11-K 1 l21107ae11vk.htm RES-CARE, INC. 11-K/PUERTO RICO EMPLOYEES Res-Care, Inc. 11-K
Table of Contents

 
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
     
þ
  ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 
    
 
  For the fiscal year ended December 31, 2005
 
    
OR
 
    
o
  TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
    
 
  For the transition period from                      to                     
Commission File Number: 1-13163
  A.   Full title of the plan and the address of the plan, if different from that of the issuer named below:
Res-Care, Inc. Retirement Savings Plan for Puerto Rico Employees
  B.   Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
Res-Care, Inc.
10140 Linn Station Road
Louisville, Kentucky 40223
 
 

 

 

 
RES-CARE, INC. RETIREMENT SAVINGS PLAN FOR PUERTO RICO EMPLOYEES
Financial Statements and Supplemental Schedule
December 31, 2005 and 2004
(With Report of Independent Registered
Public Accounting Firm Thereon)
 
RES-CARE, INC. RETIREMENT SAVINGS PLAN FOR PUERTO RICO EMPLOYEES
Table of Contents

 

Table of Contents

Report of Independent Registered Public Accounting Firm
Plan Administrator
Res-Care, Inc. Retirement Savings Plan for Puerto Rico Employees
We have audited the accompanying Statements of Net Assets Available for Benefits of the Res-Care, Inc. Retirement Savings Plan for Puerto Rico Employees (the Plan) as of December 31, 2005 and 2004 and the related Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 2005. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2005 and 2004 and the changes in net assets available for benefits for the year December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary Schedule of Assets (Held at End of Year) as of December 31, 2005 is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplementary schedule is the responsibility of the Plan’s management. The supplementary schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Mountjoy & Bressler, LLP
Louisville, Kentucky
June 6, 2006

 

Table of Contents

RES-CARE, INC.
RETIREMENT SAVINGS PLAN FOR PUERTO RICO EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
                 
    December 31,  
    2005     2004  
ASSETS
                
 
                
Investments, at fair value
   $ 1,277,376     $ 1,109,206  
 
            
 
                
Net Assets Available For Benefits
   $ 1,277,376     $ 1,109,206  
 
            
See accompanying independent auditor’s report and notes to financial statements

-2-

Table of Contents

RES-CARE, INC.
RETIREMENT SAVINGS PLAN FOR PUERTO RICO EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2005
         
Additions To Net Assets Attributed To:
        
Investment income:
        
Net appreciation in fair value of investments
   $ 55,675  
Interest
     5,924  
 
      
 
        
 
     61,599  
 
        
Contributions:
        
Employer
     61,075  
Participants’
     81,955  
 
      
 
        
 
     143,030  
 
      
 
        
Total additions
     204,629  
 
        
Deductions From Net Assets Attributed To:
        
Benefits paid
     19,554  
Administrative expenses
     16,905  
 
      
 
        
Total deductions
     36,459  
 
      
 
        
Net increase
     168,170  
 
        
Net Assets Available For Benefits:
        
 
        
Beginning of Year
     1,109,206  
 
      
 
        
End of Year
   $ 1,277,376  
 
      
See accompanying independent auditor’s report and notes to financial statements

-3-

Table of Contents

RES-CARE, INC.
RETIREMENT SAVINGS PLAN FOR PUERTO RICO EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE A—DESCRIPTION OF PLAN
The following description of the Res-Care, Inc. Retirement Savings Plan for Puerto Rico Employees (the Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General — Effective January 1, 1996, the Plan was adopted as a defined contribution plan covering certain employees of Res-Care, Inc. (the Company) employed in Puerto Rico who work 1,000 hours or more during a calendar year. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).
Trustee and Custodian — Effective January 1, 2003, the plan administrator established U.S. Bank, N.A. as Custodian of the Plan. Banco Popular de Puerto Rico, a local financial institution in Puerto Rico, serves as the Trustee for the Plan due to local requirements regarding benefit disbursements.
Contributions — Each year, participants may contribute up to 10 percent of pretax annual compensation, up to a limit of $8,000, as defined in the Plan. The Company matches 100 percent of the first 3 percent and 50 percent of the next 2 percent of base compensation that a participant contributes to the Plan. Participants may also contribute amounts representing distributions from other qualified defined benefit or contribution plans. Participants are immediately vested in their contributions and the Company matching contributions plus actual earnings thereon.
Participants’ Accounts — Each participant’s account is credited with the participant’s contribution and an allocation of (a) the Company’s contribution and (b) investment earnings and charged with an allocation of administrative expenses. Allocations are based on participant earnings or account balances, as defined by the Plan. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
Participant Loans — Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50 percent of their vested account balance. Loan terms range from one to five years. The loans are secured by the balance in the participant’s account and bear interest at prime plus 1 percent. Principal and interest are paid ratably through payroll deductions at each regular pay period.
Payment of Benefits — Upon termination of service, a participant may elect to receive a lump-sum amount in cash equal to the value of the participant’s vested interest in his or her account, or a direct rollover into another qualified plan. Benefits are also paid upon retirement, death or disability.

-4-

Table of Contents

RES-CARE, INC.
RETIREMENT SAVINGS PLAN FOR PUERTO RICO EMPLOYEES
NOTES TO FINANCIAL STATEMENTS—CONTINUED
December 31, 2005
NOTE B—SIGNIFICANT ACCOUNTING POLICIES
Following are the significant accounting policies followed by the Plan.
Basis of Presentation — The accompanying financial statements have been prepared on the accrual basis and present the net assets available for benefits and changes in those net assets.
Estimates — The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires the Plan administrator to make estimates and assumptions that affect the reported amounts of net assets available for benefits and the reported changes in net assets available for benefits during the reporting period. Actual results could differ from those estimates and assumptions.
Administration of Plan Assets — The Plan’s assets are held by the Custodian and the Trustee. Contributions are held and managed by the Custodian and Trustee, which invest cash received, interest and dividend income and makes distributions to participants. The Trustee also administers the payment of interest and principal on the participant loans, which is reimbursed to the Trustee through contributions as determined by the Company.
Payment of Benefits — Benefits are recorded when paid.
Risks and Uncertainties — The Plan provides for various investment options. Investment securities are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the values of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits and the statement of changes in net assets available for benefits.
NOTE C—INVESTMENTS
The Plan’s investments are held in bank-administered trust funds and are recorded at fair value based on quoted market prices of the fund’s underlying assets. Participant loans are valued at the amount borrowed less repayments, which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis and dividends are recorded on the ex-dividend date.
Continued

-5-

Table of Contents

RES-CARE, INC.
RETIREMENT SAVINGS PLAN FOR PUERTO RICO EMPLOYEES
NOTES TO FINANCIAL STATEMENTS—CONTINUED
December 31, 2005
NOTE C—INVESTMENTS—CONTINUED
The following table represents the fair value of individual investments which exceed 5 percent of the Plan’s net assets:
                 
    December 31,  
    2005     2004  
Interest in common/collective trust fund:
                
U.S. Bank Stable Asset Fund
   $ 561,931     $ 508,506  
 
                
Interest in registered investment companies:
                
T. Rowe Price Equity Income Fund
     170,078       154,439  
T. Rowe Price Mid Cap Growth Fund
     94,749       78,783  
M F S Total Return Fund Class A
     89,001       73,722  
Federated G N M A Fund Institutional Service Shares
     86,444       86,200  
 
                
Participant loans
     151,631       106,783  
During 2005, the Plan’s investments (including investments bought, sold and held during the year) appreciated in value as follows:
         
Interest in common/collective trust fund:
        
U.S. Bank Stable Asset Fund
   $ 19,286  
 
        
Interest in registered investment companies:
        
American Funds EuroPacific Growth Fund Class A
     656  
American Funds Growth Fund of America Class A
     983  
Federated G N M A Fund Institutional Service Shares
     2,127  
First American Investment Funds Equity Index Class Y
     771  
Franklin Managed Trust Rising Dividends Fund
     45  
M F S Total Return Fund Class A
     2,703  
T. Rowe Price Equity Income Fund
     6,626  
T. Rowe Price Mid Cap Growth Fund
     11,844  
Lord Abbott Small Cap Fund Class A
     3,275  
 
        
Common stock:
        
Res-Care, Inc.
     7,359  
 
      
 
        
 
   $ 55,675  
 
      
NOTE D—RELATED PARTY TRANSACTIONS
Plan assets totaling $63,119 are invested in the common stock of Res-Care, Inc., a related party. During the year ended December 31, 2005, the Plan had purchases and sales of this investment of approximately $8,500 and $4,500, respectively. Other Plan investments totaling $561,931 are invested in a common/collective trust fund managed by U.S. Bank, N.A., the Trustee. In addition, certain administrative functions are provided by the Company at no cost to the Plan and certain administrative costs incurred by the Plan are paid by the Company. These transactions qualify as party-in-interest transactions.

-6-

Table of Contents

RES-CARE, INC.
RETIREMENT SAVINGS PLAN FOR PUERTO RICO EMPLOYEES
NOTES TO FINANCIAL STATEMENTS—CONTINUED
December 31, 2005
NOTE E—PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right under the Plan agreement to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA.
NOTE F—INCOME TAXES
A determination letter dated January 1, 1997 has been received from the Internal Revenue Service stating that the Plan and the related trust qualified under the Internal Revenue Code (IRC) and, therefore, are exempt from Federal income taxes. The Plan has been amended since receiving the determination letter. The Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC.

-7-

Table of Contents

SUPPLEMENTARY SCHEDULE

 

Table of Contents

RES-CARE, INC.
RETIREMENT SAVINGS PLAN FOR PUERTO RICO EMPLOYEES
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
EIN: 61-0875371 Plan: 003
December 31, 2005
                         
    Identity of Issue, Borrower,               Current  
(a)   Lessor, or Similar Party (b)   Description (c)   Cost (d)     Value (e)  
   
U.S. Bank, N.A.
   American Funds EuroPacific Growth Fund Class A   $ 3,414     $ 4,099  
   
U.S. Bank, N.A.
   American Growth Fund of America Class A     7,586       8,782  
   
U.S. Bank, N.A.
   Federated G N M A Fund Institutional Service Shares     89,610       86,444  
   
U.S. Bank, N.A.
   First American Investment Funds Equity Index Class Y     13,892       17,104  
   
U.S. Bank, N.A.
   Franklin Managed Trust Rising Dividends Fund     1,499       1,598  
   
U.S. Bank, N.A.
   Lord Abbott Small Cap Fund Class A     28,197       28,840  
   
U.S. Bank, N.A.
   M F S Total Return Fund Class A     86,013       89,001  
   
U.S. Bank, N.A.
   T. Rowe Price Equity Income Fund     147,361       170,078  
   
U.S. Bank, N.A.
   T. Rowe Price Mid Cap Growth Fund     67,224       94,749  
*  
U.S. Bank, N.A.
   U.S. Bank Stable Asset Fund     519,505       561,931  
*  
U.S. Bank, N.A.
   Res-Care, Inc. Common Stock     30,168       63,119  
*  
Participant Loans
   Interest rates 5% - 10.5% per annum, various maturities     —       151,631  
   
 
                
   
 
                    
   
 
       $ 994,469     $ 1,277,376  
   
 
                
 
*   Denotes party-in-interest

 

Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  RES-CARE, INC. RETIREMENT SAVINGS PLAN FOR PUERTO RICO EMPLOYEES
 		  
  By:   /s/ Ralph G. Gronefeld, Jr.    
    Ralph G. Gronefeld, Jr.  
    President and Chief Executive Officer   
 
         
     
  By:   /s/ David W. Miles    
    David W. Miles   
    Chief Financial Officer   
 
Date: June 29, 2006
 
EXHIBIT INDEX
     
Exhibit    
Number   Description of Exhibit
23
  Consent of Independent Auditors