Subsidiary Guarantors (Tables)

9 Months Ended

Sep. 30, 2013

Subsidiary Guarantors

Schedule of condensed consolidating balance sheet

RES-CARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 2013

(In thousands)

				Guarantor			Non-Guarantor						Consolidated
	ResCare, Inc.			Subsidiaries			Subsidiaries			Eliminations			Total
ASSETS
Current assets:
Cash and cash equivalents	$	46,764		$	3,659		$	767		$	—		$	51,190
Accounts receivable, net	26,143			204,381			221			—			230,745
Refundable income taxes	2,982			—			—			—			2,982
Deferred income taxes	18,870			—			—			—			18,870
Prepaid expenses and other current assets	15,229			10,765			440			—			26,434
Total current assets	109,988			218,805			1,428			—			330,221
Property and equipment, net	50,202			49,572			354			—			100,128
Goodwill	296,476			—			5,234			—			301,710
Other intangible assets, net	298,724			27,311			3			—			326,038
Intercompany	—			691,102			69,723			(760,825		)	—
Investment in subsidiaries	966,516			42,772			—			(1,009,288		)	—
Other assets	19,916			3,769			18			—			23,703
	$	1,741,822		$	1,033,331		$	76,760		$	(1,770,113	)	$	1,081,800
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
Trade accounts payable	$	16,520		$	15,737		$	39		$	—		$	32,296
Accrued expenses	78,668			60,827			845			—			140,340
Current portion of long-term debt	10,938			1,367			1,167			(1,167		)	12,305
Current portion of obligations under capital leases	—			6,606			—			—			6,606
Accrued income taxes	662			—			(56		)	—			606
Total current liabilities	106,788			84,537			1,995			(1,167		)	192,153
Intercompany	761,189			—			—			(761,189		)	—
Long-term liabilities	36,962			487			—			—			37,449
Long-term debt	348,763			1,484			—			—			350,247
Obligations under capital leases	—			14,040			—			—			14,040
Deferred income taxes	109,014			—			—			—			109,014
Total liabilities	1,362,716			100,548			1,995			(762,356		)	702,903
Preferred shares	—			—			—			—			—
Common stock	—			—			—			—			—
Additional paid-in capital	246,721			477,447			122,998			(600,445		)	246,721
Retained earnings	132,713			455,354			(47,214		)	(408,140		)	132,713
Accumulated other comprehensive (loss) income	(328		)	(18		)	(810		)	828			(328		)
Total shareholder’s equity-Res-Care, Inc.	379,106			932,783			74,974			(1,007,757		)	379,106
Noncontrolling interest	—			—			(209		)	—			(209		)
Total shareholder’s equity	379,106			932,783			74,765			(1,007,757		)	378,897
	$	1,741,822		$	1,033,331		$	76,760		$	(1,770,113	)	$	1,081,800

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	—		629,357			70,725			(700,082		)	—
Investment in subsidiaries	906,981		42,014			—			(948,995		)	—
Other assets	24,073		3,064			17			—			27,154
	$	1,652,856	$	967,984		$	80,195		$	(1,649,077	)	$	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	697,988		—			—			(697,988		)	—
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	1,308,747		96,289			2,622			(699,710		)	707,948
Preferred shares	—		—			—			—			—
Common stock	—		—			—			—			—
Additional paid-in capital	244,345		476,811			125,104			(601,915		)	244,345
Retained earnings	99,734		394,902			(47,055		)	(347,847		)	99,734
Accumulated other comprehensive (loss) income	30		(18		)	(377		)	395			30
Total shareholder’s equity-Res-Care, Inc.	344,109		871,695			77,672			(949,367		)	344,109
Noncontrolling interest	—		—			(99		)	—			(99		)
Total shareholder’s equity	344,109		871,695			77,573			(949,367		)	344,010
	$	1,652,856	$	967,984		$	80,195		$	(1,649,077	)	$	1,051,958

Schedule of condensed consolidating statement of comprehensive income

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

Three Months Ended September 30, 2013

(In thousands)

				Guarantor			Non-Guarantor						Consolidated
	ResCare, Inc.			Subsidiaries			Subsidiaries			Eliminations			Total
Revenues	$	59,873		$	349,309		$	752		$	—		$	409,934
Operating expenses	62,872			321,376			762			—			385,010
Operating (loss) income	(2,999		)	27,933			(10		)	—			24,924
Other expenses (income):
Interest, net	8,180			(104		)	64			—			8,140
Equity in earnings of subsidiaries	(18,744		)	(311		)	—			19,055			—
Total other (income) expenses	(10,564		)	(415		)	64			19,055			8,140
Income (loss) before income taxes	7,565			28,348			(74		)	(19,055		)	16,784
Income tax (benefit) expense	(3,803		)	9,282			(29		)	—			5,450
Net income (loss)	11,368			19,066			(45		)	(19,055		)	11,334
Net loss-noncontrolling interest	—			—			(34		)	—			(34		)
Net income (loss)-Res-Care, Inc.	11,368			19,066			(11		)	(19,055		)	11,368
Other comprehensive income (loss):
Foreign currently translation adjustments	56			—			56			(56		)	56
Comprehensive income (loss) attributable to Res-Care, Inc.	$	11,424		$	19,066		$	45		$	(19,111	)	$	11,424
Total comprehensive income (loss)	$	11,424		$	19,066		$	11		$	(19,111	)	$	11,390

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

Nine Months Ended September 30, 2013

(In thousands)

				Guarantor			Non-Guarantor						Consolidated
	ResCare, Inc.			Subsidiaries			Subsidiaries			Eliminations			Total
Revenues	$	182,937		$	1,010,425		$	2,259		$	—		$	1,195,621
Operating expenses	195,326			927,947			2,454			—			1,125,727
Operating (loss) income	(12,389		)	82,478			(195		)	—			69,894
Other expenses (income):
Interest, net	24,410			(246		)	178			—			24,342
Equity in earnings of subsidiaries	(59,535		)	(758		)	—			60,293			—
Total other (income) expenses	(35,125		)	(1,004		)	178			60,293			24,342
Income (loss) before income taxes	22,736			83,482			(373		)	(60,293		)	45,552
Income tax (benefit) expense	(10,243		)	23,030			(104		)	—			12,683
Net income (loss)	32,979			60,452			(269		)	(60,293		)	32,869
Net loss-noncontrolling interest	—			—			(110		)	—			(110		)
Net income (loss)-Res-Care, Inc.	32,979			60,452			(159		)	(60,293		)	32,979
Other comprehensive income (loss):
Foreign currently translation adjustments	(358		)	—			(358		)	358			(358		)
Comprehensive income (loss) attributable to Res-Care, Inc.	$	32,621		$	60,452		$	(517	)	$	(59,935	)	$	32,621
Total comprehensive income (loss)	$	32,621		$	60,452		$	(627	)	$	(59,935	)	$	32,511

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

Three Months Ended September 30, 2012

(In thousands)

				Guarantor			Non-Guarantor						Consolidated
	ResCare, Inc.			Subsidiaries			Subsidiaries			Eliminations			Total
Revenues	$	62,506		$	333,462		$	870		$	—		$	396,838
Operating expenses	68,257			298,973			872			—			368,102
Operating (loss) income	(5,751		)	34,489			(2		)	—			28,736
Other expenses (income):
Interest, net	7,960			286			(3		)	—			8,243
Loss on extinguishment of debt	—			—			—			—			—
Equity in earnings of subsidiaries	(20,457		)	(69		)	—			20,526			—
Total other (income) expenses	(12,497		)	217			(3		)	20,526			8,243
(Loss) income before income taxes	6,746			34,272			1			(20,526		)	20,493
Income tax (benefit) expense	(5,522		)	13,770			1			—			8,249
Net income (loss)	12,268			20,502			—			(20,526		)	12,244
Net loss-noncontrolling interest	—			—			(24		)	—			(24		)
Net income (loss)-Res-Care, Inc.	12,268			20,502			24			(20,526		)	12,268
Other comprehensive income (loss):
Foreign currently translation adjustments	265			—			265			(265		)	265
Comprehensive income (loss) attributable to Res-Care, Inc.	$	12,533		$	20,502		$	289		$	(20,791	)	$	12,533
Total comprehensive income (loss)	$	12,533		$	20,502		$	265		$	(20,791	)	$	12,509

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

Nine Months Ended September 30, 2012

(In thousands)

				Guarantor			Non-Guarantor						Consolidated
	ResCare, Inc.			Subsidiaries			Subsidiaries			Eliminations			Total
Revenues	$	189,821		$	1,001,834		$	2,427		$	—		$	1,194,082
Operating expenses	207,428			911,707			2,602			—			1,121,737
Operating (loss) income	(17,607		)	90,127			(175		)	—			72,345
Other expenses (income):
Interest, net	26,396			687			(8		)	—			27,075
Loss on extinguishment of debt	7,129			—			—			—			7,129
Equity in earnings of subsidiaries	(53,408		)	(153		)	—			53,561			—
Total other (income) expenses	(19,883		)	534			(8		)	53,561			34,204
(Loss) income before income taxes	2,276			89,593			(167		)	(53,561		)	38,141
Income tax (benefit) expense	(20,587		)	36,017			(67		)	—			15,363
Net income (loss)	22,863			53,576			(100		)	(53,561		)	22,778
Net loss-noncontrolling interest	—			—			(85		)	—			(85		)
Net income (loss)-Res-Care, Inc.	22,863			53,576			(15		)	(53,561		)	22,863
Other comprehensive income (loss):
Foreign currently translation adjustments	294			—			294			(294		)	294
Comprehensive income (loss) attributable to Res-Care, Inc.	$	23,157		$	53,576		$	279		$	(53,855	)	$	23,157
Total comprehensive income (loss)	$	23,157		$	53,576		$	194		$	(53,855	)	$	23,072

Schedule of condensed consolidating statement of cash flows

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2013

(In thousands)

				Guarantor			Non-Guarantor						Consolidated
	ResCare, Inc.			Subsidiaries			Subsidiaries			Eliminations			Total
Operating activities:
Net income (loss)	$	32,979		$	60,452		$	(269	)	$	(60,293	)	$	32,869
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	13,571			11,847			117			—			25,535
Amortization of discount and deferred debt issuance costs on notes	2,612			—			—			—			2,612
Share-based compensation	2,376			—			—			—			2,376
Deferred income taxes, net	1,480			—			—			—			1,480
Provision for losses on accounts receivable	754			3,676			—			—			4,430
Loss from sale of assets	—			81			—			—			81
Equity in earnings of subsidiaries	(59,535		)	(758		)	—			60,293			—
Changes in operating assets and liabilities	(33,219		)	18,816			468			—			(13,935		)
Cash (used in) provided by operating activities	(38,982		)	94,114			316			—			55,448
Investing activities:
Purchases of property and equipment	(8,602		)	(6,362		)	(43		)	—			(15,007		)
Acquisitions of businesses, net of cash acquired	—			(19,995		)	—			—			(19,995		)
Proceeds from sale of assets	—			344			—			—			344
Cash used in investing activities	(8,602		)	(26,013		)	(43		)	—			(34,658		)
Financing activities:
Long-term debt (repayments) borrowings	(10,929		)	(2,682		)	(579		)	—			(14,190		)
Payments on obligations under capital leases	—			(5,446		)	—			—			(5,446		)
Debt issuance costs	(2		)	—			—			—			(2		)
Net payments relating to intercompany financing	62,646			(61,109		)	(1,537		)	—			—
Cash provided by (used in) financing activities	51,715			(69,237		)	(2,116		)	—			(19,638		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(96		)	—			(96		)
(Decrease) increase in cash and cash equivalents	4,131			(1,136		)	(1,939		)	—			1,056
Cash and cash equivalents at beginning of period	42,633			4,795			2,706			—			50,134
Cash and cash equivalents at end of period	$	46,764		$	3,659		$	767		$	—		$	51,190

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2012

(In thousands)

				Guarantor			Non-Guarantor						Consolidated
	ResCare, Inc.			Subsidiaries			Subsidiaries			Eliminations			Total
Operating activities:
Net income (loss)	$	22,863		$	53,576		$	(100	)	$	(53,561	)	$	22,778
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	13,588			11,486			134			—			25,208
Amortization of discount and deferred debt issuance costs on notes	2,091			—			—			—			2,091
Share-based compensation	2,945			—			—			—			2,945
Deferred income taxes, net	1,622			—			—			—			1,622
Provision for losses on accounts receivable	793			3,444			—			—			4,237
Loss on extinguishment of debt, net of original issue discount paid	6,400			—			—			—			6,400
Loss from sale of assets	—			76			—			—			76
Equity in earnings of subsidiaries	(53,408		)	(153		)	—			53,561			—
Changes in operating assets and liabilities	(22,859		)	3,021			(3,264		)	—			(23,102		)
Cash (used in) provided by operating activities	(25,965		)	71,450			(3,230		)	—			42,255
Investing activities:
Purchases of property and equipment	(7,258		)	(3,913		)	(153		)	—			(11,324		)
Acquisitions of businesses, net of cash acquired	—			(22,077		)	—			—			(22,077		)
Proceeds from sale of assets	—			80			—			—			80
Cash used in investing activities	(7,258		)	(25,910		)	(153		)	—			(33,321		)
Financing activities:
Long-term debt repayments	(169,640		)	(2,129		)	(308		)	—			(172,077		)
Long-term debt borrowings	175,000			—			—			—			175,000
Debt issuance costs	(4,007		)	—			—			—			(4,007		)
Payments on obligations under capital leases	—			(4,510		)	—			—			(4,510		)
Net payments relating to intercompany financing	37,429			(41,353		)	3,924			—			—
Cash provided by (used in) financing activities	38,782			(47,992		)	3,616			—			(5,594		)
Effect of exchange rate changes on cash and cash equivalents	—			—			93			—			93
Increase (decrease) in cash and cash equivalents	5,559			(2,452		)	326			—			3,433
Cash and cash equivalents at beginning of period	16,733			6,547			2,371			—			25,651
Cash and cash equivalents at end of period	$	22,292		$	4,095		$	2,697		$	—		$	29,084