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

Form 10-Q

     (Mark One)

Commission File Number: 0-20372

RES-CARE, INC.

(Exact name of registrant as specified in its charter)

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 þ Noo .

The number of shares outstanding of the registrant’s common stock, no par value, as of July 31, 2002, was 24,417,086.

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INDEX

RES-CARE, INC. AND SUBSIDIARIES

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PART I. FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

RES-CARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes to unaudited condensed consolidated financial statements.

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RES-CARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

See accompanying notes to unaudited condensed consolidated financial statements.

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RES-CARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes to unaudited condensed consolidated financial statements.

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Res-Care, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2002
(Unaudited)

NOTE 1. Basis of Presentation

     Res-Care, Inc. is 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. All references in these financial statements to “ResCare,” “we,” “us,” or “our” mean Res-Care, Inc. and unless the context otherwise requires, its consolidated subsidiaries.

     The accompanying unaudited condensed consolidated financial statements of ResCare have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of financial condition and results of operations for the interim periods have been included. Operating results for the three-month and six-month periods ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002.

     Certain amounts in the 2001 financial statements have been reclassified to conform with the 2002 presentation. Such reclassifications have no effect on previously reported net income.

     For further information, refer to the consolidated financial statements and footnotes thereto in our annual report on Form 10-K for the year ended December 31, 2001.

NOTE 2. Long-term Debt

     Long-term debt consists of the following:

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     On March 22, 2002, we completed an amendment to our $80 million credit facility with a group of banks. The amendment takes into account certain fourth quarter 2001 charges in calculating the financial covenants and includes other changes in determining the borrowing base and the definition of eligible accounts receivable for that determination. Interest rates on borrowings under the facility and the standby letters of credit remain unchanged as a result of this amendment. We are in compliance with our debt covenants as of June 30, 2002.

     Under the provisions of the credit facility, we are required to maintain a minimum ratio of EBITDA to consolidated interest expense (as defined in the credit agreement) throughout the term of the facility. At June 30, 2002, we were in compliance with this minimum requirement. Based on current projections, we believe it is possible that we will not maintain this minimum level as of September 30, 2002. However, we believe, based on discussions with our lenders, that it is probable that the credit agreement will be amended prior to that date and that we will be in compliance with our financial covenants as of September 30, 2002.

     During June 2002, we redeemed $1.4 million of our 6% convertible subordinated notes. The redemption resulted in a pretax gain of approximately $251,000, which is included in other income in the accompanying consolidated statement of income.

     During July 2002, we completed transactions to redeem approximately $3.6 million of our 6% convertible subordinated notes. This redemption will result in a pretax gain of approximately $800,000 in the third quarter of 2002.

NOTE 3. Earnings Per Share

     The following table sets forth the computation of basic and diluted earnings per share:

     The average shares listed below were not included in the computation of diluted earnings per share because to do so would have been antidilutive for the periods presented:

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NOTE 4. Segment Information

     The following table sets forth information about our reportable segments. During 2001, we disclosed information for two reportable operating segments, comprised of Disabilities Services and Youth Services. Effective January 1, 2002, in connection with changes in our management structure, the Youth Services division was split into two segments: (i) Training Services (consisting of the Job Corps operations) and (ii) Youth Services (consisting of all other youth services programs), which were brought under the direction of separate presidents. The information for prior periods presented has been restated to reflect this change.