Page 1


TABLE OF CONTENTS Maintaining a Balanced Workforce

3

Our Accomplishments

4

Report to Community

6

Awards of Merit

7

Yolanda Richardson: A Worthy Honor for Going Beyond Her Duties

8

Doug Baker: Winner of SourceAmerica's Management Excellence Award Dylan Prettyman: Focus on Ability, Not Disability

10 11

Our Services

12

Leadership Team and Board of Directors

13

Financial Report Independent Auditor's Report

14

Statements of Financial Position

15

Statement of Functional Expenses (2013)

16

Statement of Functional Expenses (2014)

17

Statement of Cash Flows

18

Statement of Activities and Changes in Net Assets

19

Notes to Financial Statements

19

A Final Post Script

22

Worki n g w ith Yol a n d a i s Ka n a Sh er w o o d/CT I S N a n d A l exi s Fa rm er/ C S3 , b oth Nav y S e a m en w orki n g at B al b o a Naval Hosp it al .

2


A few of the JOI hospital team takes a breather. Pictured left to right: Rodney Graham, Yolanda Richardson, Nathan Bishop, Cesar Martinez, Kyle McCarty

MAINTAINING A BALANCED WORKFORCE

W

e at Job Options, applaud the federal government’s passage of the Workforce Innovation and Opportunity Act of July 2014. This initiative made it clear that our legislators favor a program that provides competitive, integrated employment for those with disabilities.

hospital for five years, received the prestigious William M. Usdane National Award for her tireless dedication and compassion for the wounded warriors. Yolanda is profiled in this year’s annual report. Also featured in this report is Dylan Prettyman, one of our enthusiastic custodians at Camp Pendleton’s Area 53 mess hall, home to the 1st Marine Regiment and 1st Battalion. Our 260 disabled and non-disabled managers and employees provide services at five mess halls that serve over 8,000 Marines daily at the second largest Marine Base in the country.

Since our inception, Job Options has provided competitive integrated employment for our disabled employees who work alongside our non-disabled workforce and receive the same wage for the same tasks as the non-disabled. The salaries are often 30 to 40% higher than the minimum wage and are governed by the Service Contract Act to which all federal contractors are subject.

Our disabled employees are placed in positions working alongside their coworkers everyday. They realize that everyone has their own strengths and weakness and benefit from these interactions. Now in our 28th year, all of our JOI employees take tremendous pride in their performance and knowing the value of their work.

One hundred disabled Job Options workers join with our non-disabled housekeepers in the performance of their duties at San Diego’s Balboa Naval Hospital. This year Yolanda Richardson, who has worked at the

Jeffrey A. Johnson, CEO

3 Job Options 2014 Annual Report


OUR ACCOMPLISHMENTS JOB OPTIONS HISTORICAL REVENUE 2000-2014

REVENUE IN MILLIONS ($)

50

40

30

20

10

0

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

YEAR

I

n 2014, we continued our efforts to restructure our operations to more efficiently operate in an ongoing federal government environment that consists of budget cuts and cost reductions. The end result is that revenues grew only marginally to $49.1 million in Fiscal 13/14 in which we managed to earn $283K of net contribution.

over the trial ruled in our favor on five major pretrial motions brought forth by HCA.

Divisional Accomplishments A major accomplishment for our Commissary Division, the second largest in terms of revenue at $9.1 million annually, is that we have implemented a new “gauntlet� process for the nightly sorting and segregating of product to be stocked on the shelves. This process reduces our annual cost by an estimated $320K annually, which is necessary because of ongoing contractual reductions as the new five-year contracts are received at each of the six commissaries that we operate.

Cost Reduction Efforts The restructuring and cost-reduction efforts were primarily centered in our laundry and commissary businesses. With regard to our laundry business, we discontinued services to large commercial hospitals, as we were unable to negotiate prices commensurate with the linen loss and the cost of processing the excessive amount of different types of linen that these hospitals needed. The result of discontinuing commercial hospital contracts reduced our laundry business by 30% going forward, but it will operate much more within the confines of the revenue generated. The trial in our lawsuit against Hospital Corporation of America (HCA) for excessive linen losses is scheduled to begin in August 2015. During the past year, the judge who will preside

Our largest division, Hospital Environmental Services (HES), generated revenues of $16.4 million in Fiscal 13/14. The highlight of the year was providing the necessary housekeeping and cleaning services to transition into a new, larger hospital at Fort Benning, Georgia. The new hospital increases the size of this contract from $3.3 million to about $5.5 million annually. The experiences gained from this transition period will come in handy over the next two years as we move into another new and larger hospital

4 Job Options 2014 Annual Report


OUR ACCOMPLISHMENTS NUMBER OF JOB OPTIONS EMPLOYEES

IN 2014

2000-2014

NUMBER OF EMPLOYEES

1000

800

600

400

200

0

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

YEAR

A Safe Work Environment

in Fort Irwin, California. With the growth from these new hospitals, this division is positioned to be our first division generating $20 million in revenue annually, and we continue to aggressively pursue new business opportunities in this market.

Finally, we continue to emphasize safety in our workplace. Our workers’ compensation expense is one of our largest expenses and we are largely self-insured as we absorb the full cost of all workers’ compensation injuries up to $250,000 per claim. We pay our workers’ compensation carrier, Crum and Forster, approximately $1.5 million annually; the majority of this goes into an estimated loss fund. To the extent that the total cost of injuries is less than what we pay annually into this estimated loss fund, we receive a rebate. If the total cost turns out to be more, then we pay additional amounts to Crum and Forster. In 2014, we received a rebate of $176K because of a 38% decline in injuries.

Awards for Our Employees Additionally, we were notified during the past year that three of our employees have won prestigious awards from SourceAmerica, the national not-for-profit that administers the AbilityOne Program under which we operate. Yolanda Richardson has won the National William Usdane Award, which is the highest honor given to a disabled worker in the AbilityOne program. You can read more about her story elsewhere in this report. Our Food Service Division Manager, Doug Baker, won the National Council of SourceAmerica Employers Management Excellence Award for the Pacific West region and Elizabeth Coss won the Evelyne Villines Award for the Pacific West region. All three individuals will receive their awards in May 2015 at the SourceAmerica National Training Convention in Hollywood, Florida. We congratulate them for their ongoing dedication to their careers with Job Options.

Looking forward, the fiscal environment in which we operate within the federal government will not be changing anytime in the foreseeable future, so we will continue to look for ways to operate leaner and with higher productivity in response to the contractual cost reductions we are likely to experience.

5 Job Options 2014 Annual Report


REPORT TO COMMUNITY government under the provisions of the AbilityOne program, formerly known as the Javits Wagner–O’Day act. The AbilityOne program enables certain federal government contracts to be set aside for not-forprofit firms like JOI to primarily employ individuals with disabilities. Under this legislation, people with disabilities must work a minimum of 75% of the direct labor hours expended under these contracts. We have long-term contracts with the U.S. Department of Defense, General Services Administration, Veterans Administration and Homeland Security (U.S. Customs and Border Protection). Our largest customer is the Department of Defense with a substantial presence at many of the Navy and Marine Corps bases throughout Southern California. Approximately 90% of our current employees work under contracts we have with federal agencies; the remaining perform work for the commercial sector.

J

ob Options (JOI) is approaching annual revenue of $50 million as we move through our second quarter-century of service. We continue to champion that people with disabilities, properly managed, can provide superior support services at competitive prices for our government and commercial customers.

Job Options is now in its 28th year of operation. Over the past eleven years, our annual rate of growth has been approximately 9%. In Fiscal 2013/14, revenues grew slightly to $49.1 million. To meet the requirements of these contracts, in September 2013, JOI employed 923 individuals, the majority of whom had a physical, psychological developmental or emotional disability.

As a San Diego-based nonprofit organization, our mission is to provide meaningful employment for people with disabilities. We meet this goal by employing individuals in services such as janitorial, food service, laundry, administrative services, hospital environmental services, commissary inventory management and shelf-stocking services to government and commercial customers. Most of our employment opportunities result from contracts with various agencies within the federal

We are entirely self-funded through the contractual revenue received from various government and commercial accounts. We are not dependent on any gifts or grants to fund our operations. As such, it is our responsibility to operate within our budgetary confines. The company is comprised of six Divisions: Hospital Environmental Services, Facilities, Food Services, Professional/Administrative, Laundry and Commissary Services Divisions. 6

Job Options 2014 Annual Report


AWARDS OF MERIT 2014

SourceAmerica National William M. Usdane Award Yolanda Richardson

SourceAmerica Pacific West Region Evelyne Villines Award Elizabeth Cross

NCSE Management Excellence Award – Pacific West Region Doug Baker

2013

GSA Region 9 NISH Performance Award

CIMS GB Certification with Honors Hospital Environmental Services and Facilities Division

2012

NISH Pacific West Region Evelyne Villines Award Steve Credle

NCWC Management Excellence Award – West Region Carol Whitely

2011 Chula Vista Laundry Plant Accreditation Healthcare Laundry Accreditation Council 2010

NISH Pacific West Region William M. Usdane Award Rosemaria Santana

2009

NISH National Business Innovation Award

2008

NISH Board Award for Performance Excellence Randy Williams

2007

NISH Award for Outstanding Performance

2006

Governmental Relations Grassroots Excellence Award

NISH National Business Innovation Award

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

2005

NISH National William M. Usdane Award James Bandy

2004

Fastest-Growing Company Award San Diego Business Journal

2002

NISH National Evelyne Villines Award Jim Smith

7 Job Options 2014 Annual Report


YOLANDA RICHARDSON

A WORTHY HONOR FOR GOING BEYOND HER DUTIES

"I know my work and attitude contributes to the healing of the Wounded Warriors. I relate to them." Yolanda

Yolanda takes special care as a new patient moves into her quarters in Building 26 at the hospital.

8 Job Options 2014 Annual Report


CELEBRATING EXCEPTIONAL DISABLED EMPLOYEES The William M. Usdane Award is presented each year to an individual with disabilities who has exhibited outstanding achievement and exceptional character as an employee in the AbilityOne Program. The award honors the late William M. Usdane, former Assistant Commissioner of the Rehabilitation Services Administration (RSA), whose mission in

life was to work on behalf of people with disabilities. The AbilityOne Program offers employment opportunities through a network of community nonprofit partners that includes Job Options. We are proud of the achievements made by Yolanda. The award will be presented to her at the National Awards banquet in Hollywood, Florida in May.

K

nown as the “Mayor of Building 26,” an apt title for Yolanda, who has worked at the Naval Medical Center in San Diego for five years. Her primary responsibility is performing janitorial services in the rooms of the Wounded Warriors in Building 26.

and provides the help they may need to improve their daily tasks. She offers suggestions to her supervisors with ways to improve productivity among the JOI team, contributing to the success of JOI’s Hospital Services Division. Her days at work are long, and often include weekends.

When work is done, she’s at home to take care of her But Yolanda goes beyond merely performing her family. Yolanda spends time helping her sister, who daily tasks. She brings was diagnosed with smiles and a caring nature Multiple Sclerosis, and to every encounter with with her grandkids— patients, doing what she "We believe Yolanda embodies playing basketball can to make them feel “at and taking them the vision the founders of home" in an environment swimming. She instills that is often far from home this program had when it was in them the same grand and loved ones. Yolanda’s spirit she possesses to empathy and ability to developed." teach them life lessons raise the patients’ spirits she has had to learn the comes from her own bouts hard way. with depression; she truly cares and relates to these men and women who It is no wonder that Yolanda Richardson has return from war zones with severe injuries and been honored for her commitment, exemplary other effects of war. Oftentimes, Yolanda motivates attitude and hard work with the 2014 William them to “get out of your room and get some fresh Usdane National Award for meritorious service, air.” As her supervisor, other JOI employees and the given yearly to one who exhibits exceptional hospital staff will attest, Yolanda is known for her character and work habits. SourceAmerica will extreme kind and helpful nature despite many of give a monetary award to Yolanda, along with her own challenges. She typifies the ideal that “you an all-expense paid trip for her and a JOI staff are able as long as you are willing.” escort to the National Training and Achievement Conference. To Yolanda, we extend our heartfelt congratulations on a job well done.

Yolanda believes her work doesn’t stop with her janitorial skills. She’s available to assist co-workers

9 Job Options 2014 Annual Report


DOUG BAKER

SOURCEAMERICA'S MANAGEMENT EXCELLENCE AWARD WINNER

A

s Director of Food Services for Job Options, Doug Baker exemplifies the dedication and ability shown by all of our supervisors in nurturing and assisting our employees to excel. This year, in recognition of Doug Baker’s thirteen years of excellence in guiding disabled workers at Camp Pendleton’s five mess halls, Doug has been awarded the SourceAmerica Management Excellence Award. His leadership and team-building management typifies the enormous positive impact he has on those he inspires, both disabled and non-disabled. Doug’s supervision in our Food Services division, under a subcontract with Sodexo Government Services, has been exemplary. For his 241 employees (202 with significant disabilities) who service the mess halls at Camp Pendleton, Doug has created systems and training that ensure contractual standards that equal or exceed those at the nine mess halls on base not served by JOI personnel. Since 2004, mess halls under Doug’s direction have been ISO 9001: 2008-certified. He consistently receives high marks from the independent ISO registrar auditing his operation at Camp Pendleton. This is simply the result of his comprehensive and ongoing training of employees, and the loyalty of his staff, most of who have been with him for more than a decade. The day-to-day routine at the Marine mess halls were put to the test in the spring of 2014, as wildfires erupted across the sprawling base. Despite the fires, Doug and his workers kept the mess halls open during the fire. Sodexo applauded Doug and the JOI team for their selfless work. This is further testament to his leadership and commitment to his employees and the soldiers.

10 Job Options 2014 Annual Report


DYLAN PRETTYMAN

FOCUS ON ABILITY, NOT DISABILITY

A

s a Job Options, Inc. employee, Dylan Prettyman works in one of Camp Pendleton’s mess halls as a mess attendant. Dylan has been employed by Job Options for a year and a half, and works 23 hours a week at the Camp Horno Mess Hall. Dylan’s disability does not exclude him from performing his job with enthusiasm and dedication. He is a very personable individual who interacts with the Sodexo food service staff, his co-workers and the Marines who come to eat. Job Options’ supervisor Veronica Laguna says that

Dylan is competent and competitive in his work, and through the efforts of Job Options and SourceAmerica, Dylan is able to have his job at Camp Pendleton. We've acquired the proper tools to make him a productive and successful employee. His appreciation for his supervisor, job coach and co-workers gives him a deep sense of pride as he goes about his daily work with a can-do attitude and a smile for everyone he encounters. Dylan and Veronica get ready for lunch where hundreds of Marines get their meals 365 days a year.

11 Job Options 2014 Annual Report


OUR SERVICES Administrative Services

Hospital Environmental Services

Bilingual Services Customer Service Data Entry Office Support Project Management Word Processing

Clinic, Pharmacy and Laboratory Cleaning Exam/Treatment Room Cleaning Labor and Delivery Room Cleaning Medical Waste Transfer and Disposal Office/Administrative Cleaning Operating and Emergency Room Cleaning Patient Room Cleaning

Building and Custodial Services

Hospitality and Food Services

Carpet Cleaning and Bonneting Common Area Cleaning Floor Maintenance Food Preparation Area Cleaning Furniture and Office Cleaning Restroom Cleaning, Sanitizing and Re-Supply Waste Container Maintenance Window Cleaning Vacuuming and Dusting

Cashiers Cooking and Baking Food Ordering Food Service Budget Development Inventory Procurement Kitchen Cleaning Menu Planning Plate, Silverware Bar Replenishment Pot Washing Restaurant Area Cleaning Scullery Self-serve Bar Replenishment Silverware and Table Setting Replenishment Table Busing and Cleaning

Commissary and Warehousing Forklift Handling Inventory – Tracking, Management and Order Writing Material Management and Logistics Shelf Stocking Truck Loading and Unloading

Linen and Laundry Services Amenities Bed Linens and Terry Dust Control (mats, wet mops, dust mops) Flat Work, Finishing, Dry Cleaning Folding Item Rental and COG Pick-up and Delivery Table Linens and Napkins Uniforms

Grounds and Landscape Maintenance Beds Maintenance Lawn Care – Planting, Trimming, Weeding, Watering Irrigation Systems Street Sweeping

12 Job Options 2014 Annual Report


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

Gladis Jarquin

Joe Ryan

Nazar Masry

Al Salcedo

Director of Information Technology jagundis@joboptionsinc.org

Doug Baker

Food Service Division Manager dbaker@joboptionsinc.org

Steve Credle

PTS Administrator and Purchasing Director scredle@joboptionsinc.org

Peg Daly

NAVFAC Contracts Manager pdaly@joboptionsinc.org

Char Healy

Chief Financial Officer chealy@joboptionsinc.org

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

Hospital Environmental Services Division Manager nmasry@joboptionsinc.org

Marcy McCabe

Contracts Manager mccabe@joboptionsinc.org

Margaret-Ann Pe単a

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

Director of Laundry Operations jryan@joboptionsinc.org

Chief of Operations asalcedo@joboptionsinc.org

Valorie Seidl

Human Resources Director vseidl@joboptionsinc.org

Carol Whiteley

Commissary Division Manager cwhiteley@joboptionsinc.org

BOARD OF DIRECTORS Kathleen Leverette Deborah Martinez-Shriver Patrick O'Sullivan Dr. Richard Skay

13 Job Options 2014 Annual Report

Verlyn Soderstrom Bruce Whitcomb Richard Woodaman


Table of Contents Statements of Financial Position

15

Statement of Functional Expenses (2013)

16

Statement of Functional Expenses (2014)

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, 2014 and 2013, 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 Responsibilities 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, 2014 and 2013, 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 December 29, 2014

14 Job Options 2014 Annual Report


Statements of Financial Position For the fiscal years ended September 30, 2014 and 2013

Assets

2014

2013

Cash and cash equivalents (Note 3)

$ 2,368,780

$ 660,406

Contracts receivable, net (Note 4)

5,271,189

7,856,695

Other receivables

128,324

(5,357)

Inventory (Note 5)

93,787

243,265

Prepaid expenses

249,882

192,748

8,111,962

8,947,757

Fixed assets, net of depreciation (Note 6)

5,021,367

5,412,267

Investments (Note 7)

5,000

5,000

Deposits

111,513

82,310

Total Assets

$

13,249,842

$ 14,447,334

Liabilities and Net Assets

2014

2013

Accounts payable and other liabilities

$ 1,100,418

$ 1,999,102

Accrued payroll and payroll related expenses

2,630,432

2,530,798

Current portion of long-term debt (Note 8)

896,710

933,604

4,627,560

5,463,504

2,245,145

2,889,768

2,245,145

2,889,768

6,872,685

8,353,272

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 Liabilities and Net Assets

15 Job Options 2014 Annual Report

6,377,157

6,094,062

6,377,157

6,094,062

$ 13,249,842

$ 14,447,334


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

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 2014 Annual Report

Total


Statement of Functional Expenses For the fiscal years ended September 30, 2014

2014 Program Services

Management --- General

Employee salaries

$ 22,007,169

$ 1,994,602

$ 24,001,771

Employee benefits and other employee related expenses

Management fee

10,694,963

625,369

11,320,332

Sub-contractor services

5,032,493

-

5,032,493

General supplies

1,914,322

47,237

1,961,559

NISH and other commissions

1,636,499

599

1,637,098

Utilities

841,127

41,266

882,393

Depreciation

887,160

8,760

895,920

Equipment costs

302,177

40,613

342,790

Outside services

545,164

1,025

546,189

Travel and entertainment

168,881

71,487

240,368

Rent

314,018

164,412

478,430

Insurance

248,208

195,386

443,594

Bank services and interest

92,216

218,934

311,150

Professional fees

16,077

232,241

248,318

Bad debt expense

-

84,950

84,950

Loss on disposal of assets

74,076

4,842

78,918

Telephone

107,879

12,638

120,517

Office expense

65,508

104,639

170,147

Building maintenance

18,597

2,385

20,982

Miscellaneous

84

13,812

13,896

Licenses and taxes

27,869

28,084

55,953

Staff development

(87,000)

-

(87,000)

Dues and subscriptions

3,289

7,620

10,909

Total Expenses

$ 44,910,776

$ 3,900,901

$ 48,811,677

17 Job Options 2014 Annual Report

Total


Statement of Cash Flows For the fiscal years ended September 30, 2014 and 2013

2014

2013

Change in net assets

$ 283,095

$ (693,227)

Adjustments to reconcile change in net assets to net cash

Depreciation

895,920

780,732

(Increase) decrease in operating assets:

4,843

-

Contracts receivable

2,585,506

(2,126,415)

Other receivables

(133,681)

46,787

Inventory

149,478

68,598

Prepaid expenses

(57,134)

(19,496)

Deposits

(29,203)

3,415

Accounts payable and other liabilities

(898,684)

962,131

Accrued payroll and payroll related expenses

99,634

(135,799)

2,899,774

(1,113,274)

Purchase of fixed assets

(509,863)

(1,952,716)

Sale of fixed assets

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:

(509,863)

(1,952,716)

Proceeds from capital leases and notes payable

270,571

1,833,706

(Payment) for capital leases and notes payable

(952,108)

(684,085)

(681,537)

1,149,621

Net change in cash and cash equivalents

(1,708,374)

(1,916,369)

Cash and cash equivalents, beginning of year

660,406

2,576,775

Cash and cash equivalents, end of year

2,368,780

660,406

$ 258,069

$ 179,602

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 2014 Annual Report


Statement of Activities and Changes in Net Assets For the fiscal years ended September 30, 2014 and 2013

2014

2013

Contract revenue

$ 49,093,220

$ 48,218,622

Interest and investment income

1,552

3,369

Revenues

Total Revenue

49,094,772

Expenses

48,221,991

Program services

44,910,776

45,088,726

Management and general

3,900,901

3,826,492

48,811,677

Change in unrestricted net assets

283,095

Net Assets, Beginning

6,094,062

Net Assets, Ending

$ 6,377,157

Total Expenses

48,915,218 (693,227) 6,787,289

$ 6,094,062

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 the restrictions be maintained permanently by the Organization. Generally, the donors of these assets permit the Organization to use all or part of the income earned on the related investments for general or specific purposes. There were no permanently restricted assets as of September 30, 2014 and 2013.

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 2014 Annual Report


i.

j.

Consistent with generally accepted accounting principles in the United States of America, contracts receivable as of September 30, 2014 and 2013, are shown net of an allowance for doubtful accounts in the amount of $61,000 and $75,000, respectively. The Organization recorded bad debt expense of $84,950 and $162,267 for the fiscal years ended September 30, 2014 and 2013, respectively.

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.

Note 5 Inventory Inventory at September 30, 2014 and 2013, 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.

$ 2,367,930

$ 659,556

Petty cash

850

850

Total Cash and Cash Equivalents

$ 2,368,780

$ 660,406

-

(205,362)

$ 93,787

$ 243,265

Note 6 Fixed Assets Fixed assets at September 30, 2014 and 2013, consisted of the following:

2014

2013

Land

$ 100,539

$ 100,539

Work in progress

-

659,509

Buildings

1,439,789

1,399,264

Leasehold improvements

541,098

462,641

Furniture and fixtures

58,921

57,589

Equipment

8,311,060

7,297,059

Automobiles

594,913

594,913

(6,024,953)

(5,159,247)

$ 5,021,367

$ 5,412,267

Less: accumulated depreciation Total fixed assets, net of depreciation

During the fiscal years ended September 30, 2014 and 2013, $895,920 and $780,732, respectively, were charged to depreciation expense.

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, 2014 and 2013, the Organization had $2,383,486 and $740,969, respectively, of funds in excess of FDIC insurance limits.

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, 2014 and 2013, are as follows:

Note 4 Contracts Receivable Contracts receivable at September 30, 2014 and 2013, consisted of the following:

2014

2013

Accounts receivable - contracts

$ 4,856,70

$ 7,433,479

Accounts receivable REA’s/Claims pending

475,485

498,216

Less: allowance for doubtful accounts

(61,000)

(75,000)

Total Contracts Receivable

$

$ 7,856,695

5,271,189

34,253

During the year 2014, the Organization received inventory from HCA which it recorded at the lower of cost or FMV, or the recoverable amount of $93,787.

Deposits:

Cash on hand

283,969

-

In 2014, the Organization wrote off the inventory for rentals, amenities, and hospital accounts.

Cash and cash equivalents at September 30, 2014 and 2013, consisted of the following:

Cash in banks

93,787

Inventory - Amenities

On November 14, 2013, the Organization entered into an engagement with Edleson & Rezzo, Attorneys at Law, to pursue legal action against Hospital Corporation of America (HCA) to recover the loss of inventory previously written off in 2013.

Note 3 Cash and Cash Equivalents

2013

Hospital Inventory*

* See note below regarding inventory losses for the fiscal year ended September 30, 2014.

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.

2014

$ 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

2013

$ -

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.

2014 Rental Inventory

2014

2013

Cost

Fair Market Value

Cost

Fair Market Value

Stocks

$ 5,000

$ 5,000

$ 5,000

$ 5,000

Total

$

$

$

$

Description

5,000

5,000

5,000

5,000

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.

20 Job Options 2014 Annual Report


Note 8 Long-Term Liabilities

Debt service requirements for the notes payable as of September 30, 2014, are as follows:

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, 2014, are as follows: Balance (2013) Capital leases

Additions

Balance (2014)

Payments

Due in one year

$ 1,778,210

$ 270,571

$ (570,563)

$ 1,478,218

$ 632,932

Notes Payable

Total

$ 3,823,372

2,045,162

$

270,571

$

(381,545) (952,108)

1,663,617

$ 3,141,835

$

Year ending September 30

2015

$ 263,778

2016

1,184,186

2017

126,286

2018

89,367

Total

$ 1,663,617

263,778

Note 9 Health and Welfare Money Purchase Pension Plan

896,710

Included in accounts payable and other liabilities as of September 30, 2014 and 2013, were $391,077 and $375,930, respectively, due to various trusts for health and welfare pensions. Included in employee benefits expense were $5,197,657 and $4,866,150 of health and welfare benefits for the fiscal years ended September 30, 2014 and 2013, respectively.

b. Capital leases The Organization entered into various capital lease agreements with Tetra Financial Group that mature on May 1, 2018, for assets purchased in the amount of $1,390,046. Included in the purchase price is an addition in the amount of $200,052 in March 2014. Effective interest rates range from 8.14% to 10.58%. Included in the purchase price is sales tax. The outstanding principal balance on this capital lease as of September 30, 2014 was $1,013,582.

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:

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 including sales tax. The effective interest rate is 4.615%. The outstanding principal balance on this capital lease as of September 30, 2014 and 2013, was $299,375 and $526,813, respectively.

Year ending September 30

2015

$ 541,822

2016

356,552

The Organization has various car loans outstanding with maturities through 2018. The outstanding principal balance on these loans as of September 30, 2014 and 2013, was $97,228 and $153,338, respectively.

2017

32,982

2018

12,872

Debt service requirements for the capital leases as of September 30, 2014, are as follows:

2019

In July 2014, the Organization entered into a lease/purchase agreement with US Bank that matures on August 20, 2018, for equipment purchased in the amount of $70,519. Effective interest rate is 5.51%. Included in the purchase price is sales tax. The outstanding principal balance on this capital lease as of September 30, 2014 was $68,032.

Total

c.

Lease Payments

Lease Payments

193 $ 944,421

Year ending September 30

Principal

2015

632,932

2016

477,665

2017

312,807

Note 11 Related Parties

2018

54,814

Total

$ 1,478,218

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. 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, 2014 and 2013.

The Organization will receive no sublease rental revenues nor pay any contingent rentals associated with these leases. For the fiscal year ended September 30, 2014 and 2013, operating lease expense was $478,430 and $513,506, respectively.

Notes payable In 2004 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 5.75%. The loan will mature March 27, 2016. The outstanding principal balance on this note payable as of September 30, 2014 and 2013, were $758,828 and $825,620, respectively.

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. For the years ended September 30, 2014 and 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.

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, 2014 and 2013, were $46,877 and $227,347, respectively.

Note 12 Subsequent Event

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 to 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 April 1, 2016. The balance as of September 30, 2014 and 2013, was $415,089 and $448,776, respectively.

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 December 29, 2014, 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. On November 10, 2014, the Organization entered into an equipment finance agreement (EFA) with Regents Capital Corporation for the purchase of various equipment, maturing in October 2018. The effective interest rate is 4.48% at the purchase price of $184,289. Sixteen (16) quarterly payments of $12,780 will commence upon determination and approval of an amortization table.

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, 2014 and 2013, was $442,821 and $543,419, respectively.

The Organization repaid all interest and principal on the loan agreement with California Bank and Trust for the purchase of equipment on December 29, 2014.

21 Job Options 2014 Annual Report


A FINAL POSTSCRIPT

“It is truly a joy and a blessing to come to work every day because I have the support of all my coworkers and my boss.� Elizabeth

E

lizabeth Coss won the Evelyne Villines Award for the Pacific West Region. She

is a Supervisor for the Customer Service Representatives at the SENTRI office located at the Otay Mesa border. We congratulate Elizabeth for this prestigious honor. The Evelyne Villines Award recognizes an individual in the program who has advanced from work on an AbilityOne contract into a supervisory or leadership role. Congratulations, Elizabeth!

22 Job Options 2014 Annual Report


Studio 2055 Graphic Design Nanette Newbry Creative Direction Richard Dowdy Photography

23 Job Options 2014 Annual Report

Rachel Kim Illustration


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

Chula Vista Plant 2248 Main Street, Suite 10 Chula Vista, CA 91911

San Bernardino Plant 1110 S. Washington Avenue San Bernardino, CA 92408

560 Greenbrier Drive Suite 103 Oceanside, CA 92054

T 619.688.1784 F 619.688.9884 W joboptionsinc.org

T 619.575.7627 F 619.424.8768

T 909.890.4612 F 909.890.4673

T 760.547.2480 F 760.547.2485

Š2015 Job Options, Inc. 04/15

Job Options, Inc. Annual Report 2014  

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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