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 3, 2011

RES-CARE, INC.

(Exact Name of Registrant as specified in Charter)

Kentucky	0-20372	61-0875371
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	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

Item 2.02                      Results of Operations and Financial Condition.

Res-Care, Inc. is furnishing unaudited financial information related to the results of its third quarter ended September 30, 2011, that was posted to its website on November 3, 2011.  The information, which is attached as Exhibit 99.1 to this report, includes certain non-GAAP financial measures and related reconciliations to GAAP measures that were not included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011.

Item 9.01                      Financial Statements & Exhibits.

Exhibit Number            Description of Exhibit

99.1                                Unaudited financial information for the third quarter ended September 30, 2011.

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 3, 2011                                                       By: /s/ David W. Miles

                David W. Miles

Executive Vice President and

   Chief Financial Officer

EXHIBIT INDEX

Exhibit                      

Number                  Description of Exhibits

99.1 Unaudited financial information related to results for the third quarter ended September 30, 2011.

EX-99.1

Exhibit 99.1

RESCARE THIRD QUARTER 2011 RESULTS

Third Quarter 2011 Financial Results

Revenues for the third quarter of 2011 were $396.3 million, in line with the prior year period revenues of $398.8 million.  Increased revenues from acquisitions in our Residential Services and HomeCare segments since the third quarter of 2010 were offset by the loss of certain Workforce Services contracts and rate and service level reductions in certain states.

Income from continuing operations was $13.6 million for the third quarter of 2011, compared with a loss of $26.7 million in the same period of 2010.  Included in the third quarter of 2010 results was a pre-tax, non-cash charge of $51.7 million ($36.3 million, net of tax) as a result of the impairment of goodwill.  Acquisition growth and leverage of fixed costs offset the higher interest expense and the contract losses in our Workforce Services segment.  Adjusted EBITDA for the third quarter of 2011 was $35.6 million versus $29.4 million in the prior year quarter, driven primarily by operating improvements, acquisition growth and general and administrative cost savings.

The Company ceased providing international workforce services in Europe during the second quarter of 2011.  The closure and disposal of these operations have been accounted for as discontinued operations.  Accordingly, the results of these operations, net of income taxes, have been classified as discontinued operations for all periods presented.  The three and nine month periods ended September 30, 2011, include U.S. tax benefits of $17.6 million attributed to the discontinued international operations.

On November 16, 2010, an affiliate of Onex Corporation purchased 21,044,765 shares of ResCare common stock, increasing the beneficial ownership of all Onex affiliates from 24.9% to 87.4% of the issued and outstanding shares of ResCare’s common stock on an as-converted basis.  This change of control triggered a new basis of accounting.  This change creates many differences between reporting for ResCare post-acquisition, as successor, and ResCare pre-acquisition, as predecessor.  The accompanying unaudited financial highlights reflect the combination of separate reporting periods.  The 2010 reporting periods prior to November 15, 2010, are predecessor and 2011 periods are successor.

RESCARE, INC.

Unaudited Financial Highlights

(In thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	Successor			Predecessor			Successor			Predecessor
	2011			2010			2011			2010
Income Statement Data:
Revenues	$	396,267		$	398,825		$	1,181,443		$	1,174,304
Cost of services		298,075			303,597			892,851			890,913
Gross profit		98,192			95,228			288,592			283,391
Operating expenses:
Operational general and administrative		55,548			57,659			172,455			175,447
Goodwill impairment charge		—			51,734			—			51,734
Corporate general and administrative		11,256			17,739			39,524			47,946
Total operating expenses		66,804			127,132			211,979			275,127
Operating income (loss)		31,388			(31,904	)		76,613			8,264
Interest expense, net		10,394			4,777			31,757			14,427
Income (loss) before income taxes		20,994			(36,681	)		44,856			(6,163	)
Income tax expense (benefit)		7,361			(9,966	)		14,399			896
Income (loss) from continuing operations		13,633			(26,715	)		30,457			(7,059	)
Income (loss) from discontinued operations, net of tax		16,657			(15,252	)		10,441			(16,138	)
Net income (loss) – including noncontrolling interest		30,290			(41,967	)		41,898			(23,197	)
Net loss – noncontrolling interest		(57	)		(33	)		(125	)		(156	)
Net income (loss) – ResCare, Inc.	$	30,347		$	(41,934	)	$	41,023		$	(23,041	)

RESCARE, INC.

Unaudited Financial Highlights (continued)

(In thousands)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	Successor		Predecessor			Successor		Predecessor
	2011		2010			2011		2010
Income from Continuing Operations to EBITDA and Adjusted EBITDA:
Income from continuing operations	$	13,633	$	(26,715	)	$	30,457	$	(7,059	)
Add:  Interest, net		10,394		4,777			31,757		14,427
Depreciation and amortization		4,192		6,260			14,156		18,535
Income tax expense		7,361		(9,966	)		14,399		896
EBITDA (1)		35,580		(25,644	)		90,769		26,799
Add:  Onex transaction costs		—		2,390			1,737		2,390
Goodwill impairment charge		—		51,734			—		51,734
Share-based compensation		—		535			—		2,224
Acquisition costs		—		340			266		670
Adjusted EBITDA (1)	$	35,580	$	29,355		$	92,772	$	83,817

	September 30, 2011		As Adjusted December 31, 2010
Balance Sheet Data:
ASSETS
Cash and cash equivalents	$	11,664	$	27,552
Accounts receivable, net		222,187		215,941
Other current assets		56,703		41,787
Total current assets		290,554		285,280
Property and equipment, net		85,622		86,883
Goodwill		263,651		247,305
Other intangible assets, net		314,255		315,376
Other assets, net		27,242		30,108
	$	981,324	$	964,952
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities	$	173,947	$	223,992
Other long-term liabilities		158,029		131,032
Long-term debt		365,122		367,315
Shareholder’s equity		284,226		242,613
	$	981,324	$	964,952

(1) EBITDA is defined as income from continuing operations before depreciation and amortization, net interest expense and income taxes.  Adjusted EBITDA is defined as EBITDA before Onex transaction costs, goodwill impairment charge, share-based compensation and acquisition costs.  EBITDA and Adjusted EBITDA 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 Adjusted EBITDA are significant components in understanding and assessing financial performance.  Management routinely calculates and presents EBITDA and Adjusted EBITDA because it believes that EBITDA and Adjusted EBITDA are useful to investors and are used as analytical indicators within the 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 the Company’s credit agreement.

RESCARE, INC.

Unaudited Financial Highlights (continued)

(In thousands)

	Nine Months Ended September 30,
	Successor			Predecessor
	2011			2010
Cash Flow Data:
Net income (loss) – including noncontrolling interest	$	40,898		$	(23,197	)
Adjustments to reconcile net income including noncontrolling interest to cash provided by operating activities:
Depreciation and amortization		14,219			19,271
Goodwill impairment charge		–			65,577
Amortization of discount and deferred debt issuance costs		2,256			1,340
Share-based compensation		–			2,224
Deferred income taxes, net		4,272			(3,548	)
Excess tax expense from share-based compensation		–			583
Provision for losses on accounts receivable		4,962			5,402
Write down of assets held for sale		1,642			–
Loss on sale of assets		378			12
Changes in operating assets and liabilities		(25,252	)		(1,030	)
Cash provided by operating activities		43,375			66,634
Cash flows from investing activities:
Purchases of property and equipment		(9,133	)		(6,937	)
Acquisitions of businesses, net of cash acquired		(17,803	)		(21,213	)
Proceeds from sale of assets		217			306
Cash used in investing activities		(26,719	)		(27,844	)
Cash flows from financing activities:
Debt repayments, net		(33,246	)		(42,987	)
Debt issuance costs		(561	)		(4,519	)
Excess tax expense from share-based compensation		–			(583	)
Funds contributed by co-investors		1,400			–
Employee withholding payments on share-based compensation		–			(881	)
Cash used in financing activities		(32,407	)		(48,970	)
Effect of exchange rate on cash and cash equivalents		(137	)		(12	)
Decrease in cash and cash equivalents	$	(15,888	)	$	(10,192	)

RESCARE, INC.

Unaudited Financial Highlights (continued)

(Dollars in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	Successor			Predecessor			Successor			Predecessor
	2011			2010			2011			2010
Segment Data:
Revenues:
Residential Services	$	216,984		$	209,166		$	635,840		$	619,795
ResCare HomeCare		80,297			79,166			238,917			228,179
Youth Services		46,301			43,271			138,760			136,083
Workforce Services		52,685			67,222			167,926			190,247
Consolidated	$	396,267		$	398,825		$	1,181,443		$	1,174,304
Adjusted Operating Income (Loss) (1):
Residential Services	$	28,089		$	23,600		$	74,019		$	67,783
ResCare HomeCare		6,439			5,848			17,578			14,064
Youth Services		3,232			3,395			10,672			11,751
Workforce Services		4,946			4,730			14,030			14,112
Corporate		(11,318	)		(15,353	)		(37,949	)		(45,322	)
Consolidated	$	31,388		$	22,220		$	78,350		$	62,388
Adjusted Operating Margin(1):
Residential Services		12.9	%		11.3	%		11.6	%		10.9	%
ResCare HomeCare		8.0	%		7.4	%		7.4	%		6.2	%
Youth Services		7.0	%		7.8	%		7.7	%		8.6	%
Workforce Services		9.4	%		7.0	%		8.4	%		7.4	%
Corporate		(2.9	%)		(3.8	%)		(3.2	%)		(3.9	%)
Consolidated		7.9	%		5.6	%		6.6	%		5.3	%

(1)   Adjusted Operating Income is defined as operating income before the goodwill impairment charge and Onex transaction costs.  Adjusted Operating Margin is defined as Adjusted Operating Income divided by Revenues.  Adjusted Operating Income should not be considered as a measure of financial performance under accounting principles generally accepted in the United States of America.  The items excluded from Adjusted Operating Income are significant components in understanding and assessing financial performance.  Management believes that Adjusted Operating Income is useful to investors to evaluate performance.  A reconciliation of Adjusted Operating Income to GAAP measures is included in this press release.

RESCARE, INC.

Unaudited Financial Highlights (continued)

(Dollars in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	Successor			Predecessor			Successor			Predecessor
	2011			2010			2011			2010
Reconciliation of Operating Income (Loss) to Adjusted Operating Income:
Operating Income (Loss):
Residential Services (1)	$	28,089		$	(10,770	)	$	74,019		$	33,413
ResCare HomeCare(2)		6,439			(3,483	)		17,578			4,733
Youth Services (3)		3,232			(4,638	)		10,672			3,718
Workforce Services		4,946			4,730			14,030			14,112
Corporate (4)		(11,318	)		(17,743	)		(39,686	)		(47,712	)
Consolidated	$	31,388		$	(31,904	)	$	76,613		$	8,264
Adjustments:
Residential Services (1)	$	—		$	34,370		$	—		$	34,370
ResCare HomeCare(2)		—			9,331			—			9,331
Youth Services (3)		—			8,033			—			8,033
Workforce Services		—			—			—			—
Corporate (4)		—			2,390			1,737			2,390
Consolidated	$	—		$	54,124		$	1,737		$	54,124
Adjusted Operating Income:
Residential Services	$	28,089		$	23,600		$	74,019		$	67,783
ResCare HomeCare		6,439			5,848			17,578			14,064
Youth Services		3,232			3,395			10,672			11,751
Workforce Services		4,946			4,730			14,030			14,112
Corporate		(11,318	)		(15,353	)		(37,949	)		(45,322	)
Consolidated	$	31,388		$	22,220		$	78,350		$	62,388

(1) Operating income (loss) for the three month and nine month periods ended September 30, 2010, included a $34.4 million goodwill impairment charge.

(2) Operating income (loss) for the three month and nine month periods ended September 30, 2010, included a $9.3 million goodwill impairment charge.

(3) Operating income (loss) for the three month and nine month periods ended September 30, 2010, included an $8.0 million goodwill impairment charge.

(4) Operating loss for the three month and nine month periods ended September 30, 2010, included a $2.4 million charge related to Onex transaction costs in our corporate general and administrative expenses.  The nine month period ended September 30, 2011 included $1.7 million related to the Onex transaction costs.

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