<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to ___________________
Commission File Number: 0-20372
- --------------------------------------------------------------------------------
RES-CARE, INC.
(Exact name of registrant as specified in its charter)
KENTUCKY 61-0875371
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
10140 LINN STATION ROAD 40223
LOUISVILLE, KENTUCKY (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (502) 394-2100
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___.
The number of shares outstanding of the registrant's common stock, no par value,
as of April 30, 1998, was 12,491,918.
================================================================================
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION NUMBER
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 1998
and December 31, 1997........................................... 2
Condensed Consolidated Statements of Income for the three
months ended March 31, 1998 and 1997............................ 3
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 1998 and 1997...................... 4
Notes to Condensed Consolidated Financial Statements.................... 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................... 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................................... 13
Item 5. Other Information....................................................... 13
Item 6. Exhibits and Reports on Form 8-K........................................ 14
Index to Exhibits....................................................... 15
Signatures.............................................................. 16
</TABLE>
1
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RES-CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31 December 31
1998 1997
---- ----
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,205 $ 66,584
Accounts and notes receivable, net 77,563 57,240
Inventories 678 634
Deferred income taxes 6,158 3,483
Prepaid expenses 2,798 2,259
--------- ---------
Total current assets 103,402 130,200
--------- ---------
Property and equipment, net 59,323 54,403
Excess of acquisition cost over net assets acquired, net 159,598 51,751
Other assets 24,631 18,814
--------- ---------
$ 346,954 $ 255,168
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 14,412 $ 13,888
Accrued expenses 33,016 22,907
Accrued income taxes 5,287 1,564
Current portion of long-term debt 2,755 1,759
--------- ---------
Total current liabilities 55,470 40,118
--------- ---------
Long-term liabilities 5,313 1,714
Long-term debt 174,281 108,470
Deferred income taxes 1,127 38
--------- ---------
Total liabilities 236,191 150,340
--------- ---------
Commitments and contingencies
Minority interest -- 219
Shareholders' equity:
Preferred shares -- --
Common stock 41,678 41,678
Additional paid-in capital 13,433 11,215
Retained earnings 58,894 55,057
--------- ---------
114,005 107,950
Less cost of common shares in treasury (3,242) (3,341)
--------- ---------
Total shareholders' equity 110,763 104,609
--------- ---------
$ 346,954 $ 255,168
========= =========
</TABLE>
See accompanying notes.
2
<PAGE> 4
RES-CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------------------
1998 1997
---------- ----------
(unaudited)
<S> <C> <C>
Net revenues $ 105,938 $ 64,867
Facility and program expenses 91,878 56,270
Operating expenses:
Corporate general and administrative 4,055 2,565
Depreciation and amortization 2,470 1,179
--------- --------
Total operating expenses 6,525 3,744
--------- --------
Total facility, program and operating expenses 98,403 60,014
--------- --------
Operating income 7,535 4,853
Other expenses (income):
Interest expense 1,958 562
Interest income (724) (116)
(Gain) loss from sale of assets 9 (15)
--------- --------
Total other expenses, net 1,243 431
--------- --------
Minority interest in income of consolidated subsidiary -- (44)
--------- --------
Income before income taxes 6,292 4,378
Income tax expense 2,455 1,771
--------- --------
Net income $ 3,837 $ 2,607
========= ========
Income per share data:
Basic earnings per share $ 0.31 $ 0.26
========= ========
Diluted earnings per share $ 0.29 $ 0.25
========= ========
Weighted average shares used in per share calculations:
Basic earnings per share 12,410 10,049
Diluted earnings per share 16,953 10,516
</TABLE>
See accompanying notes.
3
<PAGE> 5
RES-CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------------------------------
1998 1997
---------- -----------
(unaudited)
<S> <C> <C>
Cash used in operating activities $ (1,236) $ (3,231)
Cash flows from investing activities:
Purchase of property and equipment (1,786) (3,174)
Acquisition of businesses, net of cash acquired (88,638) (7,336)
Other (388) (381)
-------- --------
Cash used in investing activities (90,812) (10,891)
-------- --------
Cash flows from financing activities:
Net borrowings under notes payable to bank 40,426 14,304
Proceeds received from exercise of stock options 1,243 364
Partnership distributions -- (234)
-------- --------
Cash provided by financing activities 41,669 14,434
-------- --------
Increase (decrease) in cash and cash equivalents $(50,379) $ 312
======== ========
</TABLE>
See accompanying notes.
4
<PAGE> 6
RES-CARE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
Res-Care, Inc. and its subsidiaries (the "Company") are
primarily engaged in the delivery of residential, training, educational and
support services to various populations with special needs, including persons
with mental retardation and other developmental disabilities and at-risk and
troubled youth. These services have in the past traditionally been provided by
state and local government agencies and not-for-profit organizations.
The accompanying unaudited condensed consolidated financial
statements of the Company have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three-month period ended March 31, 1998 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1998. For further
information, refer to the consolidated financial statements and footnotes
thereto in the Company's annual report on Form 10-K for the year ended December
31, 1997.
NOTE 2. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
March 31 December 31
1998 1997
-------- -----------
(In thousands)
<S> <C> <C>
Revolving credit facility with banks..................... $ 40,953 $ --
6% convertible subordinated notes due 2004, net of
unamortized discount of $3,115 and $3,232 in
1998 and 1997....................................... 106,245 106,128
5.9% convertible subordinated notes due 2005............. 22,000 --
Notes payable............................................ 4,500 2,500
Other.................................................... 3,338 1,601
-------- -------
177,036 110,229
Less current portion................................ 2,755 1,759
-------- --------
$174,281 $108,470
======== ========
</TABLE>
5
<PAGE> 7
NOTE 3. ACQUISITIONS
On March 12, 1998, the Company acquired all of the outstanding
common stock of Normal Life, Inc. (Normal Life), a Kentucky corporation, which
provides services to persons with mental retardation and other developmental
disabilities, including dual diagnosis, in Indiana, Kentucky, California,
Louisiana, Texas, Georgia and Florida.
The aggregate stock purchase price of $73 million was paid
with $51 million in cash and $22 million in principal amount of the Company's
5.9% convertible subordinated notes due 2005. The notes are convertible into
common stock of the Company at a conversion price of $38.7531, or approximately
567,697 shares, commencing one year from the closing date of the transaction.
The funds for the acquisition came from the Company's existing cash and
revolving credit facility.
The acquisition is being accounted for under the purchase
method of accounting. Accordingly, the cost to acquire Normal Life has been
preliminarily allocated to the assets acquired and liabilities assumed according
to their respective estimated fair values. Results of operations of Normal Life
are included in the condensed consolidated statements of income effective March
1, 1998.
Summarized below are the unaudited pro forma results of the
Company's operations for the three months ended March 31, 1998 and 1997, as
though the acquisition had occurred on January 1, 1998 and 1997, respectively.
Three Months Ended March 31,
1998 1997
----------- -------------
(In thousands,
except earnings per share)
Revenues .......................................... $116,881 $76,048
Income before income taxes......................... 5,741 4,165
Net income......................................... 3,501 2,508
Basic earnings per share........................... $ 0.28 $ 0.25
======== =======
Diluted earnings per share......................... $ 0.27 $ 0.24
======== =======
These unaudited pro forma results of operations do not reflect
the total cost savings or other synergies that may result from the acquisition.
In the opinion of the management of the Company, all adjustments necessary to
present pro forma results of operations have been made. The unaudited pro forma
results of operations do not purport to be indicative of the results that would
have occurred had the acquisition occurred at the beginning of these periods or
results of operations that may be achieved in the future.
In connection with the Normal Life acquisition, the Company
recognized a liability of approximately $2.4 million associated with termination
benefits and the closing of duplicate facilities. The termination benefits
relate principally to corporate employees. During the three months ended March
31, 1998, the Company paid approximately $247,000 against the liability
6
<PAGE> 8
established for such purposes. The Company estimates that the remaining amounts
will be paid by February 28, 1999.
The Company also completed seven other acquisitions during the
first quarter of 1998, serving more than 3,300 individuals, at an aggregate cost
of approximately $26 million.
Effective January 1, 1998, the Company acquired through
merger, the twenty-percent minority interest in its Youthtrack, Inc. subsidiary
held by members of its founding management and is operating it as a wholly-owned
subsidiary under its present management.
NOTE 4. EARNINGS PER SHARE
The following table shows the amounts used in computing earnings per
share and the effect on income and the weighted average number of shares of
dilutive potential common stock.
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
1998 1997
-------- ----------
(In thousands)
<S> <C> <C>
Income available to shareholders for basic earnings per share................ $ 3,837 $ 2,607
Interest expense, net of income tax effect, on convertible
subordinated notes...................................................... 1,109 --
------- -------
Income available to shareholders after assumed conversion
of convertible subordinated notes....................................... $ 4,946 $ 2,607
======= =======
Weighted average number of common shares used in basic
earnings per share...................................................... 12,410 10,049
Effect of dilutive securities:
Stock options ......................................................... 540 467
Convertible subordinated notes.......................................... 4,003 --
------- -------
Weighted number of common shares and dilutive potential
common shares used in diluted earnings per share........................ 16,953 10,516
======= =======
</TABLE>
NOTE 5 EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARD
In April 1998, the Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-5, Reporting on the Costs of Start-up Activities.
The SOP requires that all costs of start-up activities and organization costs be
expensed as incurred. The SOP is effective for the Company's year ending
December 31, 1999. Initial application of the SOP will be reported as the
cumulative effect of a change in accounting principle. As of March 31, 1998,
deferred start-up and organization costs of $6.3 million (net of accumulated
amortization of $3.8 million) were included in Other Assets in the Company's
consolidated balance sheet.
7
<PAGE> 9
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ACQUISITIONS
During the first quarter of 1998, the Company completed the
acquisitions of eight operations which are expected to generate more than $100
million in annualized revenue and serve approximately 4,600 new consumers. In
the Division for Youth Services, the Youthtrack subsidiary expanded its
operations into Utah and the Alternative Youth Services subsidiary entered
Arizona. In the Division for Persons with Disabilities, operations were added in
each of its four geographic regions serving persons with mental retardation and
other developmental disabilities, as well as its Premier unit which serves
persons with acquired brain injury. The most significant transaction was the
acquisition of the stock of Normal Life, Inc. in March 1998. Normal Life
operations serve approximately 1,300 consumers and are expected to contribute
approximately $68 million in annualized revenue to the Company's Division for
Persons with Disabilities.
In these transactions, the Company paid total consideration of
approximately $101.5 million. This amount was funded from the issuance of $22
million in principal amount of 5.9% convertible subordinated notes related to
the Normal Life acquisition, with the remainder from proceeds from the issuance
of $109.4 million in principal amount of 6% convertible subordinated notes in
November and December 1997 and the Company's revolving credit facility.
RESULTS OF OPERATIONS
Quarter Ended March 31, 1998 Compared to Quarter Ended March
31, 1997
Revenues
Total net revenues for the first quarter of 1998 increased by
63.3% or $41.0 million, to $105.9 million compared to $64.9 million for the
first quarter of 1997. Of the increase, 66.4% resulted from increased
disabilities services revenues. Disabilities services net revenues increased by
51.9%, or $27.2 million, to $79.8 million in the first quarter of 1998 compared
to $52.6 million in the first quarter of 1997. Revenues increased primarily as a
result of the effects of a full quarter of operations added during 1997, as well
as acquisitions during the first quarter of 1998.
Youth services net revenues for the first quarter of 1998
increased by 112.1%, or $13.8 million, to $26.1 million compared to $12.3
million during the first quarter of 1997. The increase resulted primarily from
the acquisition of five Job Corps centers from Teledyne Economic Development in
October 1997 and acquisitions by the Alternative Youth Services subsidiary that
were operational in the first quarter of 1998 compared to the same period of
1997.
8
<PAGE> 10
Facility and Program Expenses
Facility and program expenses in the first quarter of 1998
increased 63.3%, or $35.6 million, compared to the first quarter of 1997. Of
this increase, $24.5 million, or 68.8% was due to payroll and payroll-related
expenses. These expenses reflected additional personnel, as well as other costs
associated with new facilities and programs in both of the Company's divisions.
Facility and program expenses remained constant as a percentage of total net
revenues from period to period at 86.7%.
Disabilities services facility and program expenses in the
first quarter of 1998 increased 51.9%, or $23.6 million, to $69.1 million
compared to $45.5 million during the first quarter of 1997. Payroll and
payroll-related expenses represented 75.4% of the increase due primarily to the
additional personnel and other costs associated with the new facilities and
programs that were operational in the first quarter of 1998 as compared to 1997.
As a percentage of net revenues, disabilities services facility and program
expenses remained constant from period to period at 86.5%.
Youth services facility and program expenses in the first
quarter of 1998 increased 110.9%, or $12.0 million, to $22.8 million compared to
$10.8 million during the first quarter of 1997. Payroll and payroll-related
expenses represented 56.1% of the increase due primarily to the additional
facilities and programs that were operational during the first quarter of 1998
compared to the same period in 1997. Also contributing to the increase are
higher expenses associated with contract services for certain new facilities and
programs. As a percentage of net revenues, youth services facility and program
expenses decreased to 87.4% in the first quarter of 1998 from 87.9% for the
first quarter of 1997.
Operating Expenses
Corporate general and administrative expenses increased 58.1%,
or $1.5 million, in the first quarter of 1998 compared to the first quarter of
1997. Payroll and payroll-related expenses represented 51.9% of the increase due
primarily to the addition of support staff and increases in staff salaries.
Corporate general and administrative expenses in the first quarter of 1998
decreased as a percentage of total net revenues to 3.8% from 4.0% for the same
period in 1997.
Depreciation and amortization expenses in the first quarter of
1998 increased 109.5%, or $1.3 million, to $2.5 million compared to $1.2 million
during the first quarter of 1997. The increase resulted primarily from the
purchase of real property and intangible assets since the first quarter of 1997.
Other (Income) Expense, Net
Net interest expense in the first quarter of 1998 increased
$800,000 to $1.2 million compared to $400,000 for the first quarter of 1997. The
increase resulted primarily from the convertible notes issued in November and
December 1997.
9
<PAGE> 11
Income Taxes
Income taxes increased to $2.5 million in the first quarter of
1998 compared to $1.8 million in the first quarter of 1997, and reflects
effective tax rates of 39% and 40%, respectively.
Liquidity and Capital Resources
For the first three months of 1998, cash used in operating
activities was $1.2 million compared to $3.2 million for the first three months
of 1997, a decrease of $2.0 million in cash used. The decrease was due primarily
to an increase in accrued expenses, and also reflects reduced levels of growth
in accounts receivable balances from period to period partially offset by
reduced levels of growth in accounts payable balances.
During the first quarter of 1998, cash used in investing
activities was $90.8 million compared to $10.9 million for the first three
months of 1997, an increase of $79.9 million, due primarily to the acquisition
of businesses and related assets.
For the first three months of 1998, cash provided by financing
activities was $41.7 million compared to $14.4 million cash provided by
financing activities for the first three months of 1997, an increase of $27.3
million. The increase was due primarily to long-term borrowings for
acquisitions.
As of March 31, 1998, the Company had $51.4 million available
on its line-of-credit and $16.2 million in cash and cash equivalents.
Outstanding at that date were irrevocable standby letters of credit in the
principal amount of $7.6 million issued in connection with workers' compensation
insurance and certain facility leases.
Net days revenue in accounts receivable for the Company was 62
days at March 31, 1998, compared to 61 days at December 31, 1997. Accounts
receivable for disabilities services at March 31, 1998, increased to $64.9
million, compared to $47.9 million at December 31, 1997.
The Company has historically sought to provide its services in
leased premises, especially in the case of larger facilities. However, in
response to changes in certain reimbursement methodologies primarily related to
its expansion of services provided to consumers in community-based settings, the
Company has increased its real estate purchases, particularly residential homes.
Also, business acquisitions may involve the purchase of real estate.
The Company has historically satisfied its working capital
requirements, capital expenditures (excluding major acquisitions) and scheduled
debt payments from its operating cash flow and utilization of its credit
facility. Cash requirements for the acquisition of new business operations have
generally been funded through a combination of cash generated from operating
activities, utilization of the Company's revolving credit facility and the
issuance of long-term obligations and common stock. The Company believes that
cash generated from operations and remaining availability under its credit
facility will continue to be sufficient to meet its working capital
requirements, planned capital expenditures (excluding major acquisitions) and
scheduled debt repayments over the next twelve months. Cash requirements for
business acquisitions over the next twelve months are dependent upon obtaining
additional
10
<PAGE> 12
financing through either an expansion of the existing credit facility or the
issuance of additional long-term obligations or common stock.
Year 2000 Processing Issue
Many existing computer programs employed throughout the world use two
digits rather than four to identify the year. These programs, if not modified,
will not correctly handle the change from "99" to "00" on January 1, 2000, and
will no longer be able to perform necessary functions. The Year 2000 issue
affects all companies and organizations.
The Company has implemented steps intended to assure that its computer
systems and processes are capable of Year 2000 processing. Year 2000 readiness
assessments have been made in the Company's major application areas. Plans for
remediation efforts have been developed and are underway with implementation
expected to be completed by the end of the first quarter 1999. The Company is
reliant on systems maintained by third parties, including states and other
reimbursers, and is developing plans to address the risks of third-party
non-compliance. However, the Company is not presently in a position to make a
definitive assessment of the effect on results of operations or liquidity of
non-compliance by one or more states in which the Company conducts significant
operations.
The Company has not made a full assessment of the costs of its Year
2000 compliance efforts, however, the Company believes that it will be able to
fund any additional costs from available resources without materially affecting
liquidity, financial condition, or results of operations.
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 including with
respect to "Year 2000 Processing Issue".
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 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 and other rights 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
11
<PAGE> 13
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. 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 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 and
the Company's ability to tailor its services to meet the specific needs of these
different populations. The success in operating in a changing environment is
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 could adversely
affect the demand for and reimbursement of the Company's services and its
operating flexibility, and ultimately its revenues and profitability.
12
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company (or a provider with whom the Company has
a management agreement), becomes a party to legal and/or administrative
proceedings involving state program administrators and others that, in the event
of unfavorable outcomes, may affect revenues and period-to-period comparisons.
In Indiana, the Company and another provider have been in litigation with the
State over the rate-setting methodology for larger facilities. In September
1997, except for an issue involving staffing hours, the court denied plaintiffs'
motion for injunctive relief. The plaintiffs have appealed and the results of
this litigation will not have a material effect on the Company's consolidated
financial condition, results of operations or liquidity.
The Company is also involved in litigation against the landlord of four
of the Company's larger facilities in Indiana. The parties have agreed to stay
the litigation pending the outcome of the Indiana rate litigation, and the
Company is unable at this time to determine whether it will ultimately prevail
in the matter in light of the outcome of the Indiana rate litigation described
above. The Company does not believe the results of this matter will have a
material effect on its consolidated financial condition, results of operations
or liquidity.
In May 1996, legislation was passed in Florida that would have
significantly reduced rates effective September 1, 1996 for the operations that
the Company manages in that state. A preliminary injunction was granted in a
lawsuit by individual consumers, which requires the State to continue full
funding of certain intermediate care facilities and services for persons with
developmental disabilities. At the request of the State, the trial, which was
previously set for January, was postponed until May 1998. The Company does not
believe the results of this matter will have a material adverse effect on its
consolidated financial condition, results of operations or liquidity.
In addition, the Company is a party to various other legal proceedings
encountered in the ordinary course of business. The Company believes that many
of such lawsuits are without merit. Further, such claims are generally covered
by insurance. The Company does not believe the results of such litigation will
have a material adverse effect on its consolidated financial condition, results
of operations or liquidity.
ITEM 5. OTHER INFORMATION
In April 1998, the Company's Division for Youth Services was awarded
a contract by the U.S. Department of Labor to operate the Earle C. Clements Job
Corps center in Kentucky. The facility is the country's largest Job Corps
center, serving more than 2,000 students. The two-year contract provides for
revenues of more than $60 million and includes three one-year renewal options.
It was awarded following a formal bid process. The Company began operation of
the center on May 1, 1998.
On May 12, 1998, at its annual meeting, the Company announced that its
Board of Directors had declared a 3-for-2 stock split, to be effected as a 50%
stock dividend. The new shares will be distributed on June 4, 1998, to
shareholders of record at the close of business on May 22, 1998. As of April 30,
1998, the Company had approximately 12.5 million common shares outstanding. This
will increase to approximately 18.7 million shares following the distribution.
13
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.1 Third Amendment to the Loan Instruments by and
between PNC Bank, National Association; National City Bank of Kentucky; SunTrust
Bank, Nashville, N.A.; Bank One, Kentucky, N.A.; Wachovia Bank, N.A.; and
Res-Care, Inc., dated March 12, 1998.
27.1 Financial Data Schedule - March 31, 1998
27.2 Financial Data Schedule - March 31, 1997 (Restated)
(b) Reports on Form 8-K:
(i) On March 27, 1998, the Company filed a Report on
Form 8-K to report the acquisition of Normal Life, Inc. The report included
financial statements and pro forma financial information.
(ii) On January 9, 1998, the Company filed a Report
on Form 8-K to provide pro forma financial information to reflect the
acquisitions of Teledyne Economic Development and Communications Network
Consultants, Inc.
14
<PAGE> 16
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ -----------------------
10.1 Third Amendment to the Loan Instruments by and between PNC
Bank, National Association; National City Bank of Kentucky;
SunTrust Bank, Nashville, N.A.; Bank One, Kentucky, N.A.;
Wachovia Bank, N.A.; and Res-Care, Inc., dated March 12, 1998.
27.1 Financial Data Schedule - March 31, 1998
27.2 Financial Data Schedule - March 31, 1997 (Restated)
15
<PAGE> 17
SIGNATURES
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.
Registrant
Date: ____________ By: ____________________________________
Ronald G. Geary
President and Chief Executive Officer
Date: ____________ By: _____________________________________
Pamela Mandel Spaniac
Executive Vice President Finance &
Administration/Chief Financial Officer
16
<PAGE> 1
Exhibit 1
THIRD AMENDMENT TO LOAN INSTRUMENTS
This Third Amendment to Loan Instruments (the "Third Amendment"), is
made and entered into as of the 12th day of March, 1998, by and among (i) (a)
PNC BANK, NATIONAL ASSOCIATION, a national banking association with an office
and place of business in Louisville, Kentucky, successor in interest to PNC
Bank, Kentucky, Inc. ("PNC"), (b) NATIONAL CITY BANK OF KENTUCKY, a national
banking association with principal office and place of business in Louisville,
Kentucky ("National City"), (c) SUNTRUST BANK, NASHVILLE, N.A., a national
banking association with principal office and place of business in Nashville,
Tennessee ("SunTrust"), (d) BANK ONE, KENTUCKY, NA, a national banking
association with principal office and place of business in Louisville, Kentucky
("Bank One"), and (e) WACHOVIA BANK, N.A., a national banking association with
principal office and place of business in Atlanta, Georgia ("Wachovia") (PNC,
National City, SunTrust, Bank One and Wachovia are hereinafter collectively
referred to as the "Banks", and each is hereinafter individually referred to as
a "Bank"); (ii) PNC BANK, NATIONAL ASSOCIATION, a national banking association
with an office and place of business in Louisville, Kentucky, successor in
interest to PNC Bank, Kentucky, Inc., in its capacity as the administrative bank
hereunder (in such capacity the "Administrative Bank"); and (iii) RES-CARE,
INC., a Kentucky corporation with principal office and place of business in
Louisville, Kentucky ("Res-Care") and each of the Consolidated Subsidiaries of
Res-Care identified on SCHEDULE 1 hereto (Res-Care and each Consolidated
Subsidiary, a "Borrower," and all of the foregoing collectively, the
"Borrowers").
PRELIMINARY STATEMENT
A. Res-Care and certain other Existing Borrowers (defined herein)
obtained from PNC, National City, SunTrust and Bank One certain credit
accommodations pursuant to a Loan Agreement dated as of December 23, 1996 (the
"Old Loan Agreement") including the following: (i) a revolving line of credit in
the principal amount of Sixty Five Million Dollars ($65,000,000) (the "Original
Revolving Credit Facility"), (ii) a commitment to issue letters of credit for
the account of the Borrowers in an aggregate outstanding amount of up to Ten
Million Dollars ($10,000,000) and (iii) a swing revolving line of credit in the
principal amount of Seven Million Five Hundred Thousand Dollars ($7,500,000)
(the "Original Swing Line Credit Facility").
B. Res-Care and certain other Existing Borrowers, the Administrative
Bank and the Banks amended the Old Loan Agreement pursuant to a First Amendment
to Loan Instruments dated as of June 23, 1997 (the "First Amendment to Loan
Instruments"), providing for, among other things, (i) the increase of the
principal amount of the Original Revolving Credit Facility to One Hundred
Million Dollars ($100,000,000), (ii) the increase of the principal amount of the
Original Swing Line Credit Facility to Twelve Million Five Hundred Thousand
Dollars ($12,500,000), (iii) the amendment of certain financial covenants and
(iv) the addition of the New Borrowers as parties to the Loan Instruments.
C. Res-Care and certain other Existing Borrowers, the Administrative
Bank and the Banks further amended the Old Loan Agreement pursuant to a Second
Amendment to Loan
<PAGE> 2
Instruments dated as of November 20, 1997 (the "Second Amendment to Loan
Instruments"), providing for, among other things, (i) the consent of the Banks
to the Borrowers' incurring of subordinated indebtedness, (ii) the amendment of
certain financial covenants and (iii) the addition of the New Borrowers as
parties to the Loan Instruments. The Old Loan Agreement, as amended by the First
Amendment to Loan Instruments and the Second Amendment to Loan Instruments, is
referred to as the "Loan Agreement." Each capitalized term used herein, unless
otherwise expressly defined herein, shall have the meaning set forth in the Loan
Agreement.
D. The Existing Borrowers wish to amend the Loan Agreement and the Loan
Instruments to allow the Existing Borrowers to add certain New Borrowers and to
make certain other amendments. The Banks are agreeable to such amendments, upon
satisfaction of the terms and conditions set forth herein.
Now, therefore, in consideration of the premises and the mutual
covenants and agreements set forth herein and in the Loan Agreement and for
other good and valuable consideration, the mutuality, receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
I. AMENDMENTS TO LOAN AGREEMENT
A. SECTION 1 - DEFINITIONS AND CROSS REFERENCE. The following
definitions and provisions of Section 1 of the Loan Agreement are hereby amended
and restated and/or added as follows:
1.121 "Existing Borrowers" means any and all
Borrowers party to the Loan Agreement as of November 20, 1997,
but does not currently include the entities listed on SCHEDULE
1.122 attached to the Second Amendment or SCHEDULE 1.122
attached to the Third Amendment.
1.122 "New Borrowers" means certain Subsidiaries
created or acquired since November 20, 1997, specifically
identified as all of the entities on SCHEDULE 1A hereto.
1.126 "Third Amendment" means the Third Amendment to
Loan Instruments made and entered into as of March 12, 1998,
by and among the Banks, the Administrative Bank and the
Borrowers.
1.127 "Third Amendment Closing Date" means the date
on which the Third Amendment to Loan Instruments has been
executed and delivered by the parties thereto, March 12, 1998.
1.128 "Convertible Subordinated Notes means the
convertible subordinated notes issued by Res-Care in favor of
certain former shareholders of Normal Life,
2
<PAGE> 3
Inc. ("Normal Life") in connection with the acquisition of
Normal Life stock, in the aggregate amount not exceeding
$22,000,000."
B. SECTION 8 - NEGATIVE COVENANTS.
-------------------------------
(1) Section 8.2 of the Loan Agreement is hereby amended and
restated as follows:
"8.2 INDEBTEDNESS, ETC. The Borrowers will not,
without the prior written consent of the Majority Banks,
directly or indirectly, create, incur, assume, guarantee,
agree to purchase or repurchase or provide funds in respect
of, or otherwise become liable with respect to any
Indebtedness other than:
(i) The Revolving Credit Facility;
(ii) The Swing Line Credit Facility;
(iii) The Equipment Leases in the aggregate amount
not exceeding Two Million Five Hundred Thousand Dollars
($2,500,000);
(iv) Current liabilities of the Borrowers (other than
for borrowed money) incurred in the ordinary course of their
businesses and in accordance with customary trade practices;
(v) (A ) Promissory notes or other evidence of
indebtedness issued by one or more of the Borrowers as all or
part of the Business Combination Consideration in connection
with a Permitted Business Combination, or (B) purchase money
indebtedness incurred or assumed by the Borrowers in
connection with acquisition of tangible and intangible
personal and real property acquired other than in connection
with a Permitted Business Combination, to the extent that such
tangible and intangible personal and real property are to be
used by the Borrowers in businesses permitted under Section
8.5 hereof; PROVIDED THAT the aggregate amount of indebtedness
described in (B) of this Section 8.2(vi) shall not exceed Five
Million Dollars ($5,000,000); and PROVIDED FURTHER that the
aggregate amount of indebtedness described in (A) AND (B) of
this Section 8.2(vi) shall not exceed Fifteen Million Dollars
($15,000,000);
(vi) The advances, loans and guarantees permitted
under Section 8.12 hereof; and
(vii) Convertible Subordinated Notes that meet all of
the following criteria:
3
<PAGE> 4
(a) The principal amount of such Convertible
Subordinated Notes may not exceed $115,000,000; and
(b) Neither the Convertible Subordinated Notes nor
the Indenture may be amended in any manner that could
reasonably be expected to be adverse to the interests
of the Banks without prior written consent of the
Administrative Bank; and
(viii) the Convertible Subordinated Notes (Normal
Life) that meet the following criteria:
(a) The principal amount of such Convertible
Subordinated Notes (Normal Life) may not, in the
aggregate, exceed $22,000,000; and
(b) The Convertible Subordinated Notes (Normal Life)
may not be amended in any manner that could
reasonably be expected to be adverse to the interests
of the Banks without prior written consent of the
Administrative Bank."
(3) Section 8.11 PERMITTED BUSINESS COMBINATIONS. Section 8.11
is hereby amended by amending and restating clauses (iv) and (v)
thereof as follows:
"(iv) the Business Combination Consideration associated with
the proposed Business Combination plus the aggregate Business
Combination Consideration associated with Permitted Business
Combinations that have been completed in the current Fiscal
Year does not exceed Fifty Million Dollars ($50,000,000);
provided, however, that the Business Combination Consideration
associated with the acquisition of Normal Life and
subsidiaries shall be excluded in calculating aggregate
Business Combination Consideration for the foregoing
limitation;
(v) the Business Combination Consideration associated with the
proposed Business Combination does not exceed Ten Million
Dollars ($10,000,000)(except for the acquisition of certain
interests by RCP and RSCRP to occur on or after the Closing
Date as contemplated in the Exchange Agreement dated December
9, 1996, and except for the acquisition of the stock of Normal
Life by Res-Care);"
(4) Section 8.12 LOANS, ADVANCES AND GUARANTIES BY BORROWERS.
Section 8.12 is hereby amended by adding a sentence at the end of such
section as follows:
"Notwithstanding the foregoing, the Borrowers may, without
violating the provisions of Section 8.12, (i) deliver a
guaranty in favor of Bank One, Kentucky, NA in the maximum
principal amount of $2,861,000 with respect to reimbursement
obligations of Normal Life and its subsidiaries in favor of
Bank One, Kentucky, NA for letters of credit issued by it (the
"Bank One Guaranty"),
4
<PAGE> 5
and (ii) deliver a guaranty in favor of Charles W. Hames and
Robbie Lesa Hames with respect to obligations of RF Holdings,
LLC in the maximum principal amount of $1,500,000 (the "Hames
Guaranty"). Neither the Bank One Guaranty nor the Hames
Guaranty shall be considered "Indebtedness" for purposes of
calculating "Indebtedness" for use in connection with Pricing
Levels and financial covenants herein.
C. SCHEDULE 1 - LIST OF BORROWERS OTHER THAN RES-CARE.
SCHEDULE 1 to the Loan Agreement is hereby amended and replaced in its entirety
by SCHEDULE 1 attached to this Third Amendment
D. SCHEDULE 1A - LIST OF NEW BORROWERS. SCHEDULE 1A containing
a list of New Borrowers as of the Third Amendment Closing Date, is hereby added
to the Loan Agreement by Schedule 1A attached to this Third Amendment.
E. SCHEDULE 1.122 - LIST OF CERTAIN ENTITIES WHICH CURRENTLY
ARE NOT INCLUDED IN DEFINITION OF BORROWERS OR NEW BORROWERS. SCHEDULE 1.122 is
hereby amended and replaced in its entirety by Schedule 1.122 attached hereto.
F. SCHEDULE 6.13 - CONSOLIDATED SUBSIDIARIES OF RES-CARE, INC.
SCHEDULE 6.13 is hereby amended and restated in its entirety by Schedule 6.13
attached hereto.
G. RATIFICATION. The Loan Agreement, as amended by this Third
Amendment, remains in full force and effect and the Borrower reaffirms and
ratifies its obligations under the Loan Agreement, as amended by this Third
Amendment.
II. STOCK PLEDGE AGREEMENT
A. EXHIBIT A TO STOCK PLEDGE AGREEMENT. Exhibit A to the Stock
Pledge Agreement is amended and restated in its entirety by Exhibit A to this
Third Amendment.
B. DELIVERY OF STOCK CERTIFICATES TO ADMINISTRATIVE BANK.
Res-Care covenants to deliver or to cause to be delivered the pledged share
certificates identified in Section 3 of the Closing Index to the Administrative
Bank on the Third Amendment Closing Date.
C. RATIFICATION. The Stock Pledge Agreement, as amended by
this Third Amendment, remains in full force and effect and Res-Care reaffirms
and ratifies its obligations under the Stock Pledge Agreement, as amended by
this Third Amendment.
5
<PAGE> 6
III. AMENDMENT AND RATIFICATION OF SECURITY AGREEMENTS
Each of the Security Agreements remains in full force and
effect and each Borrower reaffirms and ratifies its obligations under the
Security Agreement to which it is a party. Each Borrower agrees that the
Security Agreement to which it is a party shall continue to secure all
indebtedness of the Borrower to the Banks evidenced by the Revolving Credit
Notes, the Swing Line Note, the Applications and Agreements for Letters of
Credit and the Loan Agreement, all as they may be amended by this Third
Amendment. Additionally, each of the New Borrowers, as of the date of the Third
Amendment, shall have executed and delivered to the Administrative Bank a
Security Agreement and UCC-1 financing statements in favor of the Banks, in form
and substance satisfactory to the Banks.
IV. CLOSING CONDITIONS
The establishment of the Revolving Credit Facility by the Banks in
favor of the Borrowers, the obtaining of the Revolving Credit Loans and/or
Letters of Credit by the Borrowers thereunder, the making of the Swing Line
Loans by PNC to the Borrowers, all as amended by this Third Amendment, are
subject to the satisfaction of all the following conditions (in addition to the
conditions set forth in the Loan Agreement):
A. CONDITIONS TO CLOSING OF THE THIRD AMENDMENT. The obligation of the
Banks to make the Revolving Credit Loans to the Borrowers and to make the Swing
Line Loans to the Borrowers are subject to the condition that, in addition to
the satisfaction of the conditions precedent specified in Section 5.1 of the
Loan Agreement, and with respect to the Swing Line Loan, the conditions
precedent specified in Section 3.1D of the Loan Agreement, as of the Third
Amendment Closing Date, the Banks shall have received the following from the
Borrowers, dated the Third Amendment Closing Date or such other date as shall be
acceptable to the Banks:
(1) This Third Amendment, duly executed and delivered
by the each of the Borrowers.
(2) Stock certificates evidencing all of the issued
and outstanding shares of the common stock of all New Borrowers identified on
SCHEDULE 1A, and executed blank stock powers appended thereto.
(3) Security Agreements, executed and delivered by
all New Borrowers identified on SCHEDULE 1A.
(4) UCC-1 financing statements appropriate for filing
in filing offices designated by the Administrative Bank, executed and delivered
by all New Borrowers identified on SCHEDULE 1A.
6
<PAGE> 7
(5) New Stock Pledge Agreements, executed and
delivered by Alternative Youth Services, Inc., Community Alternatives of
Missouri, Inc. and Normal Life, Inc.
(6) A Certificate of the Secretary or Assistant
Secretary of Res-Care certifying as to the authenticity, completeness and
accuracy of, and attaching copies of any amendments to the Articles of
Incorporation or Bylaws since November 20, 1997, and Resolutions of the Board of
Directors of Res-Care authorizing such Borrower's execution, delivery and
performance of the Third Amendment and any other Loan Instruments to which such
Borrower is a party, and certifying the names and true signatures of the
officers of such Borrower authorized to execute and deliver the Loan Instruments
to which the Borrower is a party, on behalf of such Borrower.
(7) A Certificate of the Secretary or Assistant
Secretary of each New Borrower certifying as to the authenticity, completeness
and accuracy of, and attaching copies of their respective Certificates of
Incorporation and Bylaws, together with any amendments thereto, and Resolutions
of the Board of Directors of each New Borrower authorizing such New Borrower's
execution, delivery and performance of the Third Amendment and any other Loan
Instruments to which such New Borrower is a party, and certifying the names and
true signatures of the officers of such New Borrower authorized to execute and
deliver the Loan Instruments to which the New Borrower is a party, on behalf of
such New Borrower.
(8) An opinion from counsel to the Borrowers, in form
and substance satisfactory to the Banks, giving substantially the same opinions
as were given in connection with the execution and delivery of the Loan
Agreement dated as of June 23, 1997, but to be given with respect to the
execution and delivery of this Third Amendment.
(9) Such other documents as the Administrative Bank
may reasonably request.
V. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF BORROWER AND
CONSOLIDATED SUBSIDIARIES. To induce the Banks to enter into this Third
Amendment, the Borrowers represent and warrant to the Banks as follows:
(1) Each Borrower has full power, authority, and
capacity to enter into this Third Amendment, and this Third Amendment
constitutes the legal, valid and binding obligations of each Borrower,
enforceable against each in accordance with its terms.
(2) No Event of Default under the Loan Agreement or
any of the other Loan Instruments has occurred which continues unwaived by the
Banks, and no event which with the passage of time, the giving of notice or both
would constitute an Event of Default, exists as of the date hereof.
7
<PAGE> 8
(3) The person executing this Third Amendment on
behalf of each Borrower is duly authorized to do so. Each such person has been
duly authorized pursuant to resolutions of the Borrowers approved by the
directors of the Borrowers to execute and deliver minor amendments to the Loan
Instruments of the sort set forth in this Third Amendment without the necessity
of further action by the respective boards of directors.
(4) The representations and warranties made by each
Borrower in all of the Loan Instruments are hereby remade and restated as of the
date hereof.
(5) There are no material actions, suits, legal,
equitable, arbitration or administrative proceedings pending or threatened
against any Borrower, the adverse determination of which could have a material
adverse effect on the Loan Instruments, the business operations or financial
condition of the Borrowers or the ability of the Borrowers to fulfill their
obligations under the Loan Instruments.
IN WITNESS WHEREOF, the Borrowers, the Banks and the Administrative
Bank have each caused this Third Amendment to be duly executed as of the date
and year first hereinabove written.
8
<PAGE> 9
PNC BANK, NATIONAL ASSOCIATION
successor in interest to
PNC Bank, Kentucky, Inc.
(the "Administrative Bank")
--------------------------------------
By: Ben Willingham, Vice President
PNC BANK, NATIONAL ASSOCIATION
successor in interest to
PNC Bank, Kentucky, Inc.
("PNC")
--------------------------------------
By: Ben Willingham, Vice President
NATIONAL CITY BANK OF
KENTUCKY
("National City")
--------------------------------------
By: Deroy Scott, Vice President
SUNTRUST BANK, NASHVILLE, N.A.
("SunTrust")
--------------------------------------
Karen Cole Ahern, Group Vice President
BANK ONE, KENTUCKY, NA
("Bank One")
--------------------------------------
Todd D. Munson, Senior Vice President
WACHOVIA BANK, N.A.
("Wachovia")
--------------------------------------
9
<PAGE> 10
By:
10
<PAGE> 11
RES-CARE, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
COMMUNITY ALTERNATIVES INDIANA,
INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
COMMUNITY ALTERNATIVES
NEBRASKA, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
COMMUNITY ADVANTAGE, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
TEXAS HOME MANAGEMENT, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
CAPITAL TX INVESTMENTS, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
11
<PAGE> 12
THM HOMES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
RSCR TEXAS, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
RES-CARE NEW MEXICO, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
RES-CARE OHIO, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
COMMUNITY ALTERNATIVES OF
TEXAS, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
CATX PROPERTIES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
12
<PAGE> 13
RES-CARE CALIFORNIA, INC., d/b/a
RCCA Services
(a "Borrower")
--------------------------------------
By: Authorized Officer
RES-CARE FLORIDA, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
RSCR CALIFORNIA, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
RES-CARE KANSAS, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
RES-CARE ILLINOIS, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
RES-CARE OKLAHOMA, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
13
<PAGE> 14
RES-CARE TENNESSEE, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
RES-CARE TRAINING
TECHNOLOGIES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
YOUTHTRACK, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
RES-CARE PREMIER, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
RES-CARE NEW JERSEY, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
COMMUNITY ALTERNATIVES
KENTUCKY, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
14
<PAGE> 15
ALTERNATIVE YOUTH SERVICES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
COMMUNITY ALTERNATIVES
VIRGINIA, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
RSCR WEST VIRGINIA, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
COMMUNITY ALTERNATIVES
MISSOURI, INC. f/k/a RAIMENT, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
RES-CARE AVIATION, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
COMMUNICATIONS NETWORK
CONSULTANTS, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
15
<PAGE> 16
THE ACADEMY FOR INDIVIDUAL
EXCELLENCE, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
RES-CARE OTHER OPTIONS, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
SOUTHERN HOME CARE SERVICES, INC.
d/b/a Eldercare
(a "Borrower")
--------------------------------------
By: Authorized Officer
GENERAL HEALTH CORPORATION
d/b/a Arizona Youth Associates, Inc.
(a "Borrower")
--------------------------------------
By: Authorized Officer
BALD-EAGLE ENTERPRISES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
BRINKLEY GROUP HOMES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
CREATIVE NETWORKS, LLC.
(a "Borrower")
16
<PAGE> 17
--------------------------------------
By: Authorized Person
NORMAL LIFE, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
NORMAL LIFE OF SOUTHERN
INDIANA, INC. (a "Borrower")
--------------------------------------
By: Authorized Officer
NORMAL LIFE OF CENTRAL
INDIANA, INC. (a "Borrower")
--------------------------------------
By: Authorized Officer
NORMAL LIFE OF LOUISIANA, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
NORMAL LIFE OF LAFAYETTE, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
NORMAL LIFE OF LAKE CHARLES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
17
<PAGE> 18
NORMAL LIFE OF FLORIDA, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
NORMAL LIFE OF KENTUCKY, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
NORMAL LIFE OF NORTH TEXAS, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
NORMAL LIFE OF NEW MEXICO, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
NORMAL LIFE OF TENNESSEE, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
CAREERS IN PROGRESS, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
18
<PAGE> 19
NORMAL LIFE FAMILY SERVICES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
NORMAL LIFE OF INDIANA
a general partnership
By: NORMAL LIFE OF SOUTHERN
INDIANA, INC.
one of its General Partners
(a "Borrower")
--------------------------------------
By: Authorized Officer
NORMAL LIFE OF CALIFORNIA, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
NORMAL LIFE OF GEORGIA, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
NORMAL LIFE MANAGEMENT, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
NL DELAWARE, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
19
<PAGE> 20
NORMAL LIFE OF OHIO, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
BOLIVAR DEVELOPMENT TRAINING
CENTER, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
HYDESBURG ESTATES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
OAK WOOD SUITES OF BOLIVAR, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
WILLARD ESTATES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
BOLIVAR ESTATES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
SKYVIEW ESTATES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
20
<PAGE> 21
RIVER BLUFF ESTATES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
MEADOW LANE ESTATES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
EBENEZER ESTATES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
HILLSIDE ESTATES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
PEBBLE CREEK ESTATES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
FORT MASON ESTATES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
SHA-REE ESTATES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
21
<PAGE> 22
BAKER MANAGEMENT, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
MISSOURI PROGRESSIVE SERVICES, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
OAKVIEW ESTATES OF BOLIVAR, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
UPWARD BOUND, INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
INDIVIDUALIZED SUPPORTED LIVING,
INC.
(a "Borrower")
--------------------------------------
By: Authorized Officer
22
<PAGE> 23
SCHEDULE 1
LIST OF BORROWERS OTHER THAN RES-CARE, INC.
1. COMMUNITY ALTERNATIVES INDIANA, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAI").
2. COMMUNITY ALTERNATIVES NEBRASKA, INC., a Delaware corporation, with
principal office and place of business in Louisville, Kentucky ("CAN").
3. COMMUNITY ADVANTAGE, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("CA").
4. TEXAS HOME MANAGEMENT, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("THM").
5. CAPITAL TX INVESTMENTS, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("CTXI").
6. THM HOMES, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("THMH").
7. RSCR TEXAS, INC., formerly THM Properties, Inc., a Delaware
corporation with principal office and place of business in Louisville, Kentucky
("RSCRT").
8. RES-CARE NEW MEXICO, INC., a Delaware corporation with principal
office and place of business of Louisville, Kentucky ("RCNM").
9. RES-CARE OHIO, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCO").
10. COMMUNITY ALTERNATIVES OF TEXAS, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAT").
11. CATX PROPERTIES, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("CATXP").
12. RES-CARE CALIFORNIA, INC., d/b/a RCCA Services, a Delaware
corporation with principal office and place of business in Louisville, Kentucky
("RCC").
13. RES-CARE FLORIDA, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCF").
14. RSCR CALIFORNIA, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RSCRC").
<PAGE> 24
15. RES-CARE KANSAS, INC., a Delaware corporation with principal office
and place of business in Louisville, Kentucky ("RCK").
16. RES-CARE ILLINOIS, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCI").
17. RES-CARE OKLAHOMA, INC. a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCOK").
18. RES-CARE TENNESSEE, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCT").
19. RES-CARE TRAINING TECHNOLOGIES, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("RCTT").
20. YOUTHTRACK, INC., a Delaware corporation with principal office and
place of business in Littleton, Colorado ("YT").
21. RES-CARE PREMIER, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCP").
22 RES-CARE NEW JERSEY, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RCNJ").
23 COMMUNITY ALTERNATIVES KENTUCKY, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAK").
24 ALTERNATIVE YOUTH SERVICES, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("AYS")
25 COMMUNITY ALTERNATIVES VIRGINIA, INC., a Delaware corporation with
principal office and place of business in Louisville, Kentucky ("CAV").
26 RSCR WEST VIRGINIA, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("RSCRWV").
27 COMMUNITY ALTERNATIVES MISSOURI, INC. f/k/a RAIMENT, INC., a
Missouri corporation with principal office and place of business in Louisville,
Kentucky ("R").
28 RES-CARE AVIATION, INC., a Kentucky corporation with principal
office and place of business in Louisville, Kentucky ("RCA").
29 COMMUNICATIONS NETWORK CONSULTANTS, INC., a Rhode Island corporation
with principal office and place of business in Louisville, Kentucky ("CNC").
<PAGE> 25
30 THE ACADEMY FOR INDIVIDUAL EXCELLENCE, INC., a Delaware corporation
with principal office and place of business in Louisville, Kentucky ("AIE").
31 RES-CARE OTHER OPTIONS, INC., a Delaware corporation with principal
office and place of business in Louisville, Kentucky ("ROO").
The following entities are all New Borrowers as of the Third Amendment Closing
Date:
32 SOUTHERN HOME CARE SERVICES, INC. d/b/a Eldercare, a Georgia
corporation with principal office and place of business in Louisville, Kentucky
("SHCS").
33. GENERAL HEALTH CORPORATION d/b/a Arizona Youth Associates, Inc., an
Arizona corporation with principal office and place of business in Louisville,
Kentucky ("AYA")
34. BALD EAGLE ENTERPRISES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("BEE").
35. BRINKLEY GROUP HOMES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("BGH").
36. CREATIVE NETWORKS, LLC, an Arizona limited liability company with
principal office and place of business in Louisville, Kentucky ("CN").
37. NORMAL LIFE, INC., a Kentucky corporation with principal office and
place of business in Louisville, Kentucky ("NL").
38. NORMAL LIFE OF SOUTHERN INDIANA, INC., an Indiana corporation with
principal office and place of business in Louisville, Kentucky ("NLSI").
39. NORMAL LIFE OF CENTRAL INDIANA, INC., successor by merger of Normal
Life of Terre Haute, Inc. and Normal Life of Sheridan, Inc., an Indiana
corporation with principal office and place of business in Louisville, Kentucky
("NLCI").
40. NORMAL LIFE OF LOUISIANA, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLL").
41. NORMAL LIFE OF LAFAYETTE, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLLAF").
42. NORMAL LIFE OF LAKE CHARLES, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLLC").
43. NORMAL LIFE OF FLORIDA, INC., a Florida corporation with principal
office and place of business in Louisville, Kentucky ("NLF").
<PAGE> 26
44. NORMAL LIFE OF KENTUCKY, INC., a Kentucky corporation with
principal office and place of business in Louisville, Kentucky ("NLK").
45. NORMAL LIFE OF NORTH TEXAS, INC., a Texas corporation with
principal office and place of business in Louisville, Kentucky ("NLNT").
46. NORMAL LIFE OF NEW MEXICO, INC., a New Mexico corporation with
principal office and place of business in Louisville, Kentucky ("NLNM").
47. NORMAL LIFE OF TENNESSEE, INC., a Tennessee corporation with
principal office and place of business in Louisville, Kentucky ("NLT").
48. CAREERS IN PROGRESS, INC., a Louisiana corporation with principal
office and place of business in Louisville, Kentucky ("CP").
49. NORMAL LIFE FAMILY SERVICES, INC. a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLFS").
50. NORMAL LIFE OF INDIANA, a general partnership a corporation duly
organized and existing under the laws of the state of Indiana, with principal
office and place of business in Louisville, Kentucky ("NLIND").
51. NORMAL LIFE OF CALIFORNIA, INC., a California corporation with
principal office and place of business in Louisville, Kentucky ("NLC").
52. NORMAL LIFE OF GEORGIA, INC., a Georgia corporation with principal
office and place of business in Louisville, Kentucky ("NLG").
53. NORMAL LIFE MANAGEMENT, INC., a Kentucky corporation with principal
office and place of business in Louisville, Kentucky ("NLM").
54. NL DELAWARE, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("NLD").
55. NORMAL LIFE OF OHIO, INC., an Ohio corporation with principal
office and place of business in Louisville, Kentucky ("NLO").
56. BOLIVAR DEVELOPMENT TRAINING CENTER, INC., a Missouri corporation
with principal office and place of business in Louisville, Kentucky ("BSTC").
57. HYDESBURG ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("HE").
58. OAK WOOD SUITES OF BOLIVAR, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("OWSB").
<PAGE> 27
59. WILLARD ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("WE").
60. BOLIVAR ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("BE").
61. SKYVIEW ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("SE").
62. RIVER BLUFF ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("RBE").
63. MEADOW LANE ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("MLE").
64. EBENEZER ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("EE").
65. HILLSIDE ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("HE").
66. PEBBLE CREEK ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("PCE").
67. FORT MASON ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("FME").
68. SHA-REE ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("SRE").
69. BAKER MANAGEMENT, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("BM").
70. MISSOURI PROGRESSIVE SERVICES, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("MPS").
71. OAKVIEW ESTATES OF BOLIVAR, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("OEB").
72. UPWARD BOUND, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("UB").
73. INDIVIDUALIZED SUPPORTED LIVING, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("ISL").
<PAGE> 28
SCHEDULE 1. A
LIST OF NEW BORROWERS
1. SOUTHERN HOME CARE SERVICES, INC., d/b/a Eldercare, a Georgia
corporation with principal office and place of business in Louisville, Kentucky
("SHCS").
2. GENERAL HEALTH CORPORATION d/b/a Arizona Youth Associates, Inc., an
Arizona corporation with principal office and place of business in Louisville,
Kentucky ("AYA")
3. BALD EAGLE ENTERPRISES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("BEE").
.
4. BRINKLEY GROUP HOMES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("BGH").
5. CREATIVE NETWORKS, LLC, an Arizona limited liability company with
principal office and place of business in Louisville, Kentucky ("CN").
6. NORMAL LIFE, INC., a Kentucky corporation with principal office and
place of business in Louisville, Kentucky ("NL").
7. NORMAL LIFE OF SOUTHERN INDIANA, INC., an Indiana corporation with
principal office and place of business in Louisville, Kentucky ("NLSI").
8. NORMAL LIFE OF CENTRAL INDIANA, INC., successor by merger of Normal
Life of Terre Haute, Inc. and Normal Life of Sheridan, Inc., an Indiana
corporation with principal office and place of business in Louisville, Kentucky
("NLCI").
9. NORMAL LIFE OF LOUISIANA, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLL").
10. NORMAL LIFE OF LAFAYETTE, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLLAF").
11. NORMAL LIFE OF LAKE CHARLES, INC., a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLLC").
12. NORMAL LIFE OF FLORIDA, INC., a Florida corporation with principal
office and place of business in Louisville, Kentucky ("NLF").
13. NORMAL LIFE OF KENTUCKY, INC., a Kentucky corporation with
principal office and place of business in Louisville, Kentucky ("NLK").
14. NORMAL LIFE OF NORTH TEXAS, INC., a Texas corporation with
principal office and place of business in Louisville, Kentucky ("NLNT").
<PAGE> 29
15. NORMAL LIFE OF NEW MEXICO, INC., a New Mexico corporation with
principal office and place of business in Louisville, Kentucky ("NLNM").
16. NORMAL LIFE OF TENNESSEE, INC., a Tennessee corporation with
principal office and place of business in Louisville, Kentucky ("NLT").
17. CAREERS IN PROGRESS, INC., a Louisiana corporation with principal
office and place of business in Louisville, Kentucky ("CP").
18. NORMAL LIFE FAMILY SERVICES, INC. a Louisiana corporation with
principal office and place of business in Louisville, Kentucky ("NLFS").
19. NORMAL LIFE OF INDIANA, a general partnership a corporation duly
organized and existing under the laws of the state of Indiana, with principal
office and place of business in Louisville, Kentucky ("NLIND").
20. NORMAL LIFE OF CALIFORNIA, INC., a California corporation with
principal office and place of business in Louisville, Kentucky ("NLC").
21. NORMAL LIFE OF GEORGIA, INC., a Georgia corporation with principal
office and place of business in Louisville, Kentucky ("NLG").
22. NORMAL LIFE MANAGEMENT, INC., a Kentucky corporation with principal
office and place of business in Louisville, Kentucky ("NLM").
23. NL DELAWARE, INC., a Delaware corporation with principal office and
place of business in Louisville, Kentucky ("NLD").
24. NORMAL LIFE OF OHIO, INC., an Ohio corporation with principal
office and place of business in Louisville, Kentucky ("NLO").
25 . BOLIVAR DEVELOPMENT TRAINING CENTER, INC., a Missouri corporation
with principal office and place of business in Louisville, Kentucky ("BSTC").
26. HYDESBURG ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("HE").
27. OAK WOOD SUITES OF BOLIVAR, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("OWSB").
28. WILLARD ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("WE").
29. BOLIVAR ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("BE").
<PAGE> 30
30. SKYVIEW ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("SE").
31. RIVER BLUFF ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("RBE").
32. MEADOW LANE ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("MLE").
33. EBENEZER ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("EE").
34. HILLSIDE ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("HE").
35. PEBBLE CREEK ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("PCE").
36. FORT MASON ESTATES, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("FME").
37. SHA-REE ESTATES, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("SRE").
38. BAKER MANAGEMENT, INC., a Missouri corporation with principal
office and place of business in Louisville, Kentucky ("BM").
39. MISSOURI PROGRESSIVE SERVICES, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("MPS").
40. OAKVIEW ESTATES OF BOLIVAR, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("OEB").
42. UPWARD BOUND, INC., a Missouri corporation with principal office
and place of business in Louisville, Kentucky ("UB").
43. INDIVIDUALIZED SUPPORTED LIVING, INC., a Missouri corporation with
principal office and place of business in Louisville, Kentucky ("ISL").
<PAGE> 31
SCHEDULE 1.32
CONTINGENT OBLIGATIONS OF RES-CARE, INC.
<PAGE> 32
SCHEDULE 1.122 TO FIRST AMENDMENT
Certain Entities which Currently are not Included in
Definition of "Existing Borrowers" or "New Borrowers"
Biscayne Bay Transitional Living Center Limited Partnership
Community Alternatives Illinois, Inc.
Premier Rehabilitation Centers of Florida, Inc.
Alternative Choices, Inc.
Refraining from including those entities within the definition of "New
Borrowers", "Existing Borrowers" or "Borrowers" does not prevent the Banks from
later exercising any rights under the Loan Instruments to require them to become
Borrowers.
<PAGE> 33
SCHEDULE 6.7
INDEBTEDNESS
<PAGE> 34
SCHEDULE 6.13
CONSOLIDATED SUBSIDIARIES OF RES-CARE, INC.
1. COMMUNITY ALTERNATIVES INDIANA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Fort Wayne, Indiana; Angola, Indiana;
Sullivan, Indiana; Greencastle, Indiana.
Qualified to do business in: Indiana
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
2. COMMUNITY ALTERNATIVES NEBRASKA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Lincoln, Nebraska
Qualified to do business in: Nebraska
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
3. COMMUNITY ADVANTAGE, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Longmont, Brighton, Grieley Colorado.
Qualified to do business in: Colorado
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
4. TEXAS HOME MANAGEMENT, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: various in Texas (59 group homes)
Qualified to do business in: Texas
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
<PAGE> 35
5. CAPITAL TX INVESTMENTS, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: owns property in various Texas locations -
Bexar, Tarrant, Angelina, Travis, Caldwell, Harris, Nacogdoches,
Anderson, Parker, Gonzalez, Plano Counties
Qualified to do business in: Texas
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
6. THM HOMES, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: owns property in various Texas locations:
Lubbock, Bexar, Williamson, Taylor, Tarrant, Anderson Counties
Qualified to do business in: Texas
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
7. RSCR TEXAS, INC., F/K/A THM PROPERTIES, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Canton, Austin, San Antonio, Dallas-Ft.
Worth, TX
Qualified to do business in: Texas
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
8. RES-CARE NEW MEXICO, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Albuquerque, Rosewell, Clovis, Santa Fe,
New Mexico Qualified to do business in: New Mexico
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
<PAGE> 36
9. RES-CARE OHIO INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Fairfield, Williamsburg, Hamilton,
Middletown, Cincinnati area, Xenia, Menton, Lake County, Ohio
Qualified to do business in: Ohio
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
10. COMMUNITY ALTERNATIVES OF TEXAS, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky Qualified/not qualified to do business in
Kentucky: Not qualified Locations of operations: Wichita Co., Tarrant
Co., Texas Qualified to do business in: Texas Any name, other than name
of Corporation, used for conducting business in the last five (5)
years:
11. CATX PROPERTIES, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: owns property in various Texas locations -
Wichita and Tarrant Counties
Qualified to do business in: Texas
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
12. RES-CARE CALIFORNIA, INC. D/B/A RCCA SERVICES
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Stanislaus, San Mateo, Sutter, Nevada,
Placer, Santa Clara County, CA
Qualified to do business in: California
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
<PAGE> 37
13. RES-CARE FLORIDA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: none
Qualified to do business in: Florida
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
14. RSCR CALIFORNIA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky Qualified/not qualified to do business in
Kentucky: Not qualified Locations of operations: Los Angeles and Orange
Counties Qualified to do business in: California Any name, other than
name of Corporation, used for conducting business in the last five (5)
years:
15. RES-CARE KANSAS, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Sherman, Neosho, Stafford & Cowley, Kansas
Qualified to do business in: Kansas
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
16. RES-CARE ILLINOIS, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Jackson and Vermilion Counties, Illinois
Qualified to do business in: Illinois
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
17. RES-CARE OKLAHOMA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Tulsa, Oklahoma City, Oklahoma
Qualified to do business in: Oklahoma
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
<PAGE> 38
18. RES-CARE TENNESSEE, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Nashville, TN
Qualified to do business in: Tennessee
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
19. RES-CARE TRAINING TECHNOLOGIES, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Qualified
Location of registered agent in Kentucky: Louisville
Locations of operations: Louisville
Qualified to do business in: Kentucky only
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
20. YOUTHTRACK, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Littleton, Colorado
Qualified/not qualified to do business in Kentucky: Qualified
Locations of operations: Arapahoe, Denver, Mesa, El Paso, Jefferson
Counties, Colorado
Qualified to do business in: Colorado, Kentucky and Puerto Rico
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
21. RES-CARE PREMIER, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: None
Qualified to do business in: Massachusetts
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
22. RES-CARE NEW JERSEY, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: None yet
Qualified to do business in: New Jersey
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
<PAGE> 39
23. COMMUNITY ALTERNATIVES KENTUCKY, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Qualified
Locations of operations: None yet
Qualified to do business in: No other states
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
24. ALTERNATIVE YOUTH SERVICES, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Qualified
Locations of operations: None yet
Qualified to do business in: Georgia, Ohio and Tennessee
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
25. COMMUNITY ALTERNATIVES VIRGINIA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: None yet
Qualified to do business in: Virginia
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
26. RSCR WEST VIRGINIA, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: West Virginia
Qualified to do business in: West Virginia
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
27. COMMUNITY ALTERNATIVES MISSOURI, INC. F/K/A RAIMENT, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Missouri
Qualified to do business in: N/A
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: Raiment, Inc.
28. RES-CARE AVIATION, INC.
<PAGE> 40
State of incorporation: Kentucky
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: N/A
Locations of operations: Kentucky
Qualified to do business in: N/A
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
29. COMMUNICATIONS NETWORK CONSULTANTS, INC.
State of incorporation: Rhode Island
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: N/A
Locations of operations: North Carolina
Qualified to do business in: North Carolina
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
30. THE ACADEMY FOR INDIVIDUAL EXCELLENCE, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Qualified
Locations of operations: Kentucky
Qualified to do business in: No other state
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
31. RES-CARE OTHER OPTIONS, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Pennsylvania, North Carolina, Oregon
Qualified to do business in: N/A
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
THE FOLLOWING ARE NEW BORROWERS JOINING IN THE LOAN DOCUMENTS EFFECTIVE WITH THE
THIRD AMENDMENT TO LOAN DOCUMENTS.
32. SOUTHERN HOME CARE SERVICES, INC., D/B/A ELDERCARE
State of incorporation: Georgia
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Georgia, South Carolina
Qualified to do business in (other than state of incorporation): None
<PAGE> 41
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State, (ii) Georgia
Secretary of State, (iii) South Carolina Secretary of State
33. GENERAL HEALTH CORPORATION, D/B/A ARIZONA YOUTH ASSOCIATES, INC.
State of incorporation: Arizona
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Arizona
Qualified to do business in (other than state of incorporation): None
<PAGE> 42
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State, (ii) Arizona
Secretary of State
34. BALD EAGLE ENTERPRISES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri
Secretary of State
35. BRINKLEY GROUP HOMES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State, (ii) Missouri
Secretary of State
36. CREATIVE NETWORKS, LLC
State of formation: Arizona
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Arizona
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State, (ii) Arizona
Secretary of State
37. NORMAL LIFE, INC.
State of incorporation: Kentucky
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: N/A, Kentucky
corporation
Locations of operations:
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Jefferson County, Kentucky
<PAGE> 43
38. NORMAL LIFE OF SOUTHERN INDIANA, INC.
State of incorporation: Indiana
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Vanderburgh County, Indiana
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State,
(ii) Indiana Secretary of State, (iii) Vanderburgh County, Indiana
39. NORMAL LIFE OF CENTRAL INDIANA, INC.
State of incorporation: Indiana
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Vigo County, Indiana, Hamilton County, Indiana
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State,
(ii) Indiana Secretary of State, (iii) Vigo County, Indiana,
(iv) Hamilton County, Indiana
40. NORMAL LIFE OF LOUISIANA, INC.
State of incorporation: Louisiana
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Jefferson Parish, Louisiana Qualified to do
business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State,
(ii) Jefferson Parish, Louisiana
41. NORMAL LIFE OF LAFAYETTE, INC.
State of incorporation: Louisiana
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Lafayette Parish, Louisiana Qualified to do
business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State,
(ii) Lafayette Parish, Louisiana
42. NORMAL LIFE OF LAKE CHARLES, INC.
<PAGE> 44
State of incorporation: Louisiana
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Calcasieu Parish, Louisiana
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State,
(ii) Calcasieu Parish, Louisiana
43. NORMAL LIFE OF FLORIDA, INC.
State of incorporation: Florida
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Pinellas County, Florida, Hillsborough County,
Florida Qualified to do business in (other than state of
incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State,
(ii) Florida Secretary of State, (iii) Pinellas County, Florida,
(iv) Hillsborough County, Florida
44. NORMAL LIFE OF KENTUCKY, INC.
State of incorporation: Kentucky
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: N/A, Kentucky
corporation Locations of operations:
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Jefferson County, Kentucky
45. NORMAL LIFE OF NORTH TEXAS, INC.
State of incorporation: Texas
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: ________ County, Texas
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State,
(ii) Texas Secretary of State
46. NORMAL LIFE OF NEW MEXICO, INC.
State of incorporation: New Mexico
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: ________ County, New Mexico
<PAGE> 45
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State,
(ii) New Mexico Secretary of State
47. NORMAL LIFE OF TENNESSEE, INC.
State of incorporation: Tennessee
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: ________ County, Tennessee
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State,
(ii) Tennessee Secretary of State
48. CAREERS IN PROGRESS, INC.
State of incorporation: Louisiana
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Jefferson Parish, Louisiana
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State,
(ii) Jefferson Parish, Louisiana
49. NORMAL LIFE FAMILY SERVICES, INC.
State of incorporation: Louisiana
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Jefferson Parish, Louisiana
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State,
(ii) Jefferson Parish, Louisiana
50. NORMAL LIFE OF INDIANA, a general partnership
State of formation: Indiana
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: (i) Vanderburgh County, Indiana,
(ii) Vigo County, Indiana and (iii) Hamilton County, Indiana
Qualified to do business in (other than state of incorporation): None
<PAGE> 46
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State,
(ii) Indiana Secretary of State, (iii) Vanderburgh County, Indiana,
(iv) Vigo County, Indiana and (v) Hamilton County, Indiana
51. NORMAL LIFE OF CALIFORNIA, INC.
State of incorporation: California
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: ________ County, California
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State,
(ii) California Secretary of State
52. NORMAL LIFE OF GEORGIA, INC.
State of incorporation: Georgia
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Fulton County, Georgia Qualified to do
business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State,
(ii) Georgia Secretary of State, (iii) Fulton County, Georgia
53. NORMAL LIFE MANAGEMENT, INC.
State of incorporation: Kentucky
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: N/A, Kentucky
corporation
Locations of operations:
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Jefferson County, Kentucky
54. NL OF DELAWARE, INC.
State of incorporation: Delaware
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
<PAGE> 47
UCC filing locations: (i) Kentucky Secretary of State,
(ii) Delaware Secretary of State
55. NORMAL LIFE OF OHIO, INC.
State of incorporation: Ohio
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky Qualified/not qualified to do business in
Kentucky: Not qualified
Locations of operations: Cuyahoga County, Ohio
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years:
UCC filing locations: (i) Kentucky Secretary of State,
(ii) Ohio Secretary of State, (iii) Cuyahoga County, Ohio
56. BOLIVAR DEVELOPMENTAL TRAINING CENTER, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; and (iii) Clerk of Polk County, Missouri
57. HYDESBURG ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Marion County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; and (iii) Clerk of Marion County, Missouri
58. OAKWOOD SUITES OF BOLIVAR, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Marion County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; and (iii) Clerk of Marion County, Missouri
<PAGE> 48
59. WILLARD ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Greene County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; and (iii) Clerk of Greene County, Missouri
60. BOLIVAR ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; and (iii) Clerk of Polk County, Missouri
61. SKYVIEW ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Marion County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; and (iii) Clerk of Marion County, Missouri
62. RIVER BLUFF ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; and (iii) Clerk of Polk County, Missouri
<PAGE> 49
63. MEADOW LANE ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Adair County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; and (iii) Clerk of Adair County, Missouri
64. EBENEZER ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Greene County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; and (iii) Clerk of Greene County, Missouri
65. HILLSIDE ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State and (iii) Clerk of Polk County, Missouri
66. PEBBLE CREEK ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; (iii) Clerk of Polk County, Missouri
67. FORT MASON ESTATES, INC.
<PAGE> 50
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Ralls County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; and (iii) Clerk of Ralls County, Missouri
68. SHA-REE ESTATES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; and (iii) Clerk of Polk County, Missouri
69. BAKER MANAGEMENT, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri Qualified to do business
in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; and (iii) Clerk of Polk County, Missouri
70. MISSOURI PROGRESSIVE SERVICES, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Polk County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; and (iii) Clerk of Polk County, Missouri
71. OAKVIEW ESTATES OF BOLIVAR, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
<PAGE> 51
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Marion County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; and (iii) Clerk of Marion County, Missouri
72. UPWARD BOUND, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Marion and Polk County, Missouri Qualified to
do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; and (iii) Clerk of Marion County, Missouri
73. INDIVIDUALIZED SUPPORTED LIVING, INC.
State of incorporation: Missouri
Location of principal office and records: 10140 Linn Station Road
Louisville, Kentucky
Qualified/not qualified to do business in Kentucky: Not qualified
Locations of operations: Marion, Adair, Polk & Greene County, Missouri
Qualified to do business in (other than state of incorporation): None
Any name, other than name of Corporation, used for conducting business
in the last five (5) years: N/A
UCC filing locations: (i) Kentucky Secretary of State; (ii) Missouri
Secretary of State; (iii) Clerk of Marion County
THE FOLLOWING ARE CONSOLIDATED SUBSIDIARIES THAT ARE NOT BORROWERS.
1. Biscayne Bay Transitional Living Center Limited Partnership
2. Community Alternatives Illinois, Inc.
3. Premier Rehabilitation Centers of Florida, Inc.
4. Alternative Choices, Inc.
<PAGE> 52
EXHIBIT A
Exhibit A
to Stock Pledge Agreement
between Res-Care, Inc.
and
PNC Bank, National Association,
as Administrative Bank
----------------------
I. PLEDGED SHARES ALREADY DELIVERED TO ADMINISTRATIVE BANK
<TABLE>
<CAPTION>
Number
Certificate of
Consolidated Subsidiary Number Shares Owned By
----------------------- ------ ------ --------
<S> <C> <C> <C>
Community Alternatives Indiana, Inc. 1 1,000 Res-Care, Inc.
Community Alternatives Nebraska, Inc. 1 1,000 Res-Care, Inc.
Community Advantage, Inc. 1 1,000 Res-Care, Inc.
Texas Home Management, Inc. 1 1,000 Res-Care, Inc.
Capital TX Investments, Inc. 1 1,000 Res-Care, Inc.
THM Homes, Inc. 1 1,000 Res-Care, Inc.
Res-Care New Mexico, Inc. 1 1,000 Res-Care, Inc.
Res-Care Ohio, Inc. 1 1,000 Res-Care, Inc.
Community Alternatives of Texas, Inc. 1 1,000 Res-Care, Inc.
CATX Properties, Inc. 1 1,000 Res-Care, Inc.
Res-Care California, Inc. 1 1,000 Res-Care, Inc.
Res-Care Florida, Inc. 1 1,000 Res-Care, Inc.
RSCR California, Inc. 1 1,000 Res-Care, Inc.
Res-Care Kansas, Inc. 1 1,000 Res-Care, Inc.
Res-Care Illinois, Inc. 1 1,000 Res-Care, Inc.
RSCR Texas, Inc. 1 1,000 Res-Care, Inc.
Res-Care Oklahoma, Inc. 1 1,000 Res-Care, Inc.
Res-Care Tennessee, Inc. 1 1,000 Res-Care, Inc.
</TABLE>
C-1
<PAGE> 53
<TABLE>
<S> <C> <C> <C>
Res-Care Training Technologies, Inc. 1 1,000 Res-Care, Inc.
Youthtrack, Inc. 1 800 Res-Care, Inc.
Res-Care Premier, Inc. 1 1,000 Res-Care, Inc.
Res-Care New Jersey, Inc. 1 1,000 Res-Care, Inc.
Community Alternatives Kentucky, Inc. 1 1,000 Res-Care, Inc.
Alternative Youth Services, Inc. 1 1,000 Res-Care, Inc.
Community Alternatives Virginia, Inc. 1 1,000 Res-Care, Inc.
RSCR West Virginia, Inc. 1 1,000 Res-Care, Inc.
Community Alternatives Missouri, Inc. f/k/a 1 500 Res-Care, Inc.
Raiment, Inc.
Res-Care Aviation, Inc. 1 1,000 Res-Care, Inc.
Communication Network Consultants, Inc. 1 100 Res-Care, Inc.
II. PLEDGED SHARES DELIVERED TO ADMINISTRATIVE BANK AT SECOND AMENDMENT CLOSING
DATE
The Academy for Individual Excellence, Inc. 1 1,000 Res-Care, Inc.
Res-Care Other Options, Inc. 1 1,000 Res-Care, Inc.
III. PLEDGED SHARES DELIVERED TO ADMINISTRATIVE BANK AS OF THIRD AMENDMENT CLOSING DATE
Southern Home Care Services, Inc. 2 1,543 Res-Care, Inc.
Normal Life, Inc. 97 906,833 Res-Care, Inc.
</TABLE>
C-2
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 16,205
<SECURITIES> 0
<RECEIVABLES> 77,563
<ALLOWANCES> 0
<INVENTORY> 678
<CURRENT-ASSETS> 103,402
<PP&E> 72,184
<DEPRECIATION> 12,861
<TOTAL-ASSETS> 346,954
<CURRENT-LIABILITIES> 55,470
<BONDS> 0
0
0
<COMMON> 41,678
<OTHER-SE> 69,085
<TOTAL-LIABILITY-AND-EQUITY> 346,954
<SALES> 0
<TOTAL-REVENUES> 105,938
<CGS> 0
<TOTAL-COSTS> 98,403
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,958
<INCOME-PRETAX> 6,292
<INCOME-TAX> 2,455
<INCOME-CONTINUING> 3,837
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,837
<EPS-PRIMARY> .31
<EPS-DILUTED> .29
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 8,244
<SECURITIES> 0
<RECEIVABLES> 47,448
<ALLOWANCES> 2,249
<INVENTORY> 656
<CURRENT-ASSETS> 58,897
<PP&E> 56,332
<DEPRECIATION> 8,297
<TOTAL-ASSETS> 138,693
<CURRENT-LIABILITIES> 28,179
<BONDS> 0
0
0
<COMMON> 15,535
<OTHER-SE> 47,714
<TOTAL-LIABILITY-AND-EQUITY> 138,693
<SALES> 0
<TOTAL-REVENUES> 64,867
<CGS> 0
<TOTAL-COSTS> 60,014
<OTHER-EXPENSES> 44
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 562
<INCOME-PRETAX> 4,378
<INCOME-TAX> 1,771
<INCOME-CONTINUING> 2,607
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,607
<EPS-PRIMARY> .26
<EPS-DILUTED> .25
</TABLE>
