0001157523-08-008924.txt : 20081105 0001157523-08-008924.hdr.sgml : 20081105 20081105172338 ACCESSION NUMBER: 0001157523-08-008924 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20081105 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20081105 DATE AS OF CHANGE: 20081105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RES CARE INC /KY/ CENTRAL INDEX KEY: 0000776325 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-NURSING & PERSONAL CARE FACILITIES [8050] IRS NUMBER: 610875371 STATE OF INCORPORATION: KY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20372 FILM NUMBER: 081164668 BUSINESS ADDRESS: STREET 1: 10140 LINN STATION RD CITY: LOUISVILLE STATE: KY ZIP: 40223 BUSINESS PHONE: 5023942100 MAIL ADDRESS: STREET 1: 10140 LINN STATION RD CITY: LOUISVILLE STATE: KY ZIP: 40223 8-K 1 a5823374.htm RES-CARE, INC. 8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

______________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):
November 5, 2008

RES-CARE, INC.
(Exact Name of Registrant as specified in Charter)

Kentucky

0-20372

61-0875371

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

9901 Linn Station Road, Louisville, Kentucky	40223
(Address of principal executive offices)	(Zip code)

(502) 394-2100
(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INFORMATION TO BE INCLUDED IN THE REPORT

- 1 -

Item 2.02 Results of Operations and Financial Condition.

On November 5, 2008, Res-Care, Inc. issued a press release to announce its results for the third quarter and nine months ended September 30, 2008. A copy of the press release is included as Exhibit 99.1 to this report.

Item 9.01 Financial Statements & Exhibits.

	Exhibit Number	Description of Exhibit
	99.1	Press release dated November 5, 2008.

- 2 -

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		RES-CARE, INC.


Date:	November 5, 2008	By:	/s/ David W. Miles
		David W. Miles
		Executive Vice President and Chief Financial Officer

- 3 -

EXHIBIT INDEX

Exhibit Number		Description of Exhibits

	99.1	Copy of press release issued by the Company on November 5, 2008.

- 4 -

EX-99.1 2 a5823374_ex991.htm EXHIBIT 99.1

Exhibit 99.1

ResCare Reports Third Quarter 2008 Results

Company Updates Guidance

LOUISVILLE, Ky.--(BUSINESS WIRE)--November 5, 2008--ResCare (NASDAQ: RSCR) today announced results for the third quarter and nine months ended September 30, 2008.

Third Quarter 2008 Financial Highlights

Consolidated revenues for the third quarter of 2008 increased 6.4% over the prior year period to $387.9 million. The Company reported income from continuing operations of $11.6 million, or $0.35 per diluted common share, compared with $11.5 million, or $0.34 per diluted common share, for the third quarter of 2007. In the third quarter of 2008, diluted loss per common share from discontinued operations was $0.01 compared with $0.00 in the prior year period.

Ralph G. Gronefeld, Jr., president and chief executive officer, said, “Despite a weak economic environment, demand for our services is steady, rates remain stable, and we continue to strengthen the Company by expanding our services to more people. ResCare’s leadership is experienced in working in difficult reimbursement and regulatory environments, and we will continue to mitigate our risk by controlling costs, providing high quality services and diversifying and growing our business through strategic acquisitions and organically.”

Guidance Update

The Company is providing guidance for the fourth quarter of 2008 for diluted earnings per common share from continuing operations in a range of $0.35 to $0.38 and revenues of $390 million to $410 million. The guidance assumes no reimbursement rate changes for the fourth quarter of 2008.

A listen-only simulcast of ResCare’s third quarter 2008 conference call will be available on-line at www.rescare.com on November 6, 2008, beginning at 9:00 a.m. Eastern Time and a replay available at 11:00 a.m. Eastern Time.

ResCare, with nearly 35 years of experience helping people reach their highest level of independence, is one of the largest providers of home care to the elderly and those with disabilities. It also offers residential and support services to people with intellectual and developmental disabilities and provides education, vocational training and job placement for people of all ages and skill levels. Based in Louisville, Kentucky, ResCare and its more than 44,000 dedicated employees serve daily more than 65,000 people in 39 states, Washington, D.C., Puerto Rico and in a growing number of international locations. For more information about ResCare, please visit the Company’s website 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 privatization of government programs. In ResCare’s filings under the federal securities laws, including its annual, periodic and current reports, the Company identifies important factors that could cause its actual results to differ materially from those anticipated in forward-looking statements. Please refer to the discussion of those factors in the Company’s 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, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Income Statement Data:
Revenues	$	387,923		$	364,598		$	1,148,700		$	1,066,116
Facility and program expenses⁽¹⁾⁽²⁾		350,165			328,622			1,056,102			961,235
Facility and program contribution		37,758			35,976			92,598			104,881
Corporate general and administrative⁽¹⁾		15,085			13,127			44,342			40,190
Operating income		22,673			22,849			48,256			64,691
Interest expense, net		4,531			4,659			13,628			14,031
Income from continuing operations before income taxes		18,142			18,190			34,628			50,660
Income tax expense		6,514			6,667			12,469			18,567
Income from continuing operations		11,628			11,523			22,159			32,093
Loss from discontinued operations, net of taxes		(122	)		(136	)		(279	)		(398	)

Net income		11,506			11,387			21,880			31,695
Net income attributable to preferred shareholders		1,650			1,637			3,149			4,571
Net income attributable to common shareholders	$	9,856		$	9,750		$	18,731		$	27,124

Basic earnings (loss) per common share:
From continuing operations	$	0.35		$	0.34		$	0.67		$	0.97
From discontinued operations		(0.00	)		(0.00	)		(0.01	)		(0.01	)
Basic earnings per common share	$	0.35		$	0.34		$	0.66		$	0.96

Diluted earnings (loss) per common share:
From continuing operations	$	0.35		$	0.34		$	0.66		$	0.96
From discontinued operations		(0.01	)		(0.00	)		(0.01	)		(0.01	)
Diluted earnings per common share	$	0.34		$	0.34		$	0.65		$	0.95

Weighted average number of common shares:
Basic		28,553			28,337			28,425			28,185
Diluted		28,747			28,648			28,617			28,538

⁽¹⁾		The Company recorded share-based compensation expense of $1.3 million ($0.03 per diluted common share) and $1.0 million ($0.02 per diluted common share) for the three months ended September 30, 2008 and 2007, respectively. Of the $1.3 million for the three months ended September 30, 2008, the Company included $0.7 million in corporate general and administrative expenses and $0.6 million in facility and program expenses. Of the $1.0 million recorded for the three months ended September 30, 2007, the Company included $0.5 million in corporate general and administrative expenses and $0.5 million in facility and program expenses. The Company recorded share-based compensation expense of $3.6 million ($0.07 per diluted common share) and $5.4 million ($0.10 per diluted common share) for the nine months ended September 30, 2008 and 2007, respectively. Of the $3.6 million for the nine months ended September 30, 2008, the Company included $1.9 million in corporate general and administrative expenses and $1.7 million in facility and program expenses. Of the $5.4 million recorded for the nine months ended September 30, 2007, the Company included $3.0 million in corporate general and administrative expenses and $2.4 million in facility and program expenses.
⁽²⁾		Facility and program expenses for the nine months ended September 30, 2008, include a pretax charge of $24.4 million recorded as a result of the Company increasing its legal reserves due to adverse developments on four lawsuits.


RESCARE, INC. Unaudited Financial Highlights (continued) (In thousands)

	Sept. 30, 2008		Dec. 31, 2007
Balance Sheet Data:
ASSETS
Cash and cash equivalents	$	14,321	$	10,809
Accounts receivable, net		220,214		206,529
Other current assets		45,151		42,234
Total current assets		279,686		259,572
Property and equipment, net		84,066		83,336
Goodwill		468,105		443,623
Other assets		59,331		48,012
	$	891,188	$	834,543

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities	$	167,102	$	150,025
Other long-term liabilities		64,466		57,158
Long-term debt		231,033		220,491
Shareholders’ equity		428,587		406,869
	$	891,188	$	834,543


RESCARE, INC. Unaudited Financial Highlights (continued) (In thousands)

	Nine Months Ended September 30,
	2008			2007
Cash Flow Data:
Net income	$	21,880		$	31,695
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		16,454			14,654
Amortization of discount and deferred debt issuance costs		891			806
Impairment charge		–			332
Deferred income taxes		1,450			2,528
Excess tax benefits from share-based compensation		(1,049	)		(1,724	)
Provision for losses on accounts receivable		5,221			4,581
Share-based compensation		3,577			5,361
Loss on sale of assets		11			110
Changes in operating assets and liabilities		(1,111	)		8,632
Cash provided by operating activities		47,324			66,975

Cash flows from investing activities:
Proceeds from sale of assets		571			534
Purchases of property and equipment		(14,150	)		(16,220	)
Acquisitions of businesses		(38,979	)		(33,444	)
Cash used in investing activities		(52,558	)		(49,130	)

Cash flows from financing activities:
Long-term debt repayments		(1,589	)		(58,966	)
Borrowings of long-term debt		–			40,000
Short-term borrowings – three months or less, net		10,000			–
Payments on obligations under capital leases		(57	)		(174	)
Proceeds from sale and leaseback transactions		–			1,669
Debt issuance costs		(118	)		–
Excess tax benefits from share-based compensation		1,049			1,724
Employee withholding payments on share-based compensation		(1,446	)		–
Proceeds received from exercise of stock options		1,339			2,144
Cash provided by (used in) financing activities		9,178			(13,603	)
Effect of exchange rate on cash and cash equivalents		(432	)		–
Increase in cash and cash equivalents	$	3,512		$	4,242


RESCARE, INC. Unaudited Financial Highlights (continued) (Dollars in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
Segment Data:
Revenues:
Community Services	$	282,619		$	270,354		$	825,219		$	781,856
Job Corps Training Services		39,952			40,074			122,270			122,626
Employment Training Services		55,140			50,904			166,641			147,087
Other		10,212			3,266			34,570			14,547
Consolidated	$	387,923		$	364,598		$	1,148,700		$	1,066,116

Operating Income:
Community Services⁽¹⁾	$	30,185		$	27,674		$	64,709		$	82,164
Job Corps Training Services		2,974			2,896			8,836			8,705
Employment Training Services		5,229			6,001			17,439			13,436
Other		(685	)		(487	)		1,715			990
Corporate general and administrative		(15,030	)		(13,235	)		(44,443	)		(40,604	)
Consolidated⁽¹⁾	$	22,673		$	22,849		$	48,256		$	64,691

Operating Margin:
Community Services⁽¹⁾		10.7	%		10.2	%		7.8	%		10.5	%
Job Corps Training Services		7.4	%		7.2	%		7.2	%		7.1	%
Employment Training Services		9.5	%		11.8	%		10.5	%		9.1	%
Other		(6.7	%)		(14.9	%)		5.0	%		6.8	%
Corporate general and administrative		(3.9	%)		(3.6	%)		(3.9	%)		(3.8	%)
Consolidated⁽¹⁾		5.8	%		6.3	%		4.2	%		6.1	%

⁽¹⁾

Nine months ended September 30, 2008, includes a pre-tax charge of $24.4 million, recorded as a result of the Company increasing its legal reserves due to adverse developments on four lawsuits.

CONTACT:
ResCare
David W. Miles, 502-394-2137
Chief Financial Officer
or
Derwin A. Wallace, 502-420-2567
Director of Investor Relations