EX-99.1 2 a4945834ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 ResCare Reports Second Quarter Results; Company Updates EPS Guidance for Full Year to $0.87 - $0.90 LOUISVILLE, Ky.--(BUSINESS WIRE)--Aug. 3, 2005--ResCare (NASDAQ/NM:RSCR), the nation's leading provider of services to persons with developmental and other disabilities and people with special needs, today announced results for the second quarter and six months ended June 30, 2005. Revenues for the second quarter of 2005 increased 7% over the prior year period to $269.6 million. Net income for the quarter increased 62% to $7.3 million, versus $4.5 million in the prior year period. Diluted earnings per share were $0.23 in the second quarter of 2005. Ronald G. Geary, ResCare chairman, president and chief executive officer, said, "We are pleased with our performance in the second quarter. The year is progressing according to our plan. We continue to take advantage of acquisition opportunities in the marketplace that strengthen the Company and increase shareholder value. At the same time, we are bringing vital services to a deserving population made possible by our committed and dedicated employees." The Company also updated its previously issued guidance for full year 2005 as follows: Diluted earnings per common share $0.87 - $0.90 Revenues $1.10 billion - $1.13 billion Net income $27.7 million - $28.7 million EBITDA (1) $74.5 million - $76.5 million EBITDAR (1) $115 million - $117 million Capital expenditures $13 million - $15 million (1) EBITDA is defined as income before depreciation and amortization, net interest expense and income taxes. EBITDAR is defined as EBITDA before facility rent. A listen-only simulcast and replay of ResCare's second quarter conference call will be available on-line at www.rescare.com and www.earnings.com on August 4, 2005, beginning at 9:00 a.m. Eastern Time. ResCare, founded in 1974, offers services to some 34,000 people in 34 states, Washington, D.C., Puerto Rico and Canada. ResCare is a human service company that provides residential, therapeutic, job training and educational supports to people with developmental or other disabilities, to youth with special needs and to adults who are experiencing barriers to employment. The Company is based in Louisville, Ky. More information about ResCare is available on the Company's web site at www.rescare.com. From time to time, ResCare makes forward-looking statements in its public disclosures, including statements relating to expected financial results, revenues that might be expected from new or acquired programs and facilities, its development and acquisition activities, reimbursement under federal and state programs, financing plans, compliance with debt covenants and other risk factors, and various trends favoring downsizing, de-institutionalization and privatization of government programs. In our filings under the federal securities laws, including our annual, periodic and current reports, we identify important factors that could cause our actual results to differ materially from those anticipated in forward-looking statements. Please refer to the discussion of those factors in our filed reports. Statements related to expected financial results are as of this date only and ResCare does not assume any responsibility to update these statements. RESCARE, INC. Unaudited Financial Highlights (In thousands) Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 2005 2004 2005 2004 -------- -------- -------- -------- Income Statement Data: Revenues $269,642 $250,844 $528,302 $496,026 Facility and program expenses 240,204 225,133 472,643 445,595 -------- -------- -------- -------- Facility and program contribution 29,438 25,711 55,659 50,431 Operating expenses: Corporate general and administrative 10,441 9,526 20,173 19,233 Depreciation and amortization 3,406 3,054 6,737 6,067 Other expense (income), net -- 749 -- 750 -------- -------- -------- -------- Total operating expenses 13,847 13,329 26,910 26,050 -------- -------- -------- -------- Operating income 15,591 12,382 28,749 24,381 Interest expense, net 4,491 4,956 9,057 10,041 -------- -------- -------- -------- Income before income taxes 11,100 7,426 19,692 14,340 Income tax expense 3,774 2,896 6,695 5,385 -------- -------- -------- -------- Net income $7,326 $4,530 $12,997 $8,955 ======== ======== ======== ======== Net income (loss) income attributable to common shareholders (1) $6,196 $(10,254) $10,985 $(5,829) ======== ======== ======== ======== Basic earnings (loss) per common share $0.24 $(0.40) $0.42 $(0.23) ======== ======== ======== ======== Diluted earnings (loss) per common share $0.23 $(0.40) $0.41 $(0.23) ======== ======== ======== ======== Weighted average number of common shares: Basic 26,360 25,323 26,254 25,150 Diluted 26,971 25,323 26,940 25,150 EBITDA (2) $18,997 $15,436 $35,486 $30,448 EBITDAR (2) 28,992 24,553 55,327 48,801 (1) Net loss attributable to common shareholders for the three months and six months ended June 30, 2004, includes the non-cash beneficial conversion feature of $14.8 million, which relates to the closing of the sale of convertible preferred shares at a time when the market price of the common shares exceeded the contractually agreed upon conversion price per common share. The beneficial conversion feature decreases the net income attributable to common shareholders used in the calculation of basic and diluted net earnings per common share. Net income attributable to preferred shareholders for the quarter and six months ended June 30, 2005, was $1.1 million and $2.0 million, respectively. (2) 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. The items excluded from EBITDA and EBITDAR are significant components in understanding and assessing financial performance. Management routinely calculates and communicates EBITDA and EBITDAR and believes that they are useful to investors because they are commonly used as analytical indicators within our industry to evaluate performance, measure leverage capacity and debt service ability, and to estimate current or prospective enterprise value. EBITDA is also used in measurements under certain covenants contained in our credit agreement. The following table sets forth a reconciliation of net income to EBITDA and EBITDAR. RESCARE, INC. Unaudited Financial Highlights (continued) (In thousands) Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 2005 2004 2005 2004 -------- -------- -------- -------- Net income as reported $7,326 $4,530 $12,997 $8,955 Add: Interest, net 4,491 4,956 9,057 10,041 Depreciation and amortization 3,406 3,054 6,737 6,067 Income tax expense 3,774 2,896 6,695 5,385 -------- -------- -------- -------- EBITDA 18,997 15,436 35,486 30,448 Add: Facility rent 9,995 9,117 19,841 18,353 -------- -------- -------- -------- EBITDAR $28,992 $24,553 $55,327 $48,801 ======== ======== ======== ======== RESCARE, INC. Unaudited Financial Highlights (continued) (In thousands) June 30, Dec. 31, 2005 2004 -------- -------- Balance Sheet Data: ASSETS Cash and cash equivalents $23,484 $28,404 Short-term investments 52,400 53,235 Accounts receivable, net 151,187 138,202 Other current assets 29,243 32,394 -------- -------- Total current assets 256,314 252,235 Property and equipment, net 72,333 72,975 Goodwill 272,395 241,789 Other assets 22,271 19,667 -------- -------- $623,313 $586,666 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities $137,015 $131,616 Other long-term liabilities 19,259 19,009 Long-term debt 180,076 166,480 Shareholders' equity 286,963 269,561 -------- -------- $623,313 $586,666 ======== ======== Six Months Ended June 30, ------------------ 2005 2004 -------- -------- Cash Flow Data: Net income $12,997 $8,955 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 6,737 6,067 Amortization of deferred charges 651 582 Provision for losses on accounts receivable 2,321 2,592 Changes in operating assets and liabilities 2,335 13,395 -------- -------- Cash provided by operating activities 25,041 31,591 -------- -------- Cash flows from investing activities: Net (purchases) redemptions of short-term investments 835 (45,000) Purchases of property and equipment (5,454) (5,217) Acquisitions of businesses (28,621) (955) Proceeds from sale of assets -- 32 -------- -------- Cash used in investing activities (33,240) (51,140) -------- -------- Cash flows from financing activities: Net repayments of long-term debt (305) (3,620) Proceeds received from exercise of stock options 3,584 3,541 Net proceeds from issuance of preferred stock -- 46,609 -------- -------- Cash provided by financing activities 3,279 46,530 -------- -------- Increase (decrease) in cash and cash equivalents $(4,920) $26,981 ======== ======== CONTACT: ResCare, Louisville Nel Taylor, 502-394-2100