Table of Contents

As filed with the Securities and Exchange Commission on April 15, 2011

Registration No. 333-          

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Res-Care, Inc.
(Exact name of registrant as specified in its charter)

SEE TABLE OF ADDITIONAL REGISTRANTS

9901 Linn Station Road
Louisville, Kentucky 40223
(502) 394-2100
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

David W. Miles
Executive Vice President and Chief Financial Officer
Res-Care, Inc.
9901 Linn Station Road
Louisville, Kentucky 40223
Telephone: (502) 394-2100
(Name, address, including zip code, and telephone number, including area code, of agent for service)

With a copy to:

Alan K. MacDonald
Frost Brown Todd LLC
400 W. Market Street, 32^nd Floor
Louisville, Kentucky 40202
Telephone: (502) 589-5400
Facsimile: (502) 581-1087

Approximate date of commencement of proposed exchange offer:
As soon as practicable after this registration statement is declared effective.

           If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

           If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

           If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

           Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

           If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

           Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)    o

           Exchange Act Rule 14d-1(d) (Cross-Border Third Party Tender Offer)    o

CALCULATION OF REGISTRATION FEE

(1)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f) under the Securities Act.

(2)

Pursuant to Rule 457(n) under the Securities Act, no separate registration fee is required for the guarantees.

           The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

Table of Contents

TABLE OF REGISTRANT GUARANTORS*

Table of Contents

Table of Contents

Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED April 15, 2011

PROSPECTUS

$200,000,000
Offer to Exchange

10.75% Senior Notes due 2019, registered under the Securities Act

for

All Outstanding 10.75% Senior Notes due 2019

of

Res-Care, Inc.

THE EXCHANGE OFFER WILL EXPIRE AT 5 P.M.
NEW YORK CITY TIME, ON                        2011, UNLESS EXTENDED

The Exchange Offer

•

We are offering to exchange $200,000,000 aggregate principal amount of registered 10.75% Senior Notes due 2019, which we refer to as the exchange notes, for all of our unregistered 10.75% Senior Notes due 2019, which we refer to as the outstanding notes, that we issued in a private placement transaction on December 22, 2010.



•

We will exchange all outstanding notes that are validly tendered and not withdrawn for an equal principal amount of exchange notes.



•

The terms of the exchange notes are substantially identical to the outstanding notes, except that the exchange notes will be registered under the Securities Act and freely tradable.



•

There is no existing market for the exchange notes to be issued, and we do not intend to apply for their listing on any securities exchange or arrange for them to be quoted on any quotation system.



•

The exchange of notes will not be a taxable event for U.S. federal income tax purposes.



•

We will not receive any proceeds from the exchange offer.



•

Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for outstanding notes where the outstanding notes were acquired as a result of market-making activities or other trading activities. In addition, until                        , 2011, all dealers effecting transactions in the exchange notes, whether or not participating in this offer, may be required to deliver a prospectus.

        You should consider carefully the "Risk Factors" beginning on page 16 of this prospectus before participating in the exchange offer.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is                        , 2011.

Table of Contents

TABLE OF CONTENTS

Important notices about information presented in this prospectus

        This prospectus summarizes the terms of several material agreements that we entered into in connection with the transactions and exchange offer discussed in this prospectus. These summaries do not purport to be complete and we urge you to read the agreements in their entirety. We will provide copies of these agreements to you without charge upon your written or oral request to Res-Care, Inc., 9901 Linn Station Road, Louisville, Kentucky 40223, Attention: Investor Relations, Telephone: (502) 394-2100. In order to obtain timely delivery of any information you request, we must receive your request at least five business days before the expiration date of the exchange offer.

        You should rely only on the information provided in this prospectus. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to exchange only the exchange notes offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

Industry and market data

        This prospectus includes market share, ranking, industry data and forecasts that we obtained from industry publications and surveys, public filings and internal company sources. Statistics regarding intellectual and developmental disabilities (ID/DD) populations and services are taken from "The State of the States in Developmental Disabilities," a 2008 report on research led by Dr. David Braddock.

i

Table of Contents

Dr. Braddock is also a director of ResCare. Unless otherwise noted, data from this publication is as of the state fiscal year ending June 30, 2006, the most recent year for which data is available. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included information. We have not independently verified any of the data from third-party sources, nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us and management's estimates and assumptions. While we are not aware of any misstatements regarding our industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading "Risk Factors" in this prospectus. We cannot guarantee the accuracy or completeness of such information contained in this prospectus.

Trademarks, service marks and copyrights

        We own or have rights to trademarks, service marks or trade names that we use in connection with the operation of our business. ResCare is a registered trademark of Res-Care, Inc. or its subsidiaries. Best in Class 2000 and the Best in Class Manual are works, including software, that are registered copyrights of Res-Care, Inc. In addition, our names, logos and website names and addresses are our service marks or trademarks. Other trademarks, service marks and trade names appearing in this prospectus are the property of their respective owners. We also own or have the rights to copyrights that protect the content of our products. Solely for convenience, the trademarks, service marks, trade names and copyrights referred to in this prospectus are listed without the ©, ® and ^TM symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names.

Forward-looking statements

        This prospectus includes forward-looking statements, which are statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results. We have based these forward-looking statements on our current views about future events. Words or phrases such as "anticipate," "believe," "estimate," "expect," "forecast," "seek," "intend," "may be," "objective," "plan," "predict," "project," "will be" and similar words or phrases, or the negative thereof are intended to identify such forward-looking statements. All statements about matters that are not historical facts are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to numerous assumptions, risks and uncertainties. By their nature, forward-looking statements involve risks and uncertainties because they involve assumptions and relate to events and depend on circumstances that may or may not occur in the future. In addition to the specific risk factors described in the section entitled "Risk factors," factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by us in this prospectus include, among others, the following:

•

changes in reimbursement rates, policies or payment practices by third-party payors;



•

changes in law, governmental regulations or the interpretations thereof;



•

changes brought about by the recent federal health care reform legislation;



•

any failure to comply with existing and future government regulations;



•

our ability to successfully integrate acquired businesses;



•

the size of our self-insurance reserves and changes in the insurance market that affect our ability to obtain coverage at reasonable rates;

ii

Table of Contents

•

the outcome or impact of ongoing or future litigation and regulatory actions;



•

changes in labor costs;



•

our ability to maintain our reputation and relationships with government agencies, advocacy groups for individuals with developmental disabilities and their families, and the public;



•

our ability to maintain our status as a licensed service provider in certain jurisdictions;



•

our ability to attract and retain experienced personnel, especially members of our senior management team;



•

increased or more effective competition;



•

the sufficiency of our cash flows and available borrowing for our operations and debt service obligations;



•

variability in interest rates; and



•

changes in our capital structure as a result of recently completed transactions.

        We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this prospectus. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this prospectus, those results or developments may not be indicative of results or developments in subsequent periods.

        Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statements that we make in this prospectus speak only as of the date of those statements. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical.

iii

Table of Contents

Prospectus Summary

        This summary highlights selected information included elsewhere in this prospectus. This summary is not complete and does not cover all of the information that you should consider before deciding whether to exchange your notes. You should carefully read the entire prospectus, including the "Risk factors" section and our financial statements and related notes, to fully understand the terms of the notes and other considerations that may be important to you in making a decision about whether to exchange your outstanding notes for the exchange notes.

        In this prospectus, unless the context indicates or requires otherwise and except as expressly set forth in the section captioned "Description of the Exchange Notes," the terms "Company," "ResCare," "Issuer," "we," "us" and "our" refer to Res-Care, Inc. and all entities owned or controlled, directly or indirectly, by Res-Care, Inc. We use the term "notes" in this prospectus to collectively refer to the outstanding notes and the exchange notes.

Our Company

        We are a leading human services company that provides residential, therapeutic, job training and educational support to people with intellectual and developmental disabilities (ID/DD), to elderly people who need in-home care, to youths with special needs, and to adults who are experiencing barriers to employment. For each of these populations, our mission is to assist people to reach their highest level of independence. We believe that our adherence to our mission, the quality of our service and care, our focus on training and compliance, and our close, long-standing relationships with federal, state, and local agencies have helped us become one of the largest human services companies in the United States. As of December 31, 2010, we provided services to over 60,000 individuals with special needs each day in 41 states, Washington, D.C., Puerto Rico, and several locations in Europe and Canada.

Acquisition Transaction

        On September 6, 2010, an affiliate of Onex Partners III LP ("Purchaser"), entered into an agreement and plan of share exchange with ResCare, pursuant to which it agreed to acquire all shares of ResCare common stock not already owned by Onex Corporation and its affiliates, including Onex Partners LP (collectively, the "Onex Investors"), for a purchase price of $13.25 per share on the terms and conditions set forth therein.

        In accordance with the share exchange agreement, Purchaser commenced a tender offer to acquire all outstanding shares of ResCare common stock not already held by Purchaser and its affiliates (the "Public Shares") on October 7, 2010, which was consummated on November 16, 2010 (the "Stock Tender Offer"). Purchaser purchased 21,044,765 Public Shares in the Stock Tender Offer, increasing the beneficial ownership of the Onex Investors to 87.4% of the issued and outstanding shares of ResCare's common stock on an as-converted basis.

        Pursuant to the share exchange agreement, Purchaser and ResCare completed a second-step share exchange transaction (the "Share Exchange") on December 22, 2010, in which all Public Shares not acquired in the Stock Tender Offer, excluding shares held by members of our management who "rolled-over" (the "Rollover Holders") their existing equity ownership into equity of Onex Rescare Holdings Corp., an affiliate of Onex Partners III LP that now holds all of the outstanding ResCare shares, were exchanged for $13.25 per share (collectively with the Stock Tender Offer, the "Acquisition").

Table of Contents

        The completion of the Stock Tender Offer on November 16, 2010 resulted in a new basis of accounting under the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations (previously Statement of Financial Accounting Standards No. 141R). This change creates many differences between reporting for ResCare post-acquisition, as successor, and ResCare pre-acquisition, as predecessor. The accompanying financial statements and the notes to the consolidated financial statements reflect separate reporting periods. The separate reporting periods are January 1, 2010 through November 15, 2010 (predecessor) and November 16, 2010 through December 31, 2010 (successor). Periods prior to and including 2009 are related to the predecessor. The total year end 2010 results are the combined successor and predecessor results.

Our Operating Segments

        Our operating segments are organized by the populations we serve. Our Community Services division serves adults and youths with ID/DD, elderly people who need assistance with activities of daily living, and people with acquired brain injury. Our Employment Training Services division assists disadvantaged job seekers with job training and employment placement programs, and our Job Corps Training Services division assists disadvantaged youths with educational and vocational skills training and employment counseling. During 2010, we derived approximately 64% of our revenues from Medicaid, 8% of our revenues from the Department of Labor (DOL) for our Job Corps business, 23% from other government agencies including state and local workforce investment boards and Medicare, and 5% of revenues from private insurance, and individual and other payors.

Community Services

        Through our Community Services division, we are the nation's largest private provider of services for individuals with ID/DD, and we are a leading provider of in-home care services to the elderly. We also offer a variety of youth programs, including foster care and residential services, and a host of services to people with acquired brain injury, including vocational and residential placement. Our programs, administered in both residential and non-residential settings, are based predominantly on individual support plans designed to encourage greater independence and the development or maintenance of daily living skills. We help individuals achieve these goals through tailored application of our different services, including social, functional, and vocational skills training, supported employment, and emotional and psychological counseling. Our interdisciplinary Community Services team consists of our employees, such as qualified mental retardation professionals (QMRPs) and support/service coordinators, as well as professional contractors, including physicians, psychologists, therapists and social workers.

        For our individuals with ID/DD, we offer an alternative to large, state-run institutional settings by providing high quality, individually focused programs. We believe that we deliver our services at a lower cost than state-run programs because of our less expensive community-based residential settings, more flexible staffing, leverageable infrastructure, and our deep industry experience. As of December 31, 2010, our Community Services division operated more than 3,000 locations, including group homes, service sites, day programs and other facilities serving more than 19,000 individuals daily through approximately 20,000 employees in 36 states. Our group homes are typically family-style houses in residential neighborhoods where four to eight individuals with ID/DD live together, usually with full-time staffing for supervision and support. Individuals are encouraged to take responsibility for their home, health, and hygiene and to actively participate in work and community functions.

        For our elderly clients, we provide services enabling them to live safely in their homes and remain active in their communities. Our support services include assistance with activities of daily living, companionship, and certain medical therapies, among other services. We believe, based on third-party surveys and studies, that people generally prefer in-home care to other alternatives once they are no longer able to care for themselves safely in their own home. In addition, we believe that in-home care

2

Table of Contents

is typically more cost effective than alternatives such as nursing homes or assisted living facilities due to the absence of a fixed plant and more efficient staffing.

        Revenues for our Community Services operations are derived primarily from 32 different state Medicaid programs and from management contracts with private operators who contract with state government agencies and are also reimbursed under Medicaid programs. Revenues for our in-home care business are derived from both state Medicaid programs and private payors. For the year ended December 31, 2010, our Community Services segment generated revenues of $1.2 billion, representing approximately 74% of our total revenues.

Employment Training Services

        We operate job training and placement programs that assist welfare recipients, displaced workers, and disadvantaged job seekers in finding employment and improving their career prospects. We currently provide services under more than 180 contracts in 23 states and Washington, D.C., serving approximately 10,000 people daily, or approximately one million annually. These centers are part of a nationwide system of government-funded offices that provide assistance, job preparation, and placement to any youth or adult. The services include offering information on the local labor market, vocational assessments, career counseling, referrals to occupational skills training for high-demand occupations, job search assistance, job placement, and help with job retention and career advancement. In addition to job seekers, these centers serve the business community by providing job matching, screening, referral, and other specialized services for employers. Our Employment Training Services programs are funded through performance-based and fixed-fee contracts from local and state governments. For the year ended December 31, 2010, our Employment Training Services segment generated revenues of $245 million, representing approximately 16% of our total revenues.

Job Corps Training Services

        Since 1976, we have operated programs for disadvantaged youths through the federal Job Corps program administered by the Department of Labor. The Job Corps program is designed to address the severe unemployment faced by disadvantaged youths ages 16 to 24 throughout the United States and Puerto Rico. According to the Bureau of Labor Statistics, for the twelve months ending October 2010, unemployment rates averaged 15.6% for individuals ages 20 to 24 and 26.3% for those ages 16 to 19. We believe that the unemployment rates for disadvantaged youths are even higher. Job Corps provides educational and vocational skills training, health care, employment counseling, and other support necessary to enable these youths to become responsible working adults. The typical Job Corps student is a high school dropout who reads at the seventh-grade level, comes from a disadvantaged background, has not held a regular job, and was living in an environment characterized by a troubled home life or other disruptive conditions.

        We operate fourteen Job Corps centers in six states and Puerto Rico serving approximately 4,500 individuals at any one time. Our centers are campus-style settings utilizing housing and classroom facilities owned and managed by the DOL. Our centers currently operate at approximately 102% of capacity. The Job Corps program requires students to participate in basic education classes to improve their academic skills and complete vocational training in order to improve their job prospects. Approximately 67% of the students completing our Job Corps programs have obtained jobs or continued their education elsewhere. Revenues for our Job Corps operations are derived primarily from reimbursement by the DOL. For the year ended December 31, 2010, our Job Corps Training Services division generated revenues of $120 million, representing approximately 8% of our total revenues.

3

Table of Contents

Other

        A portion of our business is dedicated to operating alternative education programs and charter schools and international job training and placement agencies. For the year ended December 31, 2010, these programs generated revenues of $38 million, representing approximately 2% of our total revenues.

Reorganization

        In August 2010, we announced a plan to reorganize our operations in order to increase efficiency and focus on organic growth. This reorganization principally involved separating our in-home care business from our Community Services division, which is primarily composed of our facility-based ID/DD business. This realignment is expected to allow us to focus on issues unique to in-home care including growing its private pay services by actively recruiting clients. The reporting periods under these new segments began as of January 1, 2011. The new reportable segments will be:

•

Residential Services, which will primarily include residential services for individuals with ID/DD, pharmacy services, and related programs;



•

ResCare HomeCare, which will primarily include in-home care services to the elderly and persons with ID/DD;



•

Workforce Services, which will be comprised of ResCare's domestic and international employment training and placement programs; and



•

Youth Services, which will consist of the Company's Job Corps operations, its residential youth and alternative education programs.

Industry overview

        The markets for services for special needs populations and the elderly in the United States are large and growing. The market for ID/DD services is $44 billion in size, and according to the Centers for Medicare & Medicaid Services (CMS), the market for in-home care and home health services is approximately $77 billion in size. In addition, government expenditures for employment training and job assistance programs were approximately $13 billion in fiscal 2009, including $1.7 billion for Job Corps. We believe that we are well positioned to benefit from favorable demographics and positive industry trends. We expect the industries in which we participate to experience strong growth due to the following:

        A growing number of individuals needing care from human services providers.    There are approximately 4.7 million individuals in the United States with ID/DD. Family members care for 2.8 million (60%) of these ID/DD individuals and approximately 25% of these family caregivers are parents or guardians age 60 or older. As the population ages, many of these family caregivers will no longer be capable of providing adequate support for their dependents with ID/DD, requiring their relocation to residential facilities managed by the state or human services providers. In addition, the average life expectancy of individuals with ID/DD has increased from 19 years old in the 1930s to 66 years old as of 1993, which suggests that individuals with ID/DD are increasingly likely to outlive their caregivers and require care for longer periods of time. We believe that both of these trends will continue to drive an increase in the population of individuals that require special services and support from human service providers.

        Community-based living services supported by the courts.    In June 1999, the U.S. Supreme Court, in Olmstead v. L.C., held that states must provide individuals with ID/DD the choice to be placed in community-based settings when deemed appropriate by medical professionals and placement can be reasonably completed within state budgets. This ruling intensified a movement, already under way

4

Table of Contents

nationally, to relocate persons with ID/DD from large state-operated institutions to community-based settings. Since 1970, the number of people with ID/DD in state institutions has decreased from approximately 173,000 to 38,000 and approximately 140 state-run institutions have closed or are in the process of doing so. ResCare has consistently worked with states to close large state institutions in favor of our community-based programs.

        Vocal, well organized advocacy groups.    Strong advocacy groups, often led by the parents or guardians of individuals with ID/DD along with social workers and civil rights lawyers, have organized on a national level for purposes of influencing regional and local governing bodies when ID/DD issues are addressed. These advocacy groups increase community awareness and use legislation and the courts to increase government funding and improve service levels to individuals with ID/DD, as well as increase emphasis on education and training for caregivers. These initiatives have resulted in a higher quality of life and greater independence for individuals with ID/DD. The active involvement of advocacy groups has also helped mitigate proposed cuts from state and local governments. Notable advocacy groups for ID/DD include the American Network of Community Options and Resources (ANCOR) and the Association for Retarded Citizens (ARC), among others. In addition, the elderly population has formidable advocacy groups such as the National Association for Home Care & Hospice (NAHC), the National Private Duty Association (NPDA), and the Association for the Advancement of Retired Persons (AARP), among others, to ensure support for their interests. We believe that these groups will continue to be supportive of adequate funding and service levels for in-home care.

        Favorable underlying trends for in-home care to the elderly.    We believe that several factors, including the aging population, individuals' preference to receive care in-home, and the cost effectiveness of providing care in-home relative to an institutional setting, are driving increased demand for in-home care for the elderly. Medicaid is one of the primary payors for this type of care. According to Thomson Reuters, Medicaid expenditures for home care services increased from $23.2 billion in 2002 to $37.9 billion in 2007, representing a compound annual growth rate (CAGR) of 10.3%. The U.S. Census Bureau projects the population over age 65 will increase 80% between 2010 and 2030, from 40 million to 72 million, significantly above the 22% increase projected for the entire population.

        Government outsourcing of Employment Training Services.    The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 enabled private for-profit and non-profit organizations to competitively bid to manage and operate programs providing work activities and other services for welfare recipients, who are now faced with time limitations on receiving cash assistance. The consistent and bi-partisan support for these federal programs has created an opportunity for workforce services providers.

        Strong demand for Job Corps services.    The federal Job Corps program, created in 1964, provides training for approximately 100,000 students each year at 124 centers throughout the United States and Puerto Rico. Funding for the program has increased from approximately $600 million in 1984 to $1.7 billion in 2010. The U.S. Census Bureau projects that the population ages 16-24 will grow by 14% between 2010 and 2030 and estimates that 20% of the approximately 35 million people ages 16-24 in the United States currently live below the poverty level. The Job Corps program provides this population with training and job placement assistance.

Competitive strengths

        High quality of care provided by well-trained professionals.    Our mission is to help individuals reach their highest level of independence. We accomplish this mission by providing high quality care to the individuals we serve through a broad array of tailored programs and highly trained and motivated caregivers. Our Best In Class program employs customer, employee, government, and facility surveys to continually monitor our quality of care and our customer's satisfaction and to ensure adherence to our mission. Best In Class requires annual training for all employees and sets expectations to ensure that

5

Table of Contents

we are wise stewards of taxpayer dollars and provide high quality care. Because of our emphasis on quality, many of our services are recognized both locally and nationally by independent accreditation agencies.

        Leading position in special needs markets with strong referral relationships.    We are the nation's largest private provider of services to populations with special needs. As of December 31, 2010, we provided services to approximately 60,000 individuals with special needs in 41 states, Washington, D.C., Puerto Rico and certain international locations. We are also a leading provider of in-home care. We have been operating in 33 of the 41 states we serve for at least six years and have developed close, long-standing relationships with our referral base of state and local agencies, as well as with advocacy groups in the communities we serve. We believe that we have a reputation as a high quality human services provider with the infrastructure and expertise to serve our customers. We also believe that our expertise serving ID/DD individuals has enabled us to collaborate with state and local agencies as they work to comply with state and court mandates to move these individuals off waiting lists or from state institutions to group homes or other community-based settings. In addition, we are the largest operator of "one-stop" career centers in the United States and the second largest private operator of Job Corps centers. We believe that our broad service offerings, our established presence in our target markets, and our ability to deliver services locally provide us with a competitive advantage and strengthen our relationships with our referral base.

        National platform with significant recurring revenue from diversified payors.    Care for our ID/DD customers is long-term in nature. We serve a client for an average of over five years, and the average age of our clients is 43 years. Because most of our ID/DD consumers require services over their entire lives and many states have extensive waiting lists for services, average occupancy rates in our ID/DD group homes and residential facilities have been above 90% since 1996. Our Job Corps contracts are also long-term and generate predictable revenue streams, with typical terms of five years, cost-plus pricing and high program utilization rates. Although a majority of our revenue is derived from Medicaid, each of the 32 state Medicaid agencies we serve makes its own service and rate decisions. Our largest state Medicaid program accounts for 12% of total revenue. Our governmental payor mix is further diversified between the DOL, HHS, and other federal entities, and while our Employment Training Services contracts are funded by federal agencies, they are awarded and administered by a large number of states and municipalities. Our growing in-home care business has also helped us diversify our business and payor mix. This business, which in 2010 derived 28% of its revenues from non-governmental payors, has grown from $135 million of revenue in 2005 to $307 million of revenue in 2010.

        Strong and stable free cash flow.    Our stable client base and long-term contracts produce stable recurring revenue, which translates into strong free cash flow due to our efficient operational capabilities, low maintenance capital expenditure requirements, and stable levels of working capital. Our free cash flow, defined as cash flow from operations less capital expenditures, from 2006 to 2010 ranged between $19 million and $89 million and averaged approximately $54 million annually. We intend to use a portion of our free cash flow to repay debt.

        Cost-effective and scale provider of high quality services.    We believe our national scope allows us to develop and implement best practices nationwide to provide our customers with high quality care. We are also able to leverage operational economies of scale due to our size, and use our deep industry experience to provide this quality care in a cost-effective manner that is responsive to our customers, their families and state and federal payors. We also place our patients in low-cost, high quality residential settings, and use our experience to better tailor our care to the needs of our service population. For example, according to The State of the States in Developmental Disabilities, the average cost per day of one individual in a large, state-run institution is approximately $469, while the same individual in our community-based environment costs approximately $194 per day. In addition, we

6

Table of Contents

believe that our in-home care services are able to achieve a lower cost of care relative to alternative inpatient settings, such as nursing homes, due to the absence of a fixed plant and less-expensive staffing. Because our patients are generally medically stable and generally require less intensive care than is offered in inpatient settings, staffing can be achieved at a lower cost and can also be delivered on an hourly, rather than daily basis, depending on the patient's needs. According to the MetLife 2010 Market Survey of Long-Term Care Costs, nursing home care costs an average of $229 per day, relative to $21 and $19 per hour for home health and homemaker services, respectively. We believe that the lower cost settings we provide in our ID/DD and in-home care services will create growth opportunities as payors look to lower costs while maintaining quality of care.

        Proven ability to identify and integrate acquisitions.    Our recent growth is due in part to our ability to successfully identify and integrate both tuck-in and strategic acquisitions. We employ a proven, systematic and disciplined approach that includes conducting full due diligence on contracts, the reimbursement environment, quality of services, financial condition, operational managers, and regulatory compliance for a prospective acquisition. We also have a comprehensive post-acquisition process to integrate acquired entities, which includes improving facility operations, retaining staff, and incorporating the entity into our various systems. Over the last six years, ResCare has completed an average of 14 acquisitions per year representing total annual revenue of approximately $600 million.

        Experienced management team and highly committed equity sponsor.    The members of our senior management team, led by President and CEO Ralph Gronefeld, Jr., have served an average of 15 years at ResCare. We believe that our management team has the depth and breadth to successfully grow our company and execute our strategy. In addition, our equity sponsor, Onex Corporation, has considerable experience investing in healthcare and familiarity with our Company. Onex made its initial investment in ResCare in June 2004, acquired the remainder of ResCare in November and December 2010 and has been represented on our board since its initial investment.

Strategy

        Continue to be a leading provider through innovative and cost-effective services.    We believe that our care delivery model allows us to provide high quality care to individuals at a lower cost than traditional state institutions. We plan to leverage our existing client base and continue to work with state government agencies to create new services and service models to address changing market needs. For example, we offer Rest Assured, our telecare program, which allows us to monitor video and audio in a home and offer verbal assistance to adults with ID/DD and senior citizens who want an alternative to 24-hour live-in support. A third-party pilot study has shown a 45% savings using telecare relative to traditional care models due to the more efficient use of labor while maintaining high quality of care.

        Expand our disabilities services and in-home care.    We plan to expand the range of services we offer and to expand our existing services into new markets. For example, we began delivering in-home care to individuals with ID/DD and the elderly in 1997 because we believed it to be complementary to our existing service offering and scalable. We currently serve approximately 22,000 individuals through our in-home care business. We believe that the demand for these services from families caring for their dependents and through state and federal programs is growing. We are also focused on diversifying our revenue stream by pursuing higher-margin private pay clients.

        Leverage our reorganization of business lines to drive organic growth.    In August 2010, we announced our plan to reorganize our operations in order to increase efficiency and focus on organic growth. This reorganization principally involves separating our in-home care business from our Community Services division, which is primarily composed of our facility-based ID/DD business. We believe that this realignment allows us to focus on issues unique to in-home care including growing our private pay services by actively recruiting clients through a consumer-oriented marketing strategy. The operational

7

Table of Contents

realignment of these segments is substantially complete, and reporting under these new segments is expected to begin in 2011.

        Grow through opportunities in Employment Training Services and Job Corps.    We continue to explore further growth in our job training services through the pursuit of contracts for "one-stop" career centers and Job Corps centers as they come up for bid. In 2002 we operated no "one-stop" career centers, and today we are the largest private operator of these centers in the United States.

        Pursue tuck-in acquisition opportunities.    We have an actively managed pipeline of tuck-in acquisition opportunities that could be integrated into our regional clusters where we have existing infrastructure and where payor rates are attractive. We add group homes and in-home care agencies by pursuing small tuck-in acquisitions using our proven, disciplined and systematic approach to potential acquisitions. The typical target is less than $5 million of revenue in size and has facilities in a geographic area in which we operate.

Recent transactions

        We completed the following transactions, which we refer to collectively as the "Transactions," concurrently with the issuance of the outstanding notes on December 22, 2010.

Share Exchange

        Pursuant to the share exchange agreement, Purchaser and ResCare completed the second-step Share Exchange in which all Public Shares not acquired in the Stock Tender Offer, excluding shares held by Rollover Holders, were exchanged for $13.25 per share.

Equity reorganization transactions

        Following the Share Exchange and the issuance of the outstanding notes, Onex Partners LP, the other Onex Investors holding shares of ResCare's common and preferred stock prior to the commencement of the Stock Tender Offer and the Rollover Holders contributed their shares of ResCare to Onex Rescare Holdings Corp. ("New Holdco") in exchange for shares of New Holdco's nonvoting common stock. In addition, the Onex affiliates holding membership interests in Purchaser contributed their interests in such entity to New Holdco in exchange for shares of New Holdco's voting common stock. Following these contributions, Purchaser merged into ResCare, with ResCare as the surviving entity, and ResCare became a wholly owned subsidiary of New Holdco, which in turn, is owned by the Onex Investors, certain co-investors and members of our management team. See "Security ownership of certain beneficial owners and management."

Debt refinancing transactions

        Concurrent with the private offering of the outstanding notes, we entered into a $170.0 million term loan credit facility and a $275.0 million revolving credit facility, which we refer to collectively as our senior secured credit facilities or our new senior secured credit facilities. The new senior secured credit facilities replaced our previously existing senior secured credit facilities.

        The term loan credit facility provides for aggregate borrowings of $170.0 million. Concurrently with the issuance of the outstanding notes, we issued a $170.0 million senior secured note due on December 22, 2016. The revolving credit facility provides for revolving loans and letters of credit in an initial aggregate principal amount of at least $275.0 million, with a letter of credit sub-facility of up to $130.0 million. The aggregate amount available under the revolving credit facility is $275.0 million until July 2013, after which the aggregate amount available will be $240.0 million until maturity at December 2015. The senior secured credit facilities are unconditionally guaranteed by New Holdco and substantially all of our direct and indirect wholly-owned domestic subsidiaries. The repayment of these

8

Table of Contents

facilities is secured by a first priority security interest in substantially all of our assets and the assets of New Holdco, including our capital stock and the capital stock of substantially all of our subsidiaries.

        Concurrent with the private offering of the outstanding notes, we also conducted a tender offer and consent solicitation (the "2013 Notes Tender Offer") for our 7³/4% Senior Notes due 2013 (the "2013 Notes"), of which $150 million in aggregate principal amount at maturity was outstanding. The 2013 Notes that were not repurchased in the 2013 Notes Tender Offer were satisfied and discharged by delivering to the trustee amounts sufficient to pay the applicable redemption price, plus accrued and unpaid interest, up to, but not including, the date of redemption.

        The proceeds from the new senior secured credit facilities and the offering of the outstanding notes were used to:

        (1)   fund Purchaser's redemption of the $158.8 million of Purchaser's preferred membership interests held by certain of the Onex Investors on December 22, 2010 and its payment of the $0.8 million accrued preferred return on such interests through the redemption date,

        (2)   fund the Share Exchange,

        (3)   repurchase the 2013 Notes tendered in the 2013 Notes Tender Offer and redeem the 2013 Notes not tendered in the 2013 Notes Tender Offer,

        (4)   repay in full our previously existing senior secured credit facilities, and

        (5)   pay fees and expenses incurred in connection with the Transactions.

Our Sponsor

        Onex Corporation is one of North America's oldest and most successful investment firms committed to acquiring and building high-quality businesses in partnership with talented management teams. Onex manages investment platforms focused on private equity, real estate and credit securities. In total, Onex manages approximately US $14 billion, of which US $10 billion is third-party capital. As well, Onex invests its own capital directly and as a substantial limited partner in its funds. Onex made its initial investment in ResCare in June 2004, acquired the remainder of the Company in November and December 2010 and has been represented on our board since its initial investment.

Our Corporate Information

        Res-Care, Inc. is a Kentucky corporation. Our principal executive offices are located at 9901 Linn Station Road, Louisville, Kentucky 40223, and our telephone number is (502) 394-2100.

9

Table of Contents

The Exchange Offer

        On December 22, 2010, we completed the private offering of $200,000,000 aggregate principal amount of our 10.75% Senior Notes due 2019, which we refer to in this prospectus as the "outstanding notes". The term "exchange notes" refers to the 10.75% Senior Notes due 2019 as registered under the Securities Act of 1933, as amended (the "Securities Act"). References to the "notes" in this prospectus are references to both the outstanding notes and the exchange notes. This prospectus is part of a registration statement covering the exchange of the outstanding notes for the exchange notes.

        We and the guarantors entered into a registration rights agreement with the initial purchasers in the private offering of outstanding notes in which we and the guarantors agreed to deliver this prospectus to you as part of the exchange offer and agreed to use commercially reasonable best efforts to have the registration statement covering the exchange offer to be declared effective on or before December 21, 2011. You are entitled to exchange in the exchange offer your outstanding notes for exchange notes, which are identical in all material respects to the outstanding notes except:

•

the exchange notes have been registered under the Securities Act;



•

the exchange notes are not entitled to certain registration rights which are applicable to the outstanding notes under the registration rights agreement; and



•

certain special interest rate provisions and restrictions on transfer are not applicable to the exchange notes.

10

Table of Contents

11

Table of Contents

12

Table of Contents

13

Table of Contents

Summary of the Exchange Notes

        The summary below describes the principal terms of the exchange notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The "Description of the Exchange Notes" section of this prospectus contains a more detailed description of the terms and conditions of the exchange notes.

        The form and terms of the exchange notes are the same as the form and terms of the outstanding notes, except that the exchange notes will be registered under the Securities Act and, therefore, the exchange notes will not be subject to the transfer restrictions, registration rights and special interest provisions applicable to the outstanding notes. The exchange notes represent the same debt as the outstanding notes. The same indenture governs both the outstanding notes and the exchange notes.

14

Table of Contents

15

Table of Contents

Risk Factors

        An investment in the notes involves substantial risks. You should carefully consider the following factors in addition to the other information set forth in this prospectus before you decide to tender outstanding notes in the exchange offer. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties that we do not presently know about or that we currently believe are immaterial may also adversely impact our business operations. If any of the following risks actually occur, our business, results of operations, cash flows and financial condition and our ability to make payments on the notes would likely suffer.

Risks related to the exchange offer

If you choose not to exchange your outstanding notes, the present transfer restrictions will remain in force and the market price of your outstanding notes could decline.

        If you do not exchange your outstanding notes for exchange notes in the exchange offer, then you will continue to be subject to the transfer restrictions on the outstanding notes as set forth in the offering memorandum distributed in connection with the private offering of the outstanding notes. In general, the outstanding notes may not be offered or sold unless they are registered or exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the outstanding notes under the Securities Act. You should refer to "Prospectus Summary—The Exchange Offer" and "The Exchange Offer" sections of this prospectus for information about how to tender your outstanding notes.

        The tender of outstanding notes under the exchange offer will reduce the outstanding principal amount of the outstanding notes, which may have an adverse effect upon, and increase the volatility of, the market price of the outstanding notes due to a reduction in liquidity.

Certain persons who participate in the exchange offer must deliver a prospectus in connection with resales of the exchange notes.

        Based on interpretations of the staff of the SEC contained in Exxon Capital Holdings Corp., SEC no-action letter (April 13, 1988), Morgan Stanley & Co. Inc., SEC no-action letter (June 5, 1991) and Shearman & Sterling, SEC no-action letter (July 2, 1983), we believe that you may offer for resale, resell or otherwise transfer the exchange notes without compliance with the registration and prospectus delivery requirements of the Securities Act. However, in some instances described in this prospectus under "Plan of Distribution", certain holders of exchange notes will remain obligated to comply with the registration and prospectus delivery requirements of the Securities Act to transfer the exchange notes. If such a holder transfers any exchange notes without delivering a prospectus meeting the requirements of the Securities Act or without an applicable exemption from registration under the Securities Act, such a holder may incur liability under the Securities Act. We do not and will not assume, or indemnify such a holder against, this liability.

Because there is no public market for the exchange notes, you may not be able to resell them.

        The exchange notes will be registered under the Securities Act but will constitute a new issue of securities with no established trading market, and there can be no assurance as to the liquidity of any trading market that may develop, the ability of holders to sell their exchange notes or the price at which the holders will be able to sell their exchange notes.

        We understand that certain of the initial purchasers of the outstanding notes presently intend to make a market in the exchange notes. However, they are not obligated to do so, and any market-making activity with respect to the exchange notes may be discontinued at any time without notice. In addition, any market-making activity will be subject to the limits imposed by the Securities Act and the

16

Table of Contents

Exchange Act and may be limited during the exchange offer or the pendency of an applicable shelf registration statement. There can be no assurance that an active market will exist for the exchange notes or that any trading market that does develop will be liquid.

Risks related to the notes and our indebtedness

Our substantial debt could adversely affect our financial condition and our ability to operate our business and could prevent us from fulfilling our obligations under the notes.

        We have a substantial amount of debt, which requires significant interest and principal payments. As of December 31, 2010, we have $406.6 million of indebtedness outstanding (excluding approximately $67.6 million of issued but undrawn letters of credit and approximately $207.4 million of borrowings available to us under our revolving credit facility).

        Our substantial level of indebtedness could have important consequences to the holders of the notes, including the following:

•

making it more difficult for us to satisfy our obligations with respect to the notes and our other debt;



•

limiting our ability to obtain additional financing to fund future working capital, capital expenditures, strategic acquisitions or other general corporate requirements;



•

requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of to other purposes;



•

increasing our vulnerability to general adverse economic and industry conditions;



•

limiting our financial flexibility in planning for and reacting to changes in the industry in which we compete;



•

placing us at a disadvantage compared to other, less leveraged competitors;



•

having a material adverse effect on us if we fail to comply with the covenants in the indenture governing the notes or in the instruments governing our other debt; and



•

increasing our cost of borrowing.

        The revolving senior credit facility component of our senior secured credit facilities is expected to be a significant source of liquidity for our business and is scheduled to mature on December 22, 2015. The failure to extend or renew this facility could have a significant effect on our ability to invest sufficiently in our programs, fund day to day operations, or pursue strategic opportunities.

        Subject to the limits contained in the indenture governing the notes and our other debt instruments, we may be able to incur additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we incur additional debt, the risks related to our high level of debt could intensify. See "Description of Exchange Notes."

We may not be able to generate a sufficient amount of cash flow to meet our debt service obligations, including the notes.

        Our ability to pay principal and interest or to refinance our obligations with respect to the notes and our other debt, including our senior secured credit facilities, will depend on, among other things:

•

our future financial and operating performance, which will be subject to prevailing economic and political conditions and financial, competitive, business and other factors, including the availability of financing in the banking and capital markets as well as the other risks described herein, many of which are beyond our control; and

17

Table of Contents

•

the future availability of borrowings under our senior secured credit facilities, which depends on, among other things, our complying with the covenants in our senior secured credit facilities.

        We cannot assure you that our business will generate sufficient cash flow from operations, or that future borrowings will be available to us under our new senior secured credit facilities or otherwise, in an amount sufficient to fund our liquidity needs, including the payment of principal and interest on the notes.

        If our cash flow and capital resources are insufficient to fund our debt service obligations, including the notes, and our other commitments, we could face substantial liquidity problems and may be forced to reduce or delay scheduled expansions and capital expenditures, sell material assets or operations, obtain additional capital or restructure our debt. If we are unable to meet our debt obligations or to fund our other liquidity needs, we will need to restructure or refinance all or a portion of our debt, including the notes, which could cause us to default on our debt obligations and impair our liquidity. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants which could further restrict our business operations. If we are required to dispose of material assets or operations, obtain additional capital or restructure our debt to meet our debt service and other obligations, we cannot provide assurance that we could effect any of these actions on a timely basis, on commercially reasonable terms or at all, or that these actions would be sufficient to meet our capital requirements. In addition, the terms of our existing or future debt agreements may restrict us from effecting certain or any of these alternatives. Furthermore, the Onex Investors have no continuing obligation to provide us with debt or equity financing.

        If we cannot make scheduled principal and interest payments on our debt, we will be in default and, as a result:

•

our debt holders could declare all outstanding principal and interest to be due and payable; and



•

we could be forced into bankruptcy or liquidation.

The indenture governing the notes and the credit agreement governing our senior secured credit facilities impose significant operating and financial restrictions on us and our subsidiaries, which may prevent us from capitalizing on business opportunities.

        The indenture governing the notes and the credit agreement governing our senior secured credit facilities impose, and any future indebtedness of ours would likely impose, significant operating and financial restrictions on us, including restrictions on our ability to, among other things:

•

incur or guarantee additional indebtedness;



•

pay distributions or dividends and repurchase our stock and make other restricted payments, including without limitation, certain restricted investments;



•

create or incur liens;



•

enter into agreements that restrict dividends from subsidiaries;



•

sell or otherwise dispose of assets, including capital stock of restricted subsidiaries;



•

engage in transactions with affiliates; and



•

enter into mergers, consolidations or sales of substantially all of our assets.

        In addition, our senior secured credit facilities require us to maintain certain financial ratios. See "Description of other indebtedness." As a result of these covenants, we will be limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs. Our ability to meet those financial ratios can be affected by events beyond our control, and there can be no assurance that we will meet those ratios. An adverse

18

Table of Contents

development affecting our business could require us to seek waivers or amendments of covenants, alternative or additional sources of financing or reductions in expenditures. We cannot assure you that such waivers, amendments or alternative or additional financings could be obtained or, if obtained, would be on terms acceptable to us.

        As a result of these covenants and restrictions, we will be limited in how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these covenants in the future. A failure to comply with the covenants contained in the credit agreement governing our senior secured credit facilities or the indenture governing the notes could result in an event of default under the credit agreement governing our senior secured credit facilities or the indenture governing the notes, which, if not cured or waived, could have a material adverse effect on our business, financial condition or results of operations.

Despite our current debt levels, we and our subsidiaries may incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage.

        We may be able to incur significant additional indebtedness, including secured indebtedness, in the future. Although the credit agreement governing our senior secured credit facilities and the indenture governing the notes contain restrictions on the incurrence of additional indebtedness by us or our subsidiaries, these restrictions are subject to a number of significant qualifications and exceptions, and any indebtedness incurred in compliance with these restrictions could be substantial. See "Description of Other Indebtedness" and "Description of the Exchange Notes." For example, subject to certain conditions, we will have the right under our senior secured credit facilities to request up to $175.0 million of additional commitments in the form of revolver availability or term loans, although the lenders under our new senior secured credit facilities will not be under any obligation to provide any such additional commitments. If new debt is added to our and our subsidiaries' current debt levels, the related risks that we and they face would be increased. As of December 31, 2010, we have approximately $207.4 million of borrowings available to us under our revolving senior secured credit facility, excluding outstanding letters of credit, subject to compliance with our financial and other covenants under the terms of such credit facility.

The notes are unsecured and effectively subordinated to all of our secured debt.

        The notes and the related guarantees are not secured by any of our assets or the assets of our subsidiaries. The payment of our obligations under our senior secured credit facilities is secured by a security interest in substantially all of our assets and the assets of our domestic subsidiaries, including equipment, inventory and certain intangible assets and a pledge of the capital stock of all of our domestic subsidiaries. See "Description of other indebtedness." If we become insolvent or are liquidated, or if payment under our new senior secured credit facilities or any other secured debt obligation that we may have from time to time is accelerated, our secured lenders would be entitled to exercise the remedies available to a secured lender under applicable law and would have a claim on those assets before the holders of the notes. As a result, the notes are effectively subordinated to our secured debt to the extent of the value of the assets securing such debt in the event of our bankruptcy or liquidation and it is possible that there would be no assets remaining from which your claims could be satisfied or, if any assets remained, they might be insufficient to satisfy your claims fully. As of December 31, 2010, we have approximately $167.0 million of secured debt outstanding under our senior secured credit facilities and approximately $207.4 million of additional borrowings available to us under our revolving credit facility.

19

Table of Contents

The notes are structurally subordinated to all indebtedness and other liabilities of our foreign subsidiaries, and to the obligations of our domestic subsidiaries that do not guarantee the notes.

        None of our existing or future foreign subsidiaries will guarantee the notes or otherwise have any obligations to make payments in respect of the notes, which are our direct, senior unsecured obligations. As a result, claims of holders of the notes are structurally subordinated to all indebtedness and other liabilities of our foreign subsidiaries, and to the obligations of any of our domestic subsidiaries that do not guarantee the notes. In the event of any bankruptcy, liquidation, dissolution or similar proceeding involving one of our non-guarantor subsidiaries, any of our rights or the rights of the holders of the notes to participate in the assets of that subsidiary would be structurally subordinated to the claims of creditors of that subsidiary (including any trade creditors, debt holders, secured creditors, taxing authorities and guarantee holders), and following payment by that subsidiary of its liabilities, the subsidiary may not have sufficient assets remaining to make payments to us as a shareholder or otherwise. In addition, if we caused a non-guarantor subsidiary to pay a dividend to enable us to make payments in respect of the notes and such a transfer were deemed a fraudulent transfer or an unlawful distribution, the holders of the notes could be required to return the payment to (or for the benefit of) the creditors of our non-guarantor subsidiaries. As of December 31, 2010, our non-guarantor subsidiaries have approximately $4.0 million of indebtedness outstanding for borrowed money which would have been structurally senior to the notes offered hereby. The non-guarantor subsidiaries represented approximately 1% of our total revenues for the year ended December 31, 2010. In addition, these non-guarantor subsidiaries represented approximately 9% of our total assets as of December 31, 2010. Our non-guarantor subsidiaries may, in the future, incur substantial additional liabilities, including indebtedness. Furthermore, we may, under certain circumstances, designate subsidiaries as unrestricted subsidiaries, and any domestic subsidiary that is designated as unrestricted will not guarantee the notes.

Our ability to meet our obligations under our indebtedness depends in part on our earnings and cash flows and those of our subsidiaries and on our ability and the ability of our subsidiaries to pay dividends or advance or repay funds to us.

        We conduct a portion of our operations through our subsidiaries, certain of which have not guaranteed the notes. Consequently, our ability to service our debt depends, in part, upon the earnings from the businesses conducted by our subsidiaries. Our subsidiaries are separate and distinct legal entities and have no obligation to pay any amounts to us, whether by dividends, loans, advances or other payments. The ability of our subsidiaries to pay dividends and make other payments to us depends on their earnings, capital requirements and general financial conditions and is restricted by, among other things, applicable corporate and other laws and regulations as well as, in the future, agreements to which our subsidiaries may be a party.

We may not be able to repurchase the notes upon a change of control.

        Upon a change of control as defined in the indenture governing the notes, we will be required to make an offer to repurchase all outstanding notes at 101% of their principal amount plus accrued and unpaid interest, unless we have previously given notice of our intention to exercise our right to redeem the notes or unless such obligation is suspended. We may not have sufficient financial resources to purchase all of the notes that are tendered upon a change of control offer or, if then permitted under the indenture governing the notes, to redeem the notes. A failure to make the applicable change of control offer or to pay the applicable change of control purchase price when due would result in a default under the indenture governing the notes. The occurrence of a change of control would also constitute an event of default under our senior secured credit facilities and may constitute an event of default under the terms of our future indebtedness, or, if the lenders accelerate the debt under our senior secured credit facilities or other indebtedness, under the indenture governing the notes. The

20

Table of Contents

terms of the credit agreement governing our senior secured credit facilities limit, and the terms of our future indebtedness may limit, our right to purchase or redeem the notes. If any purchase or redemption of the notes is prohibited, we may seek to obtain waivers from the required lenders under our senior secured credit facilities or holders of such other indebtedness to permit the required repurchase or redemption of the notes, but the required lenders or holders of such indebtedness have no obligation to grant, and may refuse, such a waiver. The term "change of control" that is contained in the indenture governing the notes is defined under "Description of the Exchange Notes—Change of control."

Holders of the notes may not be able to determine when a change of control giving rise to their right to have the notes repurchased has occurred following a sale of "substantially all" of our assets.

        The definition of "change of control" in the indenture governing the notes includes a phrase relating to the sale of "all or substantially all" of our assets. There is no precise established definition of the phrase "substantially all" under applicable law. Accordingly, it may be unclear as to whether a change of control has occurred and the ability of a holder of notes to require us to repurchase its notes as a result of a sale of less than all our assets to another person may be uncertain.

Certain significant restructuring transactions may not constitute a change of control under the indenture governing the notes, in which case we would not be obligated to offer to repurchase the notes.

        Under the indenture governing the notes, upon the occurrence of a change of control, we will be required to make an offer to repurchase all outstanding notes at 101% of their principal amount plus accrued and unpaid interest, unless we have previously given notice of our intention to exercise our right to redeem the notes or unless such obligation is suspended. However, the change of control provisions will not afford protection to holders of notes in the event of a highly leveraged transaction that could adversely affect the notes. For example, we could, in the future, enter into certain transactions, including acquisitions, refinancing or other recapitalizations, that would not constitute a change of control under the indenture governing the notes, but that could increase the amount of indebtedness outstanding at such time or otherwise affect our capital structure or credit ratings, and the holders would not have the right to require us to repurchase the notes.

If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the notes.

        Various risks, uncertainties and events beyond our control could affect our ability to comply with the covenants, financial tests and ratios required by our senior secured credit facilities or any future financing agreements into which we may enter. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, or interest on our senior secured credit facilities or any future financing arrangements, or if we otherwise fail to comply with any of the covenants in such indebtedness and such failure is not waived by the required holders of such indebtedness, we would be in a default under those agreements. A default would permit lenders to cease to make further extensions of credit, accelerate the maturity of the debt under these agreements and foreclose upon any collateral securing that debt. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations, including our ability to repay our senior secured credit facilities and our obligations under the notes. Furthermore, if our operating performance declines, we may in the future need to seek waivers from the required lenders under our senior secured credit facilities to avoid being in default. If we breach our covenants under our senior secured credit facilities and attempt to seek waivers, we may not be able to obtain waivers from the required lenders thereunder. If this occurs, we would be in default under our senior secured credit facilities and the lenders could exercise their rights described above, and we could be forced into bankruptcy or liquidation. See "Description of other indebtedness."

21

Table of Contents

An active trading market for the notes may not develop, and the absence of an active trading market and other factors may adversely impact the price of the notes.

        There is currently no public market, and we cannot assure you that an active trading market will develop for the notes. An active or liquid trading market for the notes may not develop. To the extent that an active trading market does not develop, the liquidity and trading prices for the notes may be adversely affected. If the notes are traded after their initial issuance, they may trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar securities, our performance and other factors. In addition, a downgrade of our credit ratings by any credit rating agencies could impact the price at which the notes trade. Our credit ratings have been and continue to be subject to regular review.

        We have no plans to list the notes on a securities exchange.

        The liquidity of, and trading market for, the notes may also be adversely affected by, among other things:

•

changes in the overall market for securities similar to the notes;



•

changes in our financial performance or prospects;



•

the prospects for companies in our industry generally;



•

the number of holders of the notes;



•

the interest of securities dealers in making a market for the notes; and



•

prevailing interest rates.

        Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial fluctuations in the price of securities that are similar to the notes. Therefore, even if a trading market for the notes develops, it may be subject to disruptions and price volatility.

An adverse rating or withdrawal of any rating of the notes may cause their trading price to fall, may increase our future borrowing costs and may reduce our access to capital.

        If a rating agency rates the notes, it may assign a rating that is lower than expected. Ratings agencies also may lower or withdraw ratings on the notes in the future. If rating agencies assign a lower-than-expected rating or reduce or withdraw, or indicate that they may reduce or withdraw their ratings in the future, the trading price of the notes could significantly decline. Credit ratings are not recommendations to purchase, hold or sell the notes. Additionally, credit ratings may not reflect the potential effect of risks relating to the structure or marketing of the notes. Furthermore, any future lowering or withdrawal of the ratings assigned to the notes likely would make it more difficult or more expensive for us to obtain additional debt financing. If any credit rating initially assigned to the notes is subsequently lowered or withdrawn for any reason, you may not be able to resell your notes without a substantial discount.

Fraudulent conveyance laws may permit courts to void the guarantors' guarantees of the notes in specific circumstances, which would interfere with the payment under the guarantors' guarantees.

        Federal and state statutes may allow courts, under specific circumstances described below, to void the guarantors' guarantees, of the notes. If such a voidance occurs, our noteholders might be required to return payments received from our guarantors in the event of bankruptcy or other financial difficulty of our guarantors. In a recent Florida bankruptcy case, subsidiary guarantees containing "savings clauses," a provision commonly used in loan documents to limit the amount of liability of, and liens granted by, the guarantor to be the largest amount that would leave the guarantor solvent, were found to be fraudulent conveyances and thus unenforceable and the court stated that this kind of limitation is

22

Table of Contents

ineffective. We do not know if that case will be followed; however, if it is followed, the risk that the subsidiary guarantees will be found to be fraudulent conveyances will be significantly increased. Under United States federal bankruptcy law and comparable provisions of state fraudulent conveyance laws, a guarantee could be set aside if, among other things, a subsidiary guarantor, at the time it incurred the debt evidenced by its guarantee:

•

incurred the guarantee with the intent of hindering, delaying or defrauding current or future creditors; or



•

received less than reasonably equivalent value or fair consideration for incurring the guarantee, and



•

was insolvent or was rendered insolvent by reason of the incurrence;



•

was engaged, or about to engage, in a business or transaction for which the assets remaining with it constituted unreasonably small capital to carry on such business; or



•

intended to incur, or believed that it would incur, debts beyond its ability to pay as those debts mature.

        The tests for fraudulent conveyance, including the criteria for insolvency, will vary depending upon the law of the jurisdiction that is being applied. Generally, however, a debtor would be considered insolvent if, at the time the debtor incurred the debt, either:

•

the sum of the debtor's debts and liabilities, including contingent liabilities, was greater than the debtor's assets at fair valuation;



•

the present fair saleable value of the debtor's assets was less than the amount required to pay the probable liability on the debtor's total existing debts and liabilities, including contingent liabilities, as they became absolute and matured; or



•

it could not pay its debts as they became due.

        If a court voids any guarantee or holds it unenforceable, you will cease to be a creditor of that guarantor and will be a creditor solely of the Company and any remaining guarantors.

Risks related to our business and industry

Federal, state and local budgetary shortfalls or changes in reimbursement policies could adversely affect our revenues and profitability and collectability of receivables.

        We derive a substantial amount of our revenues from federal, state and local government agencies, including state Medicaid programs and employment training programs. Our revenues therefore depend to a large degree on the size of the governmental appropriations for the services we provide. Budgetary pressures, as well as economic, industry, political and other factors, could influence governments to significantly decrease or eliminate appropriations for these services, which could reduce our revenues materially. The majority of states have forecasted budget shortfalls as a result of the recessionary environment. Many state governments also continue to experience shortfalls in their Medicaid budgets despite cost containment efforts. The recent health reform legislation places further demands on Medicaid budgets by mandating that states expand Medicaid eligibility. Future federal or state initiatives could institute managed care programs for individuals we serve, eliminate programs or otherwise make material changes to the Medicaid program as it now exists. Future revenues may be affected by changes in rate-setting structures, methodologies or interpretations that may be proposed or are under consideration in states where we operate.

        Our ability to collect accounts receivable is also subject to developments at state payor agencies, state budget pressures, economic conditions and other factors outside our control that may cause us to

23

Table of Contents

record higher provisions for allowances for doubtful accounts or incur bad debt write-offs, both of which could have a material adverse effect on our business, financial position, results of operations and liquidity. Changes in reimbursement procedures by the states, including engaging new agents to manage the reimbursement function, may delay reimbursement payments and create backlogs. Paying aged receivables may be a lower priority for states experiencing budgetary pressures despite our meeting applicable billing requirements. This may increase the need to pursue more aggressive collection activities, including litigation, against government agencies and other payors. Events that delay or prevent our collection of accounts receivable could have a material adverse effect on our financial condition.

        Furthermore, federal, state and local government agencies generally condition their contracts with us upon a sufficient budgetary appropriation. If a government agency does not receive an appropriation sufficient to cover its contractual obligations with us, it may terminate a contract or defer or reduce our reimbursement. Previously appropriated funds could also be reduced or eliminated through subsequent legislation. The loss or reduction of reimbursement under our contracts could have a material adverse effect on our business, financial condition and operating results.

Our revenues and operating profitability depend on our reimbursement rates and timely payment.

        Our revenues and operating profitability depend on our ability to maintain our existing reimbursement levels, to obtain periodic increases in reimbursement rates to meet higher costs and demand for more services, and to receive timely payment. If we do not receive or cannot negotiate increases in reimbursement rates at approximately the same time as our costs of providing services increase, or if states are not timely in their payments to us, our revenues and profitability could be materially adversely affected.

Our inability to maintain and renew our existing contracts and to obtain additional contracts would adversely affect our revenues.

        Each of our operating segments derives a substantial amount of revenue from contracts with government agencies. They also have contracts with non-governmental entities. Our contracts are generally in effect for a specific term, and our ability to renew or retain them depends on our operating performance and reputation, as well as other factors over which we have less or no control. We have had in the past contracts that were terminated or not renewed. We may not be successful in obtaining, renewing or retaining contracts to operate Job Corps or Employment Training centers. Our Job Corps contracts are re-bid, regardless of operating performance, at least every five years and our Employment Training Services contracts are typically re-bid every 3-60 months. Government contracts of the operations we acquire may be subject to termination upon such an event, and our ability to retain them may be affected by the performance of prior operators. Changes in the market for services and contracts, including increasing competition, transition costs or costs to implement awarded contracts, could adversely affect the timing and/or viability of future development activities. Additionally, many of our contracts are subject to state or federal government procurement rules and procedures. Changes in procurement policies that may be adopted by one or more of these agencies could also adversely affect our ability to obtain and retain these contracts. These contracts may not be renewed.

Our operations may subject us to substantial litigation.

        Our management of residential, training, educational and support programs for our clients has exposed and will continue to expose us to potential claims or litigation by our clients, employees or other individuals for wrongful death, personal injury or other damages resulting from contact with our facilities, programs, personnel or other clients. Regulatory agencies have initiated and may in the future initiate administrative proceedings alleging violations of statutes and regulations arising from our

24

Table of Contents

programs and facilities and have imposed monetary penalties or other sanctions on us. We have been and in the future may be required to pay amounts of money to respond to regulatory investigations or, if we do not prevail, in damages or penalties arising from these legal proceedings. We also are subject to potential lawsuits under the False Claims Act or other federal and state whistleblower statutes designed to combat fraud and abuse in the human services industry. These lawsuits can involve significant monetary awards to private plaintiffs who successfully bring these suits as well as to the government. We are also subject to potential actions and substantial penalties under the False Claims Act brought by the Department of Justice. Finally, we are also subject to employee-related claims including wrongful discharge or discrimination, a violation of equal employment law, the Fair Labor Standards Act or state wage and hour laws, intentional tort claims and workers compensation claims. Some awards of damages or penalties may not be covered by any insurance. If our third-party insurance coverage and self-insurance reserves are not adequate to cover these claims, it could have a material adverse effect on our business, results of operations, financial condition, and ability to satisfy our obligations under our indebtedness. Even if we are successful in our defense, civil lawsuits or regulatory proceedings could also irreparably damage our reputation and have a material adverse effect on us in the future.

A recent unfavorable jury verdict could have a material adverse effect on our financial results.

        A jury returned a verdict of approximately $53.9 million in damages against us in November 2009, consisting of approximately $4.7 million in compensatory damages and $49.2 million in punitive damages, which was subsequently reduced by the trial court judge to $15.5 million, consisting of approximately $10.8 million in punitive damages and $4.7 million in compensatory damages. We, as well as the plaintiffs, are appealing. On December 15, 2010, the trial court increased the amount of the supersedeas bond from $27.2 million to $72.2 million, an amount which represented the original judgment plus interest. We appealed the bond increase, and on March 31, 2011, the Court of Appeals ruled in our favor and set the amount of the supersedeas bond at $27.2 million. We will continue to defend this matter vigorously. Although we have made provisions in our consolidated financial statements for this self-insured matter, the amount of our legal reserve is less than the amount of the damages awarded by the trial court, including accrued interest. If our appeal to obtain a new trial or to reduce the amount of the damages is unsuccessful, it would reduce our capital resources available to fund acquisitions and other operations, which could have a material adverse effect on our financial condition, results of operations and cash flows.

We face substantial competition in attracting and retaining experienced personnel, and we may be unable to grow our business if we cannot attract and retain qualified employees.

        Our success depends to a significant degree on our ability to attract and retain highly qualified and experienced social service professionals who possess the skills and experience necessary to deliver high quality services to our clients. These employees are in great demand and are likely to remain a limited resource for the foreseeable future. Contractual requirements and client needs determine the number, education and experience levels of social service professionals we hire. Our ability to attract and retain employees with the requisite experience and skills depends on several factors including, but not limited to, our ability to offer competitive wages, benefits and professional growth opportunities. The inability to attract and retain experienced personnel could have a material adverse effect on our business.

We may not realize the anticipated benefit of any future acquisitions and we may experience difficulties in integrating these acquisitions.

        As part of our growth strategy, we intend to make selective acquisitions. Additionally, we also assess opportunities to maximize shareholder value and seek diversification through investments with other business partners. We may need additional funds to continue to take advantage of acquisition

25

Table of Contents

opportunities, and financing may not be available on acceptable terms or at all. Growing our business through acquisitions involves risks because with any acquisition there is the possibility that:

•

we may be unable to maintain and renew the contracts of the acquired business;



•

unforeseen difficulties may arise when integrating the acquired operations, including information systems and accounting controls;



•

operating efficiencies, synergies, economies of scale and cost reductions may not be achieved as expected;



•

the business we acquire may not continue to generate income at the same historical levels on which we based our acquisition decision;



•

management may be distracted from overseeing existing operations by the need to integrate the acquired business;



•

we may acquire or assume unexpected liabilities or there may be other unanticipated costs;



•

we may fail to retain and assimilate key employees of the acquired business;



•

we may finance the acquisition by additional debt and may become highly leveraged; and



•

the culture of the acquired business may not match well with our culture.

        As a result of these risks, our future acquisitions may not be successful, which may have a material adverse effect on our business, financial condition and results of operations.

Our insurance coverage and self-insurance reserves may not cover future claims.

        Workers' compensation, employee health, general/professional and auto liability insurance claims and premiums represent significant costs to us. Because we self-insure for a portion of these risks, our insurance expense is dependent on claims experience, our ability to control our claims experience, and in the case of workers' compensation and employee health, rising healthcare costs in general. Unanticipated additional insurance costs could adversely impact our results of operations and cash flows.

        As well, changes in the market for insurance may affect our ability to obtain insurance coverage at reasonable rates. Changes in our annual insurance costs and self-insured retention limits and excess coverage availability depend in large part on the insurance market. We utilize historical data to estimate our reserves for our insurance programs. Beginning on July 1, 2005, we have excess general and professional liability insurance coverages. Prior to July 1, 2005, we were fully self-insured for general and professional liability claims. If losses on asserted claims exceed the current insurance coverage and accrued reserves, our business, results of operations, financial condition and ability to meet obligations under our indebtedness could be adversely affected.

Our industry is subject to substantial government regulation and if we fail to comply with those regulations, we could suffer penalties or be required to make significant changes to our operations.

        The human services industry, including our Company, is required to comply with extensive and complex laws and regulations at each foreign country level and domestically at the federal, state and local government levels relating to, among other things:

•

licensure and certification;



•

adequacy and quality of health care services and employment services;



•

qualifications of health care and support personnel;

26

Table of Contents

•

confidentiality, maintenance and security issues associated with medical or other personal records and claims processing;



•

relationships with referral sources;



•

operating policies and procedures;



•

addition of facilities and services; and



•

billing for services.

        Many of these laws and regulations are expansive, and we do not always have the benefit of significant regulatory or judicial interpretation of them. In the future, different interpretations or enforcement of these laws and regulations could subject our current or past practices to allegations of impropriety or illegality or could require us to make changes in our facilities, equipment, personnel, services, capital expenditure programs and operating expenses.

        If we fail to comply with applicable laws and regulations, we could be subject to various sanctions, including criminal penalties, civil penalties (including the loss of our licenses or contracts to operate one or more of our homes or facilities) and exclusion of one or more of our homes or facilities from participation in the Medicare, Medicaid and other federal and state health care programs. Similar risks would apply in each foreign country where we do business. We have had in the past some of our licenses suspended or terminated and/or one or more of our facilities excluded. If allegations of noncompliance were to arise in the future in respect of a significant subsidiary or in respect of ResCare that might jeopardize its participation in Medicare or Medicaid, an adverse outcome could have a material adverse effect on our business, results of operations or liquidity.

        Both federal and state government agencies have heightened and coordinated civil and criminal enforcement efforts as part of numerous ongoing investigations of health care companies. These investigations relate to a wide variety of topics, including:

•

billing practices;



•

quality of care;



•

financial relationships with referral sources; and



•

medical necessity of services provided.

        Like other participants in the human services industry, we receive requests and demands for information from government agencies in connection with the regulatory or investigational authority. Such requests can include subpoenas, civil investigative demands, demand letters or search warrants for documents to assist the government in audits or investigations. In addition, under the False Claims Act, private parties have the right to bring "qui tam" whistleblower lawsuits against companies that submit false claims for payments to the government. A number of states and cities have adopted similar whistleblower and false claims provisions.

We are required to comply with laws governing the transmission, privacy and security of health information.

        The Health Insurance Portability and Accountability Act of 1996 (HIPAA) and Health Information Technology and Clinical Health Act of 2009 (HITECH) require us to comply with standards for privacy and security of health information, including the exchange of health information within our Company and with third parties, such as payors, business associates and patients. HIPAA and HITECH also require us to comply with standards for transmission of health information in common health care transactions. HIPAA and HITECH requirements include standards for:

•

claims information, plan eligibility, payment information and the use of electronic signatures;

27

Table of Contents

•

unique identifiers for providers, employers, health plans and individuals;



•

protecting the privacy of health information;



•

maintaining the security of health information; and



•

HIPAA enforcement.

        If we fail to comply with these standards, we could be subject to criminal penalties and civil sanctions, including the significantly expanded penalties enacted under HITECH.

We are required to comply with laws governing Medicaid services.

        The Deficit Reduction Act of 2005 (DRA) requires our operations to comply with Medicaid billing requirements. The DRA also mandated changes to our compliance program. While we believe that our operations are in compliance, the added scrutiny resulting from the DRA could have a material adverse effect on our operations and financial results.

        We are subject to the Payment Error Rate Measurement (PERM) program implemented to measure improper payments in the Medicaid program and the Children's Health Insurance Program (CHIP). If PERM audits require us to repay a material amount to states as a result of payment errors, it could have a material adverse effect on our business, financial condition or results of operations.

Increases in regulatory oversight can result in higher operating costs.

        Although we believe we are operating in material compliance with established laws and regulations, state regulatory agencies often have broad powers to mandate the types and levels of services we provide to individuals without providing appropriate funding. Future increased regulatory oversight could result in higher operating costs, including labor, consulting and maintenance expenditures, and historical losses.

Media coverage critical of us or our industry may harm our results.

        Media coverage of the industry, including operators of facilities and programs for individuals with intellectual and other developmental disabilities, has, from time to time, included reports critical of the current trend toward privatization and of the operation of certain of these facilities and programs. Adverse media coverage about providers of these services in general, and us in particular, could lead to increased regulatory scrutiny in some areas, and could have a material adverse effect on our revenues and profitability by, among other things, adversely affecting our ability to obtain or retain contracts, discouraging government agencies from privatizing facilities and programs, increasing regulation and resulting compliance costs, or discouraging clients from using our services.

Our facility and program expenses fluctuate.

        Our facility and program expenses may also fluctuate from period to period, due in large part to changes in labor costs, insurance and energy costs. Labor costs are affected by a number of factors, including the availability of qualified personnel, effective management of our programs, changes in service models, state budgetary pressures, severity of weather and other natural disasters. Our annual insurance costs and self-insured retention limits can rise due to developments in the insurance market or our claims history. Significant fluctuations in our facility and program expenses may have a material adverse effect on our business, results of operations and financial condition.

Our quarterly operating results may fluctuate significantly.

        Our revenues and net income may fluctuate from quarter to quarter, in part because annual Medicaid rate adjustments may be announced by the various states at different times of the year and

28

Table of Contents

are usually retroactive to the beginning of the particular state's fiscal reporting period. Generally, future adjustments in reimbursement rates in most states will consist primarily of cost-of-living adjustments, adjustments based upon reported historical costs of operations, or other negotiated changes in rates. However, many states in which we operate are experiencing budgetary pressures and certain of these states, from time to time, have initiated service reductions, or rate freezes and/or rate reductions. Some reimbursement rate increases must be paid to our direct care staff in the form of wage pass-throughs. Additionally, some states have, from time to time, revised their rate-setting methodologies, which has resulted in rate decreases as well as rate increases.

If downsizing, privatization and consolidation in our industry do not continue, our business may not continue to grow.

        The maintenance and expansion of our operations depend on the continuation of trends toward downsizing, privatization and consolidation, and our ability to tailor our services to meet the specific needs of the populations we serve. Our success in a changing operational environment is subject to a variety of political, economic, social and legal pressures, virtually all of which are beyond our control. Such pressures include a desire of governmental agencies to reduce costs and increase levels of services; federal, state and local budgetary constraints or shortfalls; political pressure from unions opposed to privatization or for-profit service providers; and actions brought by advocacy groups and the courts to change existing service delivery systems. Material changes resulting from these trends and pressures could adversely affect the demand for and reimbursement of our services and our operating flexibility, and ultimately our revenues and profitability.

If we fail to establish and maintain appropriate relationships with officials of government agencies, we may not be able to successfully procure or retain government-sponsored contracts which could negatively impact our revenues.

        To facilitate our ability to procure or retain government-sponsored contracts, we rely in part on establishing and maintaining appropriate relationships with officials of various government agencies. These relationships enable us to maintain and renew existing contracts and obtain new contracts and referrals. These relationships also enable us to provide informal input and advice to the government agencies prior to the development of a "request for proposal" or program for privatization of social services and enhance our chances of procuring contracts with these payors. The effectiveness of our relationships may be reduced or eliminated with changes in the personnel holding various government offices or staff positions. We also may lose key personnel who have these relationships. Any failure to establish, maintain or manage relationships with government and agency personnel may hinder our ability to procure or retain government-sponsored contracts.

Events that harm our reputation with governmental agencies and advocacy groups could reduce our revenues and operating results.

        Our success in obtaining new contracts and renewals of our existing contracts depends upon maintaining our reputation as a quality service provider among governmental authorities, advocacy groups for individuals with developmental disabilities and their families, and the public. We also rely on government entities to refer clients to our facilities and programs. Negative publicity, changes in public perception, the actions of clients under our care or investigations with respect to our industry, operations or policies could increase government scrutiny, increase compliance costs, hinder our ability to obtain or retain contracts, reduce referrals, discourage privatization of facilities and programs, and discourage clients from using our services. Any of these events could have a material adverse effect on our business, results of operations, financial condition or ability to satisfy our obligations under our indebtedness.

29

Table of Contents

A loss of our status as a licensed service provider in any jurisdiction could result in the termination of existing services and our inability to market our services in that jurisdiction.

        We operate in numerous jurisdictions and are required to maintain licenses and certifications in order to conduct our operations in each of them. Each state and county has its own regulations, which can be complicated, and each of our service lines can be regulated differently within a particular jurisdiction. As a result, maintaining the necessary licenses and certifications to conduct our operations can be cumbersome. Our licenses and certifications could be suspended, revoked or terminated for a number of reasons, including: the failure by some of our facilities or employees to properly care for clients; the failure to submit proper documentation to the government agency, including documentation supporting reimbursements for costs; the failure by our programs to abide by the applicable regulations relating to the provisions of human services; or the failure of our facilities to abide by the applicable building, health and safety codes and ordinances. We have had some of our licenses or certifications suspended or terminated in the past. If we lose our status as a licensed provider of human services in any jurisdiction or any other required certification, we would be unable to market our services in that jurisdiction, and the contracts under which we provide services in that jurisdiction could be subject to termination. Moreover, such an event could constitute a violation of provisions of contracts in other jurisdictions, resulting in other contract terminations. Any of these events could have a material adverse effect on our business, results of operations, financial condition or ability to satisfy our obligations under our indebtedness.

Expenses incurred and fees earned under government contracts are subject to scrutiny.

        We derive substantially all of our revenues from federal, state and local government agencies. As a result of our participation in these government funded programs, we are often subject to governmental reviews, audits and investigations to verify our compliance with applicable laws and regulations. As a result of these reviews, audits and investigations, these government payors may be entitled to, in their discretion:

•

terminate or modify our existing contracts;



•

suspend or prevent us from receiving new contracts or extending existing contracts because of violations or suspected violations of procurement laws or regulations;



•

impose fines, penalties or other sanctions on us;



•

reduce the amount we are paid under our existing contracts;



•

require us to refund amounts we have previously been paid; and/or



•

subject us to exclusion from participation in Medicaid and other federal and state health care programs.

        In some states, we operate on cost reimbursement contracts in which revenues are recognized at the time costs are incurred and services are rendered. These contracts provide reimbursement for direct facility and program costs related to operations, allowable indirect costs for general and administrative costs, plus a predetermined management fee, normally a combination of fixed and performance-based. In these states, payors audit our historical costs on a regular basis, and if it is determined that we do not have enough costs to justify our rates, our rates may be reduced, or we may be required to retroactively return fees paid to us. We cannot be assured that our rates will be maintained, or that we will be able to keep all payments made to us until an audit of the relevant period is complete.

        Under certain employment training contracts, we are required to maintain certain performance measures and if those measures are not met, we may be subject to financial penalties. Further, certain employment training contracts require us to administer payments for childcare and transportation on

30

Table of Contents

behalf of our participants, for which we are reimbursed by the customer. These costs are subject to governmental reviews and audits to verify our compliance with the contracts.

Our revenue growth has been related to increases in the number of individuals served in each of our operating segments.

        Our historical growth in revenues has been directly related to increases in the number of individuals served in each of our operating segments. This growth has depended largely upon development-driven activities, including the acquisitions of other businesses or facilities, the acquisition of management contract rights to operate facilities, the awarding of contracts to open new facilities, start new operations or to assume management of facilities previously operated by governmental agencies or other organizations, and the extension or renewal of contracts previously awarded to us. Our future revenues will depend primarily upon our ability to maintain, expand and renew existing service contracts and leases, and to a lesser extent upon our ability to obtain additional contracts to provide services to the special needs populations we serve, through awards in response to requests for proposals for new programs, in connection with facilities being privatized by governmental agencies, or by selected acquisitions.

We depend upon the continued services of certain members of our senior management team, without whom our business operations would be significantly disrupted.

        Our success depends, in part, on the continued contributions of our executive officers and other key employees. Our management team has significant industry experience and would be difficult to replace. If we lose or suffer an extended interruption in the service of one or more of our senior officers, it could have a material adverse effect on our financial condition and operating results. Moreover, the market for qualified individuals is highly competitive and we may not be able to attract and retain qualified personnel to replace or succeed members of our senior management or other key employees, should the need arise.

Much of our revenue is derived from state and local government and government procedures which can be complex.

        Government reimbursement, group home credentialing and client Medicaid and Medicare eligibility and service authorization procedures are often complicated and burdensome, and delays can result from, among other reasons, difficulties in timely securing documentation and coordinating necessary eligibility paperwork between agencies. These reimbursement and procedural issues occasionally cause us to have to resubmit claims several times before payment is remitted and are primarily responsible for our aged receivables. Changes in the manner in which state agencies interpret program policies and procedures, and review and audit billings and costs could have a material adverse effect on our business, results of operations, financial condition and our ability to meet obligations under our indebtedness.

If we cannot maintain effective controls and procedures that govern our billing and collections processes, such as maintenance of required documentation to support the services rendered, then our business, results of operations, financial condition and ability to satisfy our obligations under our indebtedness could be adversely affected.

        The collection of accounts receivable is a significant management challenge and requires continual focus. The limitations of some state information systems and procedures, such as the ability to obtain timely documentation or disperse funds electronically, may limit the benefits we derive from our automated billing and collection system. We must maintain effective controls and procedures for managing our billing and collection activities which includes having required documentation as necessary if we are to collect our accounts receivable on a timely basis. An inability to do so could have

31

Table of Contents

a material adverse effect on our business, results of operations, financial condition and ability to satisfy our obligations under our indebtedness.

        Our ability to collect accounts receivable is also subject to developments at state payor agencies and other factors outside our control. Changes in reimbursement procedures by the states, including engaging new agents to manage the reimbursement function, may delay reimbursement payments and create backlogs. Paying aged receivables may have a lower priority for states experiencing budgetary pressures despite our meeting applicable billing requirements. Events that delay or prevent our collection of accounts receivable could have a material adverse effect on our results of operations and financial condition and ability to satisfy our obligations under our indebtedness.

We operate in a highly competitive industry, which can adversely affect our results.

        We compete with other for-profit companies, not-for-profit entities, and governmental agencies for contracts. Competitive factors may favor other providers, thereby reducing our success in obtaining contracts, which in turn would hinder our growth. Non-profit providers may be affiliated with advocacy groups, health organizations, or religious organizations that have substantial influence with legislators and government agencies. States may give preferences to non-profit organizations in awarding contracts. Non-profit providers also may have access to government subsidies, foundation grants, tax deductible contributions and other financial resources not available to us. Governmental agencies and non-profit providers may be subject to limits on liability that do not apply to us.

        In some markets, smaller local companies may have a better understanding of local conditions and may have more political and public influence than we do. The competitive advantages enjoyed by other providers may decrease our ability to procure contracts and limit our revenues. Increased competition may also result in pricing pressures, loss of or failure to gain market share or loss of clients or payors, any of which could harm our business.

The interests of our controlling stockholders may conflict with your interests.

        The Onex Investors own 98% of the outstanding common stock of New Holdco. Accordingly, the Onex Investors can exercise a controlling influence over our business and affairs and have the power to determine all matters submitted to a vote of our stockholders, including the election of directors and approval of significant corporate transactions such as amendments to our certificate of incorporation, mergers and the sale of all or substantially all of our assets. The Onex Investors could cause corporate actions to be taken that conflict with the interests of our other stockholders or the holders of the notes offered hereby. Onex Corporation controls the voting of the Onex Investors. Gerald W. Schwartz, the Chairman, President and Chief Executive Officer of Onex Corporation, owns shares representing a majority of the voting rights of the shares of Onex Corporation.

        Additionally, the Onex Investors are in the business of making investments in companies and may from time to time in the future acquire controlling interests in businesses that complement or directly or indirectly compete with certain portions of our business. As a result, those acquisition opportunities may not be available to us.

We are subject to a number of risks due to our growth in international operations.

        Our international operations and acquisitions are subject to a number of risks. These risks include not only compliance with U.S. laws when operating in foreign jurisdictions, but also potential conflict between U.S. laws and the laws of foreign countries where we may do business, including, among others, data privacy, laws regarding licensing and labor council requirements. Foreign laws may impose new or different requirements, which may have a material adverse effect on our operations. In addition, we may experience difficulty integrating the management and operations of businesses we acquire internationally, and we may have difficulty attracting, retaining and motivating highly skilled and

32

Table of Contents

qualified personnel to staff key managerial positions in our ongoing international operations. Further, our international operations are subject to a number of risks related to general economic and political conditions in foreign countries where we operate, including, among others, fluctuations in foreign currency exchange rates, cultural differences, political instability, employee work stoppages or strikes and additional expenses and risks inherent in conducting operations in geographically distant locations. If we are unable to manage these risks, it could have a material adverse effect on our business, financial condition and operating results.

Labor changes could reduce our margins and profitability and adversely affect the quality of our care.

        Our cost structure and ultimate operating profitability are directly related to our labor costs. Labor costs may be adversely affected by a variety of factors, including limited availability of qualified personnel in each geographic area, local competitive forces, the ineffective utilization of our labor force, changes in minimum wages or other direct personnel costs, strikes or work stoppages by employees represented by labor unions, and changes in client services models, such as the trends toward supported living and managed care. We may not be able to negotiate labor agreements on satisfactory terms with our existing or any future labor unions. If any of the employees covered by collective bargaining agreements were to engage in a strike, work stoppage or other slowdown, we could experience a disruption of our operations and/or higher ongoing labor costs, which could have a material adverse effect on our business, financial condition and results of operations.

If the Employee Free Choice Act is adopted, it would be easier for unions to win representation, which could increase our labor costs.

        As of December 31, 2010, only 10% of our employees were represented by a labor union. The proposed Employee Free Choice Act of 2007: H.R. 800 (EFCA) would amend the National Labor Relations Act by making it easier for workers to obtain union representation and increasing the penalties employers may incur if they engage in labor practices in violation of the National Labor Relations Act. If passed, the EFCA, or a variation of the bill, could increase future unionization activities, which may increase our labor and other costs.

The federal health care reform legislation could adversely affect our financial condition or results of operations.

        In March 2010, the U.S. Congress passed and the President signed into law the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, which represent significant changes to the current U.S. health care system. The legislation contains a large number of health-related provisions to take effect over several years, including imposing new requirements on employer-sponsored health plans which may increase the cost of providing such benefits, modifying certain payment systems, reducing Medicare reimbursement rates for home health care services we provide to our clients and a number of other provisions that could reasonably be expected to impact our business.

        Many of the provisions of the legislation do not take effect for an extended period of time. Further revisions to this legislation could result from its implementation. We are unable to predict at this time all of the ramifications the enacted laws, or subsequent changes, may have on our business. This legislation could have a material adverse effect on our financial condition or results of operations.

If the fair values of our reporting units decline, we may have to record an additional material non-cash charge to earnings from impairment of our goodwill.

        As of December 31, 2010, we had $234.9 million of goodwill. On a quarterly basis, we look for indicators of impairment that could cause a reporting unit's fair value to be lower than its carrying

33

Table of Contents

value. The current economic and reimbursement environments and the ongoing uncertainty continue to pose challenges for our company. As discussed elsewhere in this memorandum, our revenues and profitability are being impacted by the following:

•

In the short term, the recent parliamentary election in the United Kingdom is expected to have a negative impact on our current and planned workforce contracts in that country. The newly elected government has announced its intention to replace the current welfare-to-work program with a different system by July 2011, which will require all service providers to re-bid on this business prior to that time.



•

State budgetary pressures are influencing governments to decrease or eliminate services in our Community Services Group, primarily in our Medicaid home-care business.



•

Some school districts have reduced or eliminated certain of our educational support services programs.

        In the fourth quarter of 2009, we recorded an impairment charge of $70.1 million for goodwill due primarily to declining profitability in certain reporting units as a result of deteriorating market conditions. In the third quarter of 2010, we recorded an additional estimated impairment charge of $65.6 million due to lower revenue and operating profitability expectations in certain reporting units. Step Two of the goodwill impairment test was completed in the fourth quarter of 2010. Step Two required that we determine the implied fair value of the reporting units' goodwill by allocating the reporting units' fair value determined in Step One to the fair value of the reporting units' net assets, including unrecognized intangible assets. The goodwill calculated in Step Two is then compared to the recorded goodwill, with an impairment charge recorded in the amount that the book value of goodwill exceeds the implied fair value of goodwill calculated in this step. As such, we recorded an additional impairment charge of $197.6 million related to goodwill in the fourth quarter of 2010.

34

Table of Contents

Use of Proceeds

        We will not receive any proceeds from the exchange offer. The outstanding notes surrendered in exchange for the exchange notes will be retired and canceled and cannot be reissued. Accordingly, issuance of the exchange notes and the surrender of the outstanding notes will not result in any change in our capitalization.

35

Table of Contents

Capitalization

        The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2010. You should read this table in conjunction with the information contained in "Use of Proceeds", "Selected Historical Consolidated Financial Data and Ratio of Earnings to Fixed Charges" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes included in this prospectus.

36

Table of Contents

Selected Historical Consolidated Financial Data and Ratio of Earnings to Fixed Charges

        The selected consolidated financial data below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements and related notes.

37

Table of Contents

Management's Discussion and Analysis of
Financial Condition and Results of Operations

Overview

        This Management's Discussion and Analysis (MD&A) section is intended to help the reader understand ResCare's financial performance and condition. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying notes. All references in this MD&A to "ResCare", "Company", "our company", "we", "us", or "our" mean Res-Care, Inc. and, unless the context otherwise requires, its consolidated subsidiaries. The individual sections of MD&A are:

•

Our Business—a general description of our business and revenue sources.



•

Application of Critical Accounting Policies—a discussion of accounting policies that require critical judgments and estimates.



•

Results of Operations—an analysis of our consolidated results of operations for the periods presented including analysis of our operating segments.



•

Financial Condition, Liquidity and Capital Resources—an analysis of cash flows, sources and uses of cash and financial position.



•

Contractual Obligations and Commitments—a tabular presentation of our contractual obligations and commitments for future periods.

Our Business

        We receive revenues primarily from the delivery of residential, training, educational and support services to various populations with special needs. As of December 31, 2010, we had three reportable operating segments: (i) Community Services, (ii) Job Corps Training Services and (iii) Employment Training Services. Management's discussion and analysis of each segment is included below. Further information regarding our segments is included in the Notes to Consolidated Financial Statements.

        Revenues for our Community Services operations are derived primarily from state Medicaid programs, other government agencies, commercial insurance companies and from management contracts with private operators, generally not-for-profit providers, who contract with state government agencies and are also reimbursed under the Medicaid program. Our services include social, functional and vocational skills training, supported employment and emotional and psychological counseling for individuals with intellectual or other disabilities. We also provide respite, therapeutic and other services to individuals with special needs and to older people in their homes. These services are provided on an as-needed basis or hourly basis through our periodic in-home services programs that are reimbursed on a unit-of-service basis. Reimbursement varies by state and service type, and may be based on a variety of methods including flat-rate, cost-based reimbursement, per person per diem, or unit-of-service basis. Generally, rates are adjusted annually based upon historical costs experienced by us and by other service providers, or economic conditions and their impact on state budgets. At facilities and programs where we are the provider of record, we are directly reimbursed under state Medicaid programs for services we provide and such revenues are affected by occupancy levels. At most facilities and programs that we operate pursuant to management contracts, the management fee is negotiated with the provider of record. Through ResCare HomeCare, we also provide in-home services to seniors on a private pay basis. We are concentrating growth efforts in the home care private pay business to further diversify our revenue streams.

        We operate vocational training centers under the federal Job Corps program administered by the Department of Labor (DOL) through our Job Corps Training Services operations. Under Job Corps contracts, we are reimbursed for direct facility and program costs related to Job Corps center

38

Table of Contents

operations, allowable indirect costs for general and administrative costs, plus a predetermined management fee. The management fee takes the form of a fixed contractual amount plus a computed amount based on certain performance criteria. All of such amounts are reflected as revenue, and all such direct costs are reflected as facility and program costs. Final determination of amounts due under Job Corps contracts is subject to audit and review by the DOL, and renewals and extension of Job Corps contracts are based in part on performance reviews.

        We operate job training and placement programs that assist disadvantaged job seekers in finding employment and improving their career prospects through our Employment Training Services operations. These programs are administered under contracts with local and state governments. We are typically reimbursed for direct facility and program costs related to the job training centers, allowable indirect costs plus a fee for profit. The fee can take the form of a fixed contractual amount (rate or price) or be computed based on certain performance criteria. The contracts are funded by federal agencies, including the DOL and Department of Health and Human Services (DHHS).

Acquisition Transaction

        On November 16, 2010, an affiliate of Onex Partners III LP and Onex Corporation purchased 21,044,765 shares of ResCare common stock in the Stock Tender Offer, increasing the beneficial ownership of the Onex Investors from 24.9% to 87.4% of the issued and outstanding shares of ResCare's common stock on an as-converted basis. This change of control resulted in a new basis of accounting under the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations (previously Statement of Financial Accounting Standards No. 141R). This change creates many differences between reporting for ResCare post-acquisition, as successor, and ResCare pre-acquisition, as predecessor. The accompanying consolidated financial statements and the notes to consolidated financial statements reflect separate reporting periods. The separate reporting periods are January 1, 2010 through November 15, 2010 (predecessor) and November 16, 2010 through December 31, 2010 (successor). Periods prior to and including 2009 are related to the predecessor. The total year end 2010 results are the combined successor and predecessor results.

Application of Critical Accounting Policies

        Our discussion and analysis of the financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts and related disclosures of commitments and contingencies. We rely on historical experience and on various other assumptions that we believe to be reasonable under the circumstances to make judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

        We believe the following critical accounting policies involve the more significant judgments and estimates used in the preparation of our Consolidated Financial Statements. Management has discussed the development, selection, and application of our critical accounting policies with our Audit Committee.

Valuation of Accounts Receivable

        Accounts receivable consist primarily of amounts due from Medicaid programs, other government agencies and commercial insurance companies. An estimated allowance for doubtful accounts receivable is recorded to the extent it is probable that a portion or all of a particular account will not be collected. In evaluating the collectibility of accounts receivable, we consider a number of factors, including historical loss rates, age of the accounts, changes in collection patterns, the status of ongoing disputes with third-party payors, general economic conditions and the status of state budgets. Complex

39

Table of Contents

rules and regulations regarding billing and timely filing requirements in various states are also a factor in our assessment of the collectibility of accounts receivable. Actual collections of accounts receivable in subsequent periods may require changes in the estimated allowance for doubtful accounts. Changes in these estimates are charged or credited to the results of operations in the period of the change of estimate.

Insurance Losses

        We self-insure a substantial portion of our professional, general and automobile liability, workers' compensation and health benefit risks. These liabilities are necessarily based on estimates and, while we believe that the provision for loss is adequate, the ultimate liability may be more or less than the amounts recorded. Provisions for losses for workers' compensation risks are based upon actuarially determined estimates and include an amount determined from reported claims and an amount based on past experiences for losses incurred but not reported. Estimates of workers' compensation claims reserves have been discounted using a discount rate of 3% at December 31, 2010 and 2009. The liabilities are reviewed quarterly and any adjustments are reflected in earnings in the period known.

Legal Contingencies

        We are party to numerous claims and lawsuits with respect to various matters. The material legal proceedings in which ResCare is currently involved are described in the Legal proceedings on page 63 of this report and Note 15 to the Consolidated Financial Statements. We provide for costs related to contingencies when a loss is probable and the amount is reasonably determinable. We confer with outside counsel in estimating our potential liability for certain legal contingencies. While we believe our provision for legal contingencies is adequate, the outcome of legal proceedings is difficult to predict and we may settle legal claims or be subject to judgments for amounts that exceed our estimates.

Valuation of Long-Lived Assets

        We regularly review the carrying value of long-lived assets with respect to any events or circumstances that indicate a possible inability to recover their carrying amount. Indicators of impairment include, but are not limited to, loss of contracts, significant census declines, reductions in reimbursement levels, significant litigation and impact of economic conditions on service demands and levels. Our evaluation is based on cash flow, profitability and projections that incorporate current or projected operating results, as well as significant events or changes in the reimbursement and regulatory environment. If circumstances suggest the recorded amounts cannot be recovered, the carrying values of such assets are reduced to fair value based upon various techniques to estimate fair value.

Goodwill and Other Indefinite-Lived Intangible Assets

        With respect to businesses we have acquired, we evaluate the costs of purchased businesses in excess of net assets acquired (goodwill) for impairment annually, unless significant changes in circumstances indicate a potential impairment may have occurred sooner. We are required to test goodwill on a reporting unit basis. We use a fair value approach to test goodwill for impairment and recognize an impairment charge for the amount, if any, by which the carrying amount of goodwill exceeds its implied fair value. Fair values are established using a weighted average of comparative market multiples in the current market conditions and discounted cash flows.

        Discounted cash flow computations depend on a number of factors including estimates of future market growth and trends, forecasted revenue and costs, expected periods the assets will be utilized, appropriate discount rates and other variables. We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. In addition, we make certain judgments about the selection of

40

Table of Contents

comparable companies used in determining market multiples in valuing our reporting units, as well as certain assumptions to allocate shared assets and liabilities to calculate values for each of our reporting units.

        At December 31, 2010, we had approximately $234.9 million of goodwill and $227.4 million of other indefinite-lived intangible assets. Goodwill at December 31, 2010, reflects the excess purchase price from the Acquisition as described in Note 2 of the Consolidated Financial Statements plus goodwill recorded from acquisitions completed during successor period ended December 31, 2010. Other indefinite-lived intangible assets include licenses that are essential for ResCare to operate its businesses in various states and other jurisdictions. Goodwill and other indefinite-lived intangible assets are not amortized. As all indefinite-lived intangible assets and goodwill were recorded at fair value as of November 16, 2010, no impairments were recorded during the successor period ended December 31, 2010.

        During the third quarter of 2010 (predecessor period), we updated our current and future year forecasts. The updated revenues and profits in the forecasts were negatively impacted by various contract losses, rate and service cuts by numerous states and other factors attributed to the general economic environment. We concluded that these factors were indicators of possible impairment of goodwill, requiring an interim impairment test during the quarter. We performed the interim test on all five reporting units. As such, the Company recorded an estimated impairment charge during the third quarter of 2010 of $65.6 million. Accordingly, the net carrying values of goodwill in the Community Services, International and Schools reporting units were reduced $46.9 million, $13.8 million and $4.9 million, respectively. Step Two of the goodwill impairment test was completed for these three reporting units in the fourth quarter of 2010. Step Two required that we determine the implied fair value of the reporting units' goodwill by allocating the reporting units' fair value determined in Step One to the fair value of the reporting units' net assets, including unrecognized intangible assets. The goodwill calculated in Step Two is then compared to the recorded goodwill, with an impairment charge recorded in the amount that the book value of goodwill exceeds the implied fair value of goodwill calculated in this step. As such, we recorded an additional impairment charge of $197.6 million related to goodwill in the fourth quarter of 2010, including $199.0 million recorded in the Community Services reporting unit, $0.6 million reduction to the third quarter charge recorded in the Schools reporting unit and $0.9 million reduction to the third quarter charge recorded in the International reporting unit. In total, we recorded $263.2 million in goodwill impairment charges during the predecessor period. See Note 4 of the Consolidated Financial Statements for the details of the impairment charge. A goodwill impairment charge was recorded in December 2009 in the amount of $53.1 million related to the Employment Training Services reporting unit, $8.8 million related to the Schools reporting unit and $8.2 million related to the International reporting unit. No impairment loss was recognized for any of the reporting units as a result of the impairment tests in 2008.

Revenue Recognition

        Overview:    We recognize revenues as they are realizable and earned in accordance with SEC Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements (SAB 104). SAB 104 requires that revenue can only be recognized when persuasive evidence of an arrangement exists, services have been rendered, the price is fixed or determinable and collectibility is reasonably assured.

        Community Services.    Revenues are derived primarily from state Medicaid programs, other government agencies, commercial insurance companies and from management contracts with private operators, generally not-for-profit providers, who contract with state agencies and are also reimbursed under the Medicaid programs. Revenues are recorded at rates established at or before the time services are rendered. Revenue is recognized in the period services are rendered. Depending upon the state's reimbursement policies and practices, management contract fees are computed on the basis of a fixed fee per individual, which may include some form of incentive payment, a percentage of operating

41

Table of Contents

expenses (cost-plus contracts), a percentage of revenue or an overall fixed fee paid regardless of occupancy.

        Job Corps Training Services.    Revenues include amounts reimbursable under cost reimbursement contracts with the DOL for operating Job Corps centers for education and training programs. The contracts provide reimbursement for direct facility and program costs related to operations, allowable indirect costs for general and administrative costs, plus a predetermined management fee, normally a combination of fixed and performance-based. Final determination of amounts due under the contracts is subject to audit and review by the applicable government agencies. Revenue is recognized in the period associated costs are incurred and services are rendered.

        Employment Training Services.    Revenues are derived primarily through contracts with local and state governments funded by federal agencies. Revenue is generated from contracts which contain various pricing arrangements, including: (1) cost reimbursable, (2) performance-based, (3) hybrid and (4) fixed price.

        With cost reimbursable contracts, revenue consists of the direct costs associated with functions that are specific to the contract, plus an indirect cost percentage that is applied to the direct costs, plus a profit. Revenue is recognized in the period the associated costs are incurred and services are rendered.

        Under a performance-based contract, revenue is generally recognized as earned based upon the attainment of a unit performance measure times the fixed unit price for that specific performance measure. Typically, there are many different performance measures that are stipulated in the contract that must be tracked to support the billing and revenue recognition. Revenue may be recognized prior to achieving a benchmark as long as reliable measurements of progress-to-date activity can be obtained, indicating that it is probable that the benchmark will be achieved. This requires judgment in determining what is considered to be a reliable measurement.

        Revenues for hybrid contracts are generally recognized based on the specific contract language. The most common type of hybrid contract is "cost-plus," which provide for the reimbursement of direct and indirect costs with profit tied to meeting certain performance measures. Revenues for cost-plus contracts are generally recognized in the period the associated costs are incurred with an estimate made for the performance-based portion, as long as reliable measurements of progress-to-date activity can be obtained, indicating that it is probable that the benchmark will be achieved. This requires judgment in determining what is considered to be a reliable measurement.

        Revenues for fixed price contracts are generally recognized in the period services are rendered. Certain of our long-term fixed price contracts may contain performance-based measures that can increase or decrease our revenue. Revenue is deferred in cases where the fixed price is not determinable as a result of these provisions.

        Laws and regulations governing the government programs and contracts are complex and subject to interpretation. As a result, there is at least a reasonable possibility that recorded estimates could change by a material amount in the near term. For each operating segment, expenses are subject to examination by agencies administering the contracts and services. We believe that adequate provisions have been made for potential adjustments arising from such examinations. There were no material changes in the application of our revenue recognition policies during 2010.

42

Table of Contents

Results of Operations