Subsidiary Guarantors (Tables)

6 Months Ended

Jun. 30, 2013

Subsidiary Guarantors

Schedule of condensed consolidating balance sheet

CONDENSED CONSOLIDATING BALANCE SHEET

June 30, 2013

(In thousands)

				Guarantor			Non-Guarantor						Consolidated
	ResCare, Inc.			Subsidiaries			Subsidiaries			Eliminations			Total
ASSETS
Current assets:
Cash and cash equivalents	$	57,765		$	2,693		$	618		$	—		$	61,076
Accounts receivable, net	18,391			211,757			291			—			230,439
Refundable income taxes	3,767			—			—			—			3,767
Deferred income taxes	17,355			—			—			—			17,355
Prepaid expenses and other current assets	11,247			11,678			420			—			23,345
Total current assets	108,525			226,128			1,329			—			335,982
Property and equipment, net	47,543			50,281			378			—			98,202
Goodwill	284,556			—			5,130			—			289,686
Other intangible assets, net	299,913			19,371			3			—			319,287
Intercompany	—			697,700			69,392			(767,092		)	—
Investment in subsidiaries	973,477			41,782			—			(1,015,259		)	—
Other assets	20,103			3,852			17			—			23,972
	$	1,734,117		$	1,039,114		$	76,249		$	(1,782,351	)	$	1,067,129
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
Trade accounts payable	$	16,940		$	17,737		$	60		$	—		$	34,737
Accrued expenses	57,541			56,778			828			—			115,147
Current portion of long-term debt	8,751			1,245			1,382			(1,382		)	9,996
Current portion of obligations under capital leases	—			6,670			—			—			6,670
Accrued income taxes	272			—			(47		)	—			225
Total current liabilities	83,504			82,430			2,223			(1,382		)	166,775
Intercompany	765,710			—			—			(765,710		)	—
Long-term liabilities	56,541			198			—			—			56,739
Long-term debt	353,138			1,400			—			—			354,538
Obligations under capital leases	—			14,028			—			—			14,028
Deferred income taxes	108,366			—			—			—			108,366
Total liabilities	1,367,259			98,056			2,223			(767,092		)	700,446
Preferred shares	—			—			—			—			—
Common stock	—			—			—			—			—
Additional paid-in capital	245,897			477,447			122,951			(600,398		)	245,897
Retained earnings	121,345			463,629			(47,672		)	(415,957		)	121,345
Accumulated other comprehensive (loss) income	(384		)	(18		)	(1,078		)	1,096			(384		)
Total shareholder’s equity-Res-Care, Inc.	366,858			941,058			74,201			(1,015,259		)	366,858
Noncontrolling interest	—			—			(175		)	—			(175		)
Total shareholder’s equity	366,858			941,058			74,026			(1,015,259		)	366,683
	$	1,734,117		$	1,039,114		$	76,249		$	(1,782,351	)	$	1,067,129

RES-CARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2012

(In thousands)

			Guarantor			Non-Guarantor						Consolidated
	ResCare, Inc.		Subsidiaries			Subsidiaries			Eliminations			Total
ASSETS
Current assets:
Cash and cash equivalents	$	42,633	$	4,795		$	2,706		$	—		$	50,134
Accounts receivable, net	21,515		206,491			371			—			228,377
Refundable income taxes	—		—			—			—			—
Deferred income taxes	17,589		—			—			—			17,589
Prepaid expenses and other current assets	11,620		9,981			515			—			22,116
Total current assets	93,357		221,267			3,592			—			318,216
Property and equipment, net	43,320		53,282			428			—			97,030
Goodwill	282,832		—			5,433			—			288,265
Other intangible assets, net	302,293		19,000			—			—			321,293
Intercompany	—		622,481			70,335			(692,816		)	—
Investment in subsidiaries	900,087		41,782			—			(941,869		)	—
Other assets	24,073		3,064			17			—			27,154
	$	1,645,962	$	960,876		$	79,805		$	(1,634,685	)	$	1,051,958
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
Trade accounts payable	$	20,499	$	17,181		$	58		$	—		$	37,738
Accrued expenses	55,299		58,729			848			—			114,876
Current portion of long-term debt	13,098		1,573			1,746			(1,722		)	14,695
Current portion of obligations under capital leases	—		6,052			—			—			6,052
Accrued income taxes	1,843		—			(30		)	—			1,813
Total current liabilities	90,739		83,535			2,622			(1,722		)	175,174
Intercompany	691,094		—			—			(691,094		)	—
Long-term liabilities	56,240		229			—			—			56,469
Long-term debt	357,527		893			—			—			358,420
Obligations under capital leases	—		11,632			—			—			11,632
Deferred income taxes	106,253		—			—			—			106,253
Total liabilities	1,301,853		96,289			2,622			(692,816		)	707,948
Preferred shares	—		—			—			—			—
Common stock	—		—			—			—			—
Additional paid-in capital	244,345		476,811			125,104			(601,915		)	244,345
Retained earnings	99,734		387,794			(47,445		)	(340,349		)	99,734
Accumulated other comprehensive (loss) income	30		(18		)	(377		)	395			30
Total shareholder’s equity-Res-Care, Inc.	344,109		864,587			77,282			(941,869		)	344,109
Noncontrolling interest	—		—			(99		)	—			(99		)
Total shareholder’s equity	344,109		864,587			77,183			(941,869		)	344,010
	$	1,645,962	$	960,876		$	79,805		$	(1,634,685	)	$	1,051,958

Schedule of condensed consolidating statement of comprehensive income

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

Three Months Ended June 30, 2013

(In thousands)

				Guarantor			Non-Guarantor						Consolidated
	ResCare, Inc.			Subsidiaries			Subsidiaries			Eliminations			Total
Revenues	$	62,612		$	332,866		$	755		$	—		$	396,233
Operating expenses	67,277			304,324			860			—			372,461
Operating (loss) income	(4,665		)	28,542			(105		)	—			23,772
Other expenses (income):
Interest, net	7,935			(327		)	57			—			7,665
Equity in earnings of subsidiaries	(24,576		)	(304		)	—			24,880			—
Total other (income) expenses	(16,641		)	(631		)	57			24,880			7,665
Income (loss) before income taxes	11,976			29,173			(162		)	(24,880		)	16,107
Income tax (benefit) expense	1,697			4,195			(24		)	—			5,868
Net income (loss)	10,279			24,978			(138		)	(24,880		)	10,239
Net loss-noncontrolling interest	—			—			(40		)	—			(40		)
Net income (loss)-Res-Care, Inc.	10,279			24,978			(98		)	(24,880		)	10,279
Other comprehensive income (loss):
Foreign currently translation adjustments	(223		)	—			(223		)	223			(223		)
Comprehensive income (loss) attributable to Res-Care, Inc.	$	10,056		$	24,978		$	(321	)	$	(24,657	)	$	10,056
Total comprehensive income (loss)	$	10,056		$	24,978		$	(361	)	$	(24,657	)	$	10,016

RES-CARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

Six Months Ended June 30, 2013

(In thousands)

				Guarantor			Non-Guarantor						Consolidated
	ResCare, Inc.			Subsidiaries			Subsidiaries			Eliminations			Total
Revenues	$	123,064		$	661,116		$	1,507		$	—		$	785,687
Operating expenses	132,454			606,571			1,692			—			740,717
Operating (loss) income	(9,390		)	54,545			(185		)	—			44,970
Other expenses (income):
Interest, net	16,230			(142		)	114			—			16,202
Equity in earnings of subsidiaries	(40,791		)	(447		)	—			41,238			—
Total other (income) expenses	(24,561		)	(589		)	114			41,238			16,202
Income (loss) before income taxes	15,171			55,134			(299		)	(41,238		)	28,768
Income tax (benefit) expense	(6,440		)	13,748			(75		)	—			7,233
Net income (loss)	21,611			41,386			(224		)	(41,238		)	21,535
Net loss-noncontrolling interest	—			—			(76		)	—			(76		)
Net income (loss)-Res-Care, Inc.	21,611			41,386			(148		)	(41,238		)	21,611
Other comprehensive income (loss):
Foreign currently translation adjustments	(414		)	—			(414		)	414			(414		)
Comprehensive income (loss) attributable to Res-Care, Inc.	$	21,197		$	41,386		$	(562	)	$	(40,824	)	$	21,197
Total comprehensive income (loss)	$	21,197		$	41,386		$	(638	)	$	(40,824	)	$	21,121

RES-CARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

Three Months Ended June 30, 2012

(In thousands)

				Guarantor			Non-Guarantor						Consolidated
	ResCare, Inc.			Subsidiaries			Subsidiaries			Eliminations			Total
Revenues	$	62,473		$	336,609		$	820		$	—		$	399,902
Operating expenses	68,154			307,314			871			—			376,339
Operating (loss) income	(5,681		)	29,295			(51		)	—			23,563
Other expenses (income):
Interest, net	8,132			260			(3		)	—			8,389
Loss on extinguishment of debt	7,129			—			—			—			7,129
Equity in earnings of subsidiaries	(17,332		)	(40		)	—			17,372			—
Total other (income) expenses	(2,071		)	220			(3		)	17,372			15,518
(Loss) income before income taxes	(3,610		)	29,075			(48		)	(17,372		)	8,045
Income tax (benefit) expense	(8,440		)	11,706			(20		)	—			3,246
Net income (loss)	4,830			17,369			(28		)	(17,372		)	4,799
Net loss-noncontrolling interest	—			—			(31		)	—			(31		)
Net income (loss)-Res-Care, Inc.	4,830			17,369			3			(17,372		)	4,830
Other comprehensive income (loss):
Foreign currently translation adjustments	(132		)	—			(132		)	132			(132		)
Comprehensive income (loss) attributable to Res-Care, Inc.	$	4,698		$	17,369		$	(129	)	$	(17,240	)	$	4,698
Total comprehensive income (loss)	$	4,698		$	17,369		$	(160	)	$	(17,240	)	$	4,667

RES-CARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

Six Months Ended June 30, 2012

(In thousands)

				Guarantor			Non-Guarantor						Consolidated
	ResCare, Inc.			Subsidiaries			Subsidiaries			Eliminations			Total
Revenues	$	127,315		$	668,372		$	1,557		$	—		$	797,244
Operating expenses	139,171			612,734			1,730			—			753,635
Operating (loss) income	(11,856		)	55,638			(173		)	—			43,609
Other expenses (income):
Interest, net	18,436			401			(5		)	—			18,832
Loss on extinguishment of debt	7,129			—			—			—			7,129
Equity in earnings of subsidiaries	(32,951		)	(84		)	—			33,035			—
Total other (income) expenses	(7,386		)	317			(5		)	33,035			25,961
(Loss) income before income taxes	(4,470		)	55,321			(168		)	(33,035		)	17,648
Income tax (benefit) expense	(15,065		)	22,247			(68		)	—			7,114
Net income (loss)	10,595			33,074			(100		)	(33,035		)	10,534
Net loss-noncontrolling interest	—			—			(61		)	—			(61		)
Net income (loss)-Res-Care, Inc.	10,595			33,074			(39		)	(33,035		)	10,595
Other comprehensive income (loss):
Foreign currently translation adjustments	29			—			29			(29		)	29
Comprehensive income (loss) attributable to Res-Care, Inc.	$	10,624		$	33,074		$	(10	)	$	(33,064	)	$	10,624
Total comprehensive income (loss)	$	10,624		$	33,074		$	(71	)	$	(33,064	)	$	10,563

Schedule of condensed consolidating statement of cash flows

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended June 30, 2013

(In thousands)

				Guarantor			Non-Guarantor						Consolidated
	ResCare, Inc.			Subsidiaries			Subsidiaries			Eliminations			Total
Operating activities:
Net income (loss)	$	21,611		$	41,386		$	(224	)	$	(41,238	)	$	21,535
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	8,826			7,820			80			—			16,726
Amortization of discount and deferred debt issuance costs on notes	1,742			—			—			—			1,742
Share-based compensation	1,552			—			—			—			1,552
Deferred income taxes, net	2,347			—			—			—			2,347
Provision for losses on accounts receivable	505			2,838			—			—			3,343
Loss from sale of assets	—			100			—			—			100
Equity in earnings of subsidiaries	(40,791		)	(447		)	—			41,238			—
Changes in operating assets and liabilities	(9,356		)	(4,363		)	440			—			(13,279		)
Cash provided by (used in) operating activities	(13,564		)	47,334			296			—			34,066
Investing activities:
Purchases of property and equipment	(4,242		)	(3,940		)	(30		)	—			(8,212		)
Acquisitions of businesses, net of cash acquired	—			(2,234		)	—			—			(2,234		)
Proceeds from sale of assets	—			184			—			—			184
Cash used in investing activities	(4,242		)	(5,990		)	(30		)	—			(10,262		)
Financing activities:
Long-term debt (repayments) borrowings	(8,737		)	(179		)	(364		)	—			(9,280		)
Payments on obligations under capital leases	—			(3,499		)	—			—			(3,499		)
Debt issuance costs	(2		)	—			—			—			(2		)
Net payments relating to intercompany financing	41,677			(39,687		)	(1,990		)	—			—
Cash (used in) provided by financing activities	32,938			(43,365		)	(2,354		)	—			(12,781		)
Effect of exchange rate changes on cash and cash equivalents	—			(81		)	—			—			(81		)
(Decrease) increase in cash and cash equivalents	15,132			(2,102		)	(2,088		)	—			10,942
Cash and cash equivalents at beginning of period	42,633			4,795			2,706			—			50,134
Cash and cash equivalents at end of period	$	57,765		$	2,693		$	618		$	—		$	61,076

RES-CARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended June 30, 2012

(In thousands)

				Guarantor			Non-Guarantor						Consolidated
	ResCare, Inc.			Subsidiaries			Subsidiaries			Eliminations			Total
Operating activities:
Net income (loss)	$	10,595		$	33,074		$	(100	)	$	(33,035	)	$	10,534
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	9,107			7,813			89			—			17,009
Amortization of discount and deferred debt issuance costs on notes	1,267			—			—			—			1,267
Share-based compensation	2,025			—			—			—			2,025
Deferred income taxes, net	624			—			—			—			624
Provision for losses on accounts receivable	417			2,468			—			—			2,885
Loss on extinguishment of debt, net of original issue discount paid	6,400			—			—			—			6,400
Loss from sale of assets	—			95			—			—			95
Equity in earnings of subsidiaries	(32,951		)	(84		)	—			33,035			—
Changes in operating assets and liabilities	(21,132		)	7,915			(3,103		)	—			(16,320		)
Cash provided by (used in) operating activities	(23,648		)	51,281			(3,114		)	—			24,519
Investing activities:
Purchases of property and equipment	(4,942		)	(2,340		)	(133		)	—			(7,415		)
Acquisitions of businesses, net of cash acquired	—			(8,662		)	—			—			(8,662		)
Proceeds from sale of assets	—			43			—			—			43
Cash used in investing activities	(4,942		)	(10,959		)	(133		)	—			(16,034		)
Financing activities:
Long-term debt repayments	(167,447		)	(1,294		)	(125		)	—			(168,866		)
Long-term debt borrowings	175,000			—			—			—			175,000
Debt issuance costs	(3,978		)	—			—			—			(3,978		)
Payments on obligations under capital leases	—			(3,003		)	—			—			(3,003		)
Net payments relating to intercompany financing	35,617			(39,055		)	3,438			—			—
Cash (used in) provided by financing activities	39,192			(43,352		)	3,313			—			(847		)
Effect of exchange rate changes on cash and cash equivalents	—			9			—			—			9
Increase (decrease) in cash and cash equivalents	10,602			(3,021		)	66			—			7,647
Cash and cash equivalents at beginning of period	16,733			6,547			2,371			—			25,651
Cash and cash equivalents at end of period	$	27,335		$	3,526		$	2,437		$	—		$	33,298