation

775,284

5,448

780,732

Loss on Inventory

901,512

-

901,512

Total Expenses

$ 45,088,726

$ 3,826,492

$ 48,915,218

16 Job Options 2013 Annual Report

Total


Statement of Functional Expenses For the fiscal years ended September 30, 2013 and 2012

2012 Program Services

Management and General

Employee salaries

$ 18,487,133

$ 526,665

$ 19,013,798

Employee benefits and other employee expenses

8,809,310

238,690

9,048,000

Management fee

-

3,841,590

3,841,590

Sub-contractor services

5,761,215

-

5,761,215

General supplies

1,566,593

533

1,567,126

NISH and other commissions

1,480,019

-

1,480,019

Utilities

454,703

7,236

461,939

Depreciation

684,456

2,892

687,348

Equipment costs

482,124

47,276

529,400

Outside services

253,476

3,013

256,489

Travel and entertainment

276,349

34,236

310,585

Rent

229,700

45,243

274,943

Insurance

101,917

131,173

233,090

Bank services and interest

90,553

63,190

153,743

Professional fees

17,089

13,016

30,105

Bad debt expense

-

120,000

120,000

Loss on disposal of assets

28,751

-

28,751

Telephone

91,931

(6,465)

85,466

Office expense

56,962

17,749

74,711

Building maintenance

4,966

334

5,300

Miscellaneous

-

44,214

44,214

Licenses and taxes

13,388

12,900

26,288

Staff development

(31,709)

2,763

(28,946)

Dues and subscriptions

792

5,445

6,237

Total Expenses

$ 38,859,718

$ 5,151,693

$ 44,011,411

17 Job Options 2013 Annual Report

Total


Statement of Cash Flows For the fiscal years ended September 30, 2013 and 2012

2013

2012

Change in net assets

$ (693,227)

$ 300,282

Adjustments to reconcile change in net assets to net cash

Depreciation

780,732

687,348

(Increase) decrease in operating assets:

192,748

173,252

Contracts receivable

(2,126,415)

2,117,736

Other receivables

46,787

-

Inventory

68,598

(87,982)

Prepaid expenses

(19,496)

99,131

Deposits

3,415

(22,338)

Accounts payable and other liabilities

962,131

(395,363)

Accrued payroll and payroll related expenses

(135,799)

-

(1,113,274)

2,698,814

Purchase of fixed assets

(1,952,716)

(1,143,649)

Sale of fixed assets

-

47,752

(1,952,716)

(1,095,897)

Proceeds from capital leases and notes payable

1,833,706

950,575

(Payment) for capital leases and notes payable

(684,085)

(606,983)

1,149,621

343,592

Net change in cash and cash equivalents

(1,916,369)

1,946,509

Cash and cash equivalents, beginning of year

2,576,775

630,266

Cash and cash equivalents, end of year

660,406

2,576,775

$ 179,602

$ 126,818

Cash flows from operating activities:

from operations:

Increase (decrease) in operating liabilities:

Net cash flows provided by (used in) operating activities Cash flows from investing activities:

Net cash flows used in investing activities Cash flows from financing activities:

Net cash flows provided by financing activities

Supplemental disclosures:

Cash Paid for Interest

18 Job Options 2013 Annual Report


Statement of Activities and Changes in Net Assets For the fiscal years ended September 30, 2013 and 2012

2013

2012

Contract revenue

$ 48,218,622

$ 44,310,124

Interest and investment income

3,369

1,569

Revenues

Total Revenue

48,221,991

Expenses

44,311,693

Program services

45,088,726

38,859,718

Management and general

3,826,492

5,151,693

Total Expenses

48,915,218

Change in unrestricted net assets

(693,227)

Net Assets, Beginning

Net Assets, Ending

$ 6,094,062

6,787,289

44,011,411

300,282

6,487,007

$ 6,787,289

Notes to Financial Statements c.

Note 1 Nature of Business Job Options, Inc. (Organization) contracts with federal agencies and private companies to provide a variety of services, including janitorial, grounds maintenance, shelf stocking and laundry throughout Southern California, Utah, and Georgia. Work is performed primarily under time and material and negotiated price contracts. The workforce consists principally of capable individuals with severe mental, physical, or psychological disabilities. On-the-job training and continued support is provided to assist employees in reaching their fullest potential. The Organization works closely with the Department of Rehabilitation and other nonprofit agencies that assist individuals with disabilities and currently employs over 900 individuals.

Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

d. Income taxes The Organization is exempt from income taxes under Internal Revenue Code Section 501(c)(3). It is, however, subject to income taxes from activities unrelated to its tax-exempt purpose. The Organization uses the same accounting methods for tax and financial reporting. Generally accepted accounting principles (GAAP) provides accounting and disclosure guidance about positions taken by an entity in its tax returns that might be uncertain. Management has considered its tax positions and believes that all of the positions taken in its federal and state exempt organization tax returns are more likely than not to be sustained upon examination. The Organization’s returns are subject to examination by federal and state taxing authorities, generally for three years and four years, respectively, after they are filed.

Note 2 Summary of Significant Accounting Policies a. Accounting method - basis of accounting The financial statements were prepared in accordance with accounting principles generally accepted in the United States of America as applicable to not-for-profit organizations. Basis of accounting refers to when revenues and expenses are recognized in the accounts and reported on the financial statements. Basis of accounting relates to the timing of measurement made, regardless of the measurement focus applied. The Organization uses the accrual basis of accounting. Revenues are recognized when they are earned and expenditures are recognized in the accounting period in which the liability is incurred.

e. Cash and cash equivalents Cash and cash equivalents are from time to time variously composed of cash on hand, cash in banks, and liquid investments with original maturities of three months or less. f.

b. Financial statement presentation The financial statements are presented in conformity with Accounting Standards Codification (ASC) 958-205, Not-For-Profit Entities - Presentation of Financial Statements. Under ASC 958- 205, the Organization reports information regarding its financial position and activities according to three classes of net assets: Unrestricted net assets: Unrestricted net assets are available to support all activities of the Organization, and are not subject to donor-imposed stipulations. These generally result from revenues generated by providing services, receiving unrestricted contributions, and receiving interest from investments, less expenses incurred in providing program-related services, raising contributions, and performing administrative functions.

Contracts receivable and accounts receivable Contracts receivable consists of balances due for services provided pursuant to written and verbal contracts with various public and private agencies. Generally accepted accounting principles in the United States of America require that an allowance for doubtful accounts be established for accounts receivable. It is the Organization’s policy to evaluate the collectability of receivables on a regular and ongoing basis, if deemed necessary, an adjustment to the allowance for bad debt account is recorded. Accordingly, contracts and accounts receivable are shown net of an allowance for doubtful accounts.

g. Inventory Inventory consists primarily of laundry items, hospital items, amenities and other various rental items. The values of the inventory are stated at the lower of cost or market value. Costs are determined using the first-in, first-out method.

Temporarily restricted net assets: Net assets that are subject to donor-imposed stipulations that will be met either by actions of the Organization and/or the passage of time. When a donor restricted expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and are reported in the statement of activities as net assets released from restrictions. There were no temporarily restricted assets as of September 30, 2013 and 2012.

h. Fixed assets Fixed assets are recorded at cost and depreciated under the straight-line method over their estimated useful lives of 3 to 15 years. Repair and maintenance costs, which do not extend the useful lives of the asset, are charged to expense. The cost of assets, sold or retired, and related amounts of accumulated depreciation are eliminated from the accounts in the year of disposal, and any resulting gain or loss is included in the earnings. Management has elected to capitalize and depreciate all assets costing $1,000 or more; all other assets are charged to expense in the year incurred.

Permanently restricted net assets: Net assets that are subject to donor-imposed stipulations that have restrictions must be maintained by the Organization.

19 Job Options 2013 Annual Report


i.

j.

Note 5 Inventory

Investments The Organization presents its investments in accordance with Accounting Standards Codification (ASC) 958-320, Not-For-Profit Entities - Investments Debt & Equity Securities. Under ASC 958- 320, investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the Statement of Financial Position. The fair values of these investments are subject to change based on the fluctuations of market values. Unrealized gains and losses are included in the change in net assets. Investment income and gains restricted by a donor or by the Organization are reported as increases in unrestricted net assets if the restricted are met (either by the passage of time or by use) in the reporting period in which the income and gains are recognized. See Note 7 for additional information.

Inventory at September 30, 2013 and 2012, consisted of the following:

Fair value measurements Fair value of an investment is the amount that would be received to sell the investment in an orderly transaction between market participants at the measurement date. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Investments measured and reported at fair value are classified and disclosed in one of the following categories: Level 01

Valuation based on quoted market prices in active markets for identical assets or liabilities that the Organization has the ability to access.

Level 02

Valuations based on pricing inputs that are other than quoted prices in active markets which are either directly or indirectly observable.

Level 03

Valuations are derived from other valuation methodologies, including pricing models, discounted cash flow models, and similar techniques.

$ 2,575,925

Petty cash

850

850

Total Cash and Cash Equivalents

$ 660,406

$ 2,576,775

(81,260)

$ 243,265

$ 311,863

Fixed assets at September 30, 2013 and 2012, consisted of the following:

2013

2012

Land

$ 100,539

$ 100,539

Work in progress

659,509

61,772

Buildings

1,399,264

1,322,048

Leasehold improvements

462,641

415,140

Furniture and fixtures

110,408

51,590

Equipment

6,168,733

6,162,734

Automobiles

1,670,420

536,095

(5,159,247)

(4,409,635)

$ 5,412,267

$ 4,240,283

Less: accumulated depreciation

Total fixed assets, net of depreciation

During the fiscal years ended September 30, 2013 and 2012, $780,732 and $687,348, respectively, were charged to depreciation expense.

Note 7 Investments Investments are reported at fair value in the accompanying statement of financial position. The Level 2 fair value measurements for the fiscal years ended September 30, 2013 and 2012, are as follows:

Cash balances held in banks are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). The Organization maintains its cash in bank deposit accounts that at times may exceed federally insured limits. At September 30, 2013 and 2012, the Organization had $740,969 and $-0-, respectively, of funds in excess of FDIC insurance limits.

Description

Note 4 Contracts Receivable Contracts receivable at September 30, 2013 and 2012, consisted of the following:

Quoted Prices (Level 1)

Significant Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Total

$ -

$ 5,000

$ -

$ 5,000

$ -

$ 5,000

$ -

$ 5,000

Assets:

2013

2012

Accounts receivable - contracts

$ 7,433,479

$ 5,238,370

Accounts receivable REA’s/Claims pending

498,216

575,244

Less: allowance for doubtful accounts

(75,000)

(83,334)

$ 7,856,695

$ 5,730,280

Total Contracts Receivable

(205,362)

Note 6 Fixed Assets

Deposits:

Cash on hand

34,253

On November 14, 2013, the Organization entered into an engagement with Edleson & Rezzo, Attorneys at Law, to pursue legal action against HCA to recover the loss of inventory. Also, effective January 10, 2014, the Organization will no longer provide services to HCA.

Cash and cash equivalents at September 30, 2013 and 2012, consisted of the following:

$ 659,556

228,465

34,253

In 2013, the Organization recorded a loss on inventory of $901,512 that was purchased for the HCA Agreement and can no longer be recovered.

Note 3 Cash and Cash Equivalents

Cash in banks

283,969

Inventory - Amenities

Inventory Losses: On November 1, 2012, an agreement was signed with Hospital Corporation of America (HCA) to provide service to three of their Los Angeles area hospitals. Under this three-year agreement the Organization would annually wash approximately 4 million pounds of linen for the three hospitals and the annual revenue from these accounts was to be approximately $2 million. As part of this agreement the Organization purchased the linen that was required and rented it back to HCA for a single price per pound, Over the first seven months of the agreement the Organization made an initial inventory purchase of approximately $900,000 and further supported that with additional linen purchases of approximately $300,000.

m. Reclassifications Certain reclassifications have been made to the financial statements as of and for the fiscal year ended June 30, 2012, to conform to the current year presentation. The reclassifications have no effect on previously reported excess of revenues over expenses and net assets.

2012

Hospital Inventory*

* See note below regarding inventory losses for the fiscal year ended September 30, 2013.

Functional allocation of expenses The costs of providing the program services have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the program services based on employees’ time incurred and management’s estimates of the usage of resources.

2013

$ 130,405

Total Inventory

k. Retirement Plans The Organization has four departments, NMC, Georgia, Fort Irwin, and Food Service, which are covered under union contracts for health and welfare and pension benefits. Contributions for these benefits are carried in employee benefits. Employees in other divisions are paid $.90 per hour as part of the mandated health and welfare benefit. Additional contributions of varying amounts for health and welfare are paid to outside administrators. These contributions are also carried in employee benefits. See Note 9 for additional information.

Concentration of Risk

2012

$ 130,405

Less: obsolete inventory

The categorization of an investment within the hierarchy is based on the pricing transparency of the investment and does not necessarily correspond to the Organization’s perceived risk of that investment.

l.

2013 Rental Inventory

Stocks

Total

The fair value of the Job Opportunities, Inc. stock is based on cost as there is no current market for the stock. Job Opportunities, Inc. is a for-profit company that is 100% owned by the Organization. See Note 11 for further information.

Note 8 Long-Term Liabilities

Consistent with generally accepted accounting principles in the United States of America, contracts receivable as of September 30, 2013 and 2012, are shown net of an allowance for doubtful accounts in the amount of $75,000 and $83,334, respectively. The Organization recorded bad debt expense of $162,267 and $120,000 for the fiscal years ended September 30, 2013 and 2012, respectively.

a. Long-term liabilities activity Long-term liabilities activity includes debt and other long-term liabilities. Changes in obligations for the fiscal year ended September 30, 2013, are as follows:

20 Job Options 2013 Annual Report


Balance (2012)

Additions

Payments

Balance (2013)

Capital leases

$ 906,810

$ 1,264,576

$ (393,176)

$ 1,778,210

$ 550,244

Notes Payable

1,766,941

569,130

(290,909)

2,045,162

383,360

Total

$ 2,673,751

$ 1,833,706

$ (684,085)

$ 3,823,372

$ 933,604

Note 9 Health and Welfare Money Purchase Pension Plan

Due in one year

Included in accounts payable and other liabilities as of September 30, 2013 and 2012, were $375,930 and $360,960, respectively, due to various trusts for health and welfare pensions. Included in employee benefits expense were $4,866,150 and $4,317,891 of health and welfare benefits for the fiscal years ended September 30, 2013 and 2012, respectively.

Note 10 Operating Leases The Organization leases facilities under separate lease arrangements for more than one year. The future minimum lease payments are as follows:

b. Capital leases In 2013 the Organization entered into various capital lease agreements with Tetra Financial Group that mature on September 29, 2017, for assets purchased in the amount of $1,189,994. Effective interest rates range from 8.14% to 10.56%. Included in the purchase price is sales tax. The outstanding principal balance on this capital lease as of September 30, 2013 was $1,098,059. The Organization entered into a capital lease with Celtic Leasing during the fiscal year ended September 30, 2012, that matures December 30, 2015, for assets purchased in the amount of $900,947. The effective interest rate is 4.615%. Included in the purchase price is $64,801 of sales tax. The outstanding principal balance on this capital lease as of September 30, 2013 and 2012, was $526,813 and $744,052, respectively. The Organization has various car loans outstanding with maturities through 2018. There were new loans in the amount of $74,582 for the fiscal year ended September 30, 2013. The outstanding principal balance on these loans as of September 30, 2013 and 2012, was $153,338 and $130,257, respectively.

2014

$ 508,077

Lease Payments

2015

91,933

2016

16,323

2017

14,532

2018

12,522

Total

$ 643,387

The Organization will receive no sublease rental revenues nor pay any contingent rentals associated with these leases. For the fiscal year ended September 30, 2013 and 2012, operating lease expense was $513,506 and $274,943, respectively.

The Organization entered into a capital lease with Celtic Leasing during the fiscal year ended September 30, 2007. The agreement allowed for the purchase of equipment up to $367,822. The effective interest rate was 6.94%. There was an additional $1,152 of sales tax included in the notes payable principal balance related to the Celtic capital lease. As of September 30, 2013, the balance was paid in full,

Note 11 Related Parties

The Organization entered a lease/purchase agreement with Wirth Business Credit for equipment that belonged to the Organization at the termination of the lease. Payments were $4,692 and were for 48 months. Interest was 12% per annum. As of September 30, 2013, the balance was paid in full.

a. Job Opportunities, Inc. Job Opportunities, Inc. (Company) is a for-profit corporation that is 100% wholly owned by the Organization. The Company was incorporated March 13, 2010, in the State of California. The purpose of the Company is to provide vocational rehabilitation services on contracts that may not be available for the Organization.

Debt service requirements for the capital leases as of September 30, 2013, are as follows:

c.

Year ending September 30

Year ending September 30

Principal

2014

$ 550,244

2015

572,200

2016

411,075

2017

239,762

2018

4,929

As of September 30, 2013, the only relationship maintained with MHS is a monthly payment as a portion of the total health and welfare costs provided for counseling for substance abuse.

Total

$

As of September 30, 2012, the Organization had the following outstanding liabilities and lease commitments with MHS:

The investment in the Company is $5,000 and is reflected on the balance sheet as a non-current investment. The Company had no activity for the fiscal years ended September 30, 2013 and 2012. b. Mental Health Systems, Inc. Beginning in the year ended September 30, 1994, Mental Health Systems, Inc. (MHS) assisted in establishing the Organization as a nonprofit entity administering vocational rehabilitation programs for MHS. Although the Organization was no longer administering vocational rehabilitation programs for MHS, they have entered into other business transactions since that time.

1 ,778,210

01. The Organization had entered into an operating lease agreement with MHS for laundry equipment. The lease commenced December 15, 1997 and matured December 15, 2012.

Notes payable In 2OO4 the Organization entered into a construction loan agreement with NCB Development Corporation in the amount of $181,571 for the construction of a facility. During the year ended September 30, 2005, additional proceeds of $503,429 were added to the loan. During the year ended September 30, 2007 additional proceeds of $433,906 were added to the loan. Effective interest rate was 8.375% through April 7, 2011, at which point the interest rate will fluctuate at 3.5% over the weekly average yield of US Treasury Securities. The current interest rate is 5.625%. The loan will mature March 27, 2016. The outstanding principal balance on this note payable as of September 30, 2013 and 2012, were $825,620 and $888,637, respectively.

Monthly lease payments during the fiscal year ended September 30, 2013, were $5,399. Total lease payments during the year ended September 30, 2012 was $21,600. 02. The Organization had entered into a second operating lease agreement with MHS for laundry equipment. The lease commenced February 1, 1998, and matured February 1, 2013 and required monthly lease payments of $885. Monthly lease payments during the fiscal year ended September 30, 2013, were $3,541. Total lease payments during the fiscal year ended September 30, 2012, was $10,620.

The Organization entered into a loan agreement with California Bank and Trust for the purchase of equipment in the amount of $814,000 that will mature December 21, 2014, Interest rate is 3.5% over the lender’s LIBOR rate. The current interest rate is 6.244%. The outstanding principal balance on this note payable as of September 30, 2013 and 2012, were $227,347 and $397,705, respectively.

c.

Behavioral Management Services, Inc. The Organization had entered into an agreement with Behavioral Management Services, Inc. (BMS) as of April 1,2004. BMS is a for-profit entity which had been organized to provide administrative services to the Organization. Officers of the Organization were also officers of BMS. Management fees were $-0- and $3,841,590 for the fiscal years ended September 30, 2013 and 2012, respectively. The Organization’s agreement with BMS ended on August 1, 2012. All management of BMS became employees of Job Options, Inc.

On January 17, 2006, the Organization entered into a loan agreement with NCB Development Corporation for $582,500. The interest rate started at 8.25% and on May 1, 2011, the interest rate was revised lo 5.625%. Principal and interest in the amount of $4,867 will be paid monthly with any accrued interest and principal balance due in full on the maturity date of February 1, 2016. The balance as of September 30, 2013 and 2012, was $448,776 and $480,599, respectively.

Note 12 Subsequent Event

The Organization entered into a loan agreement with King Commercial Finance for the purchase of equipment in the amount of $569,130 that will mature May 1,2018. The interest rate is 7.13% per annum. The loan calls for 1 payment at $8,846, 3 payments of $8,999, 1 payment of $9,402 and 55 payments of $11,466. The outstanding principal balance on this note payable as of September 30, 2013, was $543,419.

The Organization’s management has evaluated events or transactions that may occur for potential recognition or disclosure in the financial statements from the balance sheet date through November 20, 2013, which is the date the financial statements were available to be issued. Management has determined that there were no subsequent events or transactions that would have a material impact on the current year financial statements.

Debt service requirements for the notes payable as of September 30, 2013, are as follows:

Year ending September 30

Principal

2014

$ 383,360

2015

263,009

2016

1,183,141

2017

126,286

2018

89,366

Total

$ 2,045,162

21 Job Options 2013 Annual Report


In Memoriam: Jackie Brown

J

ackie Brown began working at Job Options in 1998 and quickly demonstrated his integrity, reliability and commitment in his job at the North Island Commissary. Recognized as a dependable employee, Jackie soon was elevated to Project Manager at the Imperial Beach Commissary. At the commissary, he not only excelled in his new position, but also continued to exhibit his compassion and tremendous work ethic toward his staff.

the work behind when he was at home–he often would bring home paperwork to finish, and answer his work phone and respond to emails, all to help Job Options be a better company to its employees and customers. It was through working at JOI that gave him the opportunity to help those around him. He succeeded in his desires every day of his life to assist less fortunate individuals who could not speak for themselves. Jackie Brown was a tireless worker, a loving husband, father and grandfather. He will be greatly missed by all who crossed his path through the years.

Jackie’s wife was quick to realize that her husband was not the kind of person to leave

Leadership Team Jeffrey Johnson

Dr. William Mead

William Eastwood

Chief Executive Officer jjohnson@joboptionsinc.org

Associate Director bmead@joboptionsinc.org

Associate Director beastwood@joboptionsinc.org

Juan Agundis

Doug Baker

Steve Credle

Director of Information Technology jagundis@joboptionsinc.org

Food Service Division Manager dbaker@joboptionsinc.org

PTS Administrator and Purchasing Director scredle@joboptionsinc.org

Peg Daly

Char Healy

Gladis Jarquin

NAVFAC Contracts Manager pdaly@joboptionsinc.org

Chief Financial Officer chealy@joboptionsinc.org

Administrative Services Division Manager and Safety Officer gjarquin@joboptionsinc.org

Nazar Masry

Marcy McCabe

Margaret-Ann Peña

Hospital Environmental Services Division Manager nmasry@joboptionsinc.org

Contracts Manager mmccabe@joboptionsinc.org

NAVFAC Division Manager and Facilities Division Manager mpena@joboptionsinc.org

Brian Priest

Joe Ryan

Al Salcedo

Healthcare Laundry Division Director of Business Development and Account Management bpriest@joboptionsinc.org

Director of Laundry Operations jryan@joboptionsinc.org

Chief of Operations asalcedo@joboptionsinc.org

Valorie Seidl

Carol Whiteley

Human Resources Director vseidl@joboptionsinc.org

Commissary Division Manager cwhiteley@joboptionsinc.org

Board of Directors Chairman

Dr. Richard Skay Kathleen Leverette

Deborah Martinez-Shriver

Patrick O’Sullivan

Verlyn Soderstrom

Bruce Whitcomb

Richard Woodaman

22 Job Options 2013 Annual Report


Notable Facts and Awards 2013

2013

2012

GSA Region 9 NISH Performance Award

CIMS GB Certification with Honors – Hospital Environmental Services and Facilities Division

NISH Pacific West Region Evelyne Villines Award Steve Credle

2012

2011

2010

NCWC Management Excellence Award – West Region Carol Whiteley

Chula Vista Laundry Plant Accreditation Healthcare Laundry Accreditation Counsil

NISH Pacific West Region William M. Usdane Award Rosemaria Santana

2009

2008

2007

NISH National Business Innovation Award

NISH Board Award for Performance Excellence Randy Williams

NISH Award for Outstanding Performance

2006

2006

2006

Governmental Relations Grassroots Excellence Award

NISH National Business Innovation Award

NAVFAC SW FEAD San Diego Safety Award – Facilities Maintenance Category, Janitorial Services Naval Medical Center San Diego

2005

2004

2002

NISH National William M, Usdane Award James Bandy

Fastest-Growing Company Award San Diego Business Journal

NISH National Evelyne Villines Award Jim Smith

AbilityOne Act: people with disabilities must work a minimum of 75% of the direct labor hours expended under contracts set aside for firms that primarily employ individuals with disabilities.


PROVIDING REAL JOBS FOR CAPABLE PEOPLE

ISO 9001:2008 Certification

CORPORATE OFFICE

LAUNDRY PLANT

LAUNDRY PLANT

FOOD SERVICES

3465 Camino Del Rio South Suite 300 San Diego, CA 92108 T 619.688.1784 F 619.688.9884 W joboptionsinc.org

Chula Vista Plant 2248 Main Street, Suite 10 Chula Vista, CA 91911 T 619.575.7627 F 619.424.8768

San Bernardino Plant 1110 S. Washington Avenue San Bernardino, CA 92408 T 909.890.4612 F 909.890.4673

560 Greenbrier Drive Suite 103 Oceanside, CA 92054 T 760.547.2480 F 760.547.2485

Š2014 Job Options, Inc. 03/14

Jop options inc. Annual Report 2013  

Job Options (JOI) was founded in 1987 with a mission of offering meaningful employment for people with disabilities. Most of our employees a...

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