EX-99 3 l97165aexv99.txt EX-99 PRESS RELEASE NEWS [RESCARE LOGO] RELEASE ResCare - 10140 Linn Station Road o Louisville, Kentucky 40223-3813 - Phone: 502.394.2100 - www.rescare.com Contact: Nel Taylor Chief Communication Officer ResCare 502/394-2357 ntaylor@rescare.com ------------------- RESCARE REPORTS THIRD QUARTER EARNINGS OF $0.15 PER SHARE LOUISVILLE, KY (NOVEMBER 5, 2002) - ResCare (Nasdaq/NM: RSCR), the nation's leading provider of services to persons with developmental disabilities and people with special needs, today announced net income of $3.7 million, or $0.15 per diluted share, for the three months ended September 30, 2002, versus $3.5 million, or $0.14 per diluted share, for the same period in 2001. Revenues for the third quarter of 2002 were $236.6 million, up from $224.8 million in the year-earlier period. For the nine months ended September 30, 2002, net income was $9.8 million, or $0.40 per diluted share, versus $6.3 million, or $0.26 per diluted share, for the nine months ended September 30, 2001. Revenues for the nine months ended September 30, 2002, were $696.7 million, up from $665.5 million in the year-earlier period. Effective January 1, 2002, the Company adopted SFAS 142 and is no longer amortizing goodwill. Pro forma earnings per share for the third quarter and nine months ended September 30, 2001, would have been $0.21 and $0.44 per share, respectively, assuming the new accounting standard had been adopted at the beginning of 2001. Today, the Company announced the signing of a definitive agreement with Media, Pennsylvania-based ARBOR, Inc., a job training and placement company with operations in New York, New Jersey, Pennsylvania, Georgia and California, to purchase the assets of ARBOR's Employment & Training Division (ARBOR E&T). The transaction is expected to close in the first quarter of 2003, subject to licensing and other approvals. Upon completion of the transaction, ARBOR E&T will become part of ResCare's Division for Training Services and is expected to generate approximately $20 million in annual revenue. Ronald G. Geary, ResCare chairman, president and chief executive officer, said, "We are pleased with our performance while operating in an adverse environment. Challenging state reimbursement issues, coupled with increasing costs during a period of economic uncertainty, make me proud of the efforts of all our employees who still manage to provide optimal care and deliver positive financial results under such circumstances." -MORE- ResCare Reports Third Quarter Earnings Page 2 November 5, 2002 As anticipated in the second quarter 10-Q, effective September 30, 2002, the Company is in non-compliance of its interest coverage covenant in its Bank Agreement. The Company is seeking an amendment of the Bank Agreement that will, among other things, provide a retroactive waiver of the covenant. Management is confident that the amendment will be in place within the next two weeks. To date, the Company has not drawn on the revolver and has the capacity to replace the standby Letters of Credit issued under the Bank Agreement. Mr. Geary added, "We continued to make progress during the quarter in adding new homes. Through the first nine months of the year, we have added 108 new homes. In as much as these homes are add-ons to our existing clusters, administrative costs are lower and margins are strengthened. We are also on track with our internal budget goals relating to the periodic in-home services we deliver. This component of our business continues to be strong, and we are focusing considerable resources on this growing area to sustain and accelerate this positive trend." The Company also announced that it expected to achieve the lower end of the range of its earlier guidance of $0.53 to $0.57 per diluted share for full year 2002. The Company cited challenging factors including the general economic environment, state reimbursement issues and reduced contribution from a non-core operation in Texas that may be sold or closed. ResCare expects earnings per share for 2003 to be approximately in the same range as 2002, but the Company believes that there are opportunities for some improvement. In closing, Mr. Geary said, "We intend to capitalize on the challenging economic environment. We view it as an opportunity, and experience has proven our outlook to be correct. Being in this business for 28 years has taught us to take advantage of economic downturns while still being prudent stewards of our shareholders' investment. Recent examples include our ongoing assumption of distressed operations, which are adding substantial value, as well as pursuing selective acquisitions such as ARBOR E&T, which will be accretive to earnings. We will be successful because we have a vital franchise. The vulnerable populations we serve must have these essential services, and no one is in a stronger position to provide them than ResCare." A listen-only simulcast and replay of ResCare's third quarter conference call will be available on-line at www.rescare.com and www.companyboardroom.com on November 6, 2002, beginning at 9:00 a.m. Eastern Time. ResCare, founded in 1974, offers services to some 27,000 people in 32 states, Washington, D.C., Puerto Rico and Canada. Of these, approximately 10,000 are youth with special needs and 17,000 are people with developmental or other disabilities. The Company is based in Louisville, KY. More information about ResCare is available on the Company's web site at www.rescare.com. The Company from time to time makes forward-looking statements in its public disclosures, including statements relating to the Company's expected financial results, revenues that might be expected from new or acquired programs and facilities, other statements regarding development and acquisition activities, statements regarding reimbursement under federal and state programs, statements regarding compliance with debt covenants and other risk factors and statements regarding various trends favoring downsizing, de-institutionalization and privatization of government programs. In the Company's filings under the federal securities laws, including its annual, periodic and current reports, the Company identifies important factors that could cause the Company's results to differ materially from those contained in such forward-looking statements. Please refer to the discussion of those factors in the Company's filed reports. -MORE- ResCare Reports Third Quarter Earnings Page 3 November 5, 2002 RESCARE, INC. UNAUDITED FINANCIAL HIGHLIGHTS (In thousands, except per share data)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------- ------------------------- 2002 2001 2002 2001 --------- --------- --------- --------- INCOME STATEMENT DATA: Revenues $ 236,629 $ 224,759 $ 696,724 $ 665,529 Facility and program expenses 213,856 201,684 629,087 599,604 --------- --------- --------- --------- Facility and program contribution 22,773 23,075 67,637 65,925 Operating expenses (income): Corporate general and administrative 9,264 8,182 26,487 23,723 Depreciation and amortization 2,964 5,186 8,983 16,038 Special charges - - - 1,729 Other income (1,071) (924) (1,373) (834) --------- --------- --------- --------- Total operating expenses 11,157 12,444 34,097 40,656 --------- --------- --------- --------- Operating income 11,616 10,631 33,540 25,269 Interest, net 6,084 4,383 18,266 14,187 --------- --------- --------- --------- Income before income taxes 5,532 6,248 15,274 11,082 Income tax expense 1,846 2,718 5,499 4,821 --------- --------- --------- --------- Net income $ 3,686 $ 3,530 $ 9,775 $ 6,261 ========= ========= ========= ========= Basic and diluted earnings per share $ 0.15 $ 0.14 $ 0.40 $ 0.26 ========= ========= ========= ========= Weighted average number of common shares: Basic 24,418 24,365 24,406 24,351 Diluted 24,464 24,733 24,614 24,474 EBITDA (1) $ 14,580 $ 15,816 $ 42,523 $ 43,036 EBITDAR (1) 22,731 23,592 66,515 65,141
Note: Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142 and is no longer amortizing goodwill. Net income for the three months ended September 30, 2001, includes goodwill amortization of $2.0 million, or $0.07 per basic and diluted share. Net income for the nine months ended September 30, 2001, includes goodwill amortization of $6.0 million, or $0.18 per basic and diluted share. (1) EBITDA is defined as income before depreciation and amortization, net interest expense and income taxes. EBITDAR is defined as EBITDA before facility rent. EBITDA and EBITDAR should not be considered as measures of financial performance under accounting principles generally accepted in the United States of America and the items excluded from EBITDA and EBITDAR are significant components in understanding and assessing financial performance. -MORE- ResCare Reports Third Quarter Earnings Page 4 November 5, 2002 RESCARE, INC. UNAUDITED FINANCIAL HIGHLIGHTS (CONTINUED) (In thousands)
SEPT. 30, JUNE 30, DEC. 31, 2002 2002 2001 -------- -------- -------- BALANCE SHEET DATA: ASSETS Cash and cash equivalents $ 55,140 $ 63,947 $ 58,997 Short-term investments 3,636 -- -- Accounts and notes receivable, net 147,785 142,488 132,181 Other current assets 39,537 39,981 35,740 -------- -------- -------- Total current assets 246,098 246,416 226,918 Property and equipment, net 57,549 55,720 58,779 Excess of acquisition cost over net assets acquired, net 216,966 216,673 211,946 Other assets 32,263 30,493 37,293 -------- -------- -------- $552,876 $549,302 $534,936 ======== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities $ 97,215 $ 93,635 $ 84,041 Other long-term liabilities 9,920 9,089 8,752 Long-term debt 261,497 266,112 268,014 Shareholders' equity 184,244 180,466 174,129 -------- -------- -------- $552,876 $549,302 $534,936 ======== ======== ========
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------------- ----------------------- 2002 2001 2002 2001 -------- -------- -------- -------- CASH FLOW DATA: Cash provided by operating activities $ 2,892 $ 12,955 $ 15,754 $ 7,639 Cash flows from investing activities: Purchases of property and equipment (4,198) (3,588) (10,314) (7,044) Purchase of short-term investments (3,636) -- (3,636) -- Acquisitions of businesses -- -- (272) -- Proceeds from sales of assets 10 3,663 341 25,629 -------- -------- -------- -------- Cash provided by (used in) investing activities (7,824) 75 (13,881) 18,585 -------- -------- -------- -------- Cash flows from financing activities: Net repayments of long-term debt (3,880) (12,263) (5,949) (50,862) Proceeds received from exercise of stock options 5 88 219 330 -------- -------- -------- -------- Cash used in financing activities (3,875) (12,175) (5,730) (50,532) -------- -------- -------- -------- Increase (decrease) in cash and cash equivalents $ (8,807) $ 855 $ (3,857) $(24,308) ======== ======== ======== ========
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