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committed to individual success

2010 annual report

A GROWING FUTURE

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CONTENTS

Promise For a Growing Future ..................................................................... 1

Profile: Patricia Cruz ................................................................................. 2–3

Profile: John Varghese ............................................................................... 4–5

Our Accomplishments .................................................................................... 6

Report to the Community ............................................................................... 7

Financial Report Independent Auditor’s Report ...................................................................... 8

Statements of Financial Position .................................................................. 9

Assets ............................................................................................................ 9

Liabilities and Net Assets ........................................................................... 9

Statements of Activities and Changes in Net Assets .......................... 10

Statements of Cash Flows ......................................................................... 11

Statement of Functional Expenses 2010 ................................................ 12

Statement of Functional Expenses 2009 ................................................ 13

Notes to Financial Statements ........................................................... 14–15

Management and Board of Directors ....................................................... 16

Our Awards .................................................................................................... 16

Our Services .................................................................................................. 17

ON OUR COVER John Varghese and Patricia Cruz’s contribution to Job Options helps provide a healthy future for themselves and the company.

promise for a growing future

Our continued growth over the

past year is the result of our

commitment to place qualified individuals

into meaningful employment. More than

75% of the direct labor hours worked

are by employees with a disability. We

continue to strive to provide the highest

quality service to our government and

commercial customers.

Over the history of our company, we have employed more than 4,000 individuals with disabilities. Their desire to step up to a good paying, meaningful position is the primary reason for Job Options’ continuing success. Our enthusiastic and able employees are the foundation upon which we build our core strengths, allowing JOI to expand into new markets and viable locations within the United States.

More importantly, the pride and reward of a “day’s pay for a day’s work” has given our employees pride and a sense of being an active participant in their communities, as they contribute to their families’ income and build a career where none may have previously existed.

In this report, we are proud to recognize the strength and dedication of our employees, who have gone beyond what is expected of them. It is our employees who give us the ability to grow our business. This past year, we have responded to the economic uncertainty with an aggressive development and facility improvement plan that has increased our presence in new service areas.

Our goal is to expand the base we have established since 1987, through our commitment to pursue new avenues of growth, as we strengthen our resolve to give even more disabled individuals the opportunities for a growing future.

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patricia cruz

Patricia Cruz has worked at the Job Options’

laundry facility in Chula Vista for nearly

12 years. In that time, she has attained perfect

attendance—never late to begin her day–and

was named Employee of the Year in 2007.

Patricia has been honored with numerous

“Extra Mile” awards for going beyond her

job description.

“Patricia knows her job and does it so well.

I wish the laundry had a dozen Patricia’s.” Joe Orlando, Manager, Chula Vista Laundry

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Born in Chula Vista, Patricia graduated from

high school and attended community college

before going to work for her sister. From that

job she moved on to Goodwill Industries. It was

there that a social worker told her about an op-

portunity with Job Options. Patricia began work

at the JOI-managed 32nd Street Navy Commis-

sary before transferring to JOI’s laundry division,

where she works at the fast-paced sheet-folding

machine and also folds towels. “Patricia knows

her job and does it well. I wish I had a dozen

more like her,” says her manager, Joe Orlando.

She helps new employees when they begin

working at the laundry and has willingly stepped

in when a fellow worker missed a day.

“Once I worked all three shifts at different

times,” Patricia recalled, “but now the laundry

is much bigger, with new machines. We can

handle it all with one shift. We can take on all

jobs now,” she proudly proclaims.

Patricia lives with her mother and brother not far

from the laundry. Her mom drives her to work

in the morning and she takes the bus home.

Outside of work, Patricia enjoys going to the

movies, meeting new people and visiting with

friends. She is excited to have recently bought

an iPad® and uses it to look at fashion sites and

to follow celebrities on the web. Along with her

mom, Patricia goes to church on Sundays.

“Because of my work at Job Options’ laundry,

I’m a stronger person,” says Patricia. “My goal?

To go to cosmetology school and own my own

beauty salon…and to get my driver’s license!”

Patricia’s devotion to her mother and siblings,

her strong work ethic and enthusiasm will take

her a long way to reaching her future goals.

• Invested $1.1 million for the Braun Batch

Tunnel Washer and Extraction System

• Reduced water consumption by 14.8 million

gallons annually

• Increased labor productivity over 19%

• Processed 5.6 million pounds annually with

capacity to expand to 12 million pounds

• Saved $345K annually due to modernization

• Employs 47 individuals, 22 with disabilities

• Customers include:

Naval Medical Center Balboa Hospital

Fleet Industrial Supply–U.S. Navy

Camp Pendleton Marine Corps Base

U.S. Border Protection Services

32nd Naval Base

North Island Navy Base, Coronado

this year’s FAST FACTS

the chula vista laundry facility

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john varghese

Originally from India, Naval Hospital

employee John Varghese was schooled

in Kenya and received a horticultural degree

in India. Following graduation from university,

John moved to New York to work as a sales-

man in the pharmaceutical industry for Bayer.

He was successful and built a good life for

himself and his wife. His marriage, arranged

in India, failed, which sent John into a spiral

of misfortune that ultimately led him to San

Diego, where he set out to make a fresh start.

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“John arrives for work an hour early–and never

misses a day. He inspires us all.”

Cesar Martinez, Special Projects Manager, Naval Medical Center

Unfortunately, John’s arrival in town coincided

with the downturn in the economy and he found

it difficult to find steady work. Often he would

work one or two days, which was not enough to

pay for an apartment. He was living on the street,

reaching a bottom in his life that he feared would

not improve.

John found shelter at the St. Vincent DePaul

Village, where a job counselor told him about

the Department of Rehabilitation’s TMI (Towards

Maximum Independence) program that assists

in finding jobs for homeless individuals. His case

manager set up an interview with Job Options

Human Resources department. John was hired at

JOI’s San Ysidro Border Crossing worksite and

then transferred to Camp Pendleton. In 2009,

John accepted a position at the Naval Medical

Center adjacent to Balboa Park, much closer to

his apartment.

As an A2 custodian, John is responsible for

keeping the second floor of Building One in spar-

kling condition. His supervisors say John excels

at his job where he sweeps, strips wax, buffs

and mops daily. According to Special Projects

Manager, Cesar Martinez, “John arrives for work

an hour early—and never misses a day. He in-

spires us all, demonstrating his commitment and

appreciation for a good position.”

John says that having an A2 designation “earns

me more money and with Job Options I have a

retirement fund too.”

On the weekends, John enjoys playing tennis,

reading mystery novels and following news and

his favorite soccer team, Manchester United, on

the internet. John reflects on the twists and turns

of his life and says he doesn’t regret what he has

been through. He remarks, “Here at the hospital,

I do my job and enjoy the friendship I have with

co-workers and supervisors. “I can tell you this:

Job Options saved my life.”

this year’s FAST FACTS

naval medical center

• Contract held for past 11 years

• Contract value: $9,588,000

• 1.8 million square feet of cleanable space

• Contract includes over 500 patient rooms in

five buildings, with 16 satellite medical/dental

clinics on nine Navy bases

• 200 custodians employed

• Disabled personnel account for 85% of direct

labor hours

• NMC received a 95% rating during the most

recent Joint Commission on Accreditation of

Healthcare Organizations (JCAHO) evaluation

• JOI recipient of Letter of Recognition from Head

of Material Management Department

• NMC is the most technologically advanced Navy

treatment center in the world

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Despite being confronted with an environment of budget pres-sures and cutbacks within our federal government business, and the ongoing effects of the economic downturn in the commercial market, we are pleased to report revenues increased in fiscal 2009–2010 to $39.6 million with a net contribution of $567,000. Here we highlight how JOI is reinvesting these profits in our businesses to provide further opportunities for people with dis-abilities to gain meaningful employment.

Hospital Environmental Services Business Development In January 2011, we expanded our geographic presence into the Southeastern United States by implement-ing a $3.3 million annual contract at Martin Army Community Hospital at Fort Benning, Georgia. The contract is the first step in Job Options having a national presence in the AbilityOne Program. While we are faced with many challenges at this facility, this contract is important to the future growth of JOI and the AbilityOne program. Our successful performance at this facility has the potential to open more opportunities to perform Hospital Environmental Services at Army Medcom hospitals throughout the United States. We inherited a hospital whose condition was not up to industry standards and we are committing considerable resources on improving the condition of the hospital, quickly and effec-tively. Given the level of resources we are expending, we do not antici-pate that this contract will be profitable in Fiscal 2010–2011. We antici-pate that once we have brought the hospital to industry and contractual standards we will be able to maintain it at the resource levels estimated, thereby operating profitably.

Laundry Business Expansion We decided last year to target the healthcare market (hospitals) in our laundry business development

efforts. We have long-term experience with a number of large military hospitals throughout Southern California. To assist us in this endeavor, we hired Brian Priest in 2010 to serve as our Business Development Director of Healthcare Laundry. Before joining JOI, Brian held a posi-tion with Angelica Textile Services that has the largest share of this market segment. As part of our expansion plan, we will double the size of our San Bernardino Plant. It is a $2.5 million capital investment slated for completion this year. Our plans for this facility will qualify for both Leadership In Energy and Environmental Design (LEED) and Healthcare Laundry Accreditation Council (HLAC). These accreditations will provide us with a competitive advantage, as it would be one of the only laundry plants to have these designations in Southern California. Our investment in additional business development and improved facilities is paying off. In February 2010, we were awarded the contract for Loma Linda Hospi-tal’s new facility in Murrieta, California.

Management Additions In addition to Brian Priest, we also added Al Salcedo to our management ranks in August 2010 as Director of Quality Control, Continuous Improvement and Business Development. Al is a graduate of the U.S. Naval Academy and worked in operations and procurement for the Navy in his 20–year career before coming to JOI. We are excited about the in-depth knowledge and contacts that Al possesses within the Navy’s operations and the enthusiasm he brings to JOI.

Smart Options For our business development efforts in the non-governmental marketplace, we have adopted a new trade name–Smart Options–and a tagline “Your Door to Greater Options.” We implemented this strategy to better communicate our commercial services and per-sonify our message of providing superior quality services.

our accomplishments

Job Options is a San Diego-based not-for-profit organization whose primary mission is to provide meaningful employment for people with disabili-ties. We meet this goal by employing individuals in basic services such as janitorial, food service, laun-dry, hospital environmental services, administrative services, commissary-inventory management and shelf-stocking for government and commercial customers. Most of our employment opportunities are with various agencies within the federal gov-ernment and are offered under the provisions of AbilityOne, formerly known as the Javits-Wagner-O’Day Program. AbilityOne enables certain federal government contracts to be set aside for firms that 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. Depart-ment of Defense, General Services Administra-tion, Veterans Administration, Homeland Security (U.S. Customs and Border Protection) and the U.S. Postal Service. Our largest customer is the Department of Defense, giving us a substantial presence at many of the Navy and Marine Corps bases throughout Southern California. Approxi-

mately 90% of our current employees work in fed-eral government facilities, with the remaining 10% in the commercial sector.

JOI is now in its 22nd year of operation. Over the past ten years, our annual rate of growth has been over 15%. This growth resulted in JOI generating revenue of over $39 million in fiscal 2009–2010. To meet the requirements of our contracts, Job Options currently employs over 800 people, the majority of whom have a physical, psychological, developmental or emotional disability.

Job Options is entirely self-funded through the contract revenue we receive from numerous governmental and commercial entities. We do not depend on any gifts or grants to fund our opera-tions. Therefore, we have an ongoing responsi-bility to operate within budget. In 2006 through 2007, we reorganized our Custodial Division into three separate groups: Hospital Environmental Services, NAVFAC and Base Custodial to more effectively service our customers. This resulted in the company having seven Divisions: Food Service, Professional and Administrative Services, Laundry, Commissary, Hospital Environmental Services, NAVFAC and Base Custodial.

We believe JOI is poised to continue substantial growth in the near term as we pursue selected commercial

opportunities and expansion in the AbilityOne Program.

report to the community

JOB OPTIONS DIVISIONAL REVENUE 09/10

Food Service Custodial Admin Commissary Laundry Hospital

$6.299M

$6.260M

$9.571M

$6.258M

$9.934M

Food Service(16%)

Custodial(15.9%)

Commissary(24.4%)

$1.023MAdmin(2.6%)

Laundry(15.9%)

Hospital(25.3%)

2010: Number of Job Options Employees

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100907 08030201 060504999897 00

200

0

600

400

800

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10 15 20 25 30 35 40

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Job Options Revenue

02/0

303

/04

06/0

707

/08

08/0

909

/10

04/0

505

/06

97/9

898

/99

99/0

000

/01

01/0

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The accompanying notes are an integral part of these financial statements.9

A CALIFORNIA NOT-FOR-PROFIT CORPORATIONJO

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. Statements of Financial Position .......................................... 9

Statements of Activities and Changes in Net Assets ......... 10

Statements of Cash Flows ................................................... 11

Statements of Functional Expenses 2010 ........................... 12

Statements of Functional Expenses 2009 .......................... 13

Notes to Financial Statements ......................................14–15

To the Board of DirectorsJob Options, Inc.

We have audited the accompanying statements of financial position of Job Options, Inc., a California not-for-profit Corporation (the “Organization”) as of September 30, 2010 and 2009, and the related statements of activities, changes in net assets, functional expenses and cash flows for the years then ended. These financial statements are the responsibility of the Organization’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Job Options, Inc., a California Not-for-profit Corporation as of September 30, 2010 and 2009, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The supplementary statement of income and changes in retained earnings for Job Opportunities, Inc., which is the responsibility of management, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

MCLEAN, ROTHERHAM & CO., CPAs San Diego, CaliforniaFebruary 21, 2011

Independent Auditor’s Report

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ASSETS 2010 2009

CURRENT ASSETSCash and cash equivalents $ 1,176,612 $ 997,693Inventory 151,151 178,867Contracts receivable, net allowance of $77,398 6,023,194 6,994,807Receivables – other 87,233 –Prepaid expense 367,891 96,584

Total Current Assets 7,806,081 8,267,951

PROPERTY AND EQUIPMENTEquipment 4,859,816 3,610,400 Furniture and fixtures 5,352 5,352Leasehold improvements 367,354 315,755 Building 1,322,048 1,322,048Land 100,539 100,539Automobiles 453,661 355,712Less: Accumulated depreciation (2,986,120) (2,527,552)

Net Property and Equipment 4,122,650 3,182,254

NON-CURRENT ASSETSConstruction in process – 240,435Investment–Job Opportunities Inc. 5,000 Deposits 29,067 117,415

Total Assets $ 11,962,798 $ 11,808,055

LIABILITIES AND NET ASSETS

CURRENT LIABILITIESAccounts payable and other liabilities $ 1,477,761 $ 2,342,742Accrued payroll and payroll related expenses 1,582,628 1,497,442Notes payable, current 429,447 406,978

Total Current Liabilities 3,489,836 4,247,162

NOTES PAYABLE, NET OF CURRENT PORTION 2,286,393 1,941,134

Total Liabilities 5,776,229 6,188,296

NET ASSETS - UNRESTRICTED 6,186,569 5,619,759Total Liabilities and Net Assets 11,962,798 11,808,055

Statements of Financial Position

For the Years Ended September 30, 2010 and 2009

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2010 2009

REVENUEContract revenue $ 39,339,902 $ 37,568,589Interest and investment income 6,942 15,357Total Revenue 39,346,844 37,583,946

DIRECT EXPENSEEmployee salaries $ 16,049,893 $ 15,502,673 Employee benefits 7,262,487 6,802,524Subcontractor services 6,007,185 5,475,606 General Supplies 991,358 1,091,070NISH commission 1,251,543 1,244,003Utilities 420,057 536,279Depreciation 569,400 431,333Equipment costs 659,321 524,808Outside services 208,896 178,593Travel 49,794 64,840Bank services and interest 152,159 119,615Insurance 124,175 128,182Facility rents 171,866 146,395Bad debt expense – 110,291Professional fees 10,929 7,498Telephone 78,265 69,362Office expense 51,376 55,256Building maintenance 35,846 44,253Licenses and tax 13,410 12,614Staff development 14,389 5,691Dues and subscriptions 220 294

Total Direct Expense 34,122,569 32,551,180

ADMINISTRATIVE EXPENSE 4,657,465 4,214,356Total Expense 38,780,034 36,765,536Change in Unrestricted Net Assets 566,810 818,410

NET ASSETS AT BEGINNING OF YEAR 5,619,759 4,801,349

NET ASSETS AT END OF YEAR 6,186,569 5,619,759

The accompanying notes are an integral part of these financial statements.

Statements of Activities and

Changes in Net Assets

For the Years Ended September 30, 2010 and 2009

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2010 2009

CASH FLOW FROM OPERATING ACTIVITIES:Excess of revenues over expenses $ 566,810 $ 818,410Add charges to revenue not requiring use of cash:

Depreciation 570,972 432,905Adjustments to reconcile excess of revenue over

expenses to net cash flow from operating activities (Increase)/ decrease in contracts and accounts receivable 884,380 (606,497)(Increase)/ decrease in inventory 27,716 28,413(Increase)/ decrease in prepaid expense (271,307) (3,137)(Increase)/ decrease in deposits 88,348 (20,049)(Increase)/ decrease in accounts payable and other liabilities (779,795) 183,922

Net Cash (used)by operating activities 1,087,124 833,967

CASH FLOW FROM INVESTING ACTIVITIES:Acquisition of property and equipment (1,314,461) (268,030)Purchase of investments (5000) –Construction in process – (240,435)Disposal of equipment 43,529 13,156

Net Cash (used) by investing activities (1,275,932) (495,309)

CASH FLOW FROM FINANCING ACTIVITIES:Proceeds from additional notes payable 890,391 177,148Principal payments on notes payable (522,664) (391,578)

Net cash provided by financing activities 367,727 (214,430)

NET INCREASE / (DECREASE) IN CASH 178,919 124,228

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 997,693 873,465

CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,176,612 $997,693

SUPPLEMENTAL INFORMATION:

Interest paid $ 182,651 $ 153,514

The accompanying notes are an integral part of these financial statements.

Statements of Cash Flows

For the Years Ended September 30, 2010 and 2009

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TOTAL

PROGRAM MANAGEMENT SERVICE AND GENERAL

Employee salaries $ 16,112,358 $16,049,893 62,465Employee benefits and other Employee expense 7,317,959 7,262,487 55,472Management Fee 4,152,376 – 4,152,376Sub–contractor services 6,007,185 6,007,185 –General supplies 991,215 991,358 (143)NISH and other commissions 1,251,543 1,251,543 –

Utilities 420,057 420,057 –Depreciation 570,972 569,400 1,572Equipment costs 661,349 659,321 2,028Outside services 211,041 208,896 2,145Travel and entertainment 54,287 49,794 4,493Rent 171,866 171,866 –Insurance 225,459 124,175 101,284Bank services and interest 206,816 152,159 54,657Professional fees 60,889 10,929 49,960Bad debt expense 138,000 – 138,000Loss on disposal of assets 4,529 – 4,529Telephone 79,659 78,265 1,394Office expense 57,358 51,378 5,980Building maintenance 35,846 35,846 –Licenses and taxes 21,417 13,410 8,007Staff development 26,865 14,389 12,476Dues and subscriptions 990 220 770

Totals $ 38,780,036 $ 34,122,571 $4,657,465

Statement of Functional Expenses

For the Year Ended September 30, 2010

The accompanying notes are an integral part of these financial statements.

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TOTAL PROGRAM MANAGEMENT SERVICE AND GENERAL

Employee salaries $ 15,526,673 $15,502,673 24,000Employee benefits and other employee expense 6,794,723 6,802,524 (7,801)Management Fee 3,918,456 – 3,918,456Sub–contractor services 5,475,606 5,475,606 –General supplies 1,091,429 1,091,070 359NISH and other commissions 1,244003 1,244,003 –Utilities 536,279 536,279 –Depreciation 432,905 431,333 1,572Equipment costs 560,854 524,808 36,046Outside services 180,566 178,593 1,973Travel and entertainment 65,016 64,840 176Rent 146,395 146,395 –Insurance 212,886 128,182 84,704Bank services and interest 190,122 119,615 70,507Professional fees 29,352 7,498 21,854Bad debt expense 110,291 110,291 –Loss on disposal of assets 13,006 – 13,006Telephone 69,418 69,362 56Office Expense 58,254 55,256 2,998Settlements 38,000 – 38,000Building maintenance 44,253 44,253 –Licenses and taxes 20,324 12,614 7,710Staff development 5,691 5,691 –Dues and subscriptions 1,034 294 740

Totals $ 36,765,536 $ 32,551,180 $ 4,214,356

The accompanying notes are an integral part of these financial statements.

Statement of Functional Expenses

For the Year Ended September 30, 2009

REVENUEContract revenue $ 309,420

Total Revenue 309,420

DIRECT EXPENSEEmployee salaries $ 135,240Employee benefits 73,995 General Supplies 39,065Management fees 33,553 Equipment costs 18,782Facility rents 2,489Telephone 1,969Insurance 1,943Bank services 1,666Licenses and tax 1,357Office expense 627Travel 260Outside services 242Utilities 54

Total Expense 311,233

Change in Unrestricted Net Assets (1,813)RETAINED EARNINGS AT BEGINNING OF YEAR –RETAINED EARNINGS AT END OF YEAR $ (1,813)

Income Statement and Changes in

Retained EarningsFor the Year Ended September 30, 2010

(Unaudited)

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. For the Years Ended September 30, 2010 and 2009

Notes to Financial Statements

NOTE 1 – NATURE OF BUSINESS Job Options, Inc. (the “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 and Utah. Work is performed primarily under time and material and negotiated price contracts. The workforce consists principally of ca-pable 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 800 individuals.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements of Job Options, Inc. have been prepared in accor-dance with accounting principles generally accepted in the United States of America on an accrual basis of accounting.

Basis of Presentation Accounting principles generally accepted in the United States of America require that the Organization present information about its financial posi-tion and activities in three classes of net assets: unrestricted, temporarily restricted and permanently restricted. In these reporting periods, the Organization had only unrestricted net assets.

The Organization reports contributions as restricted if they are received with donor stipulations that limit the use of the donated asset. When a donor-imposed restriction expires, that is, when the time restriction expires, or the purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets. When restrictions on contributions are satisfied in the same period as the receipt of the contri-bution, the Organization reports both the revenue and the related expense in the unrestricted net assets.

Cash and Cash Equivalents Cash equivalents consist of short-term highly liquid investments that are readily converted to cash with an original maturity of three months or less. The Organization’s cash equivalents include $392,870 invested in the Dreyfus Government Prime Cash Management Fund for which the average maturity cannot exceed 60 days.

Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value The carrying amounts reported in the statements of financial position for cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to their immediate short-term maturity.

Depreciation and Fixed Assets The Organization capitalizes all fixed asset acquisitions and major im-provements with a cost basis of $1000 or more with a determinable life greater than one year at the acquisition cost. Replacement, maintenance and repairs, which do not improve or extend the life of the respective asset, are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful life of the asset. Amor-tization expense and accumulated amortization have been included in depreciation expense and accumulated depreciation, respectively.

Short–Term Investments In accordance with accounting principles generally accepted in the United States of America, the Organization accounts for its short-term investments with a readily determinable market value by recording and reporting those investments at fair value. Information about the income earned from short-term investments is discussed in Note Three.

Retirement Plans The Organization has two departments, NMC 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 man-dated 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.

Income Taxes The Organization is a non-profit Corporation exempt from income taxes, except for unrelated business income, under Internal Revenue Code Section 501 (C)(3). There was no unrelated business income for the year ended September 30, 2010.

Functional Expenses The costs of providing the Organization’s programs have been sum-marized on a functional basis in these financial statements. Based on management’s estimates, costs have been allocated between programs and supporting services as they relate to those 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 nec-essary, 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.

Administrative Expense Administrative expense shown on the statement of activities reflects all costs associated with administration/management and general. Based on management’s estimates, administrative costs have been allocated be-tween programs and supporting services as they relate to those functions as reflected in the statements of functional expense.

NOTE 3 – SHORT-TERM INVESTMENTS Short-term investment income was comprised of interest and dividends in the amount of $6,942 and $15,357 for the years ended September 30, 2010 and 2009, respectively.

NOTE 4 – CONCENTRATION OF CREDIT RISK The Organization, at various times during the year, may maintain cash balances in excess of the FDIC limit in a high quality financial institution. The FDIC limit is currently $250,000 for interest bearing accounts and unlimited for non-interest bearing accounts through December 2012. As of September 30, 2010, the Organization’s non-interest bearing operating account was $1,230,052 of which $392,870 is maintained in a Dreyfus Government Prime Cash Management Fund which is not covered by FDIC.

NOTE 5 – RELATED PARTIES – MENTAL HEALTH SYSTEMS, INC. Beginning in the year ended September 30, 1994, Mental Health Systems, Inc. (MHS) assisted in establishing Job Options, Inc. (JOI), as a non-profit entity administering vocational rehabilitation programs for MHS. Although JOI is no longer administering vocational rehabilitation programs for MHS, they have entered into other business transactions since that time.

As of September 30, 2010 and 2009, the Organization had the following outstanding liabilities and lease commitments with MHS:

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

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matures December 15, 2012. Monthly lease payments decrease annually in years one through eight and become fixed in years nine through fifteen.

Monthly lease payments during the year ended September 30, 2010 and September 30, 2009 were $1,800. Total lease payments during the years ended September 30, 2010 and 2009, were $21,600 and $21,600, respec-tively. Aggregate future lease payment liabilities are $10,798 for the year ending September 30, 2011. The Organization has the ability to cancel lease with thirty days notice. The Organization would then incur a penalty of three months rent.

The Organization has entered into a second operating lease agreement with MHS for laundry equipment. The lease commenced February 1, 1998, and matures February 1, 2013 and requires monthly lease payments of $885. Total lease payments during each of the years ended September 30, 2010 and 2009 were $10,620. Aggregate future lease payment liabilities were $5,312 for the year ending September 30, 2011.

NOTE 6 – RELATED PARTY – BEHAVIORAL MANAGEMENT SYSTEMS, INC. The Organization has entered into all agreement with Behavioral Manage-ment Systems, Inc. (BMS) as of April 1, 2004. BMS is a for-profit entity which has been organized to provide administrative services to the Organi-zation. Officers of Job Options, Inc. are also officers of BMS. Management fees were $4,152,376 and $3,918,456 for the years ended September 30, 2010 and 2009 respectively.

NOTE 7 – RELATED PARTY – JOB OPPORTUNITIES, INC.Job Opportunities, Inc. is a for-profit corporation that is 100% wholly owned by Job Options, Inc. The Company was incorporated March 13, 2010 in the State of California. The purpose of the Corporation is to provide vocational rehabilitation services on contracts that may not be available for Job Options, Inc.

The investment in Job Opportunities Inc. is $5,000 and is reflected on the balance sheet as a noncurrent investment. Job Opportunities, Inc. had a loss of ($1,813) with gross revenues of $309,420 for the year ended September 30, 2010.

NOTE 8 – OPERATING LEASE COMMITMENTS The Organization has entered into various operating lease agreements for equipment, vehicles and office space. The leases expire at various dates throughout the years ending September 30, 2015.

Future minimum payments, by year and in the aggregate, under non-cancelable operating leases with initial or remaining terms of one year or more consisted of the following as of September 30:

Years ending September 30,2011 $ 578,024

2012 408,662

2013 381,823

2014 328,285

2015 and thereafter 73,878

$ 1,770,672

NOTE 9 – NOTES PAYABLE Notes payable consist of the following:

The Organization had available a revolving line of credit from NCB Develop-ment Corporation that was reduced from $1,000,000 to $582,500. The interest rate started at 8.25% and will fluctuate at 3.5% over the weekly average yield of US Treasury Securities. 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, 2010 and September 30, 2009 was $529,978 and $543,441, respectively.

The Organization entered into a capital lease with Celtic Leasing during the year ended September 30, 2007. The agreement allowed for the purchase of equipment up to $367,822. As of September 30, 2010, the principal balance was $181,227. The effective interest rate as of September 30, 2010 was 6.94%. There is an additional $16,566 of sales tax included in notes payable as of September 30, 2010 related to the Celtic capital lease.

The Organization entered into a capital lease with Celtic Leasing during the year ended September 30, 2008. Additional equipment was purchased in the amount of $189,083. As of September 30, 2010, the principal balance was $84,058. The effective interest rate as of September 30, 2010 was 7.68%.

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, addi-tional 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. The balance as of September 30, 2010 and 2009 was $988,899 and $1,016,791, respectively. Effective interest rate is 8.375% through 4/7/11 at which point the rate will fluctuate at 3.5% over the weekly average yield of US Treasury Securities. The loan will mature March 27, 2016.

During the year ended September 30, 2005, the Organization entered into an equipment loan agreement with NCB in the amount of $500,000. Ad-ditional proceeds of $196,720 were added to the loan. The interest rate is the NCB Commercial Loan Base Rate which is currently 6.22%. This loan will mature October 1, 2010. The balance as of September 30, 2010 and 2009 was $17,269 and $195,625, respectively.

The Organization entered a lease/purchase agreement with Wirth Business Credit for equipment that will be theirs at the termination of the lease. Pay-ments are $4,692 and are for 48 months. Interest is 12%. The balance as of September 30, 2010 and 2009 was $112,844 and $152,951, respectively.

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 6.24%. The balance as of September 30, 2010 was $707,564.

The Organization has various car loans outstanding with maturities through 2015. The balance in these loans was $77,435 and $18,548 as of September 30,2010 and 2009, respectively.

Aggregate future maturities of long-term debt are as follows:

Years ending September 30:2011 $ 429,448

2012 389,190

2013 286,382

2014 258,275

2015 111,091

Thereafter 1,241,454

Total 2,715,840

Less current portion 429,447

Long–term debt $ 2,286,393

NOTE 10 – HEALTH AND WELFARE MONEY PURCHASE PENSION PLAN Included in accounts payable and other liabilities as of September 30, 2010 and 2009 were $240,140 and $240,322, respectively, due to vari-ous trusts for health and welfare pensions. Included in employee benefits expense were $3,420,521 and $3,410,554, of health and welfare benefits for the years ended September 30, 2010 and 2009, respectively.

NOTE 11– CONTRACTS AND ACCOUNTS RECEIVABLE – ALLOWANCE FOR DOUBTFUL ACCOUNTS Consistent with generally accepted accounting principles in the United States of America, contracts receivable as of September 30, 2010 and 2009, are shown net of an allowance for doubtful accounts in the amount of $77,398 and $159,134, respectively. The Organization recorded bad debt of $138,000 and $110,291 for the years ended September 30, 2010 and 2009, respectively.

14

2010 NISH Pacific West Region

William M. Usdane Award – Rosamaria Santana

2009 NISH National Business Innovation Award

2008 NISH Board Award for Performance Excellence

– Randy Williams

2007 NISH Award for Outstanding Performance

2006 NAVFAC SW FEAD San Diego Safety Award

– Facilities Maintenance Category,

Janitorial Services for Naval Medical Center

2006 NISH National Business Innovation Award

2006 Grassroots Excellence Award

Governmental Relations

2005 NISH National William M. Usdane Award

– James Bandy

2004 Fastest Growing Company Award

– San Diego Business Journal

2002 NISH National Evilyne Villines Award

– Jim Smith

The quality of service we deliver to our customers is a result of our employees’ ability to get the job done efficiently, pro-fessionally and with pride. Job Options and its employees have been the re-cipients of many awards and accolades throughout our history.

our awards

William R. Mead, Ph.D.Chief Executive Officer bmead@joboptionsinc.org

Bill Eastwood, MA Chief Administrative Officer beastwood@joboptionsinc.org

Jeffrey Johnson Chief Operating Officer jjohnson@joboptionsinc.org

Char Healy Chief Financial Officer chealy@joboptionsinc.org

Doug Baker Food Service Division Manager dbaker@joboptionsinc.org

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

Al Salcedo Director of Quality and Continuous Improvement asalcedo@joboptionsinc.org

Margaret Ann Penã NAVFAC Division Manager Facilities Division Manager mpena@joboptionsinc.org

Gladis Jarquin Administrative Services Division Manager/Safety Officer gjarquin@joboptionsinc.org

Peg Daly NAVFAC Contract Managerpdaly@joboptionsinc.org

Joe Ryan Director of Laundry Operations jryan@joboptionsinc.org

Nasar Masry Hospital Environmental Services Division Manager nmasry@joboptionsinc.org

Carol WhiteleyCommissary Division Manager cwhiteley@joboptionsinc.org

Valorie Seidl Human Resources Director vseidl@joboptionsinc.org

Juan Agundis Director of Information Technology jagundis@joboptionsinc.org

Steve Credle PTS Administrator and Purchasing scredle@joboptionsinc.org

Richard Carrillo Director of Contracts Governmental Relations rcarrillo@joboptionsinc.org

management

Celia Ballesteros

Patrick O’Sullivan

Dr. Richard Skay

Verlyn Soderstrom

Bruce Whitcomb, Chairman

Richard Woodaman

board of directors

administrative services

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

building and custodial 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

commissary and warehousing

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

grounds/landscape maintenance

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

hospital environmental services

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

hospitality and food services

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

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

servicesJob Options

plays a key role

in providing

services

in a wide range

of areas to

business and

government.

Concept and Design by STUDIO 2055 | Photography by Richard Dowdy | studio2055.com

A CALIFORNIA NOT-FOR-PROFIT CORPORATIONJO

B O

PTIO

NS

, INC

.

17©2011 Job Options, Inc. 06/11

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providing real jobs for capable people

www.joboptionsinc.org

Corporate Office

3465 Camino Del Rio South

Suite 300

San Diego, CA 92108

Phone: 619-688-1784

Fax: 619-688-9884

Laundry Plant

Chula Vista Plant

2248 Main Street, Suite 10

Chula Vista, CA 91911

Phone: 619-575-7627

Fax: 619-424-8768

Laundry Plant

San Bernardino Plant

1110 S. Washington Avenue

San Bernardino, CA 92408

Phone: 909-386-0342

Fax: 909-890-4673

Food Services

560 Greenbrier Drive

Suite 103

Oceanside, CA 92054

Phone: 760-547-2480

Fax: 760-547-2485

ISO 9001:2008 certification