Back to GetFilings.com







UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K


[X] Annual Report Under Section 13 or 15 (d) of the Securities Exchange Act
of 1934 [No Fee Required]

For the fiscal year ended September 30, 2000

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]

For the transition period from _______________ to ________________

Commission File Number: 1-5707

GENERAL EMPLOYMENT ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)

Illinois 36-6097429
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

One Tower Lane, Suite 2100, Oakbrook Terrace, IL 60181
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (630) 954-0400

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Names of each exchange on which registered
Common Stock, no par value American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No __

Indicate by check mark if disclosure of delinquent filers in
response to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the voting and non-voting common
equity held by non-affiliates of the registrant as of October 31,
2000 was $11,984,000. At that date, there were 5,086,656 shares
of the registrant's common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the General Employment Enterprises, Inc. Proxy
Statement for the annual meeting of shareholders to be held on
February 28, 2001 are incorporated by reference into Part III of
this Form 10-K.




PART I


Item 1. Business

General
General Employment Enterprises, Inc. (the "Company") was
incorporated in the State of Illinois in 1962 and is the
successor to employment offices doing business since 1893. In
1987 the Company established Triad Personnel Services, Inc., a
wholly-owned subsidiary, incorporated in the State of Illinois.
The principal executive office of the Company is located at One
Tower Lane, Suite 2100, Oakbrook Terrace, Illinois.


Services Provided
The Company operates in one industry segment, providing
professional staffing services. The Company offers its customers
both full-time placement and temporary contract staffing
services, specializing in the placement of information
technology, engineering and accounting professionals.

The Company's placement services include placing candidates into
regular, full-time jobs with client-employers. The Company's
contract services include placing its professional employees on
temporary assignments, under contracts with client companies.
Contract workers are employees of the Company, typically working
at the client location and at the direction of client personnel
for periods of three months to one year. Management believes
that the combination of these two services provides a strong
marketing opportunity, because it offers customers a variety of
staffing alternatives that includes regular full-time staffing,
temporary staffing and a contract-to-hire approach to hiring.

The amount of revenues derived from these services for each of
the last three fiscal years is presented in the Company's
consolidated statement of income. In fiscal 2000, the Company
derived 60% of its revenues from placement services and 40% of
its revenues from contract services.


Marketing
The Company markets its services using the trade names General
Employment, Omni One, Business Management Personnel and Triad
Personnel Services. As of September 30, 2000, it operated 42
branch offices located in downtown or suburban areas of major
U.S. cities in 14 states. Thirty-six of the offices were full-
service branches, providing both placement and contract services,
and six of the offices specialized in contract services only.
The offices were concentrated in California (11), Illinois (8),
Indiana (3), Ohio (3) and Texas (3), with two offices each in
Arizona, Florida, Georgia, Massachusetts and Michigan, and one
office each in Nevada, North Carolina, Pennsylvania and
Tennessee.

The Company markets its services to prospective clients primarily
through telephone marketing by its employment consultants and
through mailing of employment bulletins listing candidates
available for placement and contract employees available for
assignment.

The Company has a diverse customer base, and no single customer
accounts for more than 4% of its revenues.


Recruiting
The success of the Company is highly dependent on its ability to
obtain qualified candidates. Prospective employment candidates
are recruited through telephone contact by the Company's
employment consultants, through classified newspaper advertising
and through postings on the internet. For this purpose, the
Company maintains its own internet web page at

2


www.generalemployment.com and uses other internet job posting
bulletin board services. The Company uses a computer program to
track applicants' skills and match them with job openings. The
Company screens and interviews all applicants who are presented
to its clients.


Billing Practices
The Company charges a fee for successful placements that is based
on a percentage of the applicant's projected annual salary, and
the Company provides its clients with a guarantee under which the
fee is refundable if the applicant does not remain employed
during a guarantee period. Fees for contract services are billed
on an hourly basis each week. The Company expects payment by its
customers upon receipt of its invoices. Typical of the staffing
industry, working capital is required to finance the wages of
contract workers before the related customer accounts are
collected.


Competition
The staffing industry is highly competitive. There are
relatively few barriers to entry by firms offering placement
services, while significant amounts of working capital typically
are required for firms offering contract services. The Company's
competitors include a large number of sole-proprietorship
operations, as well as regional and national organizations. Many
of them are large corporations with substantially greater
resources than the Company.

Because the Company focuses its attention on professional
staffing positions, particularly in the highly specialized
information technology field, it competes by providing services
that are dedicated to quality. This is done by providing highly
qualified candidates who are well matched for the position, by
responding quickly to client requests, and by establishing
offices in convenient locations. As an added service, the
Company provides careful reference checking and scrutiny of
candidates' work experience and optional background checks.
Pricing is considered to be secondary to quality of service as a
competitive factor.

Geographic diversity helps the Company to balance local or
regional business cycles. Multiple offices in the Atlanta,
Boston, Chicago, Columbus, Indianapolis, Los Angeles, Phoenix and
San Francisco markets help to provide better client services
through convenient office locations and the sharing of
assignments.


Regulation
Employment agency service companies are regulated by three of the
states in which the Company operates. Licenses are issued on a
year-to-year basis. As of September 30, 2000, the Company held
current licenses for all of the offices that were required to
have them.


Employees
As of September 30, 2000, the Company had approximately 490
employees.


Item 2. Properties

The Company's policy is to lease commercial office space for all
of its offices. The Company's headquarters are located in a
modern 31-story building near Chicago, Illinois. The Company
leases 12,900 square feet of space at this location, under a
lease that will expire in January 2006.

The Company's staffing offices are located in downtown
metropolitan and suburban business centers in 14 states.
Generally, the Company enters into six-month leases for new
locations, using shared office facilities whenever possible.
Established offices are operated from leased space ranging from

3


1,000 to 2,100 square feet, generally for periods of one to five
years, with cancellation clauses after certain periods of
occupancy. Management believes that existing facilities are
adequate for the Company's current needs and that its leasing
strategies provide the Company with sufficient flexibility to
open or close offices to accommodate business needs.


Item 3. Legal Proceedings

As of September 30, 2000, there were no material legal
proceedings pending against the Company.


Item 4. Results of Vote of Security Holders

No matters were submitted to a vote of security holders during
the fourth quarter of the 2000 fiscal year.



PART II

Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters

Information regarding this item is contained in "Item 8.
Financial Statements and Supplementary Data."


Item 6. Selected Financial Data

Year Ended September 30
(In Thousands, Except Per Share) 2000 1999 1998 1997 1996
Operating results:
Net revenues $39,802 $39,553 $36,734 $29,341 $23,241
Income from operations 3,577 4,569 4,710 3,780 2,539
Net income 2,532 3,025 3,090 2,441 1,641

Per share data:
Net income - basic $ .50 $ .59 $ .61 $ .49 $ .34
Net income - diluted .49 .59 .58 .48 .33
Cash dividends declared .30 .04 .04 .03 .02

Balance sheet data:
Net working capital $11,300 $11,391 $ 9,261 $ 6,418 $ 4,410
Long-term obligations -- 484 460 433 375
Shareholders' equity 14,143 13,137 10,335 7,149 4,806
Total assets 19,979 18,085 15,632 12,323 9,581


Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations

The Company provides placement and contract staffing services for
business and industry, specializing in the placement of
professional information technology, engineering and accounting
professionals. As of September 30, 2000, the Company operated 42
offices located in major metropolitan business centers in 14
states. The Company continually monitors the marketplace for new
opportunities, and it opened two new branch offices in 2000, one
in 1999 and nine in 1998. The Company also monitors the
performance of its existing operations, and it closed two under-
performing branch offices in 2000 and six in 1999.

A summary of operating data, expressed as a percentage of
consolidated net revenues, is presented below.

4


Year Ended September 30
2000 1999 1998

Net revenues:
Placement services 59.6% 57.4% 68.4%
Contract services 40.4 42.6 31.6

Net revenues 100.0 100.0 100.0

Operating expenses:
Cost of contract services 26.4 27.4 20.4
Selling 35.3 35.0 41.7
General and administrative 29.3 26.0 25.1

Total operating expenses 91.0 88.4 87.2

Income from operations 9.0% 11.6% 12.8%


Fiscal 2000 Results of Operations

Net Revenues

Consolidated net revenues for the year ended September 30, 2000
were essentially flat with the prior year - up $249,000 (1%).
Placement services represented 59.6% of consolidated net
revenues, and contract services represented 40.4% of the total.

Placement service revenues increased $1,018,000 (4%) for the
year, primarily due to a 5% increase in the average placement
fee. The number of placements was essentially unchanged from the
prior year.

Contract service revenues decreased $769,000 (5%) for the year.
This was the result of a 12% decline in billable hours that was
partially offset by a 7% increase in the average hourly billing
rate.

Although the demand for information technology professionals was
moderately strong during fiscal 2000, the Company's customers
were more cautious in their hiring patterns than in recent years.
This restrained growth in the number of placements made by the
Company, and it resulted in switching by some customers from
contract services to placement services. Consolidated revenue
growth was also adversely affected by high turnover of branch
office managers and consulting staff during the fiscal year,
which had the effect of holding back productivity in many of the
branch offices.

The Company's greatest challenge during fiscal 2000 was
attracting and retaining well-qualified personnel consultants.
The Company met this challenge by promoting new branch managers,
filling empty desks, increasing the training staff, and enhancing
compensation and benefit programs. To improve consultant
productivity, the Company also completed the installation of a
new applicant retrieval system in all offices during the fiscal
year.

The Company is well positioned for growth in fiscal 2001.
Management expects that its customers will continue to take a
cautious approach to their hiring patterns, and that revenue
growth will come from strategic openings of new branch offices,
the addition of consulting staff at existing offices and
productivity improvements as the consulting staff matures.


Operating Expenses

Total operating expenses for fiscal 2000 were up $1,241,000 (4%)
over the prior year.

5


The cost of contract services was down $323,000 (3%), as a result
of the lower contract service revenues. The gross profit margin
on contract services was 34.6% in fiscal 2000, compared with
35.7% the prior year. The gross profit on contract services
declined $446,000 (7%), due to the combination of lower contract
service revenues and a lower profit margin.

Selling expenses increased $186,000 (1%) in fiscal 2000, and they
represented 35.3% of consolidated net revenues, which was
slightly higher than the prior year. Commission expense
increased 1%, as the effect of higher placement revenues was
largely offset by lower average commission rates. Higher costs
associated with employee benefit programs were largely offset by
lower advertising and promotion expenses.

General and administrative expenses increased $1,378,000 (13%),
and they represented 29.3% of consolidated revenues. This was up
3.3 points from the prior year. Compensation in the operating
divisions increased 15% for the year, as new consultant
compensation arrangements that place greater emphasis on fixed
compensation, while reducing commission rates, were introduced in
some branch offices. Office occupancy and operating costs
increased 12% due to higher depreciation and other costs
associated with upgrading the Company's computer systems and
office furniture. Administrative compensation increased 12%, and
all other general and administrative expenses increased 17%.


Income from Operations, Other Items and Net Income

Because total operating expenses increased at a greater rate than
net revenues, the Company's operating margin declined by 2.6
points for the year - to 9.0% this year, compared with 11.6% the
prior year. This caused a $992,000 (22%) decrease in income from
operations for the year.

Interest income increased $149,000 (30%) in fiscal 2000, due to a
combination of higher funds available for investment and higher
average interest rates.

The effective income tax rate was 40.0% in fiscal 2000, about the
same as the 40.1% rate the prior year.

As a result, net income for fiscal 2000 was $493,000 (16%) lower
than fiscal 1999.


Fiscal 1999 Results of Operations

Net Revenues

For the year ended September 30, 1999, consolidated net revenues
were up $2,819,000 (8%) from the prior year. Contract service
revenues represented 42.6% of the Company's consolidated revenues
for the year, while placement service revenues accounted for
57.4% of the consolidated total.

Placement service revenues decreased $2,427,000 (10%), as a
decrease in the number of placements was partially offset by a 5%
higher average placement fee.

Contract service revenues increased $5,246,000 (45%) primarily
due to a 34% increase in billable hours and an 8% higher average
hourly billing rate.


Operating Expenses

Total 1999 operating expenses were $2,960,000 (9%) greater than
in 1998.

The cost of contract services increased $3,359,000 (45%) over
1998, in line with the higher contract service revenues. The

6


gross profit on contract services was a $1,887,000 (46%) increase
compared with the prior year, and the gross profit margin was
35.7% compared with 35.5% the prior year.

Selling expenses for 1999 decreased $1,459,000 (10%) from the
prior year, in line with the lower placement service revenues.

General and administrative expenses in 1999 increased $1,060,000
(11%) from 1998. This was largely associated with the combined
effects of opening new branch offices during fiscal 1998 and
inflationary cost increases. Branch office salaries and wages
increased 31% for the year, while occupancy costs increased 16%.
All other general and administrative expenses decreased 4%.


Income from Operations, Other Items and Net Income

The Company had income from operations of $4,569,000, which was a
$141,000 (3%) decrease from the prior year, and the operating
profit margin was 11.6%, compared with 12.8% the prior year. The
lower margin was largely due to the combination of lower
placement revenues and higher general and administrative
expenses.

Interest income increased $56,000 (13%) compared with the prior
year, due to higher investable funds.

The effective income tax rate was 40.1%, about the same as the
40.0% tax rate the prior year.

As a result, net income for the year ended September 30, 1999,
was a $65,000 (2%) decline compared with the prior year.


Financial Condition

As of September 30, 2000, the Company had cash and short-term
investments of $12,706,000. This was an increase of $874,000
over the prior year. At that date, net working capital was
$11,300,000, which was a decrease of $91,000 compared with the
prior year, and the current ratio was 2.9 to 1.

The Company's primary source of funds is from operations. In
fiscal 2000, net cash provided by operating activities was
$2,709,000.

During fiscal 2000, the Company completed the installation of
computer systems and applicant retrieval software in all of its
branch offices. The total amount spent during the year for the
acquisition of property and equipment was $1,583,000. The
Company intends to continue to upgrade its computer systems and
office facilities in the future; however, capital expenditures in
fiscal 2001 are expected to be less than in fiscal 2000. There
were no firm commitments for the purchase of property and
equipment as of September 30, 2000.

All of the Company's office facilities are leased, and
information about future minimum lease payments is presented in
the notes to the consolidated financial statements.

As of September 30, 2000, the Company had no debt outstanding,
and it had a $1,000,000 unused line of credit available.
Shareholders' equity at that date was $14,143,000, which
represented 71% of total assets.

The Company declared and paid a cash divided on its common stock
of $254,000 ($ .05 per share) in fiscal 2000. In addition, a
cash dividend of $1,272,000 ($ .25 per share) was declared in
September 2000 that is payable in January 2001. Cash dividends
in recent years have been declared on an annual basis at the
discretion of the Board of Directors. There can be no assurances
about the size or frequency of such dividends in the future.

7


Management believes that existing cash and short-term
investments, together with funds generated by operations, will be
adequate to meet the Company's anticipated operating and capital
spending needs.


Forward-Looking Statements

As a matter of policy, the Company does not provide forecasts of
future financial performance. However, the Company and its
representatives may from time to time make written or verbal
forward-looking statements, including statements contained in
press announcements, reports to shareholders and filings with the
Securities and Exchange Commission. All statements which address
expectations about future operating performance and cash flows,
future events and business developments, and future economic
conditions are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. This
includes statements relating to business expansion plans,
expectations about revenue and earnings growth, and general
statements of optimism about the future. These statements are
based on management's then-current expectations and assumptions.
Actual outcomes could differ significantly. The Company and its
representatives do not assume any obligation to provide updated
information.

Some of the factors that could affect the Company's future
performance include, but are not limited to, general business
conditions, the demand for the Company's services, competitive
market pressures, the ability of the Company to attract and
retain qualified personnel for regular full-time placement and
contract project assignments, and the ability to attract and
retain qualified corporate and branch management.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The Company's investment portfolio is exposed to the risk of
interest rate fluctuations. The primary objective for its
portfolio is to provide maximum protection of principal and high
liquidity. By investing in high-quality securities having
relatively short maturity periods, the Company reduces its
exposure to interest rate fluctuations. All of its investments
are fixed rate instruments having maturity periods of two years
or less when purchased. A summary of investments at amortized
cost, which approximates market value, as of September 30, 2000
is as follows:


Average
(In Thousands) Amount Interest Rate

Maturity Period:
Up to 3 months $8,565 6.5%
3 months to one year 999 6.1
One to two years 2,471 7.2


Item 8. Financial Statements and Supplementary Data

8


REPORT OF INDEPENDENT AUDITORS



To the Board of Directors and Shareholders
General Employment Enterprises, Inc.
Oakbrook Terrace, Illinois


We have audited the accompanying consolidated balance sheet of
General Employment Enterprises, Inc. and subsidiary as of
September 30, 2000 and 1999, and the related consolidated
statements of income, shareholders' equity and cash flows for
each of the three years in the period ended September 30, 2000.
Our audits also included the financial statement schedule listed
in the Index at Item 14. These financial statements and the
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and the schedule based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of General Employment Enterprises, Inc. and
subsidiary at September 30, 2000 and 1999, and the consolidated
results of their operations and their cash flows for each of the
three years in the period ended September 30, 2000, in conformity
with accounting principles generally accepted in the United
States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material
aspects the information set forth therein.



/s/ Ernst & Young LLP

November 10, 2000

9


GENERAL EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEET
As of September 30
(In Thousands) 2000 1999
ASSETS
Current assets:
Cash and cash equivalents $ 7,236 $ 5,025
Short-term investments 5,470 6,807
Accounts receivable, less allowances
(2000--$512; 1999--$440) 4,430 4,023

Total current assets 17,136 15,855

Property and equipment:
Furniture, fixtures and equipment 6,058 4,702
Accumulated depreciation and amortization (3,215) (2,824)

Net property and equipment 2,843 1,878

Other assets -- 352

Total assets $19,979 $18,085


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 655 $ 700
Dividends payable 1,272 --
Accrued compensation and payroll taxes 3,769 3,606
Other current liabilities 140 158

Total current liabilities 5,836 4,464

Long-term obligations -- 484

Shareholders' equity:
Common stock, no-par value; authorized --
20,000 shares; issued and outstanding --
5,087 shares 51 51
Capital in excess of stated value of shares 4,569 4,569
Retained earnings 9,523 8,517

Total shareholders' equity 14,143 13,137

Total liabilities and shareholders' equity $19,979 $18,085
See notes to consolidated financial statements.

10


GENERAL EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF INCOME
Year Ended September 30
(In Thousands, Except Per Share) 2000 1999 1998

Net revenues:
Placement services $23,720 $22,702 $25,129
Contract services 16,082 16,851 11,605

Net revenues 39,802 39,553 36,734

Operating expenses:
Cost of contract services 10,520 10,843 7,484
Selling 14,045 13,859 15,318
General and administrative 11,660 10,282 9,222

Total operating expenses 36,225 34,984 32,024

Income from operations 3,577 4,569 4,710
Interest income 645 496 440

Income before income taxes 4,222 5,065 5,150
Provision for income taxes 1,690 2,040 2,060

Net income $ 2,532 $ 3,025 $ 3,090

Net income per share:
Basic $ .50 $ .59 $ .61
Diluted $ .49 $ .59 $ .58

Average number of shares:
Basic 5,087 5,087 5,080
Diluted 5,117 5,122 5,316
See notes to consolidated financial statements.

11


GENERAL EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended September 30
(In Thousands) 2000 1999 1998

Operating activities:
Net income $2,532 $3,025 $3,090
Depreciation and amortization 597 361 247
Reduction of long-term obligations (516) -- --
Other noncurrent items 403 107 44
Accounts receivable (407) (384) (227)
Accrued compensation and payroll taxes 163 (435) 102
Other current liabilities (63) 62 (6)

Net cash provided by operating
activities 2,709 2,736 3,250

Investing activities:
Acquisition of property and equipment (1,583) (1,101) (562)
Purchases of short-term investments (3,461) (7,849) (7,961)
Maturities of short-term investments 4,800 6,960 6,580

Net cash used by investing activities (244) (1,990) (1,943)

Financing activities:
Exercises of stock options -- -- 206
Cash dividends paid (254) (221) (201)

Net cash provided (used) by
financing activities (254) (221) 5

Increase in cash and cash equivalents 2,211 525 1,312
Cash and cash equivalents at beginning
of year 5,025 4,500 3,188

Cash and cash equivalents at end
of year $7,236 $5,025 $4,500
See notes to consolidated financial statements.

12


GENERAL EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Year Ended September 30
(In Thousands, Except Per Share) 2000 1999 1998

Common shares outstanding:
Number at beginning of year 5,087 4,424 3,987
Stock dividend declared -- 663 402
Exercises of stock options -- -- 35

Number at end of year 5,087 5,087 4,424

Common stock:
Balance at beginning of year $ 51 $ 44 $ 40
Stock dividend declared -- 7 4

Balance at end of year $ 51 $ 51 $ 44

Capital in excess of stated value:
Balance at beginning of year $4,569 $4,576 $4,280
Stock dividend declared -- (7) (4)
Exercises of stock options -- -- 300

Balance at end of year $4,569 $4,569 $4,576

Retained earnings:
Balance at beginning of year $8,517 $5,715 $2,829
Net income 2,532 3,025 3,090
Cash dividends declared on common stock -
$.30 per share in 2000, $.04 per share
in 1999 and $.04 per share in 1998 (1,526) (221) (201)
Stock dividend declared -- (2) (3)

Balance at end of year $9,523 $8,517 $5,715
See notes to consolidated financial statements.

13


GENERAL EMPLOYMENT ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Company

General Employment Enterprises, Inc. (the "Company") and its
wholly-owned subsidiary, Triad Personnel Services, Inc., operate
in one industry segment, providing staffing services through a
network of branch offices located in major metropolitan areas
throughout the United States. The Company specializes in
providing information technology and other professionals to
clients on either a regular placement basis or a temporary
contract basis.
The Company has a diverse customer base, and no single customer
accounts for more than 4% of its revenues.


Significant Accounting Policies

Principles of Consolidation
The consolidated financial statements include the accounts and
transactions of the Company and its wholly-owned subsidiary. All
significant intercompany accounts and transactions are eliminated
in consolidation.


Estimates and Assumptions
Preparing financial statements in accordance with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported.
Management believes that its estimates are reasonable and proper,
however, actual results could ultimately differ from those
estimates.


Revenues from Services
Placement fees are recognized as income at the time applicants
accept employment. Provision is made for estimated losses in
realization, principally due to applicants not remaining in
employment for a guarantee period. Contract service revenues are
recognized when work is performed.


Cost of Contract Services
The cost of contract services includes the wages and the related
payroll taxes and benefits of contract workers.


Income Taxes
Deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax bases of
assets and liabilities, and are measured using the enacted tax
rates and laws that are expected to be in effect when the
differences reverse.


Net Income Per Share
Basic net income per share is based on the average number of
common shares outstanding. Diluted net income per share is based
on the average number of common shares and the dilutive effect of
stock options.


Cash and Short-term Investments
Highly liquid investments with a maturity of three months or less
when purchased are considered to be cash equivalents. The
Company classifies its short-term investments individually when
purchased as either available-for- sale or held-to-maturity
securities.

14


Property and Equipment
Furniture, fixtures and equipment are stated at cost. The
Company provides for depreciation on a straight-line basis over
estimated useful lives of two to ten years. The Company
capitalizes computer software purchased or developed for internal
use, and amortizes it over an estimated useful life of five
years. The amounts of software capitalized in prior years have
been reclassified to conform to the current year's presentation.


Stock Options
The Company accounts for stock options in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Accordingly, there is no compensation
expense to the Company when stock options are granted at prices
equal to the fair market value at the date of grant. Proceeds on
exercises of stock options and the associated income tax benefits
are credited to shareholders' equity when received. In
accordance with Emerging Issues Task Force Issue 00-15,
"Classification in the Statement of Cash Flows of the Income Tax
Benefit Received by a Company upon Exercise of a Nonqualified
Employee Stock Option," the income tax benefit of stock options
exercised in prior years has been reclassified in the
consolidated statement of cash flows.


Cash and Short-term Investments

The Company's primary objective for its investment portfolio is
to provide maximum protection of principal and high liquidity.
By investing in high-quality securities having relatively short
maturity periods, the Company reduces its exposure to the risks
associated with interest rate fluctuations. Investments in
securities of corporate issuers are rated A2 and P2 or better. A
summary of cash and short-term investments as of September 30 is
as follows:

(In Thousands) 2000 1999

Cash $ 671 $ 1,147
Certificates of deposit 1,000 800
Commercial paper 6,565 4,867
U.S. federal agency notes 2,000 1,000
Corporate notes 2,470 3,007
Municipal notes -- 1,011

Total cash and short-term investments $12,706 $11,832

Investments purchased in 2000 were classified as available-for-
sale securities, and investments purchased in prior years were
classified as held-to-maturity securities. All short-term
investments held as of September 30, 2000 were classified as
available-for-sale securities except for $1,000,000 of U.S.
federal agency notes and $999,000 of corporate notes that were
classified as held-to-maturity. As of September 30, 2000, all
investments were considered to be available for current
operations and had maturities of two years or less. Amortized
cost approximated market value for all short-term investments,
and unrealized gains and losses were not significant.

15


Income Taxes
The components of the provision for income taxes are as follows:
(In Thousands) 2000 1999 1998

Current tax provision:
U.S. federal $1,168 $1,577 $1,685
State and local 296 430 415

Total current tax provision 1,464 2,007 2,100
Deferred tax provision (credit) 226 33 (40)

Provision for income taxes $1,690 $2,040 $2,060

The differences between income taxes calculated at the 34%
statutory U.S. federal income tax rate and the Company's
provision for income taxes are as follows:

(In Thousands) 2000 1999 1998

Income tax at statutory federal
tax rate $1,435 $1,722 $1,751
State income taxes, less federal
benefit 228 287 271
Other 27 31 38

Provision for income taxes $1,690 $2,040 $2,060


The net deferred tax asset balance, included in current assets as
of September 30, 2000 and in other assets as of September 30,
1999, related to the following temporary differences:

(In Thousands) 2000 1999

Accrued compensation $119 $274
Depreciation expense (149) (84)
Other 45 51

Net deferred income tax asset $ 15 $241


The Company made income tax payments of $1,596,000 in 2000,
$2,171,000 in 1999, and $2,040,000 in 1998.

The income tax benefit resulting from exercises of stock options
reduced income taxes payable and increased shareholders' equity
by $94,000 in 1998.


Line of Credit

The Company has a loan agreement with a bank, renewable annually,
that makes a $1,000,000 unsecured line of credit available to the
Company at the prime rate. There were no borrowings outstanding
under the line of credit as of September 30, 2000 and 1999.

16


Lease Obligations

The Company leases space for all of its branch offices, which are
located either in downtown or suburban metropolitan business
centers, and space for its corporate headquarters. The branch
offices are generally leased over periods from six months to five
years, and the corporate headquarters is leased for ten years,
expiring in 2006. Certain lease agreements provide for increased
rental payments contingent upon future increases in real estate
taxes, building maintenance costs and the cost of living index.

Rent expense was $1,783,000 in 2000, $1,781,000 in 1999 and
$1,515,000 in 1998. As of September 30, 2000, future minimum
lease payments under lease agreements having initial terms in
excess of one year were: 2001 - $1,573,000, 2002 - $1,446,000,
2003 - $1,215,000, 2004 - $936,000, 2005 - $848,000, and beyond
2005 - $188,000.


Retirement Benefits

The Company has a 401(k) retirement plan in which all full-time
employees may participate after one year of service. Under the
plan, eligible participants may contribute a portion of their
earnings to a trust, and the Company makes matching
contributions, subject to certain limitations. During the year
ended September 30, 2000, the Company fulfilled its obligation
under an agreement to provide retirement benefits to an officer
by paying out a lump sum of $400,000. The present value of this
obligation was recorded at a discount rate of 7% as of September
30, 1999. The total cost of both retirement plans was $123,000
in 2000, $131,000 in 1999, and $141,000 in 1998.


Preferred Stock

As of September 30, 2000 there were 100,000 shares of preferred
stock authorized, none of which have been issued.


Stock Options

The Company has stock option plans for directors, officers and
employees. As of September 30, 2000, there were stock options
outstanding under the Company's 1999 Stock Option Plan, 1997
Stock Option Plan, 1995 Stock Option Plan and 1992 Stock Option
Plan. Under these plans, incentive or non-statutory stock
options may be granted to officers and employees, and they may be
exercisable for up to ten years. Outside directors were
automatically granted non-statutory options to purchase specified
numbers of shares on the effective dates of the plans. The Stock
Option Committee of the Board of Directors, which has the
authority to select the employees and to determine the terms of
each option granted, administers the plans.

17


A summary of stock options is as follows:

(Number of Shares in Thousands) 2000 1999 1998

Number of shares outstanding:
Beginning of year 721 554 512
Granted 32 167 90
Exercised -- -- (44)
Terminated (34) -- (4)
End of year 719 721 554

Number of shares exercisable
at end of year 651 650 361
Number of shares available for grant
at end of year 194 192 71

Weighted average option prices per
share:
Granted during the year $4.73 $4.68 $6.01
Exercised during the year -- -- 4.74
Outstanding at end of year 5.39 5.45 5.69
Exercisable at end of year 5.41 5.47 5.03

Information about stock options outstanding as of September 30,
2000 is as follows (number of shares in thousands):

Weighted Average
Range of Number Number Average Remaining
Exercise Prices Outstanding Exercisable Price Life (Years)

Under $4.00 46 46 $1.40 2
$4.00 to $6.00 586 543 5.25 7
Over $6.00 87 62 8.43 7


The issuance of stock options under the Company's plans does not
result in any present or future cash outlay by the Company.
Moreover, the Company benefits financially through the receipt of
cash proceeds and income tax benefits when options are exercised.
In accordance with generally accepted accounting principles,
there was no compensation expense resulting from the issuance of
stock options because the option exercise prices were equal to
the market prices of the underlying stock on the dates of grant.

Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation," requires companies to calculate a
hypothetical value of stock options on their dates of grant. The
Company has calculated the following weighted average option
values using the assumptions indicated and the Black-Scholes
option pricing model:

2000 1999 1998

Weighted average estimated fair value
per share of stock options granted $1.48 $1.88 $2.73
Expected option life (years) 3.00 3.00 3.00
Stock price volatility 53% 57% 64%
Risk-free interest rate 5.4% 5.3% 5.3%
Dividend yield 1.0% 1.0% 0.5%

Assuming that stock options granted during 2000, 1999 and 1998
were valued using these assumptions and the values were reflected
as compensation expense over their vesting periods, the Company's
pro forma net income and diluted net income per share would have
been $2,477,000 ($ .49 per share) in 2000, $2,793,000 ($ .55 per

18


share) in 1999, and $2,821,000 ($ .54 per share) in 1998.


Shareholder Rights Plan

On February 4, 2000 the Company adopted a shareholder rights
plan, and the Board of Directors declared a dividend of one share
purchase right for each share of outstanding common stock,
payable to shareholders of record on February 22, 2000. The
rights replace the preferred share purchase rights that were
originally distributed to common shareholders in 1990 and that
expired by their terms on February 22, 2000.

The rights will become exercisable if any person or affiliated
group (other than certain "grandfathered" shareholders) acquires,
or offers to acquire, 10% or more of the Company's outstanding
common shares. Each exercisable right entitles the holder (other
than the acquiring person or group) to purchase, at a price of
$21.50 per share, common stock of the Company having a market
value equal to two times the purchase price.

The purchase price and the number of common shares issuable on
exercise of the rights are subject to adjustment in accordance
with customary anti-dilution provisions.

The Board of Directors may authorize the Company to redeem the
rights at a price of $ .01 per right at any time before they
become exercisable. After the rights become exercisable, the
Board of Directors may authorize the Company to exchange any
unexercised rights at the rate of one share of common stock for
each right. The rights are nonvoting, and they will expire on
February 22, 2010.


Employment Contracts

The Company has agreements with two of its officers and a
separate plan covering branch managers and key corporate
employees that would become effective if the employment of any of
these officers or employees should terminate under certain
conditions following a change in control of the Company. Under
these circumstances, the Company would be obligated to make lump
sum payments to the two officers equal to two times their annual
salary, to make lump sum payments to covered employees ranging
from $20,000 to $50,000, and to provide continued benefits under
the Company's welfare plans for two years.

19


GENERAL EMPLOYMENT ENTERPRISES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Year Ended September 30
(In Thousands) 2000 1999 1998

Reserve for falloffs and doubtful
accounts:
Balance at beginning of year $440 $565 $466
Additions charged to operating expenses 411 287 476
Adjustments charged (credited) to
revenues 74 (74) 24
Deductions for bad debt write-offs (413) (338) (401)

Balance at end of year $512 $440 $565

20


GENERAL EMPLOYMENT ENTERPRISES, INC.
SELECTED QUARTERLY FINANCIAL DATA AND MARKET INFORMATION
First Second Third Fourth
(In Thousands, Except Per Share) Quarter Quarter Quarter Quarter

Fiscal 2000:
Net revenues $9,889 $10,022 $9,908 $9,983
Operating expenses 8,995 9,231 8,841 9,158

Income from operations 894 791 1,067 825
Interest income 149 140 171 185

Income before income taxes 1,043 931 1,238 1,010
Provision for income taxes 420 375 495 400

Net income $ 623 $ 556 $ 743 $ 610

Net income per share:
Basic $ .12 $ .11 $ .15 $ .12
Diluted .12 .11 .15 .12
Market price per share:
High 5.13 5.06 4.50 3.88
Low 3.94 4.13 3.50 3.25


Fiscal 1999:
Net revenues $9,161 $9,991 $10,470 $9,931
Operating expenses 8,315 9,004 9,062 8,603

Income from operations 846 987 1,408 1,328
Interest income 126 108 123 139

Income before income taxes 972 1,095 1,531 1,467
Provision for income taxes 385 440 620 595

Net income $ 587 $ 655 $ 911 $ 872

Net income per share:
Basic $ .12 $ .13 $ .18 $ .17
Diluted .11 .13 .18 .17
Market price per share:
High 7.39 6.20 5.11 6.09
Low 4.55 3.48 3.59 3.48


The Company's common stock is traded on the American Stock
Exchange under the trading symbol JOB. There were 949 holders of
record as of October 31, 2000.

The Company declared annual cash dividends on its common stock of
$.25 per share in September 2000, $.05 per share in November 1999
and $.04 per share in November 1998.

21


Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure

There have been no changes in or disagreements with the Company's
independent accountants during the two most recent fiscal years.



PART III

Item 10. Directors, Executive Officers, Promoters and Control
Persons of the Registrant

Information concerning directors and the executive officers of
the registrant is set forth in the registrant's Proxy Statement
for the annual meeting of shareholders and is incorporated herein
by reference.


Item 11. Executive Compensation

Information concerning executive compensation is set forth in the
registrant's Proxy Statement for the annual meeting of
shareholders and is incorporated herein by reference.


Item 12. Security Ownership of Certain Beneficial Owners and
Management

Information concerning security ownership of certain beneficial
owners and management is set forth in the registrant's Proxy
Statement for the annual meeting of shareholders and is
incorporated herein by reference.


Item 13. Certain Relationships and Related Transactions

Information concerning certain relationships and related
transactions is set forth in the registrant's Proxy Statement for
the annual meeting of shareholders and is incorporated herein by
reference.



PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K

Financial Statements and Financial Statement Schedules
The following financial statements and financial statement
schedules are filed as a part of this report:

Page
Report of independent auditors 9
Consolidated Balance Sheet as of September 30, 2000 and 1999 10
Consolidated Statement of Income for the years
ended September 30, 2000, 1999 and 1998 11
Consolidated Statement of Cash Flows for the years
ended September 30, 2000, 1999 and 1998 12
Consolidated Statement of Shareholders' Equity for the years
ended September 30, 2000, 1999 and 1998 13
Notes to Consolidated Financial Statements 14
Schedule II - Valuation and qualifying accounts for the years
ended September 30, 2000, 1999 and 1998 20

All other financial statement schedules are omitted because they
are not applicable.

22


Reports on Form 8-K
There were no reports filed on Form 8-K during the quarter ended
September 30, 2000.


Exhibits
The following exhibits are filed as a part of this report:

No. Description of Exhibit

3.01 Articles of Incorporation and amendments thereto.
Incorporated by reference to Exhibit 3 to the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1996, Commission File No. 1-5707.

3.02 By-Laws. Incorporated by reference to Exhibit 3(b) of the
Registrant's Annual Report on Form 10-KSB for the fiscal
year ended September 30, 1997, Commission File No. 1-5707.

4.01 Rights Agreement dated as of February 4, 2000, between
General Employment Enterprises, Inc. and Continental Stock
Transfer and Trust Company, as Rights Agent. Incorporated
by reference to Exhibit 1 to the Registrant's Registration
Statement on Form 8-A filed with the Securities and
Exchange Commission on February 7, 2000.

10.01 Employment contract with Herbert F. Imhoff. Incorporated
by reference to Exhibit 10(i) to the Registrant's Annual
Report on Form 10-K for the fiscal year ended September
30, 1981, Commission File No. 1-5707.

10.02 Senior Executive Agreement with Herbert F. Imhoff dated
May 22, 1990. Incorporated by reference to Exhibit 10(e)
to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1990, Commission File No. 1-5707.

10.03 Senior Executive Agreement with Herbert F. Imhoff, Jr.
dated May 22, 1990. Incorporated by reference to exhibit
10(f) to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1990, Commission File No. 1-
5707.

10.04 Key Manager Plan, adopted May 22, 1990. Incorporated by
reference to Exhibit 10(h) to the Registrant's Annual
Report on Form 10-K for the fiscal year ended September 30
1990, Commission File No. 1-5707.

10.05 Agreement with Sheldon Brottman dated October 3, 1991.
Incorporated by reference to Exhibit 10(l) to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1991, Commission File No. 1-5707.

10.06 General Employment Enterprises, Inc. Stock Option Plan.
Incorporated by reference to Exhibit 4.1 to the
Registrant's Form S-8 Registration Statement dated March
3, 1992, Registration No. 33-46124.

10.07 General Employment Enterprises, Inc. 1995 Stock Option
Plan. Incorporated by reference to Exhibit 4.1 to the
Registrant's Form S-8 Registration Statement dated April
25, 1995, Registration No. 33-91550.

10.08 General Employment Enterprises, Inc. 1997 Stock Option
Plan. Incorporated by reference to Exhibit 10(n) to the
Registrant's Annual Report on Form 10-KSB for the fiscal
year ended September 30,1998, Commission File No. 1-5707.

10.09 Resolution of the Board of Directors adopted September 28,
1998, amending the General Employment Enterprises, Inc.
1997 Stock Option Plan. Incorporated by reference to
Exhibit 10(o) to the Registrant's Annual Report on Form 10-
KSB for the fiscal year ended September 30,1998,
Commission File No. 1-5707.

23


10.10 General Employment Enterprises, Inc. 1999 Stock Option
Plan. Incorporated by reference to Exhibit 10 of the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999, Commission File No. 1-5707.

10.11 Resolution of the Board of Directors, adopted November 15,
1999, establishing a Senior Executive Bonus Pool for
fiscal 2000. Incorporated by reference to Exhibit 10 to
the Registrant's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1999, Commission File No. 1-
5707.

23 Consent of Independent Auditors.

27 Financial Data Schedule.

24


SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


GENERAL EMPLOYMENT ENTERPRISES, INC.
(Registrant)


Date: November 20, 2000 By: /s/ Herbert F. Imhoff
Herbert F. Imhoff
Chairman of the Board and
Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
dates indicated.

Date: November 20, 2000 By: /s/ Herbert F. Imhoff
Herbert F. Imhoff
Chairman of the Board and
Chief Executive Officer
Principal executive officer


Date: November 20, 2000 By: /s/ Herbert F. Imhoff, Jr.
Herbert F. Imhoff, Jr.
President and Chief Operating Officer
and Director


Date: November 20, 2000 By: /s/ Kent M. Yauch
Kent M. Yauch
Chief Financial Officer and Treasurer
Principal financial and accounting officer


Date: November 20, 2000 By: /s/ Dennis W. Baker
Dennis W. Baker, Director


Date: November 20, 2000 By: /s/ Sheldon Brottman
Sheldon Brottman, Director


Date: November 20, 2000 By: /s/ Delain G. Danehey
Delain G. Danehey, Director


Date: November 20, 2000 By: /s/ Walter T. Kerwin, Jr.
Walter T. Kerwin, Jr., Director


Date: November 20, 2000 By: /s/ Joseph F. Lizzadro
Joseph F. Lizzadro, Director

25