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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1997
Commission File Number 1-8351
CHEMED CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 31-0791746
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2600 Chemed Center, 255 E. Fifth Street, Cincinnati, Ohio 45202
(Address of principal executive offices) (Zip code)
(513) 762-6900
(Registrant's telephone number, including area code)
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 12 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
---- ----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Amount Date
Capital Stock 10,071,520 Shares October 31, 1997
$1 Par Value
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Page 1 of 18<PAGE>
CHEMED CORPORATION AND
SUBSIDIARY COMPANIES
Index
<TABLE>
<CAPTION>
<S> <C>
Page No.
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheet -
September 30, 1997 and
December 31, 1996 3
Consolidated Statement of Income -
Three months and nine months ended
September 30, 1997 and 1996 4
Consolidated Statement of Cash Flows
Nine months ended
September 30, 1997 and 1996 5
Notes to Unaudited Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
PART II. OTHER INFORMATION 15
</TABLE>
Page 2 of 18<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(in thousands except share and per share data)
UNAUDITED
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996*
------------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 131,495 $ 14,028
Accounts receivable, less allowances of $2,617 37,091 31,555
(1996 - 1,583)
Inventories
Raw materials 751 685
Finished goods and general merchandise 7,955 7,665
Statutory deposits 17,131 19,962
Other current assets 12,196 25,480
---------- ---------
Total current assets 206,619 99,375
Net assets of discontinued operations - 140,138
Other investments 66,217 62,098
Properties and equipment, at cost less accumulated
depreciation of $34,308 (1996 - $29,188) 50,155 40,661
Identifiable intangible assets less accumulated
amortization of $3,933 (1996 - $2,851) 13,415 12,390
Goodwill less accumulated amortization of $18,193
(1996 - $14,501) 139,506 138,203
Other assets 19,567 16,496
---------- ---------
Total Assets $ 495,479 $ 509,361
========== =========
LIABILITIES
Current liabilities
Accounts payable $ 8,783 $ 8,959
Bank notes and loans payable 135 5,000
Current portion of long-term debt 15,610 12,526
Income taxes 40,456 3,333
Deferred contract revenue 24,862 24,735
Other current liabilities 45,226 35,826
---------- ---------
Total current liabilities 135,072 90,379
Deferred income taxes 900 2,974
Long-term debt 90,339 158,140
Other liabilities and deferred income 41,931 39,977
---------- ---------
Total Liabilities 268,242 291,470
---------- ---------
STOCKHOLDERS' EQUITY
Capital stock-authorized 15,000,000 shares $1 par;
issued 12,923,019 (1996 - 12,767,565) shares 12,923 12,768
Paid-in capital 154,974 150,296
Retained earnings 150,330 139,262
Treasury stock - 2,873,140 (1996 - 2,815,655) shares,
at cost (85,149) (82,943)
Unearned compensation (24,968) (27,554)
Unrealized appreciation on investments 19,127 26,062
---------- ----------
Total Stockholders' Equity 227,237 217,891
---------- ----------
Total Liabilities and Stockholders' Equity $ 495,479 $ 509,361
========== ==========
*Reclassified for operations discontinued in September 1997.
See accompanying notes to unaudited financial statements.
</TABLE>
Page 3 of 18<PAGE>
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
UNAUDITED
(in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
1997 1996* 1997 1996*
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Continuing Operations
Sales $ 4,373 $ 4,342 $ 12,879 $ 12,716
Service revenues 83,061 70,828 238,231 209,118
-------- -------- -------- ---------
Total sales and service revenues 87,434 75,170 251,110 221,834
-------- -------- -------- ---------
Cost of goods sold 2,988 2,832 8,958 8,027
Cost of services provided 51,315 43,255 147,652 127,544
Selling and marketing expenses 6,289 5,731 18,419 17,224
General and administrative expenses 19,471 16,844 55,760 51,112
Depreciation 2,145 1,863 6,261 5,436
--------- --------- --------- ---------
Total costs and expenses 82,208 70,525 237,050 209,343
--------- --------- --------- ---------
Income from operations 5,226 4,645 14,060 12,491
Interest expense (2,924) (2,069) (8,476) (5,532)
Other income, net 1,298 1,914 16,172 24,012
--------- --------- --------- ---------
Income before income taxes
and minority interest 3,600 4,490 21,756 30,971
Income taxes (1,494) (1,801) (8,329) (11,647)
Minority interest in earnings of
subsidiary - (721) - (2,964)
--------- --------- --------- ---------
Income from continuing operations 2,106 1,968 13,427 16,360
Discontinued Operations 9,702 2,496 13,160 5,989
--------- --------- --------- ---------
Net Income $ 11,808 $ 4,464 $ 26,587 $ 22,349
========= ========= ========= =========
Earnings Per Common Share
Income from continuing operations $ .21 $ .20 $ 1.34 $ 1.66
========= ========= ========= =========
Net income $ 1.18 $ .46 $ 2.65 $ 2.27
========= ========= ========= =========
Average Number of Shares Outstanding 10,042 9,790 10,026 9,831
========= ========= ========= =========
Cash Dividends Paid Per Share $ .52 $ .52 $ 1.56 $ 1.56
========= ========= ========= =========
*Reclassified for operations discontinued in September 1997.
See accompanying notes to unaudited financial statements.
</TABLE>
Page 4 of 18<PAGE>
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------
1997 1996*
--------- ---------
<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 26,587 $ 22,349
Adjustments to reconcile net income to net cash
provided by operating activities:
Discontinued operations (13,160) (5,989)
Gains on sale of investments (12,235) (17,431)
Depreciation and amortization 10,717 7,972
Provision for uncollectible accounts receivable 330 491
Provision for deferred income taxes (222) (2,129)
Minority interest in earnings of subsidiary - 2,964
Changes in operating assets and liabilities,
excluding amounts acquired in business combinations
(Increase)/decrease in accounts receivable (2,517) 675
(Increase)/decrease in inventories and other
current assets (180) 457
Increase/(decrease) in statutory deposits 2,831 (838)
(Increase)/decrease in accounts payable, deferred
contract revenue and other current liabilities (724) 6,779
Increase in income taxes 6,290 3,127
Other - net 965 (1,974)
--------- ---------
Net cash provided by continuing operations 18,682 16,453
Net cash provided by discontinued operations 9,699 15,804
--------- ---------
Net cash provided by operating activities 28,381 32,257
--------- ---------
Cash Flows From Investing Activities
Net proceeds from sale of discontinued operations 187,278 (1,606)
Capital expenditures (15,013) (7,729)
Proceeds from sale of investments 14,060 30,349
Business combinations, net of cash acquired (8,929) (9,508)
Investing activities of discontinued operations (5,464) (5,941)
Purchase of Roto-Rooter minority interest (2,352) (89,854)
Other - net (572) 119
--------- ---------
Net cash provided/(used) by investing activities 169,008 (84,170)
--------- ---------
Cash Flows From Financing Activities
Repayment of long-term debt (95,167) (223)
Proceeds from long-term debt 35,000 -
Dividends paid (15,660) (15,343)
Increase/(decrease) in bank notes and overdrafts payable (4,865) 65,000
Issuance of capital stock 338 343
Purchase of treasury stock - (3,650)
Other - net 432 150
--------- ---------
Net cash provided/(used) by financing activities (79,922) 46,277
--------- ---------
Increase/(Decrease) In Cash And Cash Equivalents 117,467 (5,636)
Cash and cash equivalents at beginning of period 14,028 20,403
--------- ---------
Cash and cash equivalents at end of period $131,495 $ 14,767
========= =========
* Reclassified for operations discontinued in September 1997.
See accompanying notes to unaudited financial statements.
</TABLE>
Page 5 of 18<PAGE>
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
Notes to Unaudited Financial Statements
1. The accompanying unaudited consolidated financial statements
have been prepared in accordance with Rule 10-01 of SEC
Regulation S-X. Consequently, they do not include all the
disclosures required under generally accepted accounting
principles for complete financial statements. However, in
the opinion of the management of Chemed Corporation (the
"Company"), the financial statements presented herein contain
all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the financial
position, results of operations and cash flows of the Company
and its consolidated subsidiaries ("Chemed"). For further
information regarding Chemed's accounting policies, refer to
the consolidated financial statements and notes included in
Chemed's Annual Report on Form 10-K for the year ended
December 31, 1996.
2. Primary earnings per common share are computed using the
weighted average number of shares of capital stock
outstanding and exclude the dilutive effect of outstanding
stock options as it is not material.
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128
("SAFS 128"), Earnings Per Share, effective for reporting
periods ending after December 15, 1997. Adoption of SAFS 128
in December 1997 is not expected to impact the Company's
reported earnings per share.
3. Effective September 20, 1997, Chemed sold all of the wholly
owned businesses comprising the Omnia Group ("Omnia") to
Banta Corporation for $50.7 million in cash plus deferred
payments with a present value of $1.5 million. During the
third quarter of 1997, Chemed recognized an aftertax loss of
$19.2 million on the sale of Omnia. The results of Omnia, a
manufacturer and distributor of medical and dental supplies
to dealers throughout the United States, have been classified
as discontinued operations. Significant operating data
related to Omnia are presented on the following page (in
thousands):
Page 6 of 18<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ---------------------
1997 1996 1997 1996
-------- -------- ------- --------
<S> <C> <C> <C> <C>
Sales and Service
Revenues $ 14,863 $ 17,893 $ 49,754 $ 54,674
======== ======== ======== ========
Income before
income taxes $ 1,080 $ 532 $ 2,977 $ 2,972
Income Taxes (624) (145) (1,172) (895)
-------- -------- -------- --------
Net Income $ 456 $ 387 $ 1,805 $ 2,077
======== ======== ======== ========
</TABLE>
On September 30, 1997, Chemed's 82%-owned subsidiary National
Sanitary Supply Company ("National"), was merged with TFBD,
Inc., a wholly owned subsidiary of Unisource Worldwide, Inc.
("Unisource"). In exchange for its ownership interest in
National, Chemed received $120.2 million in cash. In
addition, Unisource has repaid approximately $18.1 of
intercompany borrowings owed to Chemed by National as of
September 30, 1997. During the third quarter of 1997, Chemed
recognized an aftertax gain of $28.7 million on the sale of
National. The results of National, the largest specialized
distributor of sanitary maintenance supplies and paper
supplies in the United States, have been classified as
discontinued operations. Significant operating data related
to National are presented below (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ---------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales and Service
Revenues $ 82,599 $ 80,652 $235,301 $235,139
======== ======== ======== ========
Income/(loss) before
income taxes $ (614) $ 3,066 $ 2,542 $ 6,834
Income Taxes 317 (1,254) (997) (2,869)
Minority Interest 50 (303) (281) (653)
-------- -------- -------- --------
Net Income/(loss) $ (247) $ 1,509 $ 1,264 $ 3,312
======== ======== ======== ========
</TABLE>
In addition, the assets and liabilities of Omnia and National
have been reclassified in the consolidated balance sheet as
net assets of discontinued operations. The components of net
assets of discontinued operations at December 31, 1996, are
presented on the following page (in thousands).
Page 7 of 18<PAGE>
<TABLE>
<CAPTION>
Omnia National Total
------- -------- --------
<S> <C> <C> <C>
Current assets $29,154 $ 65,923 $ 95,077
Properties and equipment, at
cost less accumulated
depreciation 20,605 21,992 42,597
Goodwill less accumulated
amortization 22,858 25,872 48,730
Other noncurrent assets 5,045 770 5,815
Current liabilities (4,919) (31,371) (36,290)
Deferred income taxes (2,827) (848) (3,675)
Minority interest - (10,820) (10,820)
Other noncurrent liabilities (26) (1,270) (1,296)
------- -------- --------
Net assets of discontinued
operations $69,890 $ 70,248 $140,138
======= ======== ========
</TABLE>
Discontinued operations, as shown in the accompanying
consolidated statement of income, comprise the following (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ---------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Gain on the Sale
of National, net
of income taxes of
$32,382,000 $ 28,740 $ - $ 28,740 $ -
Loss on the sale
of Omnia, net of
income tax benefit
of $1,223,000 (19,247) - (19,247) -
Net income/(loss)
from operations
- National (247) 1,509 1,264 3,312
Net income from
operation - Omnia 456 387 1,805 2,077
Accrual adjustments
relating to operations
discontinued in 1991 - 600 - 600
Adjustment relating to
the settlement of tax
issues arising from
the sale of operations
discontinued in 1994 - - 598 -
-------- -------- --------- ---------
Total discontinued
operations $ 9,702 $ 2,496 $ 13,160 $ 5,989
======== ======== ========= =========
</TABLE>
Page 8 of 18<PAGE>
4. During the first nine months of 1997, Chemed completed ten
purchase business combinations in the Roto-Rooter and Patient
Care business segments for an aggregate purchase price of
$8,929,000 in cash. The aggregate purchase price was
allocated as follows (in thousands):
Working capital $ 1,753
Identifiable intangible assets 694
Goodwill 6,683
Other liabilities -- net (182)
--------
Subtotal 8,948
Less: cash acquired (19)
--------
Net cash used $ 8,929
========
Unaudited pro forma sales and service revenues, assuming
these acquisitions had been completed on January 1, 1996, are
presented below (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
1997 1996 1997 1996
-------- -------- ------- --------
<S> <C> <C> <C> <C>
Pro forma sales
and service
revenues $ 89,000 $ 83,816 $263,350 $244,256
======== ======== ======== ========
</TABLE>
Other than the impact on sales and service revenues, these
acquisitions did not materially impact the results of
operations during 1997.
Page 9 of 18<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Financial Condition
- -------------------
Cash and cash equivalents increased $117.5 million from
$14.0 million at December 31, 1996 to $131.5 million at
September 30, 1997 primarily due to the receipt of cash proceeds
from the sale of the Omnia Group ("Omnia") and National Sanitary
Supply Company ("National") in September 1997. Approximately $65
million of the $187.2 million of net cash proceeds from the sales
of discontinued operations were used to repay short- and long-
term borrowings. The increase in accounts receivable from $31.6
million at December 31, 1996 to $37.1 million at
September 30, 1997 is primarily attributable to a higher level of
sales in the third quarter of 1997 versus sales recorded in the
fourth quarter of 1996. The reduction in the statutory deposits
from $20.0 million at December 31, 1996 to $17.1 million at
September 30, 1997 is primarily due to an increase in the
tangible net assets of Chemed's service contract business, which
is required to maintain such deposits based on various factors,
one of which is the level of tangible net assets. The decline in
other current assets from $25.5 million at December 31, 1996 to
$12.2 million at September 30, 1997 is due primarily to the
reclassification of current payments of Vitas' redeemable
preferred stock to other investments (noncurrent) in recognition
of the deferral of the due date of such payments to the fourth
quarter of 1998 (see discussion below).
Income taxes increased from $3.3 million at
December 31, 1996 to $40.5 million at September 30, 1997
primarily due to the accrual of current taxes on the gain on the
sale of National in September 1997. Approximately $25 million of
such taxes will be paid in December 1997 and $5 million paid in
March 31, 1998. Other current liabilities increased from $35.8
million at December 31, 1996 to $45.2 million at September
30, 1997 due to the accrual of expenses and costs on the sale of
Omnia and National in September 1997.
Vitas is continuing to explore long-term financing
alternatives to increase its liquidity. To facilitate the
completion of a possible public offering of Vitas' common stock,
Chemed and Vitas agreed to defer the due dates on the redeemable
preferred stock ("Preferred") of Vitas owned by Chemed until the
fourth quarter of 1998. Upon the completion of such an offering,
the Preferred would be due and payable. Additionally, Vitas'
debt covenants did not permit its timely payment of the preferred
dividends due Chemed on January 15 and July 15, 1997 ($1.2
million each). In August 1997, Vitas paid $608,000 toward these
Page 10 of 18<PAGE>
dividends. It is anticipated that a similar dividend payment
will be made by Vitas in November 1997. On the basis of current
information, management believes the Company's investment in
Vitas is fully recoverable and that no permanent impairment
exits.
At September 30, 1997 Chemed had approximately $34.2
million of unused lines of credit with various banks. Based on
the Company's current financial position and its available lines
of credit, management believes its sources of capital and
liquidity are satisfactory for the Company's needs in the
foreseeable future.
Results of Operations
- ---------------------
Sales and service revenues and operating profit from
continuing operations by business segment follow (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1997 1996 1997 1996
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Sales and Service Revenues
- -----------------
Roto-Rooter $ 56,358 $ 50,652 $161,387 $148,473
Patient Care 31,076 24,518 89,723 73,361
-------- ------- -------- --------
Total $ 87,434 $ 75,170 $251,110 $221,834
======== ======== ======== ========
Operating Profit
- ----------------
Roto-Rooter $ 5,924 $ 4,899 $ 15,205 $ 13,687
Patient Care 1,554 1,435 4,012 4,001
-------- ------- -------- --------
Total $ 7,478 $ 6,334 $ 19,217 $ 17,688
======== ======== ======== ========
</TABLE>
Data relating to (a) the increase or decrease in sales and
service revenues and (b) operating profit as a percent of sales
and service revenues for each segment are set forth on the
following page:
Page 11 of 18<PAGE>
<TABLE>
<CAPTION>
Sales and Service Operating Profit
Revenues % as a % of Sales
Increase/(Decrease) (Operating Margin)
------------------- -------------------
1997 vs. 1996 1997 1996
------------------- -------- ---------
<S> <C> <C> <C>
Three Months Ended
September 30,
- ------------------
Roto-Rooter 11% 10.5% 9.7%
Patient Care 27 5.0 5.9
Total 16 8.6 8.4
Nine Months Ended
September 30,
- ------------------
Roto-Rooter 9% 9.4% 9.2%
Patient Care 22 4.5 5.5
Total 13 7.7 8.0
</TABLE>
Third Quarter 1997 Versus Third Quarter 1996
- ----------------------------------------------
Sales and service revenues of the Roto-Rooter segment
for the third quarter of 1997 totaled $56,358,000, an increase of
11% over the $50,652,000 of revenues recorded for the third
quarter of 1996. For the third quarter of 1997, plumbing
revenues, which account for approximately 28% of total revenues,
and sewer and drain cleaning revenues, which account for
approximately 29%, increased 18% and 2%, respectively, over
amounts recorded in the comparable quarter of 1996. Revenues of
Roto-Rooter's service contract business (Service America) for the
third quarter of 1997, which account for approximately 31% of
this segment's total revenue, increased 10% versus such revenues
recorded in the third quarter of 1996. Excluding revenues of
businesses acquired in 1997, sales and service revenues of the
Roto-Rooter segment for the third quarter of 1997 increased 7%
over such revenues recorded for the third quarter of 1996. The
operating margin of the Roto-Rooter segment increased from 9.7%
during the third quarter of 1996 to 10.5% during the third
quarter of 1997, primarily as a result of the increased operating
margin of Service America's business during 1997.
Total revenues of the Patient Care segment increased
from $24,518,000 in the third quarter of 1996 to $31,076,000 in
the third quarter of 1997. Excluding businesses acquired in
1997, the sales of Patient Care for the third quarter of 1997
increased 6% versus sales recorded in the third quarter of 1996.
The operating margin of the Patient Care Segment declined from
5.9% during the third quarter of 1996 to 5.0% during the third
quarter of 1997, primarily due to market pressures on pricing.
Page 12 of 18<PAGE>
Interest expense increased from $2,069,000 in the third
quarter of 1996 to $2,924,000 in the third quarter of 1997,
primarily due to the increased borrowings incurred as a result of
Chemed's purchase of Roto-Rooter's minority interest in the third
quarter of 1996.
Other income declined from $1,914,000 in the third
quarter of 1996 to $1,298,000 in the third quarter of 1997,
primarily as a result of reduced interest income in the 1997
period. This reduction was attributable primarily to the use of
a portion of Chemed's excess cash for the previously mentioned
purchase of the Roto-Rooter minority interest in the third
quarter of 1996.
During the third quarter of 1997 the Company's
effective income tax rate was 41.5% as compared with 40.1% during
the comparable period of 1996. The higher rate in 1997 was
attributable primarily to higher effective state and local rates
during the 1997 period.
Chemed's income from continuing operations increased
from $1,968,000 ($.20 per share) during the third quarter of 1996
to $2,106,000 ($.21 per share) during the third quarter of 1997.
Net income for the third quarter of 1997 totalled
$11,808,000 ($1.18 per share) as compared with $4,464,000 ($.46
per share) for the third quarter of 1996. Discontinued
operations for 1997 amounted to $9,702,000, and included a net
aftertax gain of $9,493,000 on the sale of Omnia and National
Sanitary Supply. For the third quarter of 1996 discontinued
operations amounted to $2,496,000, and primarily represented the
operating results of Omnia and National Sanitary Supply.
Nine Months Ended September 30, 1997 Versus September 30, 1996
- --------------------------------------------------------------
Sales and service revenues of the Roto-Rooter segment
for the first nine months of 1997 increased 9% versus sales
recorded during the first nine months of 1996. This sales growth
was attributable to revenue increases of 12% and 2%,
respectively, in Roto-Rooter's sewer and drain cleaning and
plumbing repair business for the 1997 period. In addition, sales
of Roto-Rooter's service contract business increased 9% in 1997
as compared with sales recorded during the 1996 period. The
operating margin of this segment increased from 9.2% during the
first nine months of 1996 to 9.4% during the first nine months of
1997.
The Patient Care segment recorded service revenues of
$89,723,000 during the first nine months of 1997, an increase of
22% over revenues recorded in the first nine months of 1996.
Excluding the sales of Priority Care, acquired in April 1997,
Page 13 of 18<PAGE>
this sales growth would have been 7%. The operating margin of
Patient Care during the first nine months of 1997 was 4.5% as
compared with 5.5% during the first nine months of 1996. This
decline is primarily attributable to a decline in the gross
profit margin in the 1997 period, largely as the result of market
pricing pressures.
Interest expense for the first nine months of 1997
totalled $8,476,000 as compared with $5,532,000 for the first
nine months of 1996. This increase was primarily attributable to
increased borrowings resulting from the third quarter 1996
purchase of the Roto-Rooter minority interest by Chemed.
Other income for the first nine months of 1997 declined
from $24,012,000 in the first nine months of 1996 to $16,172,000
first nine months of 1997. This decline was primarily
attributable to larger gains in the sales of investments recorded
during the 1996 period.
For the first nine months of 1997 the Company's
effective income tax rate was 38.3% as compared with an effective
rate of 37.6% for the first nine months of 1996. This increase
is largely attributable to a higher effective state and local
income tax rate during the 1997 period.
Chemed's income from continuing operations declined
from $16,360,000 ($1.66 per share) during the first nine months
of 1996 to $13,427,000 ($1.34 per share) during the first nine
months of 1997. Earnings for the nine-month periods included
aftertax gains from sales of investments of $7,652,000 ($.76 per
share) and $10,919,000 ($1.11 per share) in 1997 and 1996,
respectively.
Net income for the first nine months of 1997 totalled
$26,587,000 ($2.65 per share) and included income from
discontinued operations amounting to $13,160,000, largely
relating to the sale of Omnia and National Sanitary Supply during
the third quarter of 1997. Net income for 1996 amounted to
$22,349,000 ($2.27 per share) and included income from
discontinued operations of $5,989,000, largely income from the
operations of National Sanitary Supply and Omnia.
Page 14 of 18<PAGE>
PART II -- OTHER INFORMATION
- ----------------------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
<TABLE>
<CAPTION>
Exhibit SK 601 Page
No. Ref. No. Description No.
------- -------- ------------------ ----------
<C> <C> <S> <C>
1 (11) Statement re:
Computation of Per
Share Earnings E-1 -- E-2
2 (27) Financial Data
Schedule E-3 -- E-4
</TABLE>
(b) Reports on Form 8-K
---------------------------
A report on Form 8-K was filed dated October 9, 1997
reporting that:
(1) On September 24, 1997, a wholly owned subsidiary of the
Company had completed the sale of all of the issued and
outstanding shares of capital stock of its wholly owned
businesses comprising of Omnia Group to Banta
Corporation for $52.2 million; and
(2) On September 30, 1997 National Sanitary Supply Company
("National"), an 82%-owned subsidiary of the Company,
was merged with TFBD, a wholly owned subsidiary of
Unisource Worldwide, Inc. In exchange for its ownership
interest in National, Chemed received $120.2 million in
cash.
The report on Form 8-K included a description of the
transactions involved along with pro forma consolidated
income statements of the Company for the six month
periods ended June 30, 1997 and 1996 and for the year
ended December 31, 1996. A pro forma balance sheet as
of June 30, 1997 was also included. The pro forma
income statements presented the consolidated results of
operations of the Company, assuming the sale of Omnia
and National occurred on January 1 of each period
presented. The pro forma balance sheet presented the
consolidated financial position of the Company assuming
said transactions occurred on June 30, 1997.
Page 15 of 18<PAGE>
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.
Chemed Corporation
-------------------------
(Registrant)
Dated: November 13, 1997 By Naomi C. Dallob
---------------------- -------------------------
Naomi C. Dallob
Vice President and Secretary
Dated: November 13, 1997 By Arthur V. Tucker, Jr.
---------------------- -------------------------
Arthur V. Tucker, Jr.
Vice President and Controller
(Principal Accounting Officer)
Page 16 of 18<PAGE>
EXHIBIT 11
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
COMPUTATION OF PER SHARE EARNINGS
(in thousands except per share data)
Income from Continuing Operations
---------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------
1997 1996 1997 1996
-------- -------- -------- -------
<TABLE>
<CAPTION>
Computation of Earnings Per
Common and Common
<F01>
Equivalent Share (a):
- ---------------------------
<S> <C> <C> <C> <C>
Reported Income $ 2,106 $ 1,968 $13,427 $16,360
======= ======= ======= =======
Average number of shares
used to compute earnings
per common share 10,042 9,790 10,026 9,831
Effect of unexercised
stock options 49 58 40 62
------- ------- ------- -------
Average number of shares
used to compute earnings
per common and common
equivalent share 10,091 9,848 10,066 9,893
======= ======= ======= =======
Earnings per common and
common equivalent share $ 0.21 $ 0.20 $ 1.33 $ 1.65
======= ======= ======= =======
Computation of Earnings Per
Common Share Assuming
<F01>
Full Dilution (a):
- ---------------------------
Reported Income $ 2,106 $ 1,968 $13,427 $16,360
======= ======= ======= =======
Average number of shares
used to compute earnings
per common share 10,042 9,790 10,026 9,831
Effect of unexercised
stock options 59 63 59 63
------- ------- ------- -------
Average number of shares
used to compute earnings
per common share assuming
full dilution 10,101 9,853 10,085 9,894
======= ======= ======= =======
Earnings per common share
assuming full dilution $ 0.21 $ 0.20 $ 1.33 $ 1.65
======= ======= ======= =======
- -------------------
<F01>
(a) This calculation is submitted in accordance with Regulation S-K Item 601
(11) although it is not required by APB Opinion No. 15 because it results
in dilution of less than 3%.
</TABLE>
E - 1
Page 17 of 18<PAGE>
EXHIBIT 11
(continued)
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
COMPUTATION OF PER SHARE EARNINGS
(in thousands except per share data)
Net Income
----------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ------------------
1997 1996 1997 1996
-------- -------- -------- --------
<TABLE>
<CAPTION>
Computation of Earnings Per
Common and Common
<F02>
Equivalent Share (a):
- ---------------------------
<S> <C> <C> <C> <C>
Reported Income $11,808 $ 4,464 $26,587 $22,349
======= ======= ======= =======
Average number of shares
used to compute earnings
per common share 10,042 9,790 10,026 9,831
Effect of unexercised
stock options 49 58 40 62
------- -------- ------- -------
Average number of shares
used to compute earnings
per common and common
equivalent share 10,091 9,848 10,066 9,893
======= ======== ======= =======
Earnings per common and
common equivalent share $ 1.17 $ 0.45 $ 2.64 $ 2.26
======= ======== ======= =======
Computation of Earnings Per
Common Share Assuming
<F02>
Full Dilution (a):
- ---------------------------
Reported Income $11,808 $ 4,464 $26,587 $22,349
======= ======== ======= =======
Average number of shares
used to compute earnings
per common share 10,042 9,790 10,026 9,831
Effect of unexercised
stock options 59 63 59 63
------- -------- ------- -------
Average number of shares
used to compute earnings
per common share assuming
full dilution 10,101 9,853 10,085 9,894
======= ======== ======= =======
Earnings per common share
assuming full dilution $ 1.17 $ 0.45 $ 2.64 $ 2.26
======= ======== ======= =======
- --------------------
<F02>
(a) This calculation is submitted in accordance with Regulation S-K Item 601
(11) although it is not required by APB Opinion No. 15 because it results
in dilution of less than 3%.
</TABLE>
E - 2
Page 18 of 18<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM FORM 10-Q FOR THE
QUARTER ENDED SEPTEMBER 30, 1997 FOR CHEMED CORPORATION AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000019584
<NAME> CHEMED CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 131,495
<SECURITIES> 0
<RECEIVABLES> 39,708
<ALLOWANCES> (2,617)
<INVENTORY> 8,706
<CURRENT-ASSETS> 206,619
<PP&E> 84,463
<DEPRECIATION> (34,308)
<TOTAL-ASSETS> 495,479
<CURRENT-LIABILITIES> 135,072
<BONDS> 90,339
0
0
<COMMON> 12,923
<OTHER-SE> 214,314
<TOTAL-LIABILITY-AND-EQUITY> 495,479
<SALES> 12,879
<TOTAL-REVENUES> 251,110
<CGS> 8,958
<TOTAL-COSTS> 156,610
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 330
<INTEREST-EXPENSE> 8,476
<INCOME-PRETAX> 21,756
<INCOME-TAX> 8,329
<INCOME-CONTINUING> 13,427
<DISCONTINUED> 13,160
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,587
<EPS-PRIMARY> 2.65
<EPS-DILUTED> 2.65
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION FOR THE QUARTER
ENDED SEPTEMBER 30, 1996 FOR CHEMED CORPORATION AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000019584
<NAME> CHEMED CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 14,767
<SECURITIES> 100
<RECEIVABLES> 33,074
<ALLOWANCES> (1,567)
<INVENTORY> 8,260
<CURRENT-ASSETS> 88,052
<PP&E> 67,735
<DEPRECIATION> (27,761)
<TOTAL-ASSETS> 517,108
<CURRENT-LIABILITIES> 178,544
<BONDS> 57,946
0
0
<COMMON> 12,700
<OTHER-SE> 201,782
<TOTAL-LIABILITY-AND-EQUITY> 517,108
<SALES> 12,716
<TOTAL-REVENUES> 221,834
<CGS> 8,027
<TOTAL-COSTS> 135,571
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 491
<INTEREST-EXPENSE> 5,532
<INCOME-PRETAX> 30,971
<INCOME-TAX> 11,647
<INCOME-CONTINUING> 16,360
<DISCONTINUED> 5,989
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,349
<EPS-PRIMARY> 2.27
<EPS-DILUTED> 2.27
</TABLE>
