AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 31, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RES-CARE, INC.
(Exact name of registrant as specified in its charter)
KENTUCKY 61-0875371
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation)
10140 Linn Station Road
Louisville, Kentucky 40223
(502) 394-2100
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
Ronald G. Geary
President and Chief Executive Officer
Res-Care, Inc.
10140 Linn Station Road
Louisville, Kentucky 40223
(502) 394-2100
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies of all communications, including all communications sent to the
agent for service, should be sent to:
Henry D. Kahn, Esq.
Piper & Marbury L.L.P.
36 South Charles Street
Baltimore, Maryland 21201
(410) 539-2530
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: | |
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered in connection with dividend or interest
reinvestment plans, check the following box:|X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: | |
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: | |
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: | |
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
<S> <C> <C> <C> <C>
Title of Each Class Proposed Maximum Proposed Maximum
of Securities Amount to be Offering Price Per Aggregate Offering Amount of
to be Registered Registered Share(1) Price Registration Fee
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Common Stock,
no par value 35,000 $20.375 $713,125 $217
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(1) Determined pursuant to Rule 457(c).
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
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SUBJECT TO COMPLETION, DATED JULY 31, 1997
PROSPECTUS
35,000 Shares
RES-CARE, INC.
Common Stock
This Prospectus relates to up to 35,000 shares (the "Shares") of Common
Stock, no par value per share (the "Common Stock"), of Res-Care, Inc. (the
"Company"), which may be offered by certain shareholders of the Company (the
"Selling Stockholders") from time to time in transactions on The Nasdaq Stock
Market's National Market (the "Nasdaq National Market"), in privately negotiated
transactions or otherwise, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders or the purchasers of the Shares for
whom such broker-dealers may act as agent or to whom they sell as principal, or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions.) See "The Selling Stockholders" and "Plan of
Distribution."
None of the proceeds from the sale of the Shares will be received by the
Company. All of the Shares covered by this Prospectus are outstanding shares
which may be offered and sold from time to time by the stockholders named
herein. See "The Selling Stockholders."
The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "RSCR." On July 29, 1997, the last reported sale price as quoted on
the Nasdaq National Market was $21.75 per share.
See "Risk Factors" at page 4 of this Prospectus for a discussion of certain
factors that should be considered by prospective purchasers of the Common Stock
offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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The date of this Prospectus is _____________, 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company with the Commission, including the reports and
other information incorporated by reference into this Prospectus, can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at its regional
offices located at 7 World Trade Center, 13th Floor, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at rates prescribed by the Commission or from the Commission's Internet
web site at http:\\www.sec.gov. The Common Stock of the Company is quoted on the
Nasdaq National Market. Reports, proxy statements and other information
concerning the Company can be inspected at the offices of the Nasdaq Stock
Market, 1735 K Street, Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain portions
of which have been omitted in accordance with the rules and regulations of the
Commission. Statements contained in this Prospectus as to any contracts,
agreements or other documents filed as an exhibit to, or incorporated by
reference in, the Registration Statement are qualified in all respects to the
copy of such contract, agreement or other document filed as an exhibit or
incorporated by reference in the Registration Statement. For further information
with respect to the Company and the Common Stock offered hereby, reference is
made to the Registration Statement, including the exhibits and schedules
thereto. The Registration Statement, together with the exhibits and schedules
thereto, may be inspected without charge, at the Commission's principal office
at 450 Fifth Street, N.W., Washington, D.C. 20549, and also at the regional
offices of the Commission listed above or through the Commission's Internet web
site. Copies of such materials may also be obtained from the Commission upon the
payment of prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
0-20372) pursuant to the 1934 Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1996;
2. The Company's Current Report on Form 8-K dated March 19, 1997;
3. The Company's Proxy Statement filed with the Commission under the 1934
Act on April 9, 1997;
4. The Company's Quarterly Report on Form 10-Q dated May 14, 1997;
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5. The Registration Statement on Form 8-A with respect to Res-Care Common
Stock dated June 25, 1992; and
6. All other documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act subsequent to the date of filing of the
Registration Statement of which this Prospectus is a part and prior to the
termination of the offering made hereby.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of any such person, a copy of any
or all of the documents which have been incorporated herein by reference, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be directed to Res-Care, Inc., 10140 Linn Station Road, Louisville,
Kentucky 40223, Attention: R. Dan Brice, telephone: (502) 394-2100.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
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THE COMPANY
Res-Care is a leading provider of residential, training, educational and
support services to populations with special needs, including persons with
developmental and other disabilities and at-risk and troubled youth. The
services provided by the Company have historically been provided by state and
local government agencies and not-for-profit organizations. The Company's
programs include an array of services provided in both residential and
non-residential settings for adults and youths with mental retardation or other
developmental disabilities ("MR/DD") and disabilities caused by acquired brain
injuries ("ABI"), and youths with severe behavioral disorders, who are from
disadvantaged backgrounds or who have entered the juvenile justice system.
Res-Care's growth strategy is to (i) pursue acquisitions, (ii) add programs
and expand its existing programs in markets in which it currently operates and
(iii) expand into additional geographic areas in the United States. The markets
for the Company's services are highly fragmented, and the Company believes that
there are significant opportunities to enhance its market positions through an
active acquisition program in the disabilities and at-risk and troubled youth
sectors that will enable the Company to expand its operations into new
geographic areas, add program offerings and establish new relationships with
governmental entities. The Company intends to build upon its established
relationships with governmental entities to expand its current programs and
obtain contracts for additional programs in existing markets, and to develop new
programs in response to societal trends and the needs of governmental agencies.
The Company also intends to expand its programs to additional geographic areas
which management identifies as having favorable reimbursement and operating
environments.
The Company was incorporated in Kentucky in 1974. Its principal executive
office is located at 10140 Linn Station Road, Louisville, Kentucky 40223 and its
telephone number is (502) 394-2100.
RISK FACTORS
In addition to the other information contained or incorporated by reference
in this Prospectus, the following risk factors should be considered carefully in
evaluating an investment in the Common Stock offered hereby.
Substantial Dependence on Governmental Reimbursement
In the year ended December 31, 1996, approximately 81% of the Company's
revenues were attributable to Medicaid-funded disabilities services programs,
and the substantial majority of the remaining revenues were attributable to
federal Job Corps contracts. Governmental agencies have undertaken cost
containment measures designed to limit payments to health care and other service
providers, and these efforts are expected to continue. Various proposals are
currently under consideration to revamp the federally-funded Medicaid programs,
including efforts to introduce managed care and other arrangements in which
financial risks associated with service delivery are retained by the provider
rather than by the funding source. State regulatory agencies which administer
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Medicaid programs have substantial discretion with regard to the implementation
of Medicaid reimbursement programs and with regard to the audit and inspection
of Medicaid programs. In June 1997, the House Commerce Committee voted to
include in its budget reconcilation provisions concerning Medicaid, a repeal of
Section 1396a(a)(13)(A) of the Medicaid Act, also known as the Boren amendment,
which provides that reimbursement rates for health care providers must be
reasonable and adequate to meet the economically and efficiently incurred costs
of providing care to Medicaid patients. With the repeal of the Boren amendment,
provider payments would be determined by the states, with no federal right of
action for providers. The Company cannot predict the outcome of the proposed
Medicaid change but the repeal of the Boren amendment could have a material
adverse effect on the Company's business and results of operations. The Company
is currently engaged in litigation with the State of Indiana regarding
reimbursement rates at certain large facilities in Indiana which, if adversely
determined, could adversely affect the Company's business and results of
operations. The Commonwealth of Kentucky has challenged in an audit proceeding
certain costs associated with a program managed by the Company in Kentucky,
which could lead to retroactive rate adjustments to the provider of record. The
provider of record has recently filed a declaratory action against Kentucky in
an effort to resolve the major issue of this matter. Various other states have
initiatives underway to change Medicaid reimbursement methodologies. No
assurance can be given that developments in one or more jurisdictions will not
adversely affect the Company's business, financial condition or results of
operations.
Growth Strategy; Risks Associated with Future Acquisitions and New Contracts
Most of the Company's facilities and programs are operating at or near full
capacity. Moreover, in light of governmental budgetary pressures and competitive
forces, there has been downward pressure on reimbursement rates. Thus, the
Company's ability to expand its revenue base is dependent to a significant
extent on its ability to effect acquisitions and to obtain new contracts. The
Company regularly reviews acquisition opportunities and opportunities for new
contracts and periodically engages in discussions regarding possible
acquisitions and contracts. The Company continually evaluates opportunities to
expand its business through acquisitions of other companies that provide
services to various special needs populations and from time to time enters into
discussions and letters of intent which may lead to acquisitions. The Company
has entered into a letter of intent to acquire Communications Network
Consultants, Inc. ("CNC"), a privately owned provider of supported living
services for persons with disabilities, including mental retardation, based in
Lenoir, North Carolina. Closing of the transaction, which is structured as a
cash purchase of CNC's outstanding stock, is subject to the completion of a
definitive agreement, due diligence and regulatory approvals, and is expected in
the third quarter of 1997. There can be no assurance that the Company will close
the CNC transaction, be able to identify other acquisition or new contract
prospects on terms favorable to the Company or in a timely manner, enter into
acceptable agreements or close any such transactions. There can be no assurance
that the Company will be able to achieve its growth strategy, and any failure to
do so could have a material adverse effect on the Company's business, financial
condition, results of operations and ability to sustain growth. In addition, the
Company believes that it will compete for acquisition candidates and management
contracts with a variety of other prospective bidders, some of which have
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greater resources than the Company. Increased competition for such acquisition
candidates and management contracts could have the effect of increasing the
costs to the Company of pursuing this growth strategy, could reduce the number
of attractive candidates to be acquired or could reduce the profitability of
management contracts. Future acquisitions and efforts to obtain management
contracts could divert management's attention from the daily operations of the
Company and otherwise require additional management, operational and financial
resources. Moreover, there can be no assurance that the Company will
successfully integrate such new operations into its business or operate such
acquisitions profitably. Acquisitions may also involve a number of special risks
including adverse short-term effects on the Company's business and results of
operations; dependence on retaining key personnel; amortization of acquired
intangible assets; and risks associated with unanticipated liabilities and
contingencies.
The Company may require additional debt or equity financing for future
acquisitions, which may not be available to the Company on terms favorable to
it, if at all. To the extent the Company uses its capital stock for all or a
portion of the consideration to be paid for future acquisitions, dilution may be
experienced by existing shareholders, including purchasers of Common Stock in
this offering. In the event that the Company's capital stock does not maintain
sufficient value or acquisition candidates are unwilling to accept the Company's
capital stock as consideration for the sale of their businesses, the Company may
be required to utilize more of its cash resources, if available, in order to
continue its acquisition program. If the Company does not have sufficient cash
resources or is not able to use its capital stock as consideration for
acquisitions, its growth through acquisitions could be limited.
Uncertain Ability to Expand Youth Services Operations
Although Res-Care has operated Job Corps centers since 1976 and has
provided services for youths with developmental disabilities in its disabilities
services operations since 1978, the Company began intensive efforts to expand
its at-risk and troubled youth services operations in 1996 following the
formation of its Youthtrack, Inc. ("Youthtrack") and Alternative Youth Services,
Inc. ("AYS") subsidiaries. The Company has not yet developed significant
experience in operating such programs. No assurance can be given that the
Company will be able to generate sufficient revenues or contribution margin to
enable the Company to realize adequate returns on its investment in this sector.
The market for delivery of at-risk and troubled youth services is highly
competitive. Several of the Company's competitors have more experience than does
the Company in developing and implementing these services. Due to the
highly-fragmented nature of the youth services industry, the barriers to entry
remain low, and the Company may experience intensive competition as it seeks to
expand in this area, including competition from companies with substantially
greater resources than Res-Care. Moreover, the privatized management of programs
for at-risk and troubled youths has received varying degrees of acceptance by
state and local governmental authorities, and no assurance can be given that the
level of acceptance will rise or be maintained. There can be no assurance that
the Company will succeed in its goal to significantly increase the revenues and
operating income attributable to its at-risk and troubled youth services
operations.
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Dependence on Governmental Agencies and Government Contracts
The Company conducts its business primarily under contracts with federal,
state and local governments and governmental agencies, and virtually all of the
Company's revenues are attributable to such contracts. The Company's cash flow
is subject to the receipt of sufficient funding and timely payment by applicable
governmental entities. If the appropriate governmental agency does not receive
sufficient appropriations to cover its contractual obligations, a contract may
be terminated or the Company's compensation may be deferred or reduced. A number
of federal, state and local governments, including certain of those with which
the Company has contracts, have experienced fiscal difficulties. Any deferral or
reduction in payment could have a material adverse effect on the Company's cash
flow. In addition, the Company is dependent on governmental entities for
referral of a sufficient number of individuals to occupy the Company's
facilities and programs. The failure of the Company to receive a sufficient
number of such referrals may have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company's contracts are typically subject to renewal (or in the case of
Job Corps contracts, extension) annually. The renewal and financial terms of
each contract are dependent upon many factors, including the quality and type of
services provided, governmental budget constraints, changes in government or
agency personnel and priorities or philosophies of governments or agencies with
respect to provision of services to various at-risk populations. Government and
agency contracts generally are subject to audits, reviews and investigations.
These audits, reviews and investigations typically involve a review of the
contractor's performance under the contract, its reported costs and its
compliance with applicable laws and regulations. In addition, some contracts are
subject to competitive bidding, and the Company's customers generally may
terminate their contracts with the Company for cause and upon certain other
specified conditions. The loss or renewal on less favorable terms of certain of
the Company's contracts could have a material adverse effect on the Company's
business, financial condition and results of operations.
Approximately 18% of the Company's net revenues are attributable to Job
Corps contracts, awarded by the U.S. Department of Labor ("DOL"). Performance at
each Job Corps center is ranked by the DOL using certain objective and
subjective criteria, and contracts for Job Corps centers with low performance
rankings may not be extended or successfully rebid. The DOL has recently made
efforts to encourage new participants in the program, including minority-owned
businesses, and several companies with government defense contracting experience
have begun to bid for Job Corps contracts. The five-year contract for the
operation of the Company's Gulfport, Mississippi Job Corps center expires in
October 1997 and the contract is up for rebid. There exists the risk that the
contract to operate this center will not be awarded to the Company, which would
have an adverse effect on the Company's revenues and net income. Although the
Company has been able to retain most of its Job Corps contracts in the past and
was awarded a new Job Corps contract in 1996 to operate the Edison Job Corps
center, there can be no assurance that the DOL will continue to extend the
Company's Job Corps contracts, or award the Company additional Job Corps
contracts, in the future.
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The Company has contracted with providers of record in various states to
manage and operate MR/DD facilities for them. In such cases, the Company is
dependent on the relationship between the state and local governments or
governmental agencies and the providers of record with which they contract. Each
state and local government or governmental agency may terminate or declare a
breach of contract with providers of record, may be denied federal matching
funds as partial reimbursement for certain program expenses or may reduce their
placement of individuals with, or the use of, such providers of record for
reasons that may be beyond the control of the Company. Such actions could
adversely affect the ability of the providers of record to pay the Company
pursuant to their subcontracts.
Government Regulation
The Company is subject to extensive federal, state and local regulations
governing licensure, conduct of operations at existing facilities, construction
of new facilities, purchase or lease of existing facilities, addition of new
services, capital expenditures, cost containment and reimbursement for services
rendered. Failure by the Company to meet applicable standards could result in
the loss of a license, the delay or loss of reimbursement or the loss of an
ability to expand services. To date, loss of license has not been a significant
factor in the Company's operations. There can be no assurance that federal,
state or local governments will not impose additional restrictions on the
operations of the Company that might adversely affect its business, financial
condition and results of operations.
Fluctuations in Quarterly Operating Results
The Company's quarterly results of operations may fluctuate significantly
as a result of a variety of factors, including the timing of acquisitions or the
opening of new programs, the timing of rate adjustments and the cumulative
effect of rate adjustments differing from previously estimated amounts. Results
for any particular quarter may not be indicative of future quarterly or annual
results.
Volatility of Market Price
From time to time after this offering, there may be significant volatility
in the market price of the Common Stock. The Company believes that the current
market price of the Common Stock reflects expectations that the Company will be
able to continue to operate its programs profitably and to develop additional
and new programs at a significant rate and operate them profitably. If the
Company is unable to operate its programs profitably or develop new programs at
a pace that reflects the expectations of the market, investors could sell shares
of Common Stock at or after the time that it becomes apparent that such
expectations may not be realized, resulting in a decrease in the market price of
the Common Stock. In addition to the operating results of the Company, changes
in earnings estimates by analysts, changes in general conditions in the economy
or the financial markets or other developments affecting the Company or
comparable companies within the privatization services industries could cause
the market price of the Common Stock to fluctuate substantially. In recent
years, the stock market has experienced extreme price and volume fluctuations.
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This volatility has had a significant effect on the market prices of securities
issued by many companies for reasons unrelated to their operating performance.
Opposition to Program Location and Adverse Publicity
The Company's success in obtaining new contracts may depend, in part, upon
its ability to locate facilities that can be leased or acquired on favorable
terms by the Company. Group homes are generally located in residential
communities. Larger facilities for persons with disabilities and at-risk and
troubled youths may be in or near populated areas and, therefore, may generate
legal action or other forms of opposition from residents in areas surrounding a
proposed site. The Company's business also is subject to public scrutiny and,
consequently, could be significantly affected by negative publicity, negative
public reaction or governmental investigations with respect to the Company's
policies or operations or the actions of consumers under its care. The Company's
reputation is very important to the retention and procurement of contracts.
Negative publicity or a governmental investigation with respect to the Company's
policies or operations or the actions of individuals under its care could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Potential Legal Liability
The Company's management of its residential, training, educational and
support programs exposes it to potential third-party claims or litigation by
participants or other persons for wrongful death, personal injury or other
damages resulting from contact with Company facilities, programs, personnel or
participants. In addition, the Company's contracts and the laws of certain
states generally require the Company to maintain adequate insurance for its
operations and to indemnify the governmental agency against any damages to which
the governmental agency may be subject in connection with such claims or
litigation. The Company has, on occasion, been sued by third parties and
maintains an insurance program that provides coverage for certain liability
risks faced by the Company, including wrongful death, personal injury, bodily
injury or property damage to a third party where the Company is found to be
negligent. There can be no assurance, however, that the Company's insurance will
be adequate to cover potential third-party claims.
Dependence on Senior Management and Skilled Personnel
The success of the Company is highly dependent upon the efforts and
abilities of Ronald G. Geary, its President and Chief Executive Officer, E.
Halsey Sandford, its Senior Executive and Jeffrey M. Cross, its Executive Vice
President -- Operations, Division for Persons with Disabilities. The Company has
recently employed Pamela M. Spaniac as its Executive Vice President of Finance
and Administration and Paul G. Dunn as its Executive Vice President for
Development. Ms. Spaniac will begin to serve in her capacity as Executive Vice
President of Finance and Administration on August 15, 1997. The Company's
at-risk and troubled youth services programs are highly dependent upon the
efforts of Donald B. Rice, President of Youthtrack and Ralph G. Gronefeld, Jr.,
Vice President, AYS. The Company has entered into separate employment agreements
with each of the officers listed above containing customary noncompetition,
nondisclosure and nonsolicitation covenants. The loss of the services of one or
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more senior executives could have a material adverse effect upon the Company's
business, financial condition and results of operations.
Availability of Qualified Personnel
The Company competes with many other providers of long-term care with
respect to attracting and retaining qualified and skilled personnel. A possible
shortage of professional personnel or direct service staff or other outside
pressures, including collective bargaining efforts, may require the Company to
enhance its wage and benefits package in order to compete in the hiring and
retention of such personnel. The Company will also be dependent upon the
available labor pool of semi-skilled and unskilled employees in each of the
markets in which it operates. The Company's labor costs are expected to
increase, and there can be no assurance that the Company can match an increase
in such costs by corresponding increases in reimbursement rates for services
rendered by the Company. Any significant failure to control its labor costs or
to receive increased reimbursement for such costs through rate increases would
have a material adverse effect on the Company's business, financial condition
and results of operations.
Control by Principal Shareholders
Mr. and Mrs. James Fornear and their children beneficially own
approximately 24.7% of the outstanding shares of Common Stock. As a result,
these shareholders are able to influence significantly the outcome of matters
requiring a shareholder vote, including the election of members of the Board of
Directors, and thereby exercise a significant degree of control over the affairs
and management of the Company.
Competition
The provision of disabilities and youth services are subject to a number of
competitive factors, including quality of services provided, cost-effectiveness,
reporting and regulatory expertise, reputation in the community and the location
and appearance of facilities and programs. In addition to certain not-for-profit
organizations, including organizations affiliated with advocacy and sponsoring
groups, certain proprietary competitors operate in multiple jurisdictions and
may be well capitalized. The Company faces significant competition from
not-for-profit organizations and proprietary competitors in the states in which
it now operates and expects to face similar competition in any state that it may
enter in the future. Many of the Company's competitors have greater resources
than the Company. Such competition may adversely affect the Company's ability to
obtain new contracts and complete acquisitions on favorable terms.
Environmental and Employee Safety Laws
The Company must comply with various federal and state laws and regulations
that govern the handling and disposal of medical and infectious waste in the
operation of its businesses. Failure to comply with these laws or regulations
could subject the Company to fines, criminal penalties and other enforcement
actions. The Company has developed and implemented policies with respect to the
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handling and disposal of medical and infectious waste and believes it is in
compliance with such laws and regulations. Federal regulations promulgated by
the Occupational Safety and Health Administration impose additional requirements
on the Company with regard to protecting employees from exposure to bloodborne
pathogens. The Company believes that it has complied, and will continue to be
able to comply, with these regulations. However, there can be no assurance that
the regulations will not adversely affect the Company's business, financial
condition and results of operations.
Effect of Anti-Takeover Provisions
The Company's Board of Directors has the authority to issue preferred stock
and to determine the price, rights, conversion ratios, preferences and
privileges of that stock without further vote or action by the holders of the
Common Stock. The rights of the holders of Common Stock will be subject to, and
may be adversely affected by, the rights, including economic rights, of the
holders of any shares of preferred stock. Any such issuance may discourage third
parties from attempting to acquire control of the Company. Furthermore, the
Company is subject to the anti-takeover provisions of the Kentucky Business
Corporation Act prohibiting the Company from engaging in a "business
combination" with an "interested stockholder" for a period of five years after
the date of the transaction in which the person first becomes an "interested
stockholder," unless the business combination is approved in a prescribed
manner. The application of this statute and certain other provisions of the
Company's Amended and Restated Articles of Incorporation also could have the
effect of discouraging, delaying or preventing a change of control of the
Company not approved by the Board of Directors, which could adversely affect the
market price of the Company's Common Stock.
Shares Eligible for Future Sale
As of July 29, 1997, the Company has outstanding 12,302,508 shares of
Common Stock, plus 1,049,942 shares of Common Stock reserved for issuance upon
exercise of options. Sales of a substantial number of shares of Common Stock in
the public market at any particular time could adversely affect the market price
for the Company's Common Stock. Substantially all of the shares of Common Stock
outstanding after completion of this offering will be either freely saleable or
saleable subject to certain volume and manner of sale restrictions under Rule
144 of the Securities Act.
Risks Associated with Forward-Looking Statements
In response to the "safe harbor" provisions contained in the Private
Securities Litigation Reform Act of 1995, the Company is including the following
cautionary statements that are intended to identify certain important factors
that could cause the Company's actual results to differ materially from those
projected in forward-looking statements concerning the Company made by or on
behalf of the Company, whether contained herein or elsewhere.
The Company's growth in revenues and earnings per share has been directly
related to a considerable increase in the number of individuals served in its
Division for Persons with Disabilities and its Division for Youth Services. This
growth is largely dependent upon development-driven activities, including the
11
<PAGE>
acquisitions of other businesses or facilities or of management contract rights
to operate facilities, the award of contracts to open new facilities or start
new operations or to assume management of facilities previously operated by
governmental agencies or not-for-profit organizations and the extension or
renewal of contracts previously awarded to the Company. The Company often makes
forward-looking statements regarding its development activities.
Changes in the Company's future revenues depend significantly upon the
success of these development activities, and in particular on the Company's
ability to obtain additional contracts to provide services to the special needs
populations it serves, whether through acquisitions, awards in response to
requests for proposals for new facilities or programs or for facilities being
privatized by governmental agencies, or other development activities. Future
revenues also depend on the Company's ability to maintain and renew its existing
services contracts and its existing leases. The Company actively seeks
acquisitions of other companies, facilities and assets as a means of increasing
the number of consumers served, and changes in the market for such acquisition
prospects, including increasing competition for and increasing pricing of such
acquisition prospects, could also adversely affect the timing and/or viability
of future development activities.
Revenues of the Company's Division for Persons with Disabilities are highly
dependent on reimbursement under federal and state Medicaid programs. Generally,
each state has its own Medicaid reimbursement regulations and formula. The
Company's revenues and operating profitability are dependent upon the Company's
ability to maintain its existing reimbursement levels and to obtain periodic
increases in reimbursement rates. Changes in the manner in which Medicaid
reimbursement rates are established in one or more of the states in which the
Company conducts its operations, such as those recently encountered by the
Company, could adversely affect revenues and profitability. Other changes in the
manner in which federal and state reimbursement programs are operated, and in
the manner in which billings/costs are reviewed and audited, could also affect
revenues and operating profitability.
The Company's cost structure and ultimate operating profitability are
significantly dependent on its labor costs and the availability and utilization
of its labor force and thus may be affected by a variety of factors, including
local competitive forces, changes in minimum wages or other direct personnel
costs, the Company's effectiveness in managing its direct service staff, and
changes in consumer services models, such as the trends toward supported living
and managed care. Additionally, the Company's continued expansion of its
existing operations, and its ability to expand into providing services to other
populations utilizing the Company's core competencies are dependent upon
continuation of trends toward downsizing, privatization and consolidation, the
Company's ability to tailor its services to meet the specific needs of these
different populations, and its success in operating in a changing reimbursement
environment. The continuation of such trends and the nature of its operating
environment are subject to a variety of political, economic, social and legal
pressures, including desires of governmental agencies to reduce costs and
increase levels of services, federal, state and local budgetary constraints and
actions brought by advocacy groups and the courts to change existing service
delivery systems. Material changes resulting from these trends and pressures
12
<PAGE>
could adversely affect the demand for and reimbursement of the Company's
services and its operating flexibility, and ultimately its revenues and
profitability.
USE OF PROCEEDS
All of the proceeds from the sale of the Shares offered hereby will be
received by the Selling Stockholders. The Company will receive none of the
proceeds from the sale of the Shares.
THE SELLING STOCKHOLDERS
All of the Shares being offered by the Selling Stockholders were acquired
pursuant to an Agreement and Plan of Reorganization dated July 17, 1997 (the
"Agreement"), by and among the Company, Rudd Aviation, Inc. ("Rudd Sub"), Rudd
Enterprises, Inc., as sole stockholder of Rudd Sub, and Mason C. Rudd, as the
sole stockholder of Rudd Enterprises, Inc. Pursuant to the Agreement, all of the
issued and outstanding capital stock of Rudd Sub were exchanged by Rudd
Enterprises, Inc. for 89,517 shares of Common Stock of the Company. Mr. Rudd
received all 89,517 shares of Common Stock upon the liquidation of Rudd
Enterprises, Inc. and 35,000 of such shares of Common Stock were acquired by the
Selling Stockholders pursuant to charitable donations from Mr. Rudd and are
being offered for sale by means of this Prospectus. Pursuant to the terms of the
Agreement, the Company agreed to prepare and file with the Commission a
registration statement within 15 days after the closing of the transaction with
respect to the resale of the Shares from time to time on the Nasdaq National
Market, in privately negotiated transactions or otherwise.
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock by the Selling Stockholders prior to
this offering, the maximum number of shares of Common Stock to be sold by the
Selling Stockholders hereby, and the beneficial ownership of the Company's
Common Stock by the Selling Stockholders after this offering, assuming that all
shares of Common Stock offered hereby are sold.
13
<PAGE>
<TABLE>
<S> <C> <C> <C>
Shares Beneficially Shares To Shares Beneficially
Owned Prior to Offering Be Sold In Owned After Offering
-------------------------- ---------------------------
Name and Address of Beneficial This
Owner Number Percent Offering Number Percent
- ----------------------------------------- ------------- ---------- ------------- ------------- -----------
The Jewish Community Federation 15,000 * 15,000 0 *
3630 Dutchmans Lane
Louisville KY 40205
The Rudd Foundation 10,000 * 10,000 0 *
3 Riverfront Plaza, Suite 320
Louisville, KY 40202
University of Louisville Foundation 5,000 * 5,000 0 *
Fairfax Building
2323 S. Brook Street
Louisville, KY 40292
The Jewish Hospital Foundation 5,000 * 5,000 0 *
217 E. Chestnut Street
Louisville, KY 40202
- -------------
* Less than 1%.
</TABLE>
PLAN OF DISTRIBUTION
The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "RSCR." The Company has been advised that the Selling Stockholders
may sell shares of Common Stock offered hereby from time to time in transactions
on the Nasdaq Stock Market, in privately-negotiated transactions or otherwise.
The Selling Stockholders may effect such transactions by selling the shares of
Common Stock offered hereby to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders or the purchasers of the Shares for
whom such broker-dealers may act as agent or to whom they sell as principal, or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions).
The Selling Stockholders and any broker-dealers who act in connection with
the sale of Shares hereunder may be deemed to be "underwriters" as that term is
defined in the Securities Act, and any commissions received by them and profit
on any resale of the Shares as principal might be deemed to be underwriting
discounts and commissions under the Securities Act.
The Common Stock offered hereby will be sold by the Selling Stockholders
acting as principal for their own account, and the Company will receive no
proceeds from this offering. The Selling Stockholders will pay all applicable
stock transfer taxes, transfer fees and brokerage commissions or discounts. The
Company has agreed to bear the cost of preparing the Registration Statement of
14
<PAGE>
which this Prospectus is a part and all filing fees and legal and accounting
expenses in connection with registration of the shares of Common Stock offered
by the Selling Stockholders hereby under federal and state securities laws.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Reed Weitkamp Schell Cox & Vice, Louisville, Kentucky.
EXPERTS
The consolidated financial statements and schedule of Res-Care, Inc. (the
Company) as of December 31, 1995 and 1996, and for each of the years in the
three-year period ended December 31, 1996, have been incorporated by reference
herein from the Company's Annual Report on Form 10-K for the year ended December
31, 1996 in reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
15
<PAGE>
================================================= ========================
No dealer, salesperson or other person
has been authorized by the Company to give any
information or to make any representations not
contained in this Prospectus in connection with
the offer covered by this Prospectus. If given
or made, such information or representations must 35,000 Shares
not be relied upon as having been authorized by
the Company. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to
buy the Common Stock in any jurisdiction where,
or to any Person to whom it is unlawful to make
such offer or solicitation. Neither the delivery
of this Prospectus nor any sale made hereunder
shall, under any circumstances, create an
implication that there has not been any change in RES-CARE, INC.
the facts set forth in this Prospectus or in the
affairs of the Company since the date hereof.
Common Stock
-----------------------------
-------------
PROSPECTUS
TABLE OF CONTENTS
-------------
Page
----
Available Information......................... 2
Incorporation of Certain
Documents by Reference..................... 2
The Company................................... 4
Risk Factors ................................. 4
Use of Proceeds...............................13
The Selling Stockholders......................13
Plan of Distribution..........................14 ___________, 1997
Legal Matters.................................15
Experts.......................................15
===================================================== ====================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following are the estimated expenses in connection with the issuance
and distribution of the securities to be registered:
SEC registration fee ................................... $ 217
Nasdaq listing fee...................................... 2,000
Accounting fees and expenses............................ 2,000
Legal fees and expenses................................. 5,000
Printing................................................ 2,000
Miscellaneous........................................... 783
--------------
TOTAL................................................... $12,000
--------------
Item 15. Indemnification of Directors and Officers
Section 271B.8-510 of the Kentucky Business Corporation Act (the "Act")
permits the indemnification by a corporation of any director who is made party
to a threatened, pending or completed action, suit or proceeding because he is
or was a director of such corporation. To be eligible for indemnification, such
person must have conducted himself in good faith and reasonably believed that
his conduct, if undertaken in his official capacity with the corporation, was in
the corporation's best interests, and, if not in his official capacity, was at
least not opposed to the corporation's best interests. In the case of a criminal
proceeding, the director must also not have had reasonable cause to believe his
conduct was unlawful. A director may not be indemnified under the
above-referenced section in connection with a proceeding by or in the right of
the corporation in which the director was adjudged liable to the corporation or
in connection with any other proceeding charging improper personal benefit to
him, whether or not involving action in official capacity, in which he was
adjudged liable on the basis that personal benefit was improperly received by
him. Indemnification permitted under Section 271B.8-510 of the Act in connection
with a proceeding by or in the right of the corporation shall be limited to
reasonable expenses incurred in connection with the proceeding. Section
271B.8-560 of the Act provides that a Kentucky corporation may indemnify its
officers, employees and agents to the same extent as directors. Mandatory
indemnification against reasonable expenses incurred in connection with a
proceeding is provided for by the Act, unless otherwise limited by the
corporation's articles of incorporation, where a director or officer has been
wholly successful on the merits or otherwise, in the defense of any proceeding
to which he was a party because he is or was a director or officer of the
corporation. A court of competent jurisdiction may also order indemnification if
the director is fairly and reasonably entitled thereto in view of all relevant
II-1
<PAGE>
circumstances, whether or not he met the applicable standard of conduct or was
adjudged liable to the corporation, but if he was adjudged liable, his
indemnification shall be limited to reasonable expenses incurred.
The Act provides that indemnification pursuant to its provisions is not
exclusive of other rights of indemnification to which a person may be entitled
under any bylaw, agreement, vote of shareholders or disinterested directors, or
otherwise. Additionally, the Act provides that a corporation may purchase and
maintain insurance on behalf of directors, officers, employees or agents of the
corporation against liability asserted against or incurred by such party in
their respective capacity with the corporation.
Article X of the Company's Amended and Restated Articles of
Incorporation and Article X of the Company's Bylaws provide for indemnification
of its directors, officers, employees and other agents to the maximum extent
permitted by law.
Item 16. Exhibits
2.1 -- Agreement by and among Res-Care, Inc. RSCR California, Inc.,
Res-Care Illinois, Inc., Res-Care Kansas Inc., and RSCR Texas,
Inc. and Beverly Health and Rehabilitation Services, Inc.,
Beverly Enterprises-- California, Inc., Beverly Enterprises--
Illinois, Inc., Beverly Enterprises -- Kansas, Inc. and Beverly
Enterprises -- Texas, Inc. dated April 5, 1995 (excluding
Exhibits and Schedules). Exhibit 2.1 to the Company's Report on
Form 8-K dated May 1, 1995 filed on May 12, 1995 is hereby
incorporated by reference.
2.2 -- Stock Purchase Agreement by and among Housecall Medical
Resources Inc. and Res-Care, Inc., Blair S. Gordon and J. Paul
Gordon dated as of May 31, 1995 (excluding Exhibits and
Schedules). Exhibit 2-1 to the Company's Report on Form 8-K dated
May 31, 1995 filed on June 15, 1995 is hereby incorporated by
reference.
3.1 -- Articles of Amendment to Amended and Restated Articles of
Incorporation of the Company dated May 29, 1997
3.2 -- Amended and Restated Articles of Incorporation of the Company
as amended, Exhibit 3.1 to the Company's Registration Statement
of Form S-1 (Reg. No. 33-48749) is hereby incorporated by
reference.
3.3 -- Bylaws of the Company. Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (Reg. No. 33-48749) is hereby
incorporated by reference.
4.1 -- Specimen Common Stock Certificate. Exhibit 4.1 to the
Company's Registration Statement on Form S-1 (Reg. No. 33-48749)
is hereby incorporated by reference.
II-2
<PAGE>
4.2 -- Article VI of the Amended and Restated Articles of
Incorporated of the Company included in Exhibit 3.2.
5.1 -- Opinion of Reed Weitkamp Schell Cox & Vice
10.1 -- 1991 Incentive Stock Option Plan of the Company (adopted April
24, 1991, amended and restated as of February 23, 1995). Exhibit
4 to the Company's Registration Statement on Form S-8 (Reg. No.
33-80331) is hereby incorporated by reference.
10.2 -- Amended and Restated Employment Agreement, dated April 27,
1992, between the Company and E. Halsey Sandford, Exhibit 10.14
to the Company's Registration Statement on Form S-1 (Reg. No.
33-48749) is hereby incorporated by reference.
10.3 -- 1991 Compensation/Evaluation Bonus Plan. Exhibit 10.15 to the
Company's Registration Statement on Form S-1 (Reg. No. 33-48749)
is hereby incorporated by reference.
10.4 -- 1993 Nonemployee Directors Stock Ownership Incentive Plan of
the Company (adopted October 28, (1993)). Exhibit 4.1 to the
Company's Registration Statement on Form S-8 (Reg. No. 33-76612)
is hereby incorporated by reference.
10.5 -- Amended and Restated Loan Agreement dated as of April 26, 1995
by and among Res-Care, Inc. and PNC Bank, Kentucky, Inc. and
National City Bank, Kentucky. Exhibit 10.7 to the Company's
Annual Report on Form 10-K for the year ending December 31, 1995
is hereby incorporated by reference.
10.6 -- 1994 Employee Stock Purchase Plan effective July 1, 1995.
Exhibit 4.1 to the Company's Registration Statement on Form S-8
(Reg. No. 33-85964) is hereby incorporated by reference.
10.7 -- Employment Agreement dated October 26, 1995 between the
Company and Ronald G. Geary. Exhibit 10-1 to the Company's Report
on Form 10-Q for the quarter ending September 30, 1995 is hereby
incorporated by reference.
10.8 -- Res-Care, Inc. 401(K) Restoration Plan effective December 1,
1995, Exhibit 10.11 to the Company's Annual Report on Form 10-K
for the year ending December 31, 1995 is hereby incorporated by
reference.
II-3
<PAGE>
10.9 -- Second Amendment to Loan Instruments dated as of February 16,
1996 by and among Res-Care, Inc., and PNC Bank, Kentucky, Inc.
National City Bank, Kentucky and Sun Trust Bank, Nashville, N.A.
Exhibit 10.12 to the Company's Annual Report on Form 10-K for the
year ending December 31, 1995 is hereby incorporated by
reference.
10.10 -- Second Amended and Restated Employment Agreement dated March
17, 1996 between the Company and E. Halsey Sandford, Exhibit
10.13 to the Company's Annual Report on Form 10-K for the year
ending December 31, 1995 is hereby incorporated by reference.
10.11 -- Amended and Restated Employment Agreement dated as of October
26, 1995 and amended November 5, 1996 between the Company and
Ronald G. Geary. Exhibit 10.11 to the Company's Annual Report on
Form 10-K for the year ending December 31, 1996 is hereby
incorporated by reference.
10.12 -- Loan Agreement dated as of December 23, 1996 by and among
Res-Care, Inc. and all of its subsidiaries and PNC Bank,
Kentucky, Inc., National City Bank of Kentucky, Sun Trust Bank,
Nashville, N.A., and Bank One, Kentucky, NA. Exhibit 10.12 to the
Company's Annual Report for the year ending December 31, 1996 is
hereby incorporated by reference.
10.13 -- Employment Agreement dated January 1, 1997 between the
Company and Jeffrey M. Cross. Exhibit 10.13 to the Company's
Annual Report on Form 10-K for the year ending December 31, 1996
is hereby incorporated by reference.
23.1 -- Consent of KPMG Peat Marwick LLP.
23.2 -- Consent of Reed Weitkamp Schell Cox & Vice (included in
opinion filed as Exhibit 5).
24.1 -- Power of Attorney (included on signature page).
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
II-4
<PAGE>
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions of the Kentucky Business Corporation Act,
the Amended and Restated Articles of Incorporation or Bylaws of the registrant
or resolutions of the Board of Directors of the registrant adopted pursuant
thereto, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suite or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(d) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
II-5
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") that are incorporated by reference
in the registration statement.
(2) That for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(e) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Louisville, Commonwealth of Kentucky, on July 30,
1997.
RES-CARE, INC.
By: /s/ Ronald G. Geary
-----------------------
Ronald G. Geary
President
and Chief Executive Officer
SIGNATURE PAGE AND POWER OF ATTORNEY
Know all men by these presents, that each person whose signature appears
below constitutes and appoints Ronald G. Geary and E. Halsey Sandford (with full
power to each of them to act alone) as his true and lawful attorney-in-fact and
agent, with full power of substitution, for him and in his name, place and stead
in any and all capacities to sign any or all amendments or post-effective
amendments to this Registration Statement, including post-effective amendments
filed pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to
file the same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, to sign any and all
applications, registration statements, notices or other document necessary or
advisable to comply with the applicable state securities laws, and to file the
same, together with all other documents in connection therewith, with the
appropriate state securities authorities, granting unto said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, thereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
II-7
<PAGE>
Signature Title Date
/s/ James R. Fornear Chairman of the Board of Directors July 30, 1997
- ----------------------------
James R. Fornear
/s/ Ronald G. Geary Chief Executive Officer, July 30, 1997
- ---------------------------- President and Director
Ronald G. Geary
/s/ E. Halsey Sandord Senior Executive and Director July 30, 1997
- ----------------------------
E. Halsey Sandford
/s/ Spiro B. Mintos Secretary, Treasurer and Director July 30, 1997
- ----------------------------
Spiro B. Mitsos
/s/ Seymour I. Bryson Director July 30, 1997
- ----------------------------
Seymour I. Bryson
/s/ W. Bruce Lunsford Director July 30, 1997
- ----------------------------
W. Bruce Lunsford
/s/ R. Dan Brice Acting Principal Financing July 30, 1997
- ---------------------------- Accounting Officer
R. Dan Brice
II-8
<PAGE>
EXHIBIT INDEX
(*Exhibits described in Item 16 and listed in this index are
incorporated by reference.)
<TABLE>
<S> <C> <C>
Sequentially
Exhibit Document Numered Page
2.1 -- Agreement by and among Res-Care, Inc. RSCR California, Inc.,
Res-Care Illinois, Inc., Res-Care Kansas Inc., and RSCR Texas,
Inc. and Beverly Health and Rehabilitation Services, Inc.,
Beverly Enterprises -- California, Inc., Beverly Enterprises --
Illinois, Inc., Beverly Enterprises -- Kansas, Inc. and Beverly
Enterprises -- Texas, Inc. dated April 5, 1995 (excluding
Exhibits and Schedules). Exhibit 2.1 to the Company's Report on
Form 8-K dated May 1, 1995 filed on May 12, 1995 is hereby
incorporated by reference.*
2.2 -- Stock Purchase Agreement by and among Housecall Medical
Resources Inc. and Res-Care, Inc., Blair S. Gordon and J. Paul
Gordon dated as of May 31, 1995 (excluding Exhibits and
Schedules). Exhibit 2-1 to the Company's Report on Form 8-K dated
May 31, 1995 filed on June 15, 1995 is hereby incorporated by
reference.*
3.1 -- Articles of Amendment to Amended and Restated Articles of
Incorporation of the Company dated May 29, 1997.
3.2 -- Amended and Restated Articles of Incorporation of the Company
as amended, Exhibit 3.1 to the Company's Registration Statement
of Form S-1 (Reg. No. 33-48749) is hereby incorporated by
reference.*
3.3 -- Bylaws of the Company. Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (Reg. No. 33-48749) is hereby
incorporated by reference.*
4.1 -- Specimen Common Stock Certificate. Exhibit 4.1 to the
Company's Registration Statement on Form S-1 (Reg. No. 33-48749)
is hereby incorporated by reference.*
4.2 -- Article VI of the Amended and Restated Articles of
Incorporated of the Company included in Exhibit 3.2.*
5.1 -- Opinion of Reed Weitkamp Schell Cox & Vice
II-9
<PAGE>
Sequentially
Exhibit Document Numered Page
------- -------- ------------
10.1 -- 1991 Incentive Stock Option Plan of the Company (adopted April
24, 1991, amended and restated as of February 23, 1995). Exhibit
4 to the Company's Registration Statement on Form S-8 (Reg. No.
33-80331) is hereby incorporated by reference.*
10.2 -- Amended and Restated Employment Agreement, dated April 27,
1992, between the Company and E. Halsey Sandford, Exhibit 10.14
to the Company's Registration Statement on Form S-1 (Reg. No.
33-48749) is hereby incorporated by reference.*
10.3 -- 1991 Compensation/Evaluation Bonus Plan. Exhibit 10.15 to the
Company's Registration Statement on Form S-1 (Reg. No. 33-48749)
is hereby incorporated by reference.*
10.4 -- 1993 Nonemployee Directors Stock Ownership Incentive Plan of
the Company (adopted October 28, (1993)). Exhibit 4.1 to the
Company's Registration Statement on Form S-8 (Reg. No. 33-76612)
is hereby incorporated by reference.*
10.5 -- Amended and Restated Loan Agreement dated as of April 26, 1995
by and among Res-Care, Inc. and PNC Bank, Kentucky, Inc. and
National City Bank, Kentucky. Exhibit 10.7 to the Company's
Annual Report on Form 10-K for the year ending December 31, 1995
is hereby incorporated by reference.*
10.6 -- 1994 Employee Stock Purchase Plan effective July 1, 1995.
Exhibit 4.1 to the Company's Registration Statement on Form S-8
(Reg. No. 33-85964) is hereby incorporated by reference.*
10.7 -- Employment Agreement dated October 26, 1995 between the
Company and Ronald G. Geary. Exhibit 10-1 to the Company's Report
on Form 10-Q for the quarter ending September 30, 1995 is hereby
incorporated by reference.*
10.8 -- Res-Care, Inc. 401(K) Restoration Plan effective December 1,
1995, Exhibit 10.11 to the Company's Annual Report on Form 10-K
for the year ending December 31, 1995 is hereby incorporated by
reference.*
II-10
<PAGE>
Sequentially
Exhibit Document Numered Page
------- -------- ------------
10.9 -- Second Amendment to Loan Instruments dated as of February 16,
1996 by and among Res-Care, Inc., and PNC Bank, Kentucky, Inc.
National City Bank, Kentucky and Sun Trust Bank, Nashville, N.A.
Exhibit 10.12 to the Company's Annual Report on Form 10-K for the
year ending December 31, 1995 is hereby incorporated by
reference.*
10.10 -- Second Amended and Restated Employment Agreement dated March
17, 1996 between the Company and E. Halsey Sandford, Exhibit
10.13 to the Company's Annual Report on Form 10-K for the year
ending December 31, 1995 is hereby incorporated by reference.*
10.11 -- Amended and Restated Employment Agreement dated as of October
26, 1995 and amended November 5, 1996 between the Company and
Ronald G. Geary. Exhibit 10.11 to the Company's Annual Report on
Form 10-K for the year ending December 31, 1996 is hereby
incorporated by reference.*
10.12 -- Loan Agreement dated as of December 23, 1996 by and among
Res-Care, Inc. and all of its subsidiaries and PNC Bank,
Kentucky, Inc., National City Bank of Kentucky, Sun Trust Bank,
Nashville, N.A., and Bank One, Kentucky, NA. Exhibit 10.12 to the
Company's Annual Report for the year ending December 31, 1996 is
hereby incorporated by reference.*
10.13 -- Employment Agreement dated January 1, 1997 between the
Company and Jeffrey M. Cross. Exhibit 10.13 to the Company's
Annual Report on Form 10-K for the year ending December 31, 1996
is hereby incorporated by reference.*
23.1 -- Consent of KPMG Peat Marwick LLP.
23.2 -- Consent of Reed Weitkamp Schell Cox & Vice (included
in opinion filed as Exhibit 5).
24.1 -- Power of Attorney (included on signature page).
</TABLE>
II-11
Exhibit 3.1
ARTICLES OF AMENDMENT
TO
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
RES-CARE, INC.
The undersigned, being the President and Chief Executive Officer of the
Corporation, does hereby state as follows:
1. The name of the Corporation is Res-Care, Inc.
2. The amendment to the Amended and Restated Articles of Incorporation
adopted by the Board of Directors and approved at a meeting of the shareholders
is as follows:
Articles IV, V and VI of the Amended and Restated Articles of Incorporation
are hereby amended such that, as amended, said Articles IV, V and VI shall read
in their entirety as follows:
"ARTICLE IV
Principal Office
The mailing address of the principal office of the Corporation is
10140 Linn Station Road, Louisville, Kentucky 40223.
ARTICLE V
Registered Office; Registered Agent
The street address of the registered office of the Corporation is
10140 Linn Station Road, Louisville (Jefferson County), Kentucky
40223, and the name of the registered agent at such office is Ronald
G. Geary.
ARTICLE VI
Authorized Shares
The total number of shares which the Corporation shall have the
authority to issue is 41,000,000 shares ("Shares"), which shall be
divided into two classes as follows:
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40,000,000 Common Shares; and
1,000,000 Preferred Shares.
The designations, voting powers and relative rights and
preferences of the shares shall be as follows:
A. Common Shares.
1. Powers, Rights and Preferences. The Common Shares shall be
without distinction as to powers, rights and preferences. Except as
may be provided by the Board of Directors in a designation of any
series of Preferred Shares (in accordance with the provisions of
Paragraph B of Article VI) or as otherwise declared by law, the Common
Shares shall have the exclusive right to vote for the election of
directors and on all other matters in which shareholders are generally
entitled to vote. Except with respect to the election of directors
(where cumulative voting is required), each of the Common Shares shall
have one vote per share (which vote may not be split into fractional
votes) on matters on which holders of Common Shares are entitled to
vote.
2. Dividends. After the requirements with respect to preferential
dividends on Preferred Shares (fixed in accordance with the provisions
of Paragraph B of Article VI), if any, have been met and after the
Corporation has complied with any requirements for setting aside sums
as sinking funds or redemption or purchase accounts and subject
further to any other conditions which may be established in accordance
with the provisions of Paragraph B of Article VI, the holders of
Common Shares shall be entitled to receive such dividends, if any, as
may be declared from time to time by the Board of Directors.
3. Distributions on Common Shares. After distribution in full of
any preferential amount (as may be fixed in accordance with the
provisions of Paragraph B of Article VI) to be distributed to the
holders of Preferred Shares, and subject to any further rights of the
holders of Preferred Shares to further participate in a liquidation,
distribution or sale or assets, dissolution or winding-up of the
Corporation, the holders of Common Shares shall be entitled to
receive, upon the voluntary or involuntary liquidation, distribution
or sale of assets, dissolution or winding-up of the Corporation, all
of its remaining assets, tangible and intangible, of whatever kind
available for distribution to the shareholders, ratably in proportion
to the number of Common Shares held by each.
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<PAGE>
4. Issuance of Common Shares. Common Shares may be issued from
time to time as the Board of Directors shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
B. Preferred Shares.
1. Issuance by Board Resolutions; Series. The Board of Directors
of the Corporation shall have authority by resolution to issue from
time to time Preferred Shares in one or more series. Each series shall
be distinctly designated by number, letter or title. All shares of any
one series of Preferred Shares shall be alike in every particular. The
powers, preferences and voting, relative, participating, optional and
other rights of each such series, and the qualifications, limitations
or restrictions thereof, if any, may differ from those of any and all
other series at any time outstanding.
2. Preferences and Rights. Subject to the provisions of
subparagraph 3 of this Paragraph B of Article VI, the Board of
Directors of the Corporation is hereby expressly granted authority to
fix by resolution or resolutions adopted prior to the issuance of any
shares of each particular series of Preferred Shares, the designation,
powers, preferences and voting, relative, participating, optional and
other rights, and the qualifications, limitations and restrictions
thereof, if any, of such series, including, but without limiting the
generality of the foregoing, the following:
(a) The distinctive designation of, and the number of Preferred
Shares which shall constitute the series, which number from time to
time may be increased (except as otherwise fixed by the Board of
Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by action of the Board of
Directors;
(b) The rate and times at which, and the terms and conditions
upon which, dividends on the shares of the series shall be paid,
whether the dividends shall be cumulative or non-cumulative, and if
cumulative, from what date or dates, and the preferences or relation,
if any, of such dividends to the dividends payable on any shares of
any other series or class of stock of the Corporation;
(c) Whether shares of the series shall be subject to redemption,
and if so subject, whether they shall be subject to redemption (i) at
the option of the Corporation, the shareholder, another person and/or
upon the occurrence of a designated event, (ii) for cash,
indebtedness, securities (including, without limitation, Common
Shares) or other property, or any combination thereof, and (iii) for a
designated amount or for an amount determined in accordance with a
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<PAGE>
designated formula or by reference to extrinsic data or events; and,
as to any shares of a series subject to redemption, such other terms
and conditions on which the shares of the series may be redeemed;
(d) Whether the holders of the shares of the series shall be
entitled to the benefit of a sinking fund or redemption or purchase
account to be applied to the purchase or redemption of the shares of
the series and, if so entitled, the amount of such fund and the terms
and conditions relative to the operation thereof;
(e) Whether the shares of the series shall be convertible into,
or exchangeable for, any Common or other Preferred Shares of the
Corporation or any other securities and, if so convertible or
exchangeable, whether the conversion or exchange (i) is at the option
of the Corporation, the shareholder, another person and/or upon the
occurrence of a designated event, (ii) shall be for cash,
indebtedness, securities (including, without limitation, Common
Shares) or other property, or any combination thereof, and (iii) shall
be for a designated amount or at a designated ratio, or for an amount
or at a ratio determined in accordance with a designated formula or by
reference to extrinsic data or events; and, as to any shares of a
series so convertible or exchangeable, such other terms and conditions
on which the shares of the series may be converted or exchanged;
(f) The rights, if any, of the holders of the shares of the
series upon voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding-up of the Corporation;
(g) Whether the shares of the series shall have priority over or
parity with or be junior to the shares of any other class or series,
or shall be entitled to the benefit of limitations restricting (i) the
creation of indebtedness of the Corporation, (ii) the issuance of
shares of any other class or series having priority over or being on a
parity with the shares of such series, or (iii) the payment of
dividends on, the making of other distributions with respect to, or
the purchase or redemption of shares of any other class or series on
parity with or ranking junior to the shares of any such series as to
dividends or other distributions, and the terms of any such
restrictions, or any other restrictions with respect to shares of any
class or series on parity with or ranking junior to the shares of such
series in any respect;
(h) Whether and in what circumstances shares of a series shall
have voting rights, which voting rights, if any, may be general,
4
<PAGE>
special, conditional or limited (and, in the case of special,
conditional or limited voting rights, may confer upon holders of such
series in certain circumstances the exclusive right to elect a
majority of the members of the Board of Directors); and, as to any
shares of a series having voting rights, the number of votes each
holder shall be entitled to cast per each share of the series and
whether holders of the series are entitled to vote separately or
together with the holders of one or more other series of Preferred
Shares on all or some matters as a separate voting group; and
(i) Any other powers, preferences, privileges and relative,
participating, optional, or other special rights of such series, and
the qualifications, limitations or restrictions thereof, to the
fullest extent now and hereafter permitted by law.
3. Issuance of Preferred Shares. Subject to the following
provisions of this subparagraph 3, shares of any series of Preferred
Shares may be issued from time to time as the Board of Directors shall
determine and on such terms and for such consideration as shall be
fixed by the Board of Directors. The relative powers, preferences and
rights of each series of Preferred Shares in relation to the powers,
preferences and rights of each other series of Preferred Shares shall
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
this Paragraph B of Article VI. Except as otherwise declared by law,
the consent by class or series vote or otherwise of the holders of
such of the series of the Preferred Shares as are from time to time
outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Shares, whether the powers,
preferences and rights of such other series shall be fixed by the
Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide in such
resolution or resolutions adopted with respect to any series of
Preferred Shares that the consent of the holders of a majority (or
such greater proportion as shall be therein fixed) of the outstanding
shares of such series voting thereon shall be required for the
issuance of any or all other series of Preferred Shares."
3. The foregoing Amendment required shareholder approval. The foregoing
Amendment was approved by the shareholders on May 13, 1997 at the annual meeting
of the shareholders. Such meeting was duly called pursuant to notice as provided
in the Corporation's By-laws. No Preferred Shares are issued and outstanding.
The total number of Common Shares of the Corporation outstanding and entitled to
vote on the Amendment was 10,059,093. The total number of votes represented at
the meeting of the shareholders in person or by proxy was 8,052,423 Common
Shares. The total number of Common Shares voting in favor of the Amendment was
7,962,107 or 79.15% of the Corporation's Common Shares outstanding and entitled
5
<PAGE>
to vote on the Amendment, which constitutes sufficient approval of the Amendment
under the Corporation's Amended and Restated Articles of Incorporation.
4. All other Articles set forth in those Amended and Restated Articles of
Incorporation filed with the Secretary of State of the Commonwealth of Kentucky
on December 21, 1992, are true and accurate and are not modified by these
Articles of Amendment to Amended and Restated Articles of Incorporation.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment on behalf of the Corporation this 29th day of May , 1997.
RES-CARE, INC.
By: /s/ Ronald G. Geary
-------------------
Ronald G. Geary
President and Chief Executive Officer
This instrument prepared by:
/s/ Gary R. Weitkamp
- --------------------
Gary R. Weitkamp, Esq.
REED WEITKAMP SCHELL COX & VICE
2400 Citizens Plaza
Louisville, Kentucky 40202
(502) 589-1000
Exhibit 5.1
[Reed Weitkamp Schell Cox & Vice Letterhead]
July 31, 1997
Res-Care, Inc.
10140 Linn Station Road
Louisville, Kentucky 40223
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Res-Care, Inc., a Kentucky corporation (the
"Company"), in connection with the Company's Registration Statement on Form S-3
(the "Registration Statement") filed on the date hereof with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"). The Registration Statement relates to 35,000 shares of the
Company's Common Stock, no par value per share (the "Shares"), which were
previously issued by the Company and are being registered for resale by the
holder thereof.
In this capacity, we have examined the Company's Amended and Restated
Articles of Incorporation and Bylaws, the Registration Statement, the
proceedings of the Board of Directors of the Company relating to the issuance of
the Shares and such other documents, instruments and matters of law as we have
deemed necessary to the rendering of this opinion.
Based on the foregoing, we are of the opinion and advise you that the
Shares described in the Registration Statement have been duly authorized and are
validly and legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the heading "Legal
Matters" in the Prospectus included in the Registration Statement.
<PAGE>
We express no opinion as to the laws of any jurisdiction other than the
laws of the Commonwealth of Kentucky and the federal laws of the United States.
Our opinion is rendered as of the date hereof and we assume no obligation to
advise you of changes that may hereafter be brought to our attention. Except as
provided in the immediately preceding paragraph, this opinion is intended solely
for your benefit and may not be relied upon, referred to or otherwise used by
any person without our express written consent.
Sincerely,
Reed Weitkamp Schell Cox & Vice
/s/ Reed Weitkamp Schell Cox & Vice
GRW/vlw
Exhibit 23.1
CONSENT OF KPMG PEAT MARWICK LLP, INDEPENDENT AUDITORS
We consent to incorporation by reference in the Registration Statement on
Form S-3 of Res-Care, Inc. of our report dated February 26, 1997, with respect
to the consolidated balance sheets of Res-Care, Inc. and subsidiaries as of
December 31, 1995 and 1996 and the related consolidated statements of income,
shareholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1996, and the related schedule, which reports appear
in the Form 10-K for the year ended December 31, 1996.
/s/ KPMG PEAT MARWICK LLP
July 29, 1997
