<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
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: 1-8351
CHEMED CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 31-0791746
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2600 Chemed Center, 255 East Fifth Street, Cincinnati, Ohio 45202-4726
(Address of principal executive offices) (Zip Code)
(513) 762-6900
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------
Capital Stock - Par Value $1 Per Share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
The aggregate market value of the voting stock held by non-affiliates of the
registrant, based upon the closing price of said stock on the New York Stock
Exchange -Composite Transaction Listing on March 17, 2000 ($31.125 per share),
was $302,080,940.
At March 17, 2000, 10,236,277 shares of Chemed Corporation Capital Stock
(par value $1 per share) were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document Where Incorporated
-------- ------------------
1999 Annual Report to Stockholders (Specified Portions) Parts I, II and IV
Proxy Statement for Annual Meeting Part III
to be held May 15, 2000.
<PAGE> 2
CHEMED CORPORATION
1999 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PAGE
PART I
Item 1. Business............................................................. 1
Item 2. Properties........................................................... 5
Item 3. Legal Proceedings.................................................... 8
Item 4. Submission of Matters to a Vote of Security Holders.................. 8
-- Executive Officers of the Registrant................................. 8
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.................................................. 9
Item 6. Selected Financial Data..............................................10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................................10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Item 8. Financial Statements and Supplementary Data..........................10
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure..................................11
PART III
Item 10. Directors and Executive Officers of the Registrant...................11
Item 11. Executive Compensation...............................................1l
Item 12. Security Ownership of Certain Beneficial Owners and
Management...........................................................11
Item 13. Certain Relationships and Related Transactions.......................11
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports
on Form 8-K..........................................................11
<PAGE> 3
PART I
ITEM 1. BUSINESS
GENERAL
Chemed Corporation was incorporated in Delaware in 1970 as a subsidiary
of W. R. Grace & Co. and succeeded to the business of W. R. Grace & Co.'s
Specialty Products Group as of April 30, 1971 and remained a subsidiary of W. R.
Grace & Co. until March 10, 1982. As used herein, "Company" refers to Chemed
Corporation, "Chemed" refers to Chemed Corporation and its subsidiaries and
"Grace" refers to W. R. Grace & Co. and its subsidiaries.
On March 10, 1982, the Company transferred to Dearborn Chemical Company,
a wholly owned subsidiary of the Company, the business and assets of the
Company's Dearborn Group, including the stock of certain subsidiaries within the
Dearborn Group, plus $185 million in cash, and Dearborn Chemical Company assumed
the Dearborn Group's liabilities. Thereafter, on March 10, 1982 the Company
transferred all of the stock of Dearborn Chemical Company to Grace in exchange
for 16,740,802 shares of the capital stock of the Company owned by Grace with
the result that Grace no longer has any ownership interest in the Company.
On December 31, 1986, the Company completed the sale of substantially all
of the business and assets of Vestal Laboratories, Inc., a wholly owned
subsidiary. The Company received cash payments aggregating approximately $67.4
million over the four-year period following the closing, the substantial portion
of which was received on December 31, 1986.
On April 2, 1991, the Company completed the sale of DuBois Chemicals,
Inc. ("DuBois"), a wholly owned subsidiary, to the Diversey Corporation
("Diversey"), then a subsidiary of The Molson Companies Ltd. Under the terms of
the sale, Diversey agreed to pay the Company net cash payments aggregating
$223,386,000, including deferred payments aggregating $32,432,000.
On December 21, 1992, the Company acquired The Veratex Corporation and
related businesses ("Veratex Group") from Omnicare, Inc., a publicly traded
company in which Chemed currently maintains a .5 percent ownership interest. The
purchase price was $62,120,000 in cash paid at closing, plus a post-closing
payment of $1,514,000 (paid in April 1993) based on the net assets of Veratex.
Effective January 1, 1994, the Company acquired all the capital stock of
Patient Care, Inc. ("Patient Care"), for cash payments aggregating $20,582,000,
including deferred payments with a present value of $6,582,000, plus 17,500
shares of the Company's Capital Stock. An additional cash payment of $1,000,000
was made on March 31, 1996 and another payment of $1,000,000 was made on March
31, 1997.
In July 1995, the Company's Omnia Group (formerly Veratex Group)
completed the sale of the business and assets of its Veratex Retail division to
Henry Schein, Inc. ("HSI") for $10 million in cash plus a $4.1 million note for
which payment was received in December 1995.
Effective September 17, 1996, the Company completed a merger of a
subsidiary of the Company, Chemed Acquisition Corp., and Roto-Rooter, Inc.
pursuant to a Tender Offer
1
<PAGE> 4
commenced on August 8, 1996 to acquire any and all of the outstanding shares of
Common Stock of Roto-Rooter, Inc. for $41.00 per share in cash.
On September 24, 1997, the Company completed the sale of its wholly owned
businesses comprising the Omnia Group to Banta Corporation for $50 million in
cash and $2.3 million in deferred payments.
Effective September 30, 1997, the Company completed a merger between its
81-percent-owned subsidiary, National Sanitary Supply Company, and a wholly
owned subsidiary of Unisource Worldwide, Inc. for $21.00 per share, with total
payments of $138.3 million.
The Company now conducts its business operations in three segments:
Roto-Rooter Group ("Roto-Rooter"), Patient Care and Service America Systems,
Inc. ("Service America").
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The required segment and geographic data for the Company's continuing
operations (as described below) for the three years ended December 31, 1997,
1998 and 1999, are shown in the "Segment Data" on pages 26 and 27 of the 1999
Annual Report to Stockholders and are incorporated herein by reference.
DESCRIPTION OF BUSINESS BY SEGMENT
The information called for by this item is included within Note 1 of the
Notes to Financial Statements appearing on page 17 of the 1999 Annual Report to
Stockholders and is incorporated herein by reference.
PRODUCT AND MARKET DEVELOPMENT
Each segment of Chemed's business engages in a continuing program for the
development and marketing of new services and products. While new products and
services and new market development are important factors for the growth of each
active segment of Chemed's business, Chemed does not expect that any new
products and services or marketing effort, including those in the development
stage, will require the investment of a material amount of Chemed's assets.
RAW MATERIALS
The principal raw materials needed for Chemed's United States
manufacturing operations are purchased from United States sources. No segment of
Chemed experienced any material raw material shortages during 1999, although
such shortages may occur in the future. Products manufactured and sold by
Chemed's active business segments generally may be reformulated to avoid the
adverse impact of a specific raw material shortage.
PATENTS, SERVICE MARKS AND LICENSES
The Roto-Rooter(R) trademark and service mark have been used and
advertised since 1935 by Roto-Rooter Corporation, a wholly owned subsidiary of
Roto-Rooter, Inc., a 100 percent-owned subsidiary of the Company. The
Roto-Rooter(R) marks are among the most highly recognized trademarks and service
marks in the United States. Chemed considers the Roto-Rooter(R) marks to be a
valuable asset and a significant factor in the marketing
2
<PAGE> 5
of Roto-Rooter's franchises, products and services and the products and services
provided by its franchisees.
COMPETITION
ROTO-ROOTER
All aspects of the sewer, drain, and pipe cleaning, HVAC services and
plumbing repair businesses are highly competitive. Competition is, however,
fragmented in most markets with local and regional firms providing the primary
competition. The principal methods of competition are advertising, range of
services provided, speed and quality of customer service, service guarantees,
and pricing.
No individual customer or market group is critical to the total sales of
this segment.
PATIENT CARE
The home healthcare services industry and, in particular, the nursing and
personal care segment is highly competitive. Patient Care competes with numerous
local, regional and national home healthcare services companies. Patient Care
competes on the basis of quality, cost-effectiveness and its ability to service
its referral base quickly throughout its regional markets.
Patient Care has contracts with several customers, the loss of any one or
more of which could have a material adverse effect on this segment.
SERVICE AMERICA
All aspects of the HVAC and appliance repair and maintenance service
industry are highly competitive. Competition is, however, fragmented in most
markets with local and regional firms providing the primary competition. The
principal methods of competition are advertising, range of services provided,
speed and quality of customer service, service guarantees, and pricing.
No individual customer or market group is critical to the total sales of
this segment.
RESEARCH AND DEVELOPMENT
Chemed engages in a continuous program directed toward the development of
new products and processes, the improvement of existing products and processes,
and the development of new and different uses of existing products. The research
and development expenditures from continuing operations have not been nor are
they expected to be material.
GOVERNMENT REGULATIONS
Roto-Rooter's franchising activities are subject to various federal and
state franchising laws and regulations, including the rules and regulations of
the Federal Trade Commission (the "FTC") regarding the offering or sale of
franchises. The rules and regulations of the FTC require that Roto-Rooter
provide all prospective franchisees
3
<PAGE> 6
with specific information regarding the franchise program and Roto-Rooter in the
form of a detailed franchise offering circular. In addition, a number of states
require Roto-Rooter to register its franchise offering prior to offering or
selling franchises in the state. Various state laws also provide for certain
rights in favor of franchisees, including (i) limitations on the franchisor's
ability to terminate a franchise except for good cause, (ii) restrictions on the
franchisor's ability to deny renewal of a franchise, (iii) circumstances under
which the franchisor may be required to purchase certain inventory of
franchisees when a franchise is terminated or not renewed in violation of such
laws, and (iv) provisions relating to arbitration. Roto-Rooter's ability to
engage in the plumbing repair business is also subject to certain limitations
and restrictions imposed by state and local licensing laws and regulations.
Service America's operations are regulated by the Florida and Arizona
Departments of Insurance. In accordance with certain Florida regulatory
requirements, Service America maintains cash with the Department of Insurance
and is also required to maintain additional unencumbered reserves. In addition,
Service America's air conditioning and appliance repair and maintenance business
is also subject to certain limitations imposed by state and local business laws
and regulations.
Patient Care's activities are subject to various federal and state laws
and regulations. Changes in the law, new interpretations of existing laws, or
changes in payment methodology, may have a dramatic effect on the definition of
permissible or impermissible activities, the relative costs associated with
doing business and the amount of reimbursement by both government and other
third-party payors. In addition to specific legislative and regulatory
influences, efforts to reduce the growth of the federal budget and the Medicare
and the Medicaid programs have resulted in enactment of the Balanced Budget Act
of 1997. This law contains several provisions affecting Medicare payment for the
coverage of home healthcare services which directly or indirectly, together with
Medicaid payments, accounted for 70 percent of Patient Care's net revenue in
1999. Certain of these provisions could have an adverse effect on Patient Care.
In addition, state legislatures periodically consider various healthcare reform
proposals. Congress and state legislatures can be expected to continue to review
and assess alternative healthcare delivery systems and payment methodologies,
and public debate of these issues can be expected to continue in the future. The
ultimate timing or effect of such additional legislative efforts cannot be
predicted and may impact Patient Care in different ways. No assurance can be
given that any such efforts will not have a material adverse effect on Patient
Care.
Certain of Patient Care's employees are subject to state laws and
regulations governing professional practice. Patient Care's operations are
subject to periodic survey by governmental and private accrediting entities to
assure compliance with applicable state licensing, and Medicare and Medicaid
certification and accreditation standards, as the case may be. From time to time
in the ordinary course of business, Patient Care, like other healthcare
companies, receives survey reports containing deficiencies for alleged failure
to comply with applicable requirements. Patient Care reviews such reports and
takes appropriate corrective action. The failure to effect such action or to
obtain, renew or maintain any of the required regulatory approvals,
certifications or licences could materially adversely affect Patient Care's
business, and could prevent the programs involved from offering products and
services to patients. There can be no assurance that either the states or the
federal government will not impose additional regulations upon the activities of
Patient Care which might materially adversely affect Patient Care.
4
<PAGE> 7
ENVIRONMENTAL MATTERS
Roto-Rooter's operations are subject to various federal, state, and local
laws and regulations regarding environmental matters and other aspects of the
operation of a sewer and drain cleaning, HVAC and plumbing services business.
For certain other activities, such as septic tank pumping, Roto-Rooter is
subject to state and local environmental health and sanitation regulations.
Service America's operations are also subject to various federal, state and
local laws and regulations regarding environmental matters and other aspects of
the operation of a HVAC and appliance repair and maintenance service industry.
In connection with the sale of DuBois to the Diversey Corporation, the
Company contractually assumed for a period of ten years the estimated liability
for potential environmental cleanup and related costs arising from the sale of
DuBois up to a maximum of $25,500,000. Based upon an updated assessment of the
Company's environmental-related liability by the Company's environmental
adviser, the Company has accrued $4,157,000 at December 31, 1999 to cover these
costs. Prior to the sale of DuBois, DuBois had been designated as a Potentially
Responsible Party ("PRP") at fourteen Superfund sites by the U.S. Environmental
Protection Agency ("USEPA"). With respect to all of these sites, the Company has
been unable to locate any records indicating it disposed of waste of any kind at
such sites. Nevertheless, it settled claims at five such sites at minimal cost.
In addition, because there was a number of other financially responsible
companies designated as PRPs relative to these sites, management believes that
it is unlikely that such actions will have a material effect on the Company's
financial condition or results of operations. With respect to one of these
sites, the Company's involvement is based on the location of one of its
manufacturing plants. Currently, the USEPA and the state governmental agency are
attempting to resolve jurisdictional issues, and action against PRPs is not
proceeding.
Chemed, to the best of its knowledge, is currently in compliance in all
material respects with the environmental laws and regulations affecting its
operations. Such environmental laws, regulations and enforcement proceedings
have not required Chemed to make material increases in or modifications to its
capital expenditures and they have not had a material adverse effect on sales or
net income. Capital expenditures for the purposes of complying with
environmental laws and regulations during 2000 and 2001 with respect to
continuing operations are not expected to be material in amount; there can be no
assurance, however, that presently unforeseen legislative or enforcement actions
will not require additional expenditures.
EMPLOYEES
On December 31, 1999, Chemed had a total of 7,817 employees; 7,769 were
located in the United States and 48 were in Canada.
ITEM 2. PROPERTIES
Chemed has plants and offices in various locations in the United States
and Canada. The major facilities operated by Chemed are listed below by industry
segment. All "owned" property is held in fee and is not subject to any major
encumbrance. Except as otherwise shown, the leases have terms ranging from one
year to eight years. Management does not foresee any difficulty in renewing or
replacing the remainder of its current leases. Chemed considers all of its major
operating properties to be maintained in good operating condition and to be
generally adequate for present and anticipated needs.
5
<PAGE> 8
<TABLE>
<CAPTION>
Location Type Owned Leased
-------- ---- ----- ------
ROTO-ROOTER GROUP
<S> <C> <C> <C>
Cincinnati, OH (1) Office and service 29,000 sq. ft. 28,000 sq. ft.
facilities
West Des Moines, Office, manufacturing and 29,000 sq. ft. --
IA distribution center facilities
Northeastern Office and service 31,000 sq. ft. 50,000 sq. ft.
U.S. Area (2) facilities
Central U.S. Office and service 26,000 sq. ft. 72,000 sq. ft.
Area (3) facilities
Mid-Atlantic Office and service 19,000 sq. ft. 30,000 sq. ft.
U.S. Area (4) facilities
Southeastern U.S. Office and service 18,000 sq. ft. 49,000 sq. ft.
Area (5) facilities
Western Central Office and service 19,000 sq. ft. 30,000 sq. ft.
U.S. Area (6) facilities
Western U.S. Office and service -- 60,000 sq. ft.
Area (7) facilities
Canada (8) Office and service -- 13,000 sq. ft.
facilities
PATIENT CARE
New Jersey (9) Office -- 56,000 sq. ft.
Connecticut (10) Office -- 42,000 sq. ft.
New York (11) Office -- 41,000 sq. ft.
Illinois (12) Office -- 2,000 sq. ft.
Ohio (13) Office -- 3,000 sq. ft.
Kentucky (14) Office -- 4,000 sq. ft.
Georgia (15) Office -- 2,000 sq. ft.
Washington, DC (16) Office -- 2,000 sq. ft.
Virginia (17) Office -- 2,000 sq. ft.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
Location Type Owned Leased
-------- ---- ----- ------
<S> <C> <C> <C>
Maryland (18) Office -- 2,000 sq. ft.
SERVICE AMERICA
Florida (19) Office and service 46,000 sq. ft. 46,000 sq. ft.
facilities
Arizona (20) Office and service -- 17,000 sq. ft.
facilities
CORPORATE
Cincinnati, OH (21) Corporate offices and 8,000 sq. ft. 38,000 sq. ft.
related facilities
- ---------------------------------
</TABLE>
(1) Includes 6,000 square feet that formerly housed a service facility.
(2) Comprising locations in Stoughton and Woburn, Massachusetts; West
Stratford; Connecticut; Farmingdale, Hawthorne, and Staten Island, New
York; Pennsauken and Brunswick, New Jersey; Levittown and Philadelphia,
Pennsylvania; Cranston, Rhode Island; and Newark, Delaware.
(3) Comprising locations in Adamsville and Birmingham, Alabama; Columbus,
Ohio; Indianapolis, Indiana; Memphis and Nashville, Tennessee;
Wilmerding and Pittsburgh, Pennsylvania; Buffalo, Rochester and West
Seneca, New York; Unionville, Connecticut; West Springfield,
Massachusetts; and St. Paul, Minnesota.
(4) Comprising locations in Baltimore and Jessup, Maryland; Independence,
Ohio; Virginia Beach and Fairfax, Virginia; Charlotte, Raleigh and
Durham, North Carolina; and Newnan, Georgia.
(5) Comprising locations in Atlanta, Decatur and Kennesaw, Georgia; Ft.
Lauderdale, Jacksonville, Miami, Orlando, Longwood, Tampa and Daytona
Beach, Florida
(6) Comprising locations in Minneapolis and Oakdale, Minnesota; Addison,
Thornton, Schaumburg and Glenview, Illinois; and St. Louis, Missouri.
(7) Comprising locations in Houston, San Antonio and Austin, Texas; Commerce
City, Colorado; Honolulu, Hawaii; Menlo Park, California; and Tacoma and
Bremerton, Washington.
(8) Comprising locations in Port Coquitlam, British Columbia; Montreal,
Quebec; and Winnipeg, Manitoba.
(9) Comprising locations in Princeton, Jersey City; Ridgewood, Montclair,
Westfield, and West Orange, New Jersey.
7
<PAGE> 10
(10) Comprising locations in Greenwich, Madison, Naugatuch, Newington,
Norwalk, New Haven, Stratford, Bridgeport and Danbury, Connecticut.
(11) Comprising locations in Brooklyn, Manhattan, Queens, Bronx and Staten
Island, New York.
(12) Comprising locations in Chicago and Glenview, Illinois.
(13) Comprising location in Columbus, Ohio.
(14) Comprising location in Louisville, Kentucky.
(15) Comprising location in Conyers, Georgia.
(16) Comprising location in Washington, D.C.
(17) Comprising location in Alexandria, Virginia.
(18) Comprising locations in Towson and Rockville, Maryland.
(19) Comprising locations in Pompano Beach, Miami, Fort Myers, St.
Petersburg, Orlando, West Palm Beach, Deerfield Beach and Delray Beach,
Florida.
(20) Comprising locations in Phoenix and Tucson, Arizona.
(21) Excludes 90,000 square feet in current Cincinnati, Ohio office
facilities that are sublet to outside parties - portions of this space
may revert to the Company beginning in 2000. Includes 36,000 square feet
leased for the Company's corporate office facilities.
ITEM 3. LEGAL PROCEEDINGS
On November 9, 1998, Paul Voet, who is an Executive Vice President
and a director of the Company, filed a lawsuit against the Company in the Court
of Common Pleas, Hamilton County, Ohio, in connection with the Company's sale of
its majority owned subsidiary, National Sanitary Supply Company, alleging that
the Company breached his employment agreement due to a material reduction in his
title, authority or responsibility. Mr. Voet is seeking a money judgment in the
principal amount of $6 million. The Company disputes these claims and believes
that the disposition of this matter will not have a material effect on the
financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
Name Age Office First Elected
- ------------------ --- ------------------------------------ --------------
<S> <C> <C> <C>
Edward L. Hutton 80 Chairman and Chief Executive Officer November 3, 1993 (1)
Kevin J. McNamara 46 President August 2, 1994 (2)
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Paul C. Voet 53 Executive Vice President May 20, 1991 (3)
Timothy S. O'Toole 44 Executive Vice President and May 18, 1992 (4)
Treasurer
Sandra E. Laney 56 Senior Vice President and Chief November 3, 1993 (5)
Administrative Officer
Arthur V. Tucker, 50 Vice President and Controller May 20, 1991 (6)
Jr.
</TABLE>
(1) Mr. E. L. Hutton is the Chairman and Chief Executive Officer of the
Company and has held these positions since November 1993. Previously,
from April 1970 to November 1993, Mr. E. L. Hutton held the positions of
President and Chief Executive Officer of the Company. Mr. E. L. Hutton
is the father of Mr. T. C. Hutton, a director and a Vice President of
the Company.
(2) Mr. K. J. McNamara is President of the Company and has held this
position since August 1994. Previously, he served as an Executive Vice
President, Secretary and General Counsel of the Company, since November
1993, August 1986 and August 1986, respectively. He previously held the
position of Vice President of the Company, from August 1986 to May 1992.
(3) Mr. P. C. Voet is an Executive Vice President of the Company and has
held this position since May 1991. From May 1988 to November 1993, he
served the Company as Vice Chairman.
(4) Mr. T. S. O'Toole is an Executive Vice President and the Treasurer of
the Company and has held these positions since May 1992 and February
1989, respectively. Mr. O'Toole is Chairman and Chief Executive Officer
of Patient Care, Inc. and has held these positions since April 1995.
(5) Ms. S. E. Laney is Senior Vice President and the Chief Administrative
Officer of the Company and has held these positions since November 1993
and May 1991, respectively. Previously, from May 1984 to November 1993,
she held the position of Vice President of the Company.
(6) Mr. A. V. Tucker, Jr. is a Vice President and Controller of the Company
and has held these positions since February 1989. From May 1983 to
February 1989, he held the position of Assistant Controller of the
Company.
Each executive officer holds office until the annual election at the next
annual organizational meeting of the Board of Directors of the Company which is
scheduled to be held on May 15, 2000.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's Capital Stock (par value $1 per share) is traded on the New
York Stock Exchange under the symbol CHE. The range of the high and low sale
prices on the New York Stock Exchange and dividends paid per share for each
quarter of 1998 and 1999 are set forth below.
9
<PAGE> 12
Closing
-------
Dividends Paid
High Low Per Share
- -------------------------------------------------------------------------------
1999
First Quarter $33 13/16 $25 3/4 $.53
Second Quarter 33 7/8 26 5/16 .53
Third Quarter 33 7/16 29 1/4 .53
Fourth Quarter 30 1/8 24 15/16 .53
1998
First Quarter $42-5/16 $38 $.53
Second Quarter 41-1/4 32-9/16 .53
Third Quarter 34-11/16 25-9/16 .53
Fourth Quarter 34-7/8 28-1/8 .53
In November 1999, the Board of Directors adopted a new dividend policy,
whereby future dividends were reduced from $.53 per quarter to $.10 per quarter.
Future dividends are necessarily dependent upon the Company's earnings
and financial condition, compliance with certain debt covenants and other
factors not presently determinable.
As of March 17, 2000, there were approximately 4,118 stockholders of
record of the Company's Capital Stock. This number only includes stockholders of
record and does not include stockholders with shares beneficially held for them
in nominee name or within clearinghouse positions of brokers, banks or other
institutions.
ITEM 6. SELECTED FINANCIAL DATA.
The information called for by this Item for the five years ended
December 31, 1999 is set forth on pages 28 and 29 of the 1999 Annual Report to
Stockholders and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information called for by this Item is set forth on pages 32
through 35 of the 1999 Annual Report to Stockholders and is incorporated herein
by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company has an insignificant number of financial instruments held
for trading purposes and does not hedge any of its market risks with derivative
instruments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements, together with the report thereon
of PricewaterhouseCoopers LLP dated February 1, 2000, appearing on pages 11
through 27 of the 1999 Annual Report to Stockholders, along with the
Supplementary Data (Unaudited Summary of Quarterly Results) appearing on page
31, are incorporated herein by reference.
10
<PAGE> 13
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The directors of the Company are:
Edward L. Hutton Sandra E. Laney
Rick L. Arquilla Spencer S. Lee
James H. Devlin Kevin J. McNamara
Charles H. Erhart, Jr. John M. Mount
Joel F. Gemunder Timothy S. O'Toole
Patrick P. Grace Donald E. Saunders
Thomas C. Hutton Paul C. Voet
Walter L. Krebs George J. Walsh III
The additional information required under this Item with respect to the
directors and executive officers is set forth in the Company's 2000 Proxy
Statement and in Part I hereof under the caption "Executive Officers of the
Registrant" and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information required under this Item is set forth in the Company's 2000
Proxy Statement, which is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required under this Item is set forth in the Company's 2000
Proxy Statement, which is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required under this Item is set forth in the Company's 2000
Proxy Statement, which is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K.
EXHIBITS
3.1 Certificate of Incorporation of Chemed Corporation.*
3.2 By-Laws of Chemed Corporation.*
4.1. Offer to Exchange Chemed Capital Trust Convertible Preferred
Securities for Shares of Capital Stock, dated as of December 23,
1999.*
11
<PAGE> 14
4.2 Chemed Capital Trust, dated as of December 23, 1999.*
4.3 Amended and Restated Declaration of Trust of Chemed Capital
Trust, dated February 7, 2000.*
10.1 Agreement and Plan of Merger among Diversey U.S. Holdings, Inc.,
D. C. Acquisition Inc., Chemed Corporation and DuBois Chemicals,
Inc., dated as of February 25, 1991.*
10.2 Stock Purchase Agreement between Omnicare, Inc. and Chemed
Corporation, dated as of August 5, 1992.*
10.3 Agreement and Plan of Merger among National Sanitary Supply
Company, Unisource Worldwide, Inc. and TFBD, Inc. dated as of
August 11, 1997.*
10.4 1981 Stock Incentive Plan, as amended through May 20, 1991.*,**
10.5 1983 Incentive Stock Option Plan, as amended through May 20,
1991.*,**
10.6 1986 Stock Incentive Plan, as amended through May 20, 1991.*,**
10.7 1988 Stock Incentive Plan, as amended through May 20, 1991.*,**
10.8 1993 Stock Incentive Plan.*,**
10.9 1995 Stock Incentive Plan.*,**
10.10 1997 Stock Incentive Plan.*,**
10.11 1999 Stock Incentive Plan. **
10.12 1999 Long-Term Employee Incentive Plan.
10.13 Employment Contracts with Executives.*,**
10.14 Amendment to Employment Contracts with Executives.**
10.15 Amendment No. 3 to Employment Contract with James H. Devlin.*,**
10.16 Employment Contracts with John M. Mount and Walter L. Krebs.*,**
10.17 Employment Contract with Lawrence J. Gillis.*,**
10.18 Amendment No. 7 to Employment Agreement with Edward L.
Hutton.*,**
10.19 Excess Benefits Plan, as restated and amended, effective April
1, 1997.*,**
10.20 Non-Employee Directors' Deferred Compensation Plan.*,**
10.21 Chemed/Roto-Rooter Savings & Retirement Plan, effective
January 1, 1999.*,**
10.22 Stock Purchase Agreement by and Among Banta Corporation, Chemed
Corporation and OCR Holding Company as of September 24, 1997.*
10.25 Directors Emeriti Plan.*,**
12
<PAGE> 15
10.26 Second Amendment to Split Dollar Agreement with Executives.**
10.27 Split Dollar Agreement - II with James H. Devlin.*,**
10.28 Split Dollar Agreement with Sandra E. Laney.*,**
10.29 Split Dollar Agreement with Executives.*,**
10.30 Split Dollar Agreement with Edward L. Hutton.*,**
10.31 Split Dollar Agreement with Paul C. Voet.*,**
10.32 Split Dollar Agreement with John M. Mount**
10.33 Split Dollar Agreement with Spencer S. Lee**
10.34 Split Dollar Agreement with Rick L. Arquilla**
10.35 Form of Promissory Note under the Executive Stock Purchase
Plan.**
13. 1999 Annual Report to Stockholders.
21. Subsidiaries of Chemed Corporation.
23. Consent of Independent Accountants.
24. Powers of Attorney.
27. Financial Data Schedule +
* This exhibit is being filed by means of incorporation by reference (see
Index to Exhibits on page E-1). Each other exhibit is being filed with
this Annual Report on Form 10-K.
** Management contract or compensatory plan or arrangement.
+ Not filed herewith.
FINANCIAL STATEMENT SCHEDULE
See Index to Financial Statements and Financial Statement Schedule on
page S-1.
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended December 31,
1999.
13
<PAGE> 16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
March 29, 2000 By /s/ Edward L. Hutton
----------------------------------
Edward L. Hutton
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C> <C>
/s/ Edward L. Hutton Chairman and Chief
- ------------------------- Executive Officer and a
Edward L. Hutton Director (Principal
Executive Officer)
/s/ Timothy S. O'Toole Executive Vice President
- ------------------------ and Treasurer and a
Timothy S. O'Toole Director
(Principal Financial Officer)
/s/ Arthur V.Tucker,Jr. Vice President and March 29, 2000
- ----------------------- Controller
Arthur V. Tucker, Jr. (Principal Accounting
Officer)
Rick L. Arquilla* Sandra E. Laney*
James H. Devlin* Spencer S. Lee*
Charles H. Erhart, Jr.* Kevin J. McNamara*
Joel F. Gemunder* John M. Mount* --Directors
Patrick P. Grace* Donald E. Saunders*
Thomas C. Hutton* Paul C. Voet*
Walter L. Krebs* George J. Walsh III*
- -------------------------------
</TABLE>
* Naomi C. Dallob by signing her name hereto signs this document on behalf
of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
March 29, 2000 /s/ Naomi C. Dallob
- ----------------------- ----------------------------------
Date Naomi C. Dallob
(Attorney-in-Fact)6-14
14
<PAGE> 17
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
1997, 1998 AND 1999
<TABLE>
<CAPTION>
CHEMED CORPORATION CONSOLIDATED FINANCIAL PAGE(s)
STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
<S> <C>
Report of Independent Accountants............................... 11*
Statement of Accounting Policies.................................12*
Consolidated Statement of Income.................................13*
Consolidated Balance Sheet.......................................14*
Consolidated Statement of Cash Flows.............................15*
Consolidated Statement of Changes in Stockholders' Equity........16*
Consolidated Statement of Comprehensive Income...................16*
Notes to Financial Statements....................................17-25*
Segment Data.....................................................26-27*
Report of Independent Accountants on Financial Statement
Schedule.......................................................S-2
Schedule II -- Valuation and Qualifying Accounts.................S-3-S-4
</TABLE>
* Indicates page numbers in Chemed Corporation 1999 Annual Report to
Stockholders.
- -------------------------------
The consolidated financial statements of Chemed Corporation listed above,
appearing in the 1999 Annual Report to Stockholders, are incorporated herein by
reference. The Financial Statement Schedule should be read in conjunction with
the consolidated financial statements listed above. Schedules not included have
been omitted because they are not applicable or the required information is
shown in the financial statements or notes thereto as listed above.
S-1
<PAGE> 18
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of Chemed Corporation
Our audits of the consolidated financial statements referred to in our report
dated February 1, 2000 appearing on page 11 of the 1999 Annual Report to
Stockholders of Chemed Corporation (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule listed in Item 14 of
this Form 10-K. In our opinion, the Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
- ---------------------------------
PRICEWATERHOUSECOOPERS LLP
Cincinnati, Ohio
February 1, 2000
S-2
<PAGE> 19
SCHEDULE II
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
VALUATION AND QUALIFYING ACCOUNTS (a)
(in thousands)
Dr/(Cr)
<TABLE>
<CAPTION>
ADDITIONS
-------------------------------------
(Charged) (Charged) Applicable
Credited Credited to
Balance at to Costs to Other Companies Balance
Beginning and Accounts Acquired Deductions at End
Description of Period Expenses (b) in Period (c) of Period
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Allowances for doubtful
accounts (d)
For the year 1999......... $ (3,601) $(2,235) $ - $ (25) $ 1,307 $ (4,554)
========= ======== ======== ========= ======== =========
For the year 1998......... $ (2,626) $(2,452) $ - $ (15) $ 1,492 $ (3,601)
========= ======== ======== ========= ======= =========
For the year 1997......... $ (1,583) $ (702) $ - $ (974) $ 633 $ (2,626)
========= ======== ======== ========= ======= =========
Allowances for doubtful
accounts - notes
receivable (e)
For the year 1999......... $ (23) $ - $ - $ - $ 23 $ -
========= ======== ======== ========= ======= =========
For the year 1998......... $ (23) $ - $ - $ - $ - $ (23)
========= ======== ======== ========= ======= =========
For the year 1997......... $ (120) $ - $ - $ - $ 97 $ (23)
========= ======== ======== ========= ======= =========
</TABLE>
S-3
<PAGE> 20
<TABLE>
<CAPTION>
(Charged) (Charged) Applicable
Credited Credited to
Balance at to Costs to Other Companies Balance
Beginning and Accounts Acquired Deductions at End
Description of Period Expenses (b) in Period (c) of Period
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Valuation allowance for
available-for-sale securities
For the year 1999......... $ 20,406 $ - $(10,525) $ - $ (4,661) $ 5,220
========= ======== ========= ========= ======== ========
For the year 1998......... $ 30,705 $ - $ 2,290 $ - $(12,589) $ 20,406
========= ======== ========= ========= ========= ========
For the year 1997......... $ 40,096 $ - $ 2,844 $ - $(12,235) $ 30,705
========= ======== ========= ========= ========= ========
</TABLE>
- -------------------------
(a) Amounts are presented on a continuing operations basis.
(b) With respect to the valuation allowance for available-for-sale
securities, amounts charged or credited to other accounts comprise
decreases or increases in net unrealized holding gains.
(c) With respect to allowances for doubtful accounts, deductions include
accounts considered uncollectible or written off, payments, companies
divested, etc. With respect to valuation allowance for
available-for-sale securities, deductions comprise net realized gains
on sales of investments.
(d) Classified in consolidated balance sheet as a reduction of accounts
receivable.
(e) Classified in consolidated balance sheet as a reduction of other
assets.
S-4
<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Page Number
or
Incorporation by Reference
--------------------------
Exhibit File No. and Previous
Number Filing Date Exhibit No.
- ------- ------------ -----------
<S> <C> <C> <C>
3.1 Certificate of Incorporation of Form S-3 4.1
Chemed Corporation Reg. No. 33-44177
11/26/91
3.2 By-Laws of Chemed Corporation Form 10-K 2
3/28/89
4.1 Offer to Exchange Chemed Capital Form T-3 T3E-1
Trust Convertible Trust Preferred 12/23/99
Securities for Shares of Capital
Stock, dated as of 12/23/99
4.2 Chemed Capital Trust, dated Schedule 13E-4 (b)(1)
as of 12/23/99 12/23/99
4.3 Amended and Restated Declaration Schedule 13E-4A (b)(2)
of Trust of Chemed Capital Trust, 2/7/00, Amendment
dated February 7, 2000 No. 2
10.1 Agreement and Plan of Merger Form 8-K 1
among Diversey U.S. Holdings, 3/11/91
Inc., D.C. Acquisition Inc.,
Chemed Corporation and DuBois
Chemicals, Inc., dated as of
February 25, 1991
10.2 Stock Purchase Agreement between Form 10-K 5
Omnicare, Inc. and Chemed 3/25/93
Corporation dated as of August 5,
1992
10.3 Agreement and Plan of Merger Form 8-K 1
among National Sanitary 10/13/97
Supply Company, Unisource
Worldwide, Inc. and TFBD, Inc.
10.4 1981 Stock Incentive Plan, as Form 10- K 7
amended through May 20, 1991 3/27/92
10.5 1983 Incentive Stock Option Plan, Form 10-K 8
as amended through May 20, 1991 3/27/92
10.6 1986 Stock Incentive Plan, as Form 10-K 9
amended through May 20, 1991 3/27/92
10.7 1988 Stock Incentive Plan, as Form 10-K 10
amended through May 20, 1991 3/27/92
</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>
Page Number
or
Incorporation by Reference
--------------------------
Exhibit File No. and Previous
Number Filing Date Exhibit No.
- ------- ------------ -----------
<S> <C> <C> <C>
10.8 1993 Stock Incentive Plan Form 10-K 10.8
3/29/94
10.9 1995 Stock Incentive Plan Form 10-K 10.14
3/28/96
10.10 1997 Stock Incentive Plan Form 10-K 10.10
3/27/98
10.11 1999 Stock Incentive Plan *
10.12 1999 Long-Term Employee *
Incentive Plan
10.13 Employment Contracts with Form 10-K 10.12
Executives 3/28/89
10.14 Amendment to Employment
Contracts with Executives *
10.15 Amendment No. 3 to Employment Form 10-K 10.22
Contract with James H. Devlin 3/27/98
10.16 Employment Contracts with John Form 10-K 10.23
M. Mount and Walter L. Krebs 3/27/98
10.17 Employment Contract with Lawrence Form 10-K 10.24
J. Gillis 3/27/98
10.18 Amendment No. 7 to Employment Form 10-K 10.18
Agreement with Edward L. Hutton 3/27/97
10.19 Excess Benefits Plan, as restated Form 10-K 10.9
and amended, effective April 1, 3/27/98
1997
10.20 Non-Employee Directors' Deferred Form 10-K 10.10
Compensation Plan 3/24/88
10.21 Chemed/Roto-Rooter Savings & Form 10-K 10.25
Retirement Plan, effective 3/25/99
January 1, 1999
</TABLE>
2
<PAGE> 23
<TABLE>
<CAPTION>
Page Number
or
Incorporation by Reference
--------------------------
Exhibit File No. and Previous
Number Filing Date Exhibit No.
- ------- ------------ -----------
<S> <C> <C> <C>
10.22 Stock Purchase Plan by and Form 8-K 10.21
among Banta Corporation, Chemed 10/13/97
Corporation and OCR Holding
Company
10.25 Directors Emeriti Plan Form 10-Q 10.11
5/12/88
10.26 Second Amendment to Split Dollar *
Agreement with Executives
10.27 Split Dollar Agreement - II Form 10-K 10.27
with James H. Devlin 3/25/99
10.28 Split Dollar Agreement with Form 10-K 10.27
Sandra E. Laney 3/25/99
10.29 Split Dollar Agreements Form 10-K 10.15
with Executives 3/28/96
10.30 Split Dollar Agreement with Form 10-K 10.16
Edward L. Hutton 3/28/96
10.31 Split Dollar Agreement with Form 10-K 10.17
Paul C. Voet 3/28/96
10.32 Split Dollar Agreement with *
John M. Mount
10.33 Split Dollar Agreement with *
Spencer S. Lee
10.34 Split Dollar Agreement with *
Rick L. Arquilla
10.35 Form of Promissory Note under *
the Executive Stock Purchase Plan
13 1999 Annual Report to Stockholders *
21 Subsidiaries of Chemed Corporation *
23 Consent of Independent Accountants *
</TABLE>
3
<PAGE> 24
24 Powers of Attorney *
27 Financial Data Schedule *
- -----------------------------
* Filed herewith.
4
<PAGE> 1
EXHIBIT 10.11
================================================================================
- --------------------------------------------------------------------------------
CHEMED CORPORATION
1999 STOCK INCENTIVE PLAN
MAY 17, 1999
- --------------------------------------------------------------------------------
================================================================================
<PAGE> 2
CHEMED CORPORATION
1999 STOCK INCENTIVE PLAN
1. PURPOSES: The purposes of this Plan are (a) to secure for the
Corporation the benefits of incentives inherent in ownership of Capital Stock by
Key Employees, (b) to encourage Key Employees to increase their interest in the
future growth and prosperity of the Corporation and to stimulate and sustain
constructive and imaginative thinking by Key Employees, (c) to further the
identification of interest of those who hold positions of major responsibility
in the Corporation and its Subsidiaries with the interests of the Corporation's
stockholders, (d) to induce the employment or continued employment of Key
Employees and (e) to enable the Corporation to compete with other organizations
offering similar or other incentives in obtaining and retaining the services of
competent executives.
2. DEFINITIONS: Unless otherwise required by the context, the following
terms when used in this Plan shall have the meanings set forth in this Section
2.
BOARD OF DIRECTORS: The Board of Directors of the Corporation.
CAPITAL STOCK: The Capital Stock of the Corporation, par value
$l.00 per share, or such other class of shares or other securities as may be
applicable pursuant to the provisions of Section 8.
CORPORATION: Chemed Corporation, a Delaware corporation.
FAIR MARKET VALUE: As applied to any date, the mean between
the high and low sales prices of a share of Capital Stock on the principal stock
exchange on which the Corporation is listed, or, if it is not so listed, the
mean between the bid and the ask prices of a share of Capital Stock in the
over-the-counter market as reported by the National Association of Securities
Dealers Automated Quotation System on such date or, if no such sales or prices
were made or quoted on such date, on the next preceding date on which there were
sales or quotes of Capital Stock on such exchange or market, as the case may be;
provided, however, that, if the Capital Stock is not so listed or quoted, Fair
Market Value shall be determined in accordance with the method approved by the
Compensation/Incentive Committee, and, provided further, if any of the foregoing
methods of determining Fair Market Value shall not be consistent with the
regulations of the Secretary of the Treasury or his delegate at the time
applicable to a Stock Incentive of the type involved, Fair Market Value in the
case of such Stock Incentive shall be determined in
<PAGE> 3
accordance with such regulations and shall mean the value as so
determined.
COMPENSATION/INCENTIVE COMMITTEE: The Compensation/Incentive
Committee designated to administer this Plan pursuant to the provisions of
Section 10.
INCENTIVE COMPENSATION: Bonuses, extra and other compensation
payable in addition to a salary or other base amount, whether contingent or
discretionary or required to be paid pursuant to an agreement, resolution or
arrangement, and whether payable currently or on a deferred basis, in cash,
Capital Stock or other property, awarded by the Corporation or a Subsidiary
prior or subsequent to the date of the approval and adoption of this Plan by the
stockholders of the Corporation.
KEY EMPLOYEE: An employee of the Corporation or of a
Subsidiary who in the opinion of the Compensation/Incentive Committee can
contribute significantly to the growth and successful operations of the
Corporation or a Subsidiary. The grant of a Stock Incentive to an employee by
the Compensation/Incentive Committee shall be deemed a determination by the
Compensation/Incentive Committee that such employee is a Key Employee. For the
purposes of this Plan, a director or officer of the Corporation or of a
Subsidiary shall be deemed an employee regardless of whether or not such
director or officer is on the payroll of, or otherwise paid for services by, the
Corporation or a Subsidiary.
OPTION: An option to purchase shares of Capital Stock.
PERFORMANCE UNIT: A unit representing a share of Capital
Stock, subject to a Stock Award, the issuance, transfer or retention of which is
contingent, in whole or in part, upon attainment of a specified performance
objective or objectives, including, without limitation, objectives determined by
reference to or changes in (a) the Fair Market Value, book value or earnings per
share of Capital Stock, or (b) sales and revenues, income, profits and losses,
return on capital employed, or net worth of the Corporation (on a consolidated
or unconsolidated basis) or of any one or more of its groups, divisions,
Subsidiaries or departments, or (c) a combination of two or more of the
foregoing factors.
PLAN: The 1999 Stock Incentive Plan herein set forth as the
same may from time to time be amended.
STOCK AWARD: An issuance or transfer of shares of Capital
Stock at the time the Stock Incentive is granted or as soon thereafter as
practicable, or an undertaking to issue or
2
<PAGE> 4
transfer such shares in the future, including, without limitation, such an
issuance, transfer or undertaking with respect to Performance Units.
STOCK INCENTIVE: A stock incentive granted under this Plan in
one of the forms provided for in Section 3.
SUBSIDIARY: A corporation or other form of business
association of which shares (or other ownership interests) having 50% or more of
the voting power are owned or controlled, directly or indirectly, by the
Corporation.
3. GRANTS OF STOCK INCENTIVES:
(a) Subject to the provisions of this Plan, the
Compensation/Incentive Committee may at any time, or from time to time, grant
Stock Incentives under this Plan to, and only to, Key Employees.
(b) Stock Incentives may be granted in the following forms:
(i) a Stock Award, or
(ii) an Option, or
(iii) a combination of a Stock Award and an
Option.
4. STOCK SUBJECT TO THIS PLAN:
(a) Subject to the provisions of paragraph (c) and (d) of this
Section 4 and of Section 8, the aggregate number of shares of Capital Stock
which may be issued or transferred pursuant to Stock Incentives granted under
this Plan shall not exceed 450,000 shares; provided, however, that the maximum
aggregate number of shares of Capital Stock which may be issued or transferred
pursuant to Stock Incentives in the form of Stock Awards, shall not exceed
135,000 shares.
(b) The maximum aggregate number of shares of Capital Stock
which may be issued or transferred under the Plan to directors of the
Corporation or of a Subsidiary shall not exceed 100,000 shares.
(c) Authorized but unissued shares of Capital Stock and shares
of Capital Stock held in the treasury, whether acquired by the Corporation
specifically for use under this Plan or otherwise, may be used, as the
Compensation/Incentive Committee may from time to time determine, for purposes
of this Plan, provided, however, that any shares acquired or held by the
Corporation for the purposes of this Plan shall, unless and until transferred to
a Key Employee in accordance with the terms and conditions of a Stock Incentive,
be and at all times remain treasury shares of the Corporation, irrespective of
whether such
3
<PAGE> 5
shares are entered in a special account for purposes of this Plan, and shall be
available for any corporate purpose.
(d) If any shares of Capital Stock subject to a Stock
Incentive shall not be issued or transferred and shall cease to be issuable or
transferable because of the termination, in whole or in part, of such Stock
Incentive or for any other reason, or if any such shares shall, after issuance
or transfer, be reacquired by the Corporation or a Subsidiary because of an
employee's failure to comply with the terms and conditions of a Stock Incentive,
the shares not so issued or transferred, or the shares so reacquired by the
Corporation or a Subsidiary shall no longer be charged against any of the
limitations provided for in paragraphs (a) or (b) of this Section 4 and may
again be made subject to Stock Incentives.
5. STOCK AWARDS: Stock Incentives in the form of Stock Awards shall be
subject to the following provisions:
(a) A Stock Award shall be granted only in payment of
Incentive Compensation that has been earned or as Incentive Compensation to be
earned, including, without limitation, Incentive Compensation awarded
concurrently with or prior to the grant of the Stock Award.
(b) For the purposes of this Plan, in determining the value of
a Stock Award, all shares of Capital Stock subject to such Stock Award shall be
valued at not less than 100 percent of the Fair Market Value of such shares on
the date such Stock Award is granted, regardless of whether or when such shares
are issued or transferred to the Key Employee and whether or not such shares are
subject to restrictions which affect their value.
(c) Shares of Capital Stock subject to a Stock Award may be
issued or transferred to the Key Employee at the time the Stock Award is
granted, or at any time subsequent thereto, or in installments from time to
time, as the Compensation/Incentive Committee shall determine. In the event that
any such issuance or transfer shall not be made to the Key Employee at the time
the Stock Award is granted, the Compensation/Incentive Committee may provide for
payment to such Key Employee, either in cash or in shares of Capital Stock from
time to time or at the time or times such shares shall be issued or transferred
to such Key Employee, of amounts not exceeding the dividends which would have
been payable to such Key Employee in respect of such shares (as adjusted under
Section 8) if they had been issued or transferred to such Key Employee at the
time such Stock Award was granted. Any amount payable in shares of Capital Stock
under the terms of a Stock Award may, at the discretion of the Corporation, be
paid in cash, on each date on which delivery of shares would otherwise have been
made, in an amount equal to the Fair Market Value on
4
<PAGE> 6
such date of the shares which would otherwise have been delivered.
(d) A Stock Award shall be subject to such terms and
conditions, including, without limitation, restrictions on sale or other
disposition of the Stock Award or of the shares issued or transferred pursuant
to such Stock Award, as the Compensation/Incentive Committee may determine;
provided, however, that upon the issuance or transfer of shares pursuant to a
Stock Award, the recipient shall, with respect to such shares, be and become a
stockholder of the Corporation fully entitled to receive dividends, to vote and
to exercise all other rights of a stockholder except to the extent otherwise
provided in the Stock Award. Each Stock Award shall be evidenced by a written
instrument in such form as the Compensation/Incentive Committee shall determine,
provided the Stock Award is consistent with this Plan and incorporates it by
reference.
6. OPTIONS: Stock Incentives in the form of Options shall be subject to
the following provisions:
(a) The maximum aggregate number of Stock Incentives in the
form of Options which may be granted to an individual employee of the
Corporation or a Subsidiary in any calendar year shall not exceed 50,000
Options.
(b) Upon the exercise of an Option, the purchase price shall
be paid in cash or, if so provided in the Option or in a resolution adopted by
the Compensation/Incentive Committee(and subject to such terms and conditions as
are specified in the Option or by the Compensation/Incentive Committee), in
shares of Capital Stock or in a combination of cash and such shares. Shares of
Capital Stock thus delivered shall be valued at their Fair Market Value on the
date of exercise. Subject to the provisions of Section 8, the purchase price per
share shall be not less than 100 percent of the Fair Market Value of a share of
Capital Stock on the date the Option is granted.
(c) Each Option shall be exercisable in full or in part six
months after the date the Option is granted, or may become exercisable in one or
more installments and at such time or times, as the Compensation/Incentive
Committee shall determine. Unless otherwise provided in the Option, an Option,
to the extent it is or becomes exercisable, may be exercised at any time in
whole or in part until the expiration or termination of the Option. Any term or
provision in any outstanding Option specifying when the Option is exercisable or
that it be exercisable in installments may be modified at any time during the
life of the Option by the Compensation/Incentive Committee, provided, however,
no such modification of an outstanding Option shall, without the consent of the
optionee, adversely affect any
5
<PAGE> 7
Option theretofore granted to him. An Option will become immediately exercisable
in full if at any time during the term of the Option the Corporation obtains
actual knowledge that any of the following events has occurred, irrespective of
the applicability of any limitation on the number of shares then exercisable
under the Option: (1) any person within the meaning of Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (the "1934 Act"), other than the
Corporation or any of its subsidiaries, has become the beneficial owner, within
the meaning of Rule 13d-3 under the 1934 Act, of 30 percent or more of the
combined voting power of the Corporation's then outstanding voting securities;
(2) the expiration of a tender offer or exchange offer, other than an offer by
the Corporation, pursuant to which 20 percent or more of the shares of the
Corporation's Capital Stock have been purchased; (3) the stockholders of the
Corporation have approved (i) an agreement to merge or consolidate with or into
another corporation and the Corporation is not the surviving corporation or (ii)
an agreement to sell or otherwise dispose of all or substantially all of the
assets of the Corporation (including a plan of liquidation); or (4) during any
period of two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors cease for any reason to constitute at least a
majority thereof, unless the nomination for the election by the Corporation's
stockholders of each new director was approved by a vote of at least one-half of
the persons who were directors at the beginning of the two-year period.
(d) Each Option shall be exercisable during the life of the
optionee only by him or a transferee or assignee permitted by paragraph (g) of
this Section (6) and, after his death, only by his estate or by a person who
acquired the right to exercise the Option pursuant to one of the provisions of
paragraph (g) of this Section (6). An Option, to the extent that it shall not
have been exercised, shall terminate when the optionee ceases to be an employee
of the Corporation or a Subsidiary, unless he ceases to be an employee because
of his resignation with the consent of the Compensation/Incentive Committee
(which consent may be given before or after resignation), or by reason of his
death, incapacity or retirement under a retirement plan of the Corporation or a
Subsidiary. Except as provided in the next sentence, if the optionee ceases to
be an employee by reason of such resignation, the Option shall terminate three
months after he ceases to be an employee. If the optionee ceases to be an
employee by reason of such death, incapacity or retirement, or if he should die
during the three-month period referred to in the preceding sentence, the Option
shall terminate fifteen months after he ceases to be an employee. Where an
Option is exercised more than three months after the optionee ceased to be an
employee, the Option may be exercised only to the extent it could have been
exercised three months after he ceased to be an employee. A leave of absence for
military or governmental
6
<PAGE> 8
service or for other purposes shall not, if approved by the
Compensation/Incentive Committee, be deemed a termination of employment within
the meaning of this paragraph (d); provided, however, that an Option may not be
exercised during any such leave of absence. Notwithstanding the foregoing
provisions of this paragraph (d) or any other provision of this Plan, no Option
shall be exercisable after expiration of the term for which the Option was
granted, which shall in no event exceed ten years. Where an Option is granted
for a term of less than ten years, the Compensation/Incentive Committee, may, at
any time prior to the expiration of the Option, extend its term for a period
ending not later than ten years from the date the Option was granted.
(e) Options shall be granted for such lawful consideration as
the Compensation/Incentive Committee shall determine.
(f) Neither the Corporation nor any Subsidiary may directly or
indirectly lend any money to any person for the purpose of assisting him to
purchase or carry shares of Capital Stock issued or transferred upon the
exercise of an Option.
(g) No Option nor any right thereunder may be assigned or
transferred by the optionee except:
(i) by will or the laws of descent and
distribution;
(ii) pursuant to a qualified domestic relations
order as defined by the Internal Revenue
Code of 1986, as amended, or by the Employee
Retirement Income Security Act of 1974, as
amended, or the rules thereunder;
(iii) by an optionee who, at the time of the
transfer, is not subject to the provisions
of Section 16 of the 1934 Act, provided such
transfer is to, or for the benefit of
(including but not limited to trusts for the
benefit of), the optionee's spouse or lineal
descendants of the optionee's parents; or
(iv) by an optionee who, at the time of the
transfer, is subject to the provisions of
Section 16 of the 1934 Act, to the extent,
if any, such transfer would be permitted
under Securities and Exchange Commission
Rule 16b-3 or any successor rule thereto, as
such rule or any successor rule thereto may
be in effect at the time of the transfer.
If so provided in the Option or if so authorized by the
Compensation/Incentive Committee and subject to such terms and conditions as are
specified in the Option or by the Compensation/Incentive Committee, the
Corporation may, upon or
7
<PAGE> 9
without the request of the holder of the Option and at any time or from time to
time, cancel all or a portion of the Option then subject to exercise and either
(i) pay the holder an amount of money equal to the excess, if any, of the Fair
Market Value, at such time or times, of the shares subject to the portion of the
Option so canceled over the aggregate purchase price of such shares, or (ii)
issue or transfer shares of Capital Stock to the holder with a Fair Market
Value, at such time or times, equal to such excess.
(h) Each Option shall be evidenced by a written instrument,
which shall contain such terms and conditions, and shall be in such form, as the
Compensation/Incentive Committee may determine, provided the Option is
consistent with this Plan and incorporates it by reference. Notwithstanding the
preceding sentence, an Option, if so granted by the Compensation/Incentive
Committee, may include restrictions and limitations in addition to those
provided for in this Plan.
(i) Any federal, state or local withholding taxes payable by
an optionee or awardee upon the exercise of an Option or upon the removal of
restrictions of a Stock Award shall be paid in cash or in such other form as the
Compensation/Incentive Committee may authorize from time to time, including the
surrender of shares of Capital Stock or the withholding of shares of Capital
Stock to be issued to the optionee or awardee. All such shares so surrendered or
withheld shall be valued at Fair Market Value on the date such are surrendered
to the Corporation or authorized to be withheld.
7. COMBINATIONS OF STOCK AWARDS AND OPTIONS: Stock Incentives
authorized by paragraph (b)(iii) of Section 3 in the form of combinations of
Stock Awards and Options shall be subject to the following provisions:
(a) A Stock Incentive may be a combination of any form of
Stock Award with any form of Option; provided, however, that the terms and
conditions of such Stock Incentive pertaining to a Stock Award are consistent
with Section 5 and the terms and conditions of such Stock Incentive pertaining
to an Option are consistent with Section 6.
(b) Such combination Stock Incentive shall be subject to such
other terms and conditions as the Compensation/Incentive Committee may
determine, including, without limitation, a provision terminating in whole or in
part a portion thereof upon the exercise in whole or in part of another portion
thereof. Such combination Stock Incentive shall be evidenced by a written
instrument in such form as the Compensation/Incentive Committee shall determine,
provided it is consistent with this Plan and incorporates it by reference.
8
<PAGE> 10
8. ADJUSTMENT PROVISIONS: In the event that any recapitalization, or
reclassification, split-up or consolidation of shares of Capital Stock shall be
effected, or the outstanding shares of Capital Stock are, in connection with a
merger or consolidation of the Corporation or a sale by the Corporation of all
or a part of its assets, exchanged for a different number or class of shares of
stock or other securities of the Corporation or for shares of the stock or other
securities of any other corporation, or a record date for determination of
holders of Capital Stock entitled to receive a dividend payable in Capital Stock
shall occur (a) the number and class of shares or other securities that may be
issued or transferred pursuant to Stock Incentives, (b) the number and class of
shares or other securities which have not been issued or transferred under
outstanding Stock Incentives, (c) the purchase price to be paid per share or
other security under outstanding Options, and (d) the price to be paid per share
or other security by the Corporation or a Subsidiary for shares or other
securities issued or transferred pursuant to Stock Incentives which are subject
to a right of the Corporation or a Subsidiary to reacquire such shares or other
securities, shall in each case be equitably adjusted.
9. TERM: This Plan shall be deemed adopted and shall become effective
on the date it is approved and adopted by the stockholders of the Corporation.
No Stock Incentives shall be granted under this Plan after May 17, 2009.
10. ADMINISTRATION:
(a) The Plan shall be administered by the
Compensation/Incentive Committee, which shall consist of no fewer than three
persons designated by the Board of Directors. Grants of Stock Incentives may be
granted by the Compensation/Incentive Committee either in or without
consultation with employees, but, anything in this Plan to the contrary
notwithstanding, the Compensation/Incentive Committee shall have full authority
to act in the matter of selection of all Key Employees and in determining the
number of Stock Incentives to be granted to them.
(b) The Compensation/Incentive Committee may establish such
rules and regulations, not inconsistent with the provisions of this Plan, as it
deems necessary to determine eligibility to participate in this Plan and for the
proper administration of this Plan, and may amend or revoke any rule or
regulation so established. The Compensation/Incentive Committee may make such
determinations and interpretations under or in connection with this Plan as it
deems necessary or advisable. All such rules, regulations, determinations and
interpretations shall be binding and conclusive upon the Corporation, its
Subsidiaries, its stockholders and all employees, and upon their respective
legal
9
<PAGE> 11
representatives, beneficiaries, successors and assigns and upon all other
persons claiming under or through any of them.
(c) Members of the Board of Directors and members of the
Compensation/Incentive Committee acting under this Plan shall be fully protected
in relying in good faith upon the advice of counsel and shall incur no liability
except for gross negligence or willful misconduct in the performance of their
duties.
11. GENERAL PROVISIONS:
(a) Nothing in this Plan nor in any instrument executed
pursuant hereto shall confer upon any employee any right to continue in the
employ of the Corporation or a Subsidiary, or shall affect the right of the
Corporation or of a Subsidiary to terminate the employment of any employee with
or without cause.
(b) No shares of Capital Stock shall be issued or transferred
pursuant to a Stock Incentive unless and until all legal requirements applicable
to the issuance or transfer of such shares, in the opinion of counsel to the
Corporation, have been complied with. In connection with any such issuance or
transfer, the person acquiring the shares shall, if requested by the
Corporation, give assurances, satisfactory to counsel to the Corporation, that
the shares are being acquired for investment and not with a view to resale or
distribution thereof and assurances in respect of such other matters as the
Corporation or a Subsidiary may deem desirable to assure compliance with all
applicable legal requirements.
(c) No employee (individually or as a member of a group), and
no beneficiary or other person claiming under or through him, shall have any
right, title or interest in or to any shares of Capital Stock allocated or
reserved for the purposes of this Plan or subject to any Stock Incentive except
as to such shares of Capital Stock, if any, as shall have been issued or
transferred to him.
(d) The Corporation or a Subsidiary may, with the approval of
the Compensation/Incentive Committee, enter into an agreement or other
commitment to grant a Stock Incentive in the future to a person who is or will
be a Key Employee at the time of grant, and, notwithstanding any other provision
of this Plan, any such agreement or commitment shall not be deemed the grant of
a Stock Incentive until the date on which the Company takes action to implement
such agreement or commitment.
(e) In the case of a grant of a Stock Incentive to an employee
of a Subsidiary, such grant may, if the Compensation/Incentive Committee so
directs, be implemented by the Corporation issuing or transferring the shares,
if any,
10
<PAGE> 12
covered by the Stock Incentive to the Subsidiary, for such lawful consideration
as the Compensation/Incentive Committee may specify, upon the condition or
understanding that the Subsidiary will transfer the shares to the employee in
accordance with the terms of the Stock Incentive specified by the
Compensation/Incentive Committee pursuant to the provisions of this Plan.
Notwithstanding any other provision hereof, such Stock Incentive may be issued
by and in the name of the Subsidiary and shall be deemed granted on the date it
is approved by the Compensation/Incentive Committee, on the date it is delivered
by the Subsidiary or on such other date between said two dates, as the
Compensation/Incentive Committee shall specify.
(f) The Corporation or a Subsidiary may make such provisions
as it may deem appropriate for the withholding of any taxes which the
Corporation or a Subsidiary determines it is required to withhold in connection
with any Stock Incentive.
(g) Nothing in this Plan is intended to be a substitute for,
or shall preclude or limit the establishment or continuation of, any other plan,
practice or arrangement for the payment of compensation or fringe benefits to
employees generally, or to any class or group of employees, which the
Corporation or any Subsidiary or other affiliate now has or may hereafter
lawfully put into effect, including, without limitation, any retirement,
pension, group insurance, stock purchase, stock bonus or stock option plan.
12. AMENDMENTS AND DISCONTINUANCE:
(a) This Plan may be amended by the Board of Directors upon
the recommendation of the Compensation/Incentive Committee, provided that,
without the approval of the stockholders of the Corporation, no amendment shall
be made which (i) increases the aggregate number of shares of Capital Stock that
may be issued or transferred pursuant to Stock Incentives as provided in
paragraph (a) of Section 4, (ii) increases the maximum aggregate number of
shares of Capital Stock that may be issued or transferred under the Plan to
directors of the Corporation or of a Subsidiary as provided in paragraph (b) of
Section 4, (iii) increases the maximum aggregate number of Stock Incentives, in
the form of Options, which may be granted to an individual employee as provided
in paragraph (a) of Section 6, (iv) withdraws the administration of this Plan
from the Compensation/Incentive Committee, (v) permits any person who is not at
the time a Key Employee of the Corporation or of a Subsidiary to be granted a
Stock Incentive, (vi) permits any Option to be exercised more than ten years
after the date it is granted, (vii) amends Section 9 to extend the date set
forth therein or (viii) amends this Section 12.
11
<PAGE> 13
(b) Notwithstanding paragraph (a) of this Section 12, the
Board of Directors may amend the Plan to take into account changes in applicable
securities laws, federal income tax laws and other applicable laws. Should the
provisions of Rule 16b-3, or any successor rule, under the Securities Exchange
Act of 1934 be amended, the Board of Directors may amend the Plan in accordance
therewith.
(c) The Board of Directors may by resolution adopted by a
majority of the entire Board of Directors discontinue this Plan.
(d) No amendment or discontinuance of this Plan by the Board
of Directors or the stockholders of the Corporation shall, without the consent
of the employee, adversely affect any Stock Incentive theretofore granted to
him.
12
<PAGE> 1
EXHIBIT 10.12
================================================================================
- --------------------------------------------------------------------------------
CHEMED CORPORATION
1999 LONG-TERM EMPLOYEE INCENTIVE PLAN
MAY 17, 1999
- --------------------------------------------------------------------------------
================================================================================
<PAGE> 2
CHEMED CORPORATION
1999 LONG-TERM EMPLOYEE INCENTIVE PLAN
1. PURPOSES: The purposes of this Plan are (a) to secure for the
Corporation the benefits of incentives inherent in ownership of Capital Stock by
Employees, (b) to encourage Employees to increase their interest in the future
growth and prosperity of the Corporation and to stimulate and sustain
constructive and imaginative thinking by Employees, (c) to further the
identification of interest of employees of the Corporation and its Subsidiaries
with the interests of the Corporation's stockholders, (d) to induce the
employment or continued employment of Employees and (e) to enable the
Corporation to compete with other organizations offering similar or other
incentives in obtaining and retaining the services of employees.
2. DEFINITIONS: Unless otherwise required by the context, the following
terms when used in this Plan shall have the meanings set forth in this Section
2.
BOARD OF DIRECTORS: The Board of Directors of the Corporation.
CAPITAL STOCK: The Capital Stock of the Corporation, par value
$l.00 per share, or such other class of shares or other securities as may be
applicable pursuant to the provisions of Section 8.
CORPORATION: Chemed Corporation, a Delaware corporation.
FAIR MARKET VALUE: As applied to any date, the mean between
the high and low sales prices of a share of Capital Stock on the principal stock
exchange on which the Corporation is listed, or, if it is not so listed, the
mean between the bid and the ask prices of a share of Capital Stock in the
over-the-counter market as reported by the National Association of Securities
Dealers Automated Quotation System on such date or, if no such sales or prices
were made or quoted on such date, on the next preceding date on which there were
sales or quotes of Capital Stock on such exchange or market, as the case may be;
provided, however, that, if the Capital Stock is not so listed or quoted, Fair
Market Value shall be determined in accordance with the method approved by the
Compensation/Incentive Committee, and, provided further, if any of the foregoing
methods of determining Fair Market Value shall not be consistent with the
regulations of the Secretary of the Treasury or his delegate at the time
applicable to a Stock Incentive of the type involved, Fair Market Value in the
case of such Stock Incentive shall be determined in
<PAGE> 3
accordance with such regulations and shall mean the value as so determined.
COMPENSATION/INCENTIVE COMMITTEE: The Compensation/Incentive
Committee designated to administer this Plan pursuant to the provisions of
Section 10.
INCENTIVE COMPENSATION: Bonuses, extra and other compensation
payable in addition to a salary or other base amount, whether contingent or
discretionary or required to be paid pursuant to an agreement, resolution or
arrangement, and whether payable currently or on a deferred basis, in cash,
Capital Stock or other property, awarded by the Corporation or a Subsidiary
prior or subsequent to the date of the approval and adoption of this Plan by the
stockholders of the Corporation.
EMPLOYEE: An employee of the Corporation or of a Subsidiary
who in the opinion of the Compensation/Incentive Committee can contribute
significantly to the growth and successful operations of the Corporation or a
Subsidiary. The grant of a Stock Incentive to an employee by the Compensation/
Incentive Committee shall be deemed a determination by the
Compensation/Incentive Committee that such employee is an Employee. For the
purposes of this Plan, a director or officer of the Corporation or of a
Subsidiary shall not be deemed an Employee.
OPTION: An option to purchase shares of Capital Stock.
PERFORMANCE UNIT: A unit representing a share of Capital
Stock, subject to a Stock Award, the issuance, transfer or retention of which is
contingent, in whole or in part, upon attainment of a specified performance
objective or objectives, including, without limitation, objectives determined by
reference to or changes in (a) the Fair Market Value, book value or earnings per
share of Capital Stock, or (b) sales and revenues, income, profits and losses,
return on capital employed, or net worth of the Corporation (on a consolidated
or unconsolidated basis) or of any one or more of its groups, divisions,
Subsidiaries or departments, or (c) a combination of two or more of the
foregoing factors.
PLAN: The 1999 Long-Term Employee Incentive Plan herein set
forth as the same may from time to time be amended.
STOCK AWARD: An issuance or transfer of shares of Capital
Stock at the time the Stock Incentive is granted or as soon thereafter as
practicable, or an undertaking to issue or transfer such shares in the future,
including, without
2
<PAGE> 4
limitation, such an issuance, transfer or undertaking with respect to
Performance Units.
STOCK INCENTIVE: A stock incentive granted under this Plan in
one of the forms provided for in Section 3.
SUBSIDIARY: A corporation or other form of business
association of which shares (or other ownership interests) having 50% or more of
the voting power are owned or controlled, directly or indirectly, by the
Corporation.
3. GRANTS OF STOCK INCENTIVES:
(a) Subject to the provisions of this Plan, the
Compensation/Incentive Committee may at any time, or from time to time, grant
Stock Incentives under this Plan to, and only to, Employees.
(b) Stock Incentives may be granted in the following forms:
(i) a Stock Award, or
(ii) an Option, or
(iii) a combination of a Stock Award and an
Option.
4. STOCK SUBJECT TO THIS PLAN:
(a) Subject to the provisions of paragraph (c) and (d) of this
Section 4 and of Section 8, the aggregate number of shares of Capital Stock
which may be issued or transferred pursuant to Stock Incentives granted under
this Plan shall not exceed 250,000 shares; provided, however, that the maximum
aggregate number of shares of Capital Stock which may be issued or transferred
pursuant to Stock Incentives in the form of Stock Awards, shall not exceed
135,000 shares.
(b) Authorized but unissued shares of Capital Stock and shares
of Capital Stock held in the treasury, whether acquired by the Corporation
specifically for use under this Plan or otherwise, may be used, as the
Compensation/Incentive Committee may from time to time determine, for purposes
of this Plan, provided, however, that any shares acquired or held by the
Corporation for the purposes of this Plan shall, unless and until transferred to
an Employee in accordance with the terms and conditions of a Stock Incentive, be
and at all times remain treasury shares of the Corporation, irrespective of
whether such shares are entered in a special account for purposes of this Plan,
and shall be available for any corporate purpose.
(c) If any shares of Capital Stock subject to a Stock
Incentive shall not be issued or transferred and shall cease to
3
<PAGE> 5
be issuable or transferable because of the termination, in whole or in part, of
such Stock Incentive or for any other reason, or if any such shares shall, after
issuance or transfer, be reacquired by the Corporation or a Subsidiary because
of an Employee's failure to comply with the terms and conditions of a Stock
Incentive, the shares not so issued or transferred, or the shares so reacquired
by the Corporation or a Subsidiary shall no longer be charged against any of the
limitations provided for in paragraphs (a) or (b) of this Section 4 and may
again be made subject to Stock Incentives.
5. STOCK AWARDS: Stock Incentives in the form of Stock Awards shall be
subject to the following provisions:
(a) A Stock Award shall be granted only in payment of
Incentive Compensation that has been earned or as Incentive Compensation to be
earned, including, without limitation, Incentive Compensation awarded
concurrently with or prior to the grant of the Stock Award.
(b) For the purposes of this Plan, in determining the value of
a Stock Award, all shares of Capital Stock subject to such Stock Award shall be
valued at not less than 100 percent of the Fair Market Value of such shares on
the date such Stock Award is granted, regardless of whether or when such shares
are issued or transferred to the Employee and whether or not such shares are
subject to restrictions which affect their value.
(c) Shares of Capital Stock subject to a Stock Award may be
issued or transferred to the Employee at the time the Stock Award is granted, or
at any time subsequent thereto, or in installments from time to time, as the
Compensation/Incentive Committee shall determine. In the event that any such
issuance or transfer shall not be made to the Employee at the time the Stock
Award is granted, the Compensation/Incentive Committee may provide for payment
to such Employee, either in cash or in shares of Capital Stock from time to time
or at the time or times such shares shall be issued or transferred to such
Employee, of amounts not exceeding the dividends which would have been payable
to such Employee in respect of such shares (as adjusted under Section 8) if they
had been issued or transferred to such Employee at the time such Stock Award was
granted. Any amount payable in shares of Capital Stock under the terms of a
Stock Award may, at the discretion of the Corporation, be paid in cash, on each
date on which delivery of shares would otherwise have been made, in an amount
equal to the Fair Market Value on such date of the shares which would otherwise
have been delivered.
(d) A Stock Award shall be subject to such terms and
conditions, including, without limitation, restrictions on sale
4
<PAGE> 6
or other disposition of the Stock Award or of the shares issued or transferred
pursuant to such Stock Award, as the Compensation/Incentive Committee may
determine; provided, however, that upon the issuance or transfer of shares
pursuant to a Stock Award, the recipient shall, with respect to such shares, be
and become a stockholder of the Corporation fully entitled to receive dividends,
to vote and to exercise all other rights of a stockholder except to the extent
otherwise provided in the Stock Award. Each Stock Award shall be evidenced by a
written instrument in such form as the Compensation/Incentive Committee shall
determine, provided the Stock Award is consistent with this Plan and
incorporates it by reference.
6. OPTIONS: Stock Incentives in the form of Options shall be subject to
the following provisions:
(a) The maximum aggregate number of Stock Incentives in the
form of Options which may be granted to an individual Employee in any calendar
year shall not exceed 25,000 Options.
(b) Upon the exercise of an Option, the purchase price shall
be paid in cash or, if so provided in the Option or in a resolution adopted by
the Compensation/Incentive Committee(and subject to such terms and conditions as
are specified in the Option or by the Compensation/Incentive Committee), in
shares of Capital Stock or in a combination of cash and such shares. Shares of
Capital Stock thus delivered shall be valued at their Fair Market Value on the
date of exercise. Subject to the provisions of Section 8, the purchase price per
share shall be not less than 100 percent of the Fair Market Value of a share of
Capital Stock on the date the Option is granted.
(c) Each Option shall be exercisable in full or in part six
months after the date the Option is granted, or may become exercisable in one or
more installments and at such time or times, as the Compensation/Incentive
Committee shall determine. Unless otherwise provided in the Option, an Option,
to the extent it is or becomes exercisable, may be exercised at any time in
whole or in part until the expiration or termination of the Option. Any term or
provision in any outstanding Option specifying when the Option is exercisable or
that it be exercisable in installments may be modified at any time during the
life of the Option by the Compensation/Incentive Committee, provided, however,
no such modification of an outstanding Option shall, without the consent of the
optionee, adversely affect any Option theretofore granted to him. An Option will
become immediately exercisable in full if at any time during the term of the
Option the Corporation obtains actual knowledge that any of the following events
has occurred, irrespective of the applicability of any limitation on the number
of shares then exercisable under the Option: (1) any person within the meaning
5
<PAGE> 7
of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "1934
Act"), other than the Corporation or any of its subsidiaries, has become the
beneficial owner, within the meaning of Rule 13d-3 under the 1934 Act, of 30
percent or more of the combined voting power of the Corporation's then
outstanding voting securities; (2) the expiration of a tender offer or exchange
offer, other than an offer by the Corporation, pursuant to which 20 percent or
more of the shares of the Corporation's Capital Stock have been purchased; (3)
the stockholders of the Corporation have approved (i) an agreement to merge or
consolidate with or into another corporation and the Corporation is not the
surviving corporation or (ii) an agreement to sell or otherwise dispose of all
or substantially all of the assets of the Corporation (including a plan of
liquidation); or (4) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors cease for any
reason to constitute at least a majority thereof, unless the nomination for the
election by the Corporation's stockholders of each new director was approved by
a vote of at least one-half of the persons who were directors at the beginning
of the two-year period.
(d) Each Option shall be exercisable during the life of the
optionee only by him or a transferee or assignee permitted by paragraph (g) of
this Section (6) and, after his death, only by his estate or by a person who
acquired the right to exercise the Option pursuant to one of the provisions of
paragraph (g) of this Section (6). An Option, to the extent that it shall not
have been exercised, shall terminate when the optionee ceases to be an employee
of the Corporation or a Subsidiary, unless he ceases to be an employee because
of his resignation with the consent of the Compensation/Incentive Committee
(which consent may be given before or after resignation), or by reason of his
death, incapacity or retirement under a retirement plan of the Corporation or a
Subsidiary. Except as provided in the next sentence, if the optionee ceases to
be an employee by reason of such resignation, the Option shall terminate three
months after he ceases to be an employee. If the optionee ceases to be an
employee by reason of such death, incapacity or retirement, or if he should die
during the three-month period referred to in the preceding sentence, the Option
shall terminate fifteen months after he ceases to be an employee. Where an
Option is exercised more than three months after the optionee ceased to be an
employee, the Option may be exercised only to the extent it could have been
exercised three months after he ceased to be an employee. A leave of absence for
military or governmental service or for other purposes shall not, if approved by
the Compensation/Incentive Committee, be deemed a termination of employment
within the meaning of this paragraph (d); provided, however, that an Option may
not be exercised during any such leave of absence. Notwithstanding the foregoing
provisions of this paragraph (d) or any other provision of this Plan, no Option
6
<PAGE> 8
shall be exercisable after expiration of the term for which the Option was
granted, which shall in no event exceed ten years. Where an Option is granted
for a term of less than ten years, the Compensation/Incentive Committee, may, at
any time prior to the expiration of the Option, extend its term for a period
ending not later than ten years from the date the Option was granted.
(e) Options shall be granted for such lawful consideration as
the Compensation/Incentive Committee shall determine.
(f) Neither the Corporation nor any Subsidiary may directly or
indirectly lend any money to any person for the purpose of assisting him to
purchase or carry shares of Capital Stock issued or transferred upon the
exercise of an Option.
(g) No Option nor any right thereunder may be assigned or
transferred by the optionee except:
(i) by will or the laws of descent and
distribution;
(ii) pursuant to a qualified domestic relations
order as defined by the Internal Revenue
Code of 1986, as amended, or by the Employee
Retirement Income Security Act of 1974, as
amended, or the rules thereunder;
(iii) by an optionee who, at the time of the
transfer, is not subject to the provisions
of Section 16 of the 1934 Act, provided such
transfer is to, or for the benefit of
(including but not limited to trusts for the
benefit of), the optionee's spouse or lineal
descendants of the optionee's parents; or
(iv) by an optionee who, at the time of the
transfer, is subject to the provisions of
Section 16 of the 1934 Act, to the extent,
if any, such transfer would be permitted
under Securities and Exchange Commission
Rule 16b-3 or any successor rule thereto, as
such rule or any successor rule thereto may
be in effect at the time of the transfer.
If so provided in the Option or if so authorized by the
Compensation/Incentive Committee and subject to such terms and conditions as are
specified in the Option or by the Compensation/Incentive Committee, the
Corporation may, upon or without the request of the holder of the Option and at
any time or from time to time, cancel all or a portion of the Option then
subject to exercise and either (i) pay the holder an amount of money equal to
the excess, if any, of the Fair Market Value, at such time or times, of the
shares subject to the portion of the
7
<PAGE> 9
Option so canceled over the aggregate purchase price of such shares, or (ii)
issue or transfer shares of Capital Stock to the holder with a Fair Market
Value, at such time or times, equal to such excess.
(h) Each Option shall be evidenced by a written instrument,
which shall contain such terms and conditions, and shall be in such form, as the
Compensation/Incentive Committee may determine, provided the Option is
consistent with this Plan and incorporates it by reference. Notwithstanding the
preceding sentence, an Option, if so granted by the Compensation/Incentive
Committee, may include restrictions and limitations in addition to those
provided for in this Plan.
(i) Any federal, state or local withholding taxes payable by
an optionee or awardee upon the exercise of an Option or upon the removal of
restrictions of a Stock Award shall be paid in cash or in such other form as the
Compensation/Incentive Committee may authorize from time to time, including the
surrender of shares of Capital Stock or the withholding of shares of Capital
Stock to be issued to the optionee or awardee. All such shares so surrendered or
withheld shall be valued at Fair Market Value on the date such are surrendered
to the Corporation or authorized to be withheld.
7. COMBINATIONS OF STOCK AWARDS AND OPTIONS: Stock Incentives
authorized by paragraph (b)(iii) of Section 3 in the form of combinations of
Stock Awards and Options shall be subject to the following provisions:
(a) A Stock Incentive may be a combination of any form of
Stock Award with any form of Option; provided, however, that the terms and
conditions of such Stock Incentive pertaining to a Stock Award are consistent
with Section 5 and the terms and conditions of such Stock Incentive pertaining
to an Option are consistent with Section 6.
(b) Such combination Stock Incentive shall be subject to such
other terms and conditions as the Compensation/Incentive Committee may
determine, including, without limitation, a provision terminating in whole or in
part a portion thereof upon the exercise in whole or in part of another portion
thereof. Such combination Stock Incentive shall be evidenced by a written
instrument in such form as the Compensation/Incentive Committee shall determine,
provided it is consistent with this Plan and incorporates it by reference.
8. ADJUSTMENT PROVISIONS: In the event that any recapitalization, or
reclassification, split-up or consolidation of shares of Capital Stock shall be
effected, or the outstanding shares of Capital Stock are, in connection with a
merger or
8
<PAGE> 10
consolidation of the Corporation or a sale by the Corporation of all or a part
of its assets, exchanged for a different number or class of shares of stock or
other securities of the Corporation or for shares of the stock or other
securities of any other corporation, or a record date for determination of
holders of Capital Stock entitled to receive a dividend payable in Capital Stock
shall occur (a) the number and class of shares or other securities that may be
issued or transferred pursuant to Stock Incentives, (b) the number and class of
shares or other securities which have not been issued or transferred under
outstanding Stock Incentives, (c) the purchase price to be paid per share or
other security under outstanding Options, and (d) the price to be paid per share
or other security by the Corporation or a Subsidiary for shares or other
securities issued or transferred pursuant to Stock Incentives which are subject
to a right of the Corporation or a Subsidiary to reacquire such shares or other
securities, shall in each case be equitably adjusted.
9. TERM: This Plan shall be deemed adopted and shall become effective
on May 17, 1999. No Stock Incentives shall be granted under this Plan after May
17, 2009.
10. ADMINISTRATION:
(a) The Plan shall be administered by the
Compensation/Incentive Committee, which shall consist of no fewer than three
persons designated by the Board of Directors. Grants of Stock Incentives may be
granted by the Compensation/Incentive Committee either in or without
consultation with employees, but, anything in this Plan to the contrary
notwithstanding, the Compensation/Incentive Committee shall have full authority
to act in the matter of selection of all Employees and in determining the number
of Stock Incentives to be granted to them.
(b) The Compensation/Incentive Committee may establish such
rules and regulations, not inconsistent with the provisions of this Plan, as it
deems necessary to determine eligibility to participate in this Plan and for the
proper administration of this Plan, and may amend or revoke any rule or
regulation so established. The Compensation/Incentive Committee may make such
determinations and interpretations under or in connection with this Plan as it
deems necessary or advisable. All such rules, regulations, determinations and
interpretations shall be binding and conclusive upon the Corporation, its
Subsidiaries, its stockholders and all employees, and upon their respective
legal representatives, beneficiaries, successors and assigns and upon all other
persons claiming under or through any of them.
(c) Members of the Board of Directors and members of the
Compensation/Incentive Committee acting under this Plan shall
9
<PAGE> 11
be fully protected in relying in good faith upon the advice of counsel and shall
incur no liability except for gross negligence or willful misconduct in the
performance of their duties.
11. GENERAL PROVISIONS:
(a) Nothing in this Plan nor in any instrument executed
pursuant hereto shall confer upon any employee any right to continue in the
employ of the Corporation or a Subsidiary, or shall affect the right of the
Corporation or of a Subsidiary to terminate the employment of any employee with
or without cause.
(b) No shares of Capital Stock shall be issued or transferred
pursuant to a Stock Incentive unless and until all legal requirements applicable
to the issuance or transfer of such shares, in the opinion of counsel to the
Corporation, have been complied with. In connection with any such issuance or
transfer, the person acquiring the shares shall, if requested by the
Corporation, give assurances, satisfactory to counsel to the Corporation, that
the shares are being acquired for investment and not with a view to resale or
distribution thereof and assurances in respect of such other matters as the
Corporation or a Subsidiary may deem desirable to assure compliance with all
applicable legal requirements.
(c) No employee (individually or as a member of a group), and
no beneficiary or other person claiming under or through him, shall have any
right, title or interest in or to any shares of Capital Stock allocated or
reserved for the purposes of this Plan or subject to any Stock Incentive except
as to such shares of Capital Stock, if any, as shall have been issued or
transferred to him.
(d) The Corporation or a Subsidiary may, with the approval of
the Compensation/Incentive Committee, enter into an agreement or other
commitment to grant a Stock Incentive in the future to a person who is or will
be an Employee at the time of grant, and, notwithstanding any other provision of
this Plan, any such agreement or commitment shall not be deemed the grant of a
Stock Incentive until the date on which the Company takes action to implement
such agreement or commitment.
(e) In the case of a grant of a Stock Incentive to an employee
of a Subsidiary, such grant may, if the Compensation/Incentive Committee so
directs, be implemented by the Corporation issuing or transferring the shares,
if any, covered by the Stock Incentive to the Subsidiary, for such lawful
consideration as the Compensation/Incentive Committee may specify, upon the
condition or understanding that the Subsidiary will transfer the shares to the
employee in accordance with the terms of the Stock Incentive specified by the
10
<PAGE> 12
Compensation/Incentive Committee pursuant to the provisions of this Plan.
Notwithstanding any other provision hereof, such Stock Incentive may be issued
by and in the name of the Subsidiary and shall be deemed granted on the date it
is approved by the Compensation/Incentive Committee, on the date it is delivered
by the Subsidiary or on such other date between said two dates, as the
Compensation/Incentive Committee shall specify.
(f) The Corporation or a Subsidiary may make such provisions
as it may deem appropriate for the withholding of any taxes which the
Corporation or a Subsidiary determines it is required to withhold in connection
with any Stock Incentive.
(g) Nothing in this Plan is intended to be a substitute for,
or shall preclude or limit the establishment or continuation of, any other plan,
practice or arrangement for the payment of compensation or fringe benefits to
employees generally, or to any class or group of employees, which the
Corporation or any Subsidiary or other affiliate now has or may hereafter
lawfully put into effect, including, without limitation, any retirement,
pension, group insurance, stock purchase, stock bonus or stock option plan.
12. AMENDMENTS AND DISCONTINUANCE:
(a) This Plan may be amended by the Board of Directors upon
the recommendation of the Compensation/Incentive Committee, provided that,
without the approval of the stockholders of the Corporation, no amendment shall
be made which (i) increases the aggregate number of shares of Capital Stock that
may be issued or transferred pursuant to Stock Incentives as provided in
paragraph (a) of Section 4, (ii) increases the maximum aggregate number of Stock
Incentives, in the form of Options, which may be granted to an individual
employee as provided in paragraph (a) of Section 6, (iii) withdraws the
administration of this Plan from the Compensation/Incentive Committee, (iv)
permits any person who is not at the time an Employee of the Corporation or of a
Subsidiary to be granted a Stock Incentive, (v) permits any Option to be
exercised more than ten years after the date it is granted, (vi) amends Section
9 to extend the date set forth therein or (vii) amends this Section 12.
(b) Notwithstanding paragraph (a) of this Section 12, the
Board of Directors may amend the Plan to take into account changes in applicable
securities laws, federal income tax laws and other applicable laws. Should the
provisions of Rule 16b-3, or any successor rule, under the Securities Exchange
Act of 1934 be amended, the Board of Directors may amend the Plan in accordance
therewith.
11
<PAGE> 13
(c) The Board of Directors may by resolution adopted by a
majority of the entire Board of Directors discontinue this Plan.
(d) No amendment or discontinuance of this Plan by the Board
of Directors or the stockholders of the Corporation shall, without the consent
of the employee, adversely affect any Stock Incentive theretofore granted to
him.
12
<PAGE> 1
EXHIBIT 10.14
AMENDMENT
TO EMPLOYMENT AGREEMENT
AGREEMENT dated as of May 17, 1999 between __________________
("Employee") and Chemed Corporation (the "Company").
WHEREAS, Employee and the Company have entered into an Employment
Agreement dated as of May 2, 1988 and amended May 15, 1989, May 21, 1990, May
20, 1991, May 18, 1992, May 17, 1993, May 16, 1994, May 15, 1995, May 20, 1996,
May 19, 1997 and May 18, 1998 ("Employment Agreement"); and
WHEREAS, Employee and the Company desire to further amend the
Employment Agreement in certain respects.
NOW, THEREFORE, Employee and the Company mutually agree that the
Employment Agreement shall be amended, effective as of May 17, 1999, as follows:
A. The date, amended as of May 18, 1998, set forth in Section 1.2
of the Employment Agreement, is hereby deleted and the date of
___________ is hereby substituted therefor.
B. The base salary amount set forth in the first sentence of
Section 2.1 of the Employment Agreement is hereby deleted and
the base salary amount of $_______ per annum is hereby
substituted.
C. The amount of unrestricted stock award
<PAGE> 2
recognized in lieu of incentive compensation in 1998 is
$______.
Except as specifically amended in this Amendment to Employment
Agreement, the Employment Agreement, as amended, shall continue in full force
and effect in accordance with its terms, conditions and provisions.
IN WITNESS WHEREOF, the parties have duly executed this amendatory
agreement as of the date first above written.
EMPLOYEE
---------------------
CHEMED CORPORATION
---------------------
ATTEST
<PAGE> 3
SCHEDULE TO EXHIBIT 10.14
MINIMUM CURRENT
ANNUAL CURRENT (a) EXPIRATION
BASE SALARY STOCK AWARD DATE OF
NAME AND POSITION AND BONUS COMPENSATION AGREEMENT
- ----------------- ----------- ------------ ----------
Edward L. Hutton $590,000 $247,800 5/3/2001
Chairman and 274,165
Chief Executive Officer
Kevin J. McNamara 325,200 81,544 5/3/2004
President 47,112
Timothy S. O'Toole 202,500 64,727 5/3/2004
Executive Vice President 28,373
and Treasurer
John M. Mount 238,500 8,942 11/5/2001
Vice President 60,000
Sandra E. Laney 200,000 62,217 5/3/2004
Senior Vice President and 44,999
Chief Administrative Officer
Thomas C. Hutton 190,500 26,888 5/3/2004
Vice President 19,210
Arthur V. Tucker 121,100 26,888 5/3/2004
Vice President and Controller 20,342
- -----------------------------
(a) Amount of unrestricted stock award recognized in lieu of incentive
compensation in 1998.
<PAGE> 1
EXHIBIT 10.26
SECOND AMENDMENT TO
SPLIT-DOLLAR AGREEMENT
This amendment made on August 4, 1999 by and between Chemed Corporation
(the "Corporation"), a Delaware corporation, and _________________ ("Employee"),
who hereby agree as follows:
1. Recitals
(a) The Corporation and the Employee are parties to a
Split Dollar Agreement dated as of ____________ and
amended ____________ (the "Agreement")
2. (a) Paragraph 4.3 of the Agreement is hereby amended to
read in its entirety as follows:
"4.3 The premium advances by the Corporation
pursuant to paragraph 4.1 and the bonus payments to
the Employee pursuant to paragraph 4.2 shall continue
with respect to annual premiums due under the Policy
until the later of (i) the date on which the Employee
reaches age 65, (ii) the date on which the Employee's
employment with the Corporation is terminated, or
(iii) if a Change of Control (as defined in Exhibit A
to this Agreement) occurs while the Employee remains
employed by the Corporation, the expiration date
specified in the employment agreement between
Employee and the Company (without regard to any early
termination of such agreement).
(b) "Immediately upon a Change in Control, the
Corporation shall cause a lump-sum payment to be made
to a "rabbi" trust (or other funding vehicle
acceptable to the Employee) that represents the
present value of all payments that would be required
to be made by the Corporation under paragraphs 4.1
and 4.2 until the date the Employee reaches age 65,
with such present value to be determined based on the
applicable federal rate (compounded annually) under
Section 1274(d) of the Internal Revenue Code on the
date of the Change in Control. All such funds shall
be administered and
<PAGE> 2
disbursed in accordance with the terms of this
Agreement. The Corporation shall promptly pay upon
demand any reasonable legal fees incurred by the
Employee in connection with any enforcement of
his/her rights under this Agreement upon a Change in
Control."
(c) Exhibit A of the Agreement hereby reads in its
entirety as follows:
" 'Change of Control' shall mean the
occurrence of one of the following events: (i) any
Person becomes a beneficial owner, directly or
indirectly, of securities of Chemed Corporation (the
"Company") representing 30 percent or more of the
combined voting power of the Company's then
outstanding voting securities; (ii) the expiration of
a tender offer or exchange offer, other than an offer
by the Corporation, pursuant to which 20 percent or
more of the shares of the Corporation's Capital Stock
have been purchased; (iii) the stockholders of the
Corporation have approved (a) an agreement to merge
or consolidate with or into another corporation and
the Corporation is not the surviving corporation or
(b) an agreement to sell or otherwise dispose of all
or substantially all of the assets of the Corporation
(including a plan of liquidation); or (iv) during any
period of two consecutive years, individuals who at
the beginning of such period constitute the Board of
Directors cease for any reason to constitute at least
a majority thereof, unless the nomination for the
election by the Corporation's stockholders of each
new director was approved by a vote of at least
one-half of the persons who were directors at the
beginning of the two-year period."
3. General
Except as specifically amended herein, the Agreement will
remain in full force and effect in accordance with its original terms,
conditions, and provisions.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have duly executed this amendatory
agreement as of _______________, 1999.
CHEMED CORPORATION
_______________________ By: ____________________________
Witness
_______________________ By: ____________________________
Witness Employee
3
<PAGE> 4
SCHEDULE TO EXHIBIT 10.26
Insured Date of Amendment
------- -----------------
KEVIN J. MCNAMARA 8/4/99
PRESIDENT
TIMOTHY S. O'TOOLE 8/4/99
EXECUTIVE VICE PRESIDENT
AND TREASURER
PAUL C. VOET 8/4/99
EXECUTIVE VICE PRESIDENT
THOMAS C. HUTTON 8/4/99
VICE PRESIDENT
ARTHUR V. TUCKER 8/4/99
VICE PRESIDENT AND
CONTROLLER
<PAGE> 1
EXHIBIT 10.32
SPLIT DOLLAR AGREEMENT
This Agreement, made on August 4, 1999, by and between Chemed
Corporation ("the Corporation"), a Delaware corporation with offices at 2600
Chemed Center, 255 E. Fifth Street, Cincinnati, Ohio 45202 and Albert E. Heekin,
III ("the Trustee"), as Trustee of an Irrevocable Trust Agreement with John M.
Mount and Rosemary L. Mount dated June 22, 1998 ("the Trust").
1. PREMISES
1.1 John M. Mount is an employee of the Corporation and has
created the Trust. The Trustee wishes to insure the lives of
Mr. Mount and his wife, Rosemary L. Mount, for the benefit and
protection of their family. The Corporation will help the
Trustee provide this insurance coverage by payment of part of
the premiums under a split dollar arrangement, whereby the
Trustee will be the owner of a life insurance policy which
will be collaterally assigned to the Corporation as security
for amounts the Corporation will contribute for the premium
payments.
2. APPLICATION FOR INSURANCE
2.1 The Trustee has applied to Phoenix Home Life Mutual
Insurance Company for a Survivor
<PAGE> 2
Legacy Policy on the lives of John M. Mount and Rosemary L.
Mount for $ $2,000,000 ("Policy").
3. POLICY OWNERSHIP
3.1 The Trustee shall own the Policy and may exercise all
rights of ownership with respect to it, subject only to the
security interest of the Corporation as expressed in this
Agreement and the collateral assignment of the Policy to the
Corporation.
4. PAYMENT OF PREMIUMS
4.1 On or before the due date of each annual premium on the
Policy, the Corporation will pay to Phoenix Home Life Mutual
Insurance Company an amount equal to the greater of 80 percent
of the annual premium or the annual premium less the economic
benefit cost (as measured by the Phoenix Home Life term
insurance rates) of the portion of the insurance which the
beneficiary or beneficiaries named by the Trustee would be
entitled to receive if Mr. Mount and Mrs. Mount died during
the policy year for which the annual premium is paid.
4.2 On or before the due date of each annual premium on the
Policy, the Corporation will pay
2
<PAGE> 3
to Phoenix Home Life Mutual Insurance Company, on behalf of
the Trustee, the remainder of the annual premium. This payment
will constitute compensation to Mr. Mount in the form of a
bonus during his lifetime and in the form of deferred
compensation if he dies before Mrs. Mount and will be
considered paid by the Trustee for purposes of the Assignment
(as defined in Article 5).
4.3 These premium advances by the Corporation shall apply
specifically to annual premiums due under the Policy up to Mr.
Mount's age of 65. However, additional premium advances may be
made by mutual agreement of the parties.
5. ASSIGNMENT OF POLICY
5.1 The Trustee shall collaterally assign the Policy to the
Corporation so as to reflect the respective interests of the
parties under this Agreement, said collateral assignment
("Assignment") having been executed by the parties on the date
of this Split Dollar Agreement, and thus made a part of such
Policy and this Agreement.
3
<PAGE> 4
6. USE OF DIVIDENDS
6.1 The dividends declared by Phoenix Home Life Mutual
Insurance Company on the Policy will be used to purchase
paid-up insurance.
6.2 The dividend option which is specified in paragraph 6.1 of
this Article will not be terminated or changed without a
conforming amendment to this Agreement and unless such change
is done in accordance with the provisions of Part D "Joint
Rights" section of the Assignment.
7. SURRENDER OF POLICY
7.1 The Trustee shall have the sole and exclusive right to
surrender the Policy.
7.2 If the Policy is surrendered, the Trustee shall direct the
insurance company in writing to draw a check payable to the
Corporation in an amount equal to the "Assignee's Cash Value
Rights", as defined within the provisions of Part A
"Definitions" section of the Assignment.
7.3 If there is a delay in the surrender of the Policy by
either party to this Agreement, and if such delay results in
diminished policy values being available to either party,
neither party
4
<PAGE> 5
to this Agreement shall hold the insurance company liable for
such diminution in Policy values.
8. DEATH CLAIMS
8.1 Upon the death of the last to die of Mr. and Mrs. Mount,
the Corporation shall have an interest in the proceeds of the
Policy equal to the "Assignee's Death Benefit Share", as
defined within the provisions of Part A "Definitions" section
of the Assignment. The balance of proceeds remaining shall be
paid directly by the insurance company to the beneficiary or
beneficiaries designated in the Policy.
9. TERMINATION OF AGREEMENT
9.1 This Agreement shall terminate upon surrender of the
Policy by the Trustee or upon thirty (30) days' written notice
of termination given by either party to the other by
registered mail at the party's last known address.
9.2 Prior to termination of this Agreement, the Trustee shall
direct the insurance company in writing to draw a check
payable to the Corporation for an amount equal to the
"Assignee's Cash Value Interest", as defined
5
<PAGE> 6
within the provisions of Part A "Definitions" section of the
Assignment. Upon receipt of this amount, the Corporation shall
release the security interest of the Corporation expressed in
this Agreement and the Assignment.
10. SPECIAL PROVISIONS
The following provisions are part of this Plan and are
intended to meet the requirements of the Employee Retirement
Income Security Act of 1974:
10.01 - The named fiduciary: The Secretary of the Company
10.02 - The funding policy under this Plan is that all
premiums on the Policy be remitted to the Insurer
when due.
10.03 - Direct payment by the Insurer is the basis of payment
of benefits under this Plan, with those benefits in
turn being based on the payment of premiums as
provided in the Plan.
10.04 - For claims procedure purposes, the "Claims Manager"
shall be the Secretary of the Company.
6
<PAGE> 7
(a) If for any reason a claim for benefits under
this Plan is denied by the Company, the
Claims Manager shall deliver to the claimant
a written explanation setting forth the
specific reasons for the denial, pertinent
references to the Plan section on which the
denial is based, such other data as may be
pertinent and information on the procedures
to be followed by the claimant in obtaining
a review of his claim, all written in a
manner calculated to be understood by the
claimant. For this purpose:
(1) The claimant's claim shall be
deemed filed when presented orally
or in writing to the Claims
Manager.
7
<PAGE> 8
(2) The Claims Manager's explanation
shall be in writing delivered to
the claimant within 90 days of the
date the claim is filed.
(b) The claimant shall have 60 days following
his/her receipt of the denial of the claim
to file with the Claims Manager a written
request for review of the denial. For such
review, the claimant or his/her
representative may submit pertinent
documents and written issues and comments.
(c) The Claims Manager shall decide the issue on
review and furnish the claimant with a copy
within 60 days of receipt of the claimant's
request for review of his/her claim. The
decision on review shall be in writing and
shall include
8
<PAGE> 9
specific reasons for the decision written in
a manner calculated to be understood by the
claimant, as well as specific references to
the pertinent Plan provisions on which the
decision is based. If a copy of the decision
is not so furnished to the claimant within
such 60 days, the claims shall be deemed
denied on review.
11. AMENDMENT AND BINDING EFFECT
11.1 This embodies all agreements by the parties made with
respect to the Policy. The Agreement shall not be modified or
amended except by a writing signed by the parties. The
Agreement shall be binding upon the parties, their heirs,
legal representatives, successors and assigns.
12. GOVERNING LAW
12.1 This Agreement shall be subject to and shall be construed
under the laws of the State of Ohio.
9
<PAGE> 10
Executed by the parties at Cincinnati, Ohio, as of August 4, 1999.
CHEMED CORPORATION
- ------------------------ By: /s/ David G. Sparks, Vice President
------------------------------------
Witness Signature, Corporate Title
- ------------------------ By: /s/ Alfred E. Heekin, III
------------------------------------
Witness Trustee
10
<PAGE> 1
EXHIBIT 10.33
SPLIT DOLLAR AGREEMENT
This Agreement, made on June 1, 1999, by and between Roto-Rooter
Services Company ("the Corporation"), an Iowa corporation with offices at 2500
Chemed Center, 255 E. Fifth Street, Cincinnati, Ohio 45202 and Spencer S. Lee
(the "Employee"), who is an employee of the Corporation.
1. PREMISES
1.1 The Employee is a valuable employee of the Corporation.
He/she wishes to provide adequate protection for his/her
family by insuring his/her life. The Corporation will assist
the Employee in providing this insurance coverage by payment
of part of the premiums under a split dollar arrangement,
whereby the Employee will be the owner of a life insurance
policy which will be collaterally assigned to the Corporation
as security for amounts the Corporation will contribute for
the premium payments.
2. APPLICATION FOR INSURANCE
2.1 The Employee has applied to Phoenix Home Life Mutual
Insurance Company for an Executive Equity Life Insurance Plan
on the life of the Employee for $1,600,000 ("Policy").
<PAGE> 2
3. POLICY OWNERSHIP
3.1 The Employee shall own the Policy and may exercise all
rights of ownership with respect to it, subject only to the
security interest of the Corporation as expressed in this
Agreement and the collateral assignment of the Policy to the
Corporation.
4. PAYMENT OF PREMIUMS
4.1 On or before the due date of each annual premium on the
Policy, the Corporation will pay to Phoenix Home Life Mutual
Insurance Company an amount equal to the greater of 80 percent
of the annual premium or the annual premium less the economic
benefit cost received by the Employee (as measured by the
Phoenix Home Life term insurance rates) for the portion of the
insurance which the beneficiary or beneficiaries named by the
Employee or their transferee would be entitled to receive if
the Employee died during the policy year for which the annual
premium is paid.
4.2 On or before the due date of each annual premium on the
Policy, the Corporation will pay to Phoenix Home Life Mutual
Insurance Company,
2
<PAGE> 3
on behalf of the Employee, the remainder of the annual
premium. This payment will constitute compensation to the
Employee in the form of a bonus and will be considered paid by
the Employee for purposes of the Assignment (as defined in
Article 5).
4.3 These premium advances by the Corporation shall apply
specifically to annual premiums due under the Policy up to the
Employee's age of 65. However, additional premium advances may
be made by mutual agreement of the parties.
5. ASSIGNMENT OF POLICY
5.1 The Employee shall collaterally assign the Policy to the
Corporation so as to reflect the respective interests of the
parties under this Agreement, said collateral assignment
("Assignment") having been executed by the parties on the date
of this Split Dollar Agreement, and thus made a part of such
Policy and this Agreement.
6. USE OF DIVIDENDS
6.1 The dividends declared by Phoenix Home Life Mutual
Insurance Company on the Policy will be
3
<PAGE> 4
used to purchase Option Term with the balance used to purchase
paid-up insurance.
6.2 The dividend option which is specified in paragraph 6.1 of
this Article will not be terminated or changed without a
conforming amendment to this Agreement and unless such change
is done in accordance with the provisions of Part D "Joint
Rights" section of the Assignment.
7. SURRENDER OF POLICY
7.1 The Employee shall have the sole and exclusive right to
surrender the Policy.
7.2 If the Policy is surrendered, the Employee shall direct
the insurance company in writing to draw a check payable to
the Corporation in an amount equal to the "Assignee's Cash
Value Rights", as defined within the provisions of Part A
"Definitions" section of the Assignment.
7.3 If there is a delay in the surrender of the Policy by
either party to this Agreement, and if such delay results in
diminished policy values being available to either party,
neither party to this Agreement shall hold the insurance
4
<PAGE> 5
company liable for such diminution in Policy values.
8. DEATH CLAIMS
8.1 Upon the death of the Employee, the Corporation shall have
an interest in the proceeds of the Policy equal to the
"Assignee's Death Benefit Share", as defined within the
provisions of Part A "Definitions" section of the Assignment.
The balance of proceeds remaining shall be paid directly by
the insurance company to the beneficiary or beneficiaries
designated in the Policy.
9. TERMINATION OF AGREEMENT
9.1 This Agreement shall terminate upon surrender of the
Policy by the Employee or upon thirty (30) days' written
notice of termination given by either party to the other by
registered mail at the party's last known address.
9.2 Prior to termination of this Agreement, the Employee shall
direct the insurance company in writing to draw a check
payable to the Corporation for an amount equal to the
"Assignee's Cash Value Interest", as defined within the
provisions of Part A "Definitions"
5
<PAGE> 6
section of the Assignment. Upon receipt of this amount, the
Corporation shall release the security interest of the
Corporation expressed in this Agreement and the Assignment.
10. SPECIAL PROVISIONS
The following provisions are part of this Plan and are
intended to meet the requirements of the Employee Retirement
Income Security Act of 1974:
10.01 - The named fiduciary: The Secretary of the Company
10.02 - The funding policy under this Plan is that all
premiums on the Policy be remitted to the Insurer
when due.
10.03 - Direct payment by the Insurer is the basis of
payment of benefits under this Plan, with those
benefits in turn being based on the payment of
premiums as provided in the Plan.
10.04 - For claims procedure purposes, the "Claims Manager"
shall be the Secretary of the Company.
6
<PAGE> 7
(a) If for any reason a claim for benefits under
this Plan is denied by the Company, the
Claims Manager shall deliver to the claimant
a written explanation setting forth the
specific reasons for the denial, pertinent
references to the Plan section on which the
denial is based, such other data as may be
pertinent and information on the procedures
to be followed by the claimant in obtaining
a review of his claim, all written in a
manner calculated to be understood by the
claimant. For this purpose:
(1) The claimant's claim shall be
deemed filed when presented orally
or in writing to the Claims
Manager.
7
<PAGE> 8
(2) The Claims Manager's explanation
shall be in writing delivered to
the claimant within 90 days of the
date the claim is filed.
(b) The claimant shall have 60 days following
his/her receipt of the denial of the claim
to file with the Claims Manager a written
request for review of the denial. For such
review, the claimant or his/her
representative may submit pertinent
documents and written issues and comments.
(c) The Claims Manager shall decide the issue on
review and furnish the claimant with a copy
within 60 days of receipt of the claimant's
request for review of his/her claim. The
decision on review shall be in writing and
shall include
8
<PAGE> 9
specific reasons for the decision written in
a manner calculated to be understood by the
claimant, as well as specific references to
the pertinent Plan provisions on which the
decision is based. If a copy of the decision
is not so furnished to the claimant within
such 60 days, the claims shall be deemed
denied on review.
11. AMENDMENT AND BINDING EFFECT
11.1 This embodies all agreements by the parties made with
respect to the Policy. The Agreement shall not be modified or
amended except by a writing signed by the parties. The
Agreement shall be binding upon the parties, their heirs,
legal representatives, successors and assigns.
12. GOVERNING LAW
12.1 This Agreement shall be subject to and shall be construed
under the laws of the State of Ohio.
9
<PAGE> 10
Executed by the parties at Cincinnati, Ohio, as of June 1, 1999.
ROTO-ROOTER SERVICES COMPANY
By: /s/ Naomi C. Dallob, Secretary
- ------------------------ ------------------------------
Witness Signature, Corporate Title
By: /s/ Spencer S. Lee
- ------------------------ ------------------------------
Witness Employee/Insured
10
<PAGE> 1
EXHIBIT 10.34
SPLIT DOLLAR AGREEMENT
This Agreement, made on June 1, 1999, by and between Roto-Rooter
Services Company ("the Corporation"), an Iowa corporation with offices at 2500
Chemed Center, 255 E. Fifth Street, Cincinnati, Ohio 45202 and Rick L. Arquilla
the "Employee"), who is an employee of the Corporation.
1. PREMISES
1.1 The Employee is a valuable employee of the Corporation.
He/she wishes to provide adequate protection for his/her
family by insuring his/her life. The Corporation will assist
the Employee in providing this insurance coverage by payment
of part of the premiums under a split dollar arrangement,
whereby the Employee will be the owner of a life insurance
policy which will be collaterally assigned to the Corporation
as security for amounts the Corporation will contribute for
the premium payments.
2. APPLICATION FOR INSURANCE
2.1 The Employee has applied to Phoenix Home Life Mutual
Insurance Company for an Executive Equity Life Insurance Plan
on the life of the Employee for $1,520,000 ("Policy").
<PAGE> 2
3. POLICY OWNERSHIP
3.1 The Employee shall own the Policy and may exercise all
rights of ownership with respect to it, subject only to the
security interest of the Corporation as expressed in this
Agreement and the collateral assignment of the Policy to the
Corporation.
4. PAYMENT OF PREMIUMS
4.1 On or before the due date of each annual premium on the
Policy, the Corporation will pay to Phoenix Home Life Mutual
Insurance Company an amount equal to the greater of 80 percent
of the annual premium or the annual premium less the economic
benefit cost received by the Employee (as measured by the
Phoenix Home Life term insurance rates) for the portion of the
insurance which the beneficiary or beneficiaries named by the
Employee or their transferee would be entitled to receive if
the Employee died during the policy year for which the annual
premium is paid.
4.2 On or before the due date of each annual premium on the
Policy, the Corporation will pay to Phoenix Home Life Mutual
Insurance Company,
2
<PAGE> 3
on behalf of the Employee, the remainder of the annual
premium. This payment will constitute compensation to the
Employee in the form of a bonus and will be considered paid by
the Employee for purposes of the Assignment (as defined in
Article 5).
4.3 These premium advances by the Corporation shall apply
specifically to annual premiums due under the Policy up to the
Employee's age of 65. However, additional premium advances may
be made by mutual agreement of the parties.
5. ASSIGNMENT OF POLICY
5.1 The Employee shall collaterally assign the Policy to the
Corporation so as to reflect the respective interests of the
parties under this Agreement, said collateral assignment
("Assignment") having been executed by the parties on the date
of this Split Dollar Agreement, and thus made a part of such
Policy and this Agreement.
6. USE OF DIVIDENDS
6.1 The dividends declared by Phoenix Home Life Mutual
Insurance Company on the Policy will be
3
<PAGE> 4
used to purchase Option Term with the balance used to purchase
paid-up insurance.
6.2 The dividend option which is specified in paragraph 6.1 of
this Article will not be terminated or changed without a
conforming amendment to this Agreement and unless such change
is done in accordance with the provisions of Part D "Joint
Rights" section of the Assignment.
7. SURRENDER OF POLICY
7.1 The Employee shall have the sole and exclusive right to
surrender the Policy.
7.2 If the Policy is surrendered, the Employee shall direct
the insurance company in writing to draw a check payable to
the Corporation in an amount equal to the "Assignee's Cash
Value Rights", as defined within the provisions of Part A
"Definitions" section of the Assignment.
7.3 If there is a delay in the surrender of the Policy by
either party to this Agreement, and if such delay results in
diminished policy values being available to either party,
neither party to this Agreement shall hold the insurance
4
<PAGE> 5
company liable for such diminution in Policy values.
8. DEATH CLAIMS
8.1 Upon the death of the Employee, the Corporation shall have
an interest in the proceeds of the Policy equal to the
"Assignee's Death Benefit Share", as defined within the
provisions of Part A "Definitions" section of the Assignment.
The balance of proceeds remaining shall be paid directly by
the insurance company to the beneficiary or beneficiaries
designated in the Policy.
9. TERMINATION OF AGREEMENT
9.1 This Agreement shall terminate upon surrender of the
Policy by the Employee or upon thirty (30) days' written
notice of termination given by either party to the other by
registered mail at the party's last known address.
9.2 Prior to termination of this Agreement, the Employee shall
direct the insurance company in writing to draw a check
payable to the Corporation for an amount equal to the
"Assignee's Cash Value Interest", as defined within the
provisions of Part A "Definitions"
5
<PAGE> 6
section of the Assignment. Upon receipt of this amount, the
Corporation shall release the security interest of the
Corporation expressed in this Agreement and the Assignment.
10. SPECIAL PROVISIONS
The following provisions are part of this Plan and are
intended to meet the requirements of the Employee Retirement
Income Security Act of 1974:
10.01 - The named fiduciary: The Secretary of the Company
10.02 - The funding policy under this Plan is that all
premiums on the Policy be remitted to the Insurer
when due.
10.03 - Direct payment by the Insurer is the basis of
payment of benefits under this Plan, with those
benefits in turn being based on the payment of
premiums as provided in the Plan.
10.04 - For claims procedure purposes, the "Claims Manager"
shall be the Secretary of the Company.
6
<PAGE> 7
(a) If for any reason a claim for benefits under
this Plan is denied by the Company, the
Claims Manager shall deliver to the claimant
a written explanation setting forth the
specific reasons for the denial, pertinent
references to the Plan section on which the
denial is based, such other data as may be
pertinent and information on the procedures
to be followed by the claimant in obtaining
a review of his claim, all written in a
manner calculated to be understood by the
claimant. For this purpose:
(1) The claimant's claim shall be
deemed filed when presented orally
or in writing to the Claims
Manager.
7
<PAGE> 8
(2) The Claims Manager's explanation
shall be in writing delivered to
the claimant within 90 days of the
date the claim is filed.
(b) The claimant shall have 60 days following
his/her receipt of the denial of the claim
to file with the Claims Manager a written
request for review of the denial. For such
review, the claimant or his/her
representative may submit pertinent
documents and written issues and comments.
(c) The Claims Manager shall decide the issue on
review and furnish the claimant with a copy
within 60 days of receipt of the claimant's
request for review of his/her claim. The
decision on review shall be in writing and
shall include
8
<PAGE> 9
specific reasons for the decision written in
a manner calculated to be understood by the
claimant, as well as specific references to
the pertinent Plan provisions on which the
decision is based. If a copy of the decision
is not so furnished to the claimant within
such 60 days, the claims shall be deemed
denied on review.
11. AMENDMENT AND BINDING EFFECT
11.1 This embodies all agreements by the parties made with
respect to the Policy. The Agreement shall not be modified or
amended except by a writing signed by the parties. The
Agreement shall be binding upon the parties, their heirs,
legal representatives, successors and assigns.
12. GOVERNING LAW
12.1 This Agreement shall be subject to and shall be construed
under the laws of the State of Ohio.
9
<PAGE> 10
Executed by the parties at Cincinnati, Ohio, as of June 1, 1999.
ROTO-ROOTER SERVICES COMPANY
By: /s/ Naomi C. Dallob, Secretary
- ------------------------ ------------------------------
Witness Signature, Corporate Title
By: /s/ Rick L. Arguilla
- ------------------------ ------------------------------
Witness Employee/Insured
10
<PAGE> 1
EXHIBIT 10.35
FORM OF PROMISSORY NOTE
$ Cincinnati Ohio January 1, 2000
- --------------------------------------------------------------------------------
Amount City State Date
In consideration of value received, the undersigned promises to pay, in
lawful money of the United States of America, on demand to the order of Chemed
Corporation, a Delaware corporation, at its offices located at 2600 Chemed
Center, 255 East Fifth Street, Cincinnati, Ohio 45202, the principal sum of
____________________________________($__________) plus interest.
Interest shall accrue and be payable annually on the last day of each
year at the short term semi-annual Applicable Federal Rate as published by the
Internal Revenue Service, currently 5.88%, until this Note, together with all
accrued interest, be paid in full.
Any payment hereon shall be applied first to the payment of any
interest which may then be due and unpaid and the balance thereof to the
repayment of the said principal amount.
This Note shall be and become immediately due and payable at the option
of the holder without any demand or notice upon the first to occur of the
following: (1) the holder deems itself insecure, (2) the death, insolvency,
assignment for the benefit of creditors, or the commencement of any bankruptcy
or insolvency proceedings of or against the undersigned, (3) any attempted
transfer by the undersigned of those shares of Chemed capital stock purchased on
the undersigned's behalf through the Executive Stock Ownership Program, or (4)
upon termination of employment of the undersigned with Chemed Corporation or its
affiliates for any reason.
The undersigned agrees to pay all costs of collection which may be
incurred should suit be instituted.
The waiver of any provision, term or condition of this Note shall not
be taken to be a waiver of any subsequent breach of the same or any other
provision, term or condition.
<PAGE> 2
The undersigned hereby waives presentment, demand, notice of dishonor,
protest and notice of nonpayment and protest.
_______________________________
Witness:
_______________________________
<PAGE> 3
SCHEDULE TO EXHIBIT 10.35
Employee Title Amount
-------- ----- ------
Edward L. Hutton Chairman, CEO $540,006.51
Timothy S. O'Toole Executive V.P. & Treasurer 360,000.00
Sandra E. Laney Senior V.P., COA 200,000.00
Thomas C. Hutton Vice President 184,002.77
James H. Devlin Vice President 184,002.77
John M. Mount Vice President 183,997.24
Spencer S. Lee Vice President 183,997.24
Rick L. Arquilla President of Roto-Rooter 99,986.18
Services Company
<PAGE> 1
Exhibit 13
CHEMED
ANNUAL REPORT
1999
PROVIDING ESSENTIAL SERVIES TO HOME OWNERS AND BUSINESSES,
INDIVIDUALS AND FAMILIES
<PAGE> 2
CHEMED
Chemed Corporation, headquartered in Cincinnati, is publicly traded on the New
York Stock Exchange. Through three wholly owned subsidiaries, Roto-Rooter, Inc.,
Patient Care, Inc., and Service America Systems, Inc., Chemed offers essential
services to home owners and businesses, individuals and families.
ROTO-ROOTER(R)
Roto-Rooter provides plumbing and drain cleaning services, through both company
operations and franchisees, to residential and commercial customers in the
United States, Canada, and six overseas territories.
PATIENT CARE INC.(R)
Patient Care delivers home healthcare services, focusing on personal care
provided by its staff of well-trained home health aides.
SERVICE AMERICA(TM)
Service America markets major-appliance and heating, ventilating, and
air-conditioning (HVAC) repair through service contracts and provides repair,
replacement, and maintenance on a retail basis as well.
<PAGE> 3
FINANCIAL REVIEW
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Statement of Accounting Policies ..................... 12
Consolidated Statement of Income ..................... 13
Consolidated Balance Sheet ........................... 14
Consolidated Statement of Cash Flows ................. 15
Consolidated Statement of Changes
in Stockholders' Equity ........................... 16
Consolidated Statement
of Comprehensive Income ........................... 16
Notes to Financial Statements ........................ 17
Segment Data ......................................... 26
Selected Financial Data .............................. 28
Supplemental Revenue and Profit
Statistics by Business Segment .................... 30
Unaudited Summary of Quarterly Results ............... 31
Management's Discussion and
Analysis of Financial Condition
and Results of Operations ......................... 32
</TABLE>
[PricewaterhouseCoopers LLP LOGO]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of Chemed Corporation
In our opinion, the consolidated financial statements appearing on pages 12
through 27 of this report present fairly, in all material respects, the
financial position of Chemed Corporation and its subsidiaries ("the Company") at
December 31, 1999 and 1998, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Cincinnati, Ohio
February 1, 2000
11
<PAGE> 4
STATEMENT OF ACCOUNTING POLICIES
Chemed Corporation and Subsidiary Companies
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Chemed
Corporation and its wholly owned subsidiaries. All significant intercompany
transactions have been eliminated.
CASH EQUIVALENTS
Cash equivalents comprise short-term highly liquid investments that have been
purchased within three months of their date of maturity.
OTHER INVESTMENTS
Other investments are recorded at their estimated fair values. In calculating
realized gains and losses on the sales of investments, the
specific-identification method is used to determine the cost of investments
sold.
INVENTORIES
Inventories are stated at the lower of cost or market. For determining the
value of inventories, the first-in, first-out ("FIFO") method is used.
DEPRECIATION AND
PROPERTIES AND EQUIPMENT
Depreciation of properties and equipment is computed using the straight-line
method over the estimated useful lives of the assets. Expenditures for
maintenance, repairs, renewals and betterments that do not materially prolong
the useful lives of the assets are expensed as incurred. The cost of property
retired or sold and the related accumulated depreciation are removed from the
accounts, and the resulting gain or loss is reflected currently in income.
INTANGIBLE ASSETS
Goodwill and identifiable intangible assets arise from purchase business
combinations and are amortized using the straight-line method over the estimated
useful lives of the assets, but not in excess of 40 years.
The lives of the Company's gross intangible assets at December 31, 1999, were
(in thousands):
<TABLE>
<CAPTION>
<S> <C>
1 - 10 years $ 5,158
11 - 20 years 3,077
31 - 40 years 200,722
</TABLE>
The Company periodically makes an estimation and valuation of the future
benefits of its intangible assets based on key financial indicators. If the
projected undiscounted cash flows of a major business unit indicate that
goodwill or identifiable intangible assets have been impaired, a write-down to
fair value is made.
REVENUE RECOGNITION
Revenues received under prepaid contractual service agreements are recognized
on a straight-line basis over the life of the contract. All other service
revenues and sales are recognized when the services are provided or the products
are delivered.
COMPUTATION OF EARNINGS PER SHARE
Earnings per share are computed using the weighted average number of shares
of capital stock outstanding. Diluted earnings per share reflect the dilutive
impact of the Company's outstanding stock options and nonvested stock awards.
EMPLOYEE STOCK OWNERSHIP PLANS
Contributions to the Company's Employee Stock Ownership Plans ("ESOP") are
based on established debt repayment schedules. Shares are allocated to
participants based on the principal and interest payments made during the
period. The Company's policy is to record its ESOP expense by applying the
transition rule under the level-principal amortization concept.
STOCK-BASED COMPENSATION PLANS
The Company uses Accounting Principles Board Opinion No. 25 ("APB 25"),
Accounting for Stock Issued to Employees, to account for stock-based
compensation. Since the Company's stock options qualify as fixed options under
APB 25 and since the option price equals the market price on the date of grant,
there is no compensation cost recorded for stock options. Restricted stock is
recorded as compensation cost over the requisite vesting periods based on the
market value on the date of grant.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain amounts in prior years' financial statements have been reclassified
to conform to the 1999 presentation.
12
<PAGE> 5
CONSOLIDATED STATEMENT OF INCOME
Chemed Corporation and Subsidiary Companies
<TABLE>
<CAPTION>
(in thousands, except per share data)
For the Years Ended December 31, 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Continuing Operations
Service revenues and sales ............................. $453,593 $381,283 $341,729
-------- -------- --------
Cost of services provided and goods sold ............... 276,759 237,148 212,647
General and administrative expenses .................... 95,683 80,145 76,047
Selling and marketing expenses ......................... 41,237 33,249 24,931
Depreciation ........................................... 13,129 10,649 8,622
Acquisition expenses (Note 2) .......................... -- 752 --
-------- -------- --------
Total costs and expenses ............................ 426,808 361,943 322,247
-------- -------- --------
Income from operations ................................. 26,785 19,340 19,482
Interest expense ....................................... (6,858) (6,793) (10,552)
Other income--net (Note 4) ............................. 11,026 19,578 18,951
-------- -------- --------
Income before income taxes .......................... 30,953 32,125 27,881
Income taxes (Note 5) .................................. (11,257) (12,216) (10,804)
-------- -------- --------
Income from continuing operations ...................... 19,696 19,909 17,077
Discontinued Operations (Note 3) ............................. -- -- 13,160
-------- -------- --------
Net Income ................................................... $ 19,696 $ 19,909 $ 30,237
======== ======== ========
Earnings Per Share
Income from continuing operations ...................... $ 1.88 $ 1.98 $ 1.72
======== ======== ========
Net income ............................................. $ 1.88 $ 1.98 $ 3.04
======== ======== ========
Average number of shares outstanding ................... 10,470 10,058 9,940
======== ======== ========
Diluted Earnings Per Share (Note 13)
Income from continuing operations ...................... $ 1.87 $ 1.97 $ 1.71
======== ======== ========
Net income ............................................. $ 1.87 $ 1.97 $ 3.02
======== ======== ========
Average number of shares outstanding ................... 10,514 10,100 10,014
======== ======== ========
</TABLE>
The Statement of Accounting Policies and the accompanying Notes to Financial
Statements are integral parts of this statement.
13
<PAGE> 6
CONSOLIDATED BALANCE SHEET
Chemed Corporation and Subsidiary Companies
<TABLE>
<CAPTION>
(in thousands, except share and per share data)
December 31, 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents (Note 6) ......................................................... $ 17,282 $ 41,358
Accounts receivable less allowances of $4,554 (1998--$3,601) ............................... 55,889 45,260
Inventories, primarily general merchandise and finished goods .............................. 9,794 9,828
Statutory deposits ......................................................................... 14,254 16,698
Current deferred income taxes (Note 5) ..................................................... 9,294 6,807
Other current assets ....................................................................... 5,289 4,680
-------- --------
Total current assets .................................................................... 111,802 124,631
Other investments (Note 12) ................................................................... 37,849 55,778
Properties and equipment, at cost less accumulated depreciation (Note 7) ...................... 71,728 61,721
Identifiable intangible assets less accumulated amortization of $6,558 (1998--$5,369) ......... 12,597 12,960
Goodwill less accumulated amortization of $26,545 (1998--$21,879) ............................. 163,257 155,965
Other assets .................................................................................. 24,070 18,649
-------- --------
Total Assets ...................................................................... $421,303 $429,704
======== ========
Liabilities
Current liabilities
Accounts payable ........................................................................... $ 11,246 $ 10,318
Current portion of long-term debt (Note 8) ................................................. 11,719 4,393
Income taxes (Note 5) ...................................................................... 8,714 12,563
Deferred contract revenue .................................................................. 25,630 26,571
Other current liabilities (Note 9) ......................................................... 41,119 37,253
-------- --------
Total current liabilities ............................................................... 98,428 91,098
Long-term debt (Note 8) ....................................................................... 78,580 80,407
Other liabilities (Note 9) .................................................................... 32,251 34,843
-------- --------
Total Liabilities ................................................................. 209,259 206,348
-------- --------
Stockholders' Equity
Capital stock--authorized 15,000,000 shares $1 par;
issued 13,664,892 shares (1998--13,605,481 shares) ......................................... 13,665 13,605
Paid-in capital ............................................................................... 164,549 162,252
Retained earnings ............................................................................. 144,322 146,961
Treasury stock--3,268,783 shares (1998--3,190,757 shares), at cost ............................ (99,437) (97,237)
Unearned compensation (Note 10) ............................................................... (17,056) (20,558)
Deferred compensation payable in Company stock (Note 10) ...................................... 5,340 5,071
Accumulated other comprehensive income ........................................................ 3,392 13,262
Notes receivable for shares sold (Note 14) .................................................... (2,731) --
-------- --------
Total Stockholders' Equity ........................................................ 212,044 223,356
-------- --------
Commitments and contingencies (Notes 9 and 11)
Total Liabilities and Stockholders' Equity ........................................ $421,303 $429,704
======== ========
</TABLE>
The Statement of Accounting Policies and the accompanying Notes to Financial
Statements are integral parts of this statement.
14
<PAGE> 7
CONSOLIDATED STATEMENT OF CASH FLOWS
Chemed Corporation and Subsidiary Companies
(in thousands)
<TABLE>
<CAPTION>
For the Years Ended December 31, 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ............................................................... $ 19,696 $19,909 $ 30,237
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization ........................................ 20,129 17,284 15,163
Gains on sales of investments ........................................ (4,661) (12,589) (12,235)
Provision for uncollectible accounts receivable ...................... 2,235 2,452 702
Provision for deferred income taxes .................................. 128 3,426 (1,820)
Discontinued operations .............................................. -- -- (13,160)
Changes in operating assets and liabilities, excluding
amounts acquired in business combinations:
Increase in accounts receivable ................................. (13,949) (3,848) (7,327)
Decrease/(increase) in statutory reserve requirements ........... 2,444 (561) 3,825
Increase in inventories and other current assets ................ (541) (938) (762)
Increase/(decrease) in accounts payable, deferred
contract revenue and other current liabilities ............... 5,094 (4,593) 2,209
Increase/(decrease) in income taxes ............................. (3,108) 475 7,565
Other--net ............................................................ 75 (239) (650)
-------- ------- --------
Net cash provided by continuing operations ........................... 27,542 20,778 23,747
Net cash provided by discontinued operations ......................... -- -- 9,699
-------- ------- --------
Net cash provided by operating activities ............................ 27,542 20,778 33,446
-------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures ..................................................... (22,411) (21,997) (20,117)
Business combinations, net of cash acquired (Note 2) .................... (15,518) (14,843) (14,669)
Proceeds from sales of investments ....................................... 7,701 14,963 14,060
Net proceeds from discontinued operations (Note 3) ...................... (2,533) (5,607) 154,691
Investing activities of discontinued operations .......................... -- -- (6,792)
Purchase of Roto-Rooter minority interest ................................ (1,708) (1,556) (2,734)
Other--net ................................................................ 2,295 3,794 1,514
-------- ------- --------
Net cash provided/(used) by investing activities ..................... (32,174) (25,246) 125,953
-------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid ........................................................... (22,456) (21,674) (21,000)
Proceeds from issuance of long-term debt (Note 8) ....................... 10,000 -- 35,000
Repayment of long-term debt (Note 8) .................................... (2,982) (2,891) (96,487)
Acquisition of shares for stock purchase plan ............................ (2,731) -- --
Purchases of treasury stock .............................................. (1,724) (399) --
Prepayment of ESOP debt (Note 10) ....................................... -- -- (16,201)
Decrease in bank notes and loans payable ................................. -- -- (5,000)
Other-net ................................................................ 449 (168) 1,219
-------- ------- --------
Net cash used by financing activities ................................ (19,444) (25,132) (102,469)
-------- ------- --------
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS .............................. (24,076) (29,600) 56,930
Cash and cash equivalents at beginning of year ................................ 41,358 70,958 14,028
-------- ------- --------
Cash and cash equivalents at end of year ...................................... $ 17,282 $ 41,358 $ 70,958
======== ======== ========
The Statement of Accounting Policies and the accompanying Notes to Financial
Statements are integral parts of this statement.
</TABLE>
15
<PAGE> 8
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
Chemed Corporation and Subsidiary Companies
(in thousands, except per share data)
<TABLE>
<CAPTION>
TREASURY
CAPITAL PAID-IN RETAINED STOCK--
STOCK CAPITAL EARNINGS AT COST
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 ......................... $ 12,768 $ 150,296 $ 139,262 $(82,943)
Net income ........................................... -- -- 30,237 --
Dividends paid ($2.09 per share) .................... -- -- (21,000) --
Other comprehensive income ........................... -- -- -- --
Decrease in unearned
compensation (Note 10) ........................... -- -- -- --
Stock awards and exercise
of stock options (Note 14) ....................... 252 8,558 -- (5,120)
Other ................................................ -- (369) 181 --
--------- --------- --------- --------
Balance at December 31, 1997 ................... 13,020 158,485 148,680 (88,063)
Net income ........................................... -- -- 19,909 --
Dividends paid ($2.12 per share) .................... -- -- (21,674) --
Other comprehensive income ........................... -- -- -- --
Decrease in unearned
compensation (Note 10) ........................... -- -- -- --
Reclassification of employee benefit
trust liabilities/(assets) ....................... -- -- -- (5,345)
Pooling of interests (Note 2) ....................... 469 200 (104) --
Purchases of treasury stock .......................... -- -- -- (399)
Stock awards and exercise
of stock options (Note 14) ....................... 118 4,266 -- (3,581)
Other ................................................ (2) (699) 150 151
--------- --------- --------- --------
BALANCE AT DECEMBER 31, 1998 .................... 13,605 162,252 146,961 (97,237)
NET INCOME ........................................... -- -- 19,696 --
DIVIDENDS PAID ($2.12 PER SHARE) ..................... -- -- (22,456) --
OTHER COMPREHENSIVE INCOME ........................... -- -- -- --
DECREASE IN UNEARNED
COMPENSATION (NOTE 10) ........................... -- -- -- --
SALE OF SHARES FOR NOTES ............................. -- -- -- 2,731
PURCHASES OF TREASURY STOCK .......................... -- -- -- (4,455)
STOCK AWARDS (NOTE 14) ............................... 54 1,690 -- (326)
OTHER ................................................ 6 607 121 (150)
--------- --------- --------- --------
BALANCE AT DECEMBER 31, 1999 ................... $ 13,665 $ 164,549 $ 144,322 $(99,437)
========= ========= ========= ========
</TABLE>
<TABLE>
<CAPTION>
DEFERRED
COMPENSATION ACCUMULATED NOTES
UNEARNED PAYABLE OTHER COM- RECEIVABLE
COMPEN- IN COMPANY PREHENSIVE FOR
SATION STOCK INCOME SHARES SOLD TOTAL
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 ......................... $(27,554) $ -- $ 26,062 $ -- $ 217,891
Net income ........................................... -- -- -- -- 30,237
Dividends paid ($2.09 per share) .................... -- -- -- -- (21,000)
Other comprehensive income ........................... -- -- (6,105) -- (6,105)
Decrease in unearned
compensation (Note 10) ........................... 5,788 -- -- -- 5,788
Stock awards and exercise
of stock options (Note 14) ....................... (2,193) -- -- -- 1,497
Other ................................................ -- -- -- -- (188)
--------- --------- --------- -------- ---------
Balance at December 31, 1997 ................... (23,959) -- 19,957 -- 228,120
Net income ........................................... -- -- -- -- 19,909
Dividends paid ($2.12 per share) .................... -- -- -- -- (21,674)
Other comprehensive income ........................... -- -- (6,695) -- (6,695)
Decrease in unearned
compensation (Note 10) ........................... 3,934 -- -- -- 3,934
Reclassification of employee benefit
trust liabilities/(assets) ....................... -- 5,345 -- -- --
Pooling of interests (Note 2) ....................... -- -- -- -- 565
Purchases of treasury stock .......................... -- -- -- -- (399)
Stock awards and exercise
of stock options (Note 14) ....................... (533) -- -- -- 270
Other ................................................ -- (274) -- -- (674)
--------- --------- --------- -------- ---------
BALANCE AT DECEMBER 31, 1998 .................... (20,558) 5,071 13,262 -- 223,356
NET INCOME ........................................... -- -- -- -- 19,696
DIVIDENDS PAID ($2.12 PER SHARE) ..................... -- -- -- -- (22,456)
OTHER COMPREHENSIVE INCOME ........................... -- -- (9,870) -- (9,870)
DECREASE IN UNEARNED
COMPENSATION (NOTE 10) ........................... 4,498 -- -- -- 4,498
SALE OF SHARES FOR NOTES ............................. -- -- -- (2,731) --
PURCHASES OF TREASURY STOCK .......................... -- -- -- -- (4,455)
STOCK AWARDS (NOTE 14) ............................... (996) -- -- -- 422
OTHER ................................................ -- 269 -- -- 853
--------- --------- --------- -------- ---------
BALANCE AT DECEMBER 31, 1999 ................... $(17,056) $ 5,340 $ 3,392 $ (2,731) $ 212,044
========= ========= ========= ======== =========
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Chemed Corporation and Subsidiary Companies
(in thousands)
For the Years Ended December 31, 1999 1998 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income ................................................................ $19,696 $19,909 $30,237
------- ------- -------
Other comprehensive income net of income tax:
Unrealized holding gains/(losses) arising during the period ......... (6,910) 1,250 1,547
Less reclassification adjustment for gains included in net income ... (2,960) (7,945) (7,652)
------- ------- -------
Total ............................................................... (9,870) (6,695) (6,105)
------- ------- -------
Comprehensive income ...................................................... $ 9,826 $13,214 $24,132
======= ======= =======
</TABLE>
The Statement of Accounting Policies and the accompanying Notes to Financial
Statements are integral parts of these statements.
16
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS
Chemed Corporation and Subsidiary Companies
1. SEGMENTS AND NATURE
OF THE BUSINESS
Chemed is a diversified public corporation with strategic positions in
plumbing, drain cleaning, and heating, ventilating and air conditioning ("HVAC")
services (Roto-Rooter); home healthcare services (Patient Care); and residential
appliance and air conditioning repair services (Service America). Relative
contributions to aftertax segment earnings were 72%, 16% and 12% in 1999,
respectively.
The business segments are defined as follows:
o The Roto-Rooter segment includes the combined operations of the Roto-Rooter
Group ("Roto-Rooter"), a group of wholly owned businesses that provide repair
and maintenance services to residential and commercial accounts. Such services
include plumbing; sewer, drain and pipe cleaning; and HVAC services. They are
delivered through company-owned, contractor-operated and franchised locations.
Roto-Rooter also manufactures and sells products and equipment used to provide
such services.
o The Patient Care segment includes the consolidated operations of the wholly
owned businesses comprising the Patient Care Group ("Patient Care"), which
offers complete, professional home-healthcare services primarily in the New
York-New Jersey-Connecticut area. Services provided include skilled nursing;
home health aid; physical, speech, respiratory and occupational therapies;
medical social work; and nutrition.
o The Service America segment includes the consolidated operations of the
wholly owned businesses comprising the Service America Systems Group ("Service
America"). The group provides HVAC and appliance repair and maintenance services
primarily to residential customers through service contracts and retail sales.
In addition, Service America sells air conditioning equipment and duct cleaning
services.
Substantially all of the Company's service revenues and sales from continuing
operations are generated from business within the United States. Within the
Patient Care segment, balances due from the U.S. federal government at December
31, 1999, accounted for approximately 13% of the Company's consolidated accounts
receivable balance. No other single customer's balance at December 31, 1999,
accounted for more than 10% of the Company's consolidated accounts receivable
balance. In addition, substantially all of Patient Care's accounts receivable at
December 31, 1999 ($31.8 million), was generated from customers located in the
northeastern United States.
Management closely monitors accounts receivable balances and has established
policies regarding the extension of credit and compliance therewith. The Patient
Care segment historically has experienced a relatively low level of losses on
the collection of its receivables.
Approximately 36% of Patient Care's net revenues are derived from services
provided directly to patients with coverage under the federal government's
Medicare program or under joint federal-and-state-sponsored Medicaid programs.
In addition, 34% of Patient Care's revenues arise from contracts with other
certified home-health agencies to provide services to recipients under these
entitlement programs.
Financial data by business segment shown on pages 26 and 27 of this annual
report are integral parts of these financial statements.
2. BUSINESS COMBINATIONS
During 1999, 10 purchase business combinations were completed within the
Roto-Rooter, Patient Care and Service America segments for aggregate purchase
prices of $15.5 million in cash.
During 1998, 16 purchase business combinations were completed within the
Roto-Rooter, Patient Care and Service America segments for aggregate purchase
prices of $18.6 million in cash. In addition, two pooling-of-interests business
combinations were completed within the Roto-Rooter segment upon the issuance of
469,560 shares of Chemed Capital Stock. Also, during 1997, 12 purchase business
combinations were completed within the Roto-Rooter and Patient Care segments for
aggregate purchase prices of $12.7 million in cash.
All of the aforementioned Roto-Rooter business combinations involved
operations primarily in the business of providing plumbing repair, HVAC and
drain cleaning services. All of the Patient Care acquisitions involved
operations primarily in the business of providing home healthcare services, and
the Service America acquisitions provide HVAC and appliance repair and
maintenance services.
17
<PAGE> 10
The unaudited pro forma results of operations, assuming purchase business
combinations completed in 1999, 1998 and 1997 were completed on January 1 of the
preceding year, are presented below (in thousands, except per share data):
<TABLE>
<CAPTION>
For the Years Ended
December 31,
--------------------------------------
Continuing Operations 1999 1998 1997
- -------------------- ---------- ---------- --------
<S> <C> <C> <C>
Service revenues
and sales $458,578 $409,935 $383,203
Income from con-
tinuing operations 20,017 21,202 19,590
Earnings per share 1.91 2.11 1.97
Diluted earnings
per share 1.90 2.10 1.96
</TABLE>
The excess of the purchase price over the fair value of the net assets
acquired in purchase business combinations is classified as goodwill. A summary
of net assets acquired in purchase business combinations follows (in thousands):
<TABLE>
<CAPTION>
For the Years Ended
December 31,
--------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Working capital $ 2,935 $ 1,038 $ 2,961
Identifiable intangible
assets 765 485 1,105
Goodwill 11,893 17,294 11,449
Other assets and
liabilities--net (75) (307) (827)
-------- -------- --------
Total net assets 15,518 18,510 14,688
Less--cash and
cash equivalents
acquired -- (767) (19)
--present value
of deferred
payments -- (2,900) --
-------- -------- --------
Net cash used $ 15,518 $ 14,843 $ 14,669
======== ======== ========
</TABLE>
The combined impact of the two pooling-of-interests transactions on the
Company's historical consolidated financial statements was not material;
consequently, prior-period financial statements were not restated for these
transactions. The results of operations of all business combinations have been
included in the Company's consolidated financial statements from the effective
date of each combination.
In connection with the pooling-of-interests transactions in 1998, the Company
incurred expenses aggregating $752,000 ($495,000 aftertax or $.05 per share).
3. DISCONTINUED OPERATIONS
Effective September 20, 1997, the Company 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. The
Company recognized a loss of $19.2 million (net of income tax benefit of $1.2
million) on the sale of Omnia.
On September 30, 1997, Chemed's 81%-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 repaid approximately $18.1 million of intercompany
borrowings owed to Chemed by National. The Company recognized a gain of $28.7
million (net of income taxes of $32.4 million) on the sale of National.
During 1997, combined revenues, income before income taxes and net income of
National and Omnia were $285,055,000, $5,519,000 and $3,069,000, respectively.
The Company recorded an aftertax net gain on the sale of National and Omnia of
$9,493,000 and accrual adjustments aggregating $598,000 relating to operations
discontinued in 1991.
4. OTHER INCOME--NET
Other income--net comprises the following (in thousands):
<TABLE>
<CAPTION>
For the Years Ended
December 31,
---------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Gain on sales
of investments $ 4,661 $ 12,589 $ 12,235
Dividend income 2,626 2,822 2,920
Unrealized gains/(losses)
on investments 1,966 (266) --
Interest income 1,589 4,049 3,687
Other--net 184 384 109
-------- -------- --------
Total other income
--net $ 11,026 $ 19,578 $ 18,951
======== ======== ========
</TABLE>
18
<PAGE> 11
5. INCOME TAXES
The provision for income taxes comprises the following (in thousands):
<TABLE>
<CAPTION>
For the Years Ended
December 31,
---------------------------------------
Continuing Operations 1999 1998 1997
- -------------------- -------- -------- --------
<S> <C> <C> <C>
Current
U.S. federal $ 9,024 $ 7,457 $ 9,752
U.S. state and local 1,917 1,213 1,985
Foreign 188 120 245
Deferred
U.S. federal 171 3,432 (971)
Foreign (43) (6) (207)
-------- -------- --------
Total $ 11,257 $ 12,216 $ 10,804
======== ======== ========
Discontinued Operations
- ----------------------
Current
U.S. federal $ (770) $ 237 $ 26,853
U.S. state and local -- -- 5,807
Deferred U.S. federal 770 (237) (54)
-------- -------- --------
Total $ -- $ -- $ 32,606
======== ======== ========
</TABLE>
A summary of the significant temporary differences that give rise to deferred
income tax assets/(liabilities) follows (in thousands):
<TABLE>
<CAPTION>
December 31,
---------------------------
1999 1998
-------- --------
<S> <C> <C>
Accruals related
to discontinued operations $ 6,337 $ 6,958
Deferred compensation 5,656 4,598
Accrued insurance expense 4,667 4,491
Accrued state taxes 1,932 --
Allowances for uncollectible
accounts receivable 1,601 1,264
Amortization of intangibles 1,262 1,827
Severance payments 963 1,562
Other 3,519 3,145
-------- --------
Gross deferred income
tax assets 25,937 23,845
-------- --------
Accelerated tax depreciation (6,045) (4,649)
Market valuation of investments (2,259) (7,097)
Cash to accrual adjustments (2,123) (1,601)
Other (1,788) (1,756)
-------- --------
Gross deferred income
tax liabilities (12,215) (15,103)
-------- --------
Net deferred income
tax assets $ 13,722 $ 8,742
======== ========
</TABLE>
Included in other assets at December 31, 1999, are deferred income tax
assets of $4,428,000 (December 31, 1998--$1,935,000). Based on the Company's
history of prior operating earnings and its expectations for future growth,
management has determined that the operating income of the Company will, more
likely than not, be sufficient to ensure the full realization of the deferred
income tax assets.
The difference between the effective tax rate for continuing operations and
the statutory U.S. federal income tax rate is explained as follows:
<TABLE>
<CAPTION>
For the Years Ended
December 31,
------------------------------
1999 1998 1997
----- ---- ----
<S> <C> <C> <C>
Statutory U.S. federal
income tax rate 35.0% 35.0% 35.0%
Nondeductible amortization
of goodwill 4.5 4.2 5.0
State and local income taxes,
less federal income tax
benefit 4.0 2.4 4.6
Domestic dividend exclusion (2.3) (2.2) (2.6)
Tax adjustments related
to finalization of
prior years' audits (1.7) -- --
Tax benefit on dividends
paid to ESOPs (1.3) (1.3) (2.6)
Other--net (1.8) (.1) (.6)
---- ---- ----
Effective tax rate 36.4% 38.0% 38.8%
==== ==== ====
</TABLE>
Income taxes included in the components of other comprehensive income are as
follows (in thousands):
<TABLE>
<CAPTION>
For the Years Ended
December 31,
-----------------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Unrealized holding
gains/(losses) $(3,721) $ 673 $ 833
Reclassification
adjustment (1,701) (4,644) (4,583)
</TABLE>
The total amount of income taxes paid during the year ended December 31,
1999, was $13,982,000 (1998--$8,069,000; 1997--$36,849,000).
19
<PAGE> 12
6. CASH EQUIVALENTS
Included in cash and cash equivalents at December 31, 1999, are cash
equivalents in the amount of $14,514,000 (1998--$38,330,000). The cash
equivalents at both dates consist of investments in various money market funds
and repurchase agreements yielding interest at a weighted average rate of 2.5%
in 1999 and 4.8% in 1998.
From time to time throughout the year, the Company invests its excess cash in
repurchase agreements directly with major commercial banks. The collateral is
not physically held by the Company, but the term of such repurchase agreements
is less than 10 days. Investments of significant amounts are spread among a
number of banks, and the amounts invested in each bank are varied constantly.
7. PROPERTIES AND EQUIPMENT
A summary of properties and equipment follows (in thousands):
<TABLE>
<CAPTION>
December 31,
---------------------
1999 1998
--------- --------
<S> <C> <C>
Land $ 2,245 $ 2,243
Buildings 17,822 16,205
Transportation equipment 37,549 30,246
Machinery and equipment 28,471 24,867
Furniture and fixtures 35,116 30,670
Projects under construction 5,935 1,940
-------- --------
Total properties
and equipment 127,138 106,171
Less accumulated depreciation (55,410) (44,450)
-------- --------
Net properties
and equipment $ 71,728 $ 61,721
======== ========
</TABLE>
8. LONG-TERM DEBT AND LINES OF CREDIT
A summary of the Company's long-term debt follows (in thousands):
<TABLE>
<CAPTION>
December 31,
-------------------
1999 1998
-------- -------
<S> <C> <C>
Senior notes:
8.15%, due 2000 - 2004 $ 50,000 $50,000
7.31%, due 2005 - 2009 25,000 25,000
10.67%, due 1999 - 2003 4,000 5,000
Revolving Credit Agreement:
6.33%, due 2001 10,000 --
Employee Stock Ownership
Plans loan guarantees:
8.14% (1998--7.50%),
due 1999 - 2000 568 2,494
Other 731 2,306
-------- -------
Subtotal 90,299 84,800
Less current portion (11,719) (4,393)
-------- -------
Long-term debt, less
current portion $ 78,580 $80,407
======== =======
</TABLE>
SENIOR NOTES
In March 1997, the Company borrowed $25,000,000 from several insurance
companies. Principal is repayable in five annual installments of $5,000,000
beginning on March 15, 2005, and bears interest at the rate of 7.31% per annum.
Interest is payable on March 15 and September 15 of each year.
In December 1992, the Company borrowed $50,000,000 from several insurance
companies. Principal is repayable in five annual installments of $10,000,000
beginning on December 15, 2000, and bears interest at the rate of 8.15% per
annum. Interest is payable on June 15 and December 15 of each year.
In November 1988, the Company borrowed $11,000,000 from a consortium of
insurance companies. Annual installments of $1,000,000 were due and paid
November 1, 1993 through 1999. The remaining $4,000,000 bears interest at the
rate of 10.67% with annual principal payments of $1,000,000 due on November 1,
2000 through 2003. Interest is payable on May 1 and November 1 of each year.
20
<PAGE> 13
REVOLVING CREDIT AGREEMENT AND LINES OF CREDIT
In June 1996, the Company entered into an amended revolving credit agreement
with Bank of America National Trust and Savings Association to borrow up to
$85,000,000 at any time during the five-year period ending June 20, 2001. Unpaid
principal, which amounts to $10,000,000 at December 31, 1999, is due on June 20,
2001. The interest rate is based on various stipulated market rates of interest.
In addition, the Company had approximately $26,600,000 of unused short-term
lines of credit with various banks at December 31, 1999.
EMPLOYEE STOCK OWNERSHIP PLANS ("ESOPs") LOAN GUARANTEES
The Company has guaranteed ESOP loans made by various institutional lenders.
Payments by the ESOPs, including both principal and interest, are due on March
31 and June 30, 2000. The loans are secured in part by the unallocated shares of
the Company's capital stock held by the ESOP trusts. Interest rates are subject
to adjustments for changes in rates of specified U.S. Treasury obligations, U.S.
federal statutory income tax rates and certain federal tax law changes.
The market value of the unallocated shares of the Company's capital stock
held by the ESOPs at December 31, 1999, based on that day's closing price of
$28.63, was $8,479,000 as compared with aggregate loan guarantees of $568,000.
OTHER
Other long-term debt has arisen from the assumption of loans in connection
with various acquisitions. Interest rates range from 7% to 9%, and the
obligations are due on various dates through 2009.
The following is a schedule by year of required long-term debt payments as of
December 31, 1999 (in thousands):
<TABLE>
<CAPTION>
<S> <C>
2000 $11,719
2001 21,129
2002 11,078
2003 11,059
2004 10,059
After 2004 25,255
-------
Total long-term debt $90,299
=======
</TABLE>
The various loan agreements contain certain covenants which could restrict
the amount of cash dividend payments, net rental payments, treasury stock
purchases and certain other transactions of the Company. The Company does not
anticipate that the restrictions imposed by the agreements will materially
restrict its future operations or ability to pay dividends.
The total amount of interest paid during the year ended December 31, 1999,
was $6,706,000 (1998--$6,994,000; 1997--$9,949,000). Total interest capitalized
during the year ended December 31, 1999, was $927,000 (1998--$308,000;
1997--nil).
9. OTHER LIABILITIES
At December 31, 1999, other current liabilities included accrued insurance
liabilities of $14,336,000 and accrued wages of $5,888,000 (1998--$12,600,000
and $5,408,000, respectively). Other liabilities at December 31, 1999, include
deferred compensation liabilities totaling $12,896,000 (1998--$9,993,000).
At December 31, 1999, the Company's accrual for its estimated liability for
potential environmental cleanup and related costs arising from the sale of
DuBois Chemicals Inc. ("DuBois") amounts to $4,157,000. Of this balance,
$3,657,000 is included in other liabilities and $500,000 is included in other
current liabilities. The Company is contingently liable for additional
DuBois-related environmental cleanup and related costs up to a maximum of
$16,890,000. On the basis of a continuing evaluation of the Company's potential
liability by the Company's environmental adviser, management believes that it is
not probable this additional liability will be paid. Accordingly, no provision
for this contingent liability has been recorded. Although it is not presently
possible to reliably project the timing of payments related to the Company's
potential liability for environmental costs, management believes that any
adjustments to its recorded liability will not materially adversely affect its
financial position or results of operations.
21
<PAGE> 14
10. PENSION AND RETIREMENT PLANS
Retirement obligations under various plans cover substantially all full-time
employees who meet age and/or service eligibility requirements. The major plans
providing retirement benefits to the Company's employees are defined
contribution plans.
The Company has established two ESOPs which purchased a total of $56,000,000
of the Company's capital stock. Until December 1997, the ESOPs were financed by
loans from banks and insurance companies, and payment was guaranteed by the
Company. Due to the sales of Omnia and National in 1997, the Company
restructured the ESOPs and internally financed approximately $16.2 million of
the $21.8 million ESOP loans outstanding at December 31, 1997. Prior to
September 30, 1997, substantially all Chemed headquarters and Omnia employees
and substantially all employees of National not covered by collective bargaining
agreements were participants in the ESOPs. Beginning January 1, 1998, eligible
employees of Roto-Rooter began to participate in the ESOPs. Eligible employees
of Roto-Rooter and Patient Care are also covered by other defined contribution
plans.
Expenses charged to continuing operations for the Company's pension and
profit-sharing plans, ESOPs, excess benefit plans and other similar plans
comprise the following (in thousands):
<TABLE>
<CAPTION>
For the Years Ended
December 31,
-----------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
ESOPs:
Interest expense $ 23 $ 173 $ 336
Compensation cost 1,057 1,038 1,426
Pension, profit-sharing
and other similar plans 7,255 3,471 3,586
------ ------ ------
Total $8,335 $4,682 $5,348
====== ====== ======
Dividends on ESOP shares
used for debt service $1,502 $1,643 $2,570
====== ====== ======
</TABLE>
At December 31, 1999, there were 401,282 allocated shares (December 31,
1998--356,915 shares) and 296,157 unallocated shares (December 31, 1998--376,346
shares) in the ESOP trusts.
The Company has an excess benefit plan for key employees whose participation
in the ESOPs is limited by ERISA rules. Benefits are determined based on
theoretical participation in the qualified ESOPs. Prior to September 1, 1998,
the value of these benefits was invested in shares of the Company's stock and in
mutual funds, which were held by grantor trusts. Beginning September 1, 1998,
current benefits are invested in only mutual funds and participants are not
permitted to diversify accumulated benefits which have been invested in shares
of the Company's stock. At December 31, 1999, the trusts' assets invested in
shares of the Company's capital stock are included in treasury stock, and the
corresponding liability is included in a separate component of shareholders'
equity. The assets of these excess benefit plans and of Roto-Rooter and Service
America excess benefits plans, all of which are invested in various mutual
funds, are included in other assets, and the corresponding liabilities are
included in other liabilities. At December 31, 1999, these trusts held 156,852
shares of the Company's stock (December 31, 1998--147,310 shares).
11. LEASE ARRANGEMENTS
The Company, as lessee, has operating leases which cover its corporate office
headquarters; various plant, warehouse and office facilities; office equipment;
and transportation equipment. The remaining terms of these leases range from one
year to eight years, and in most cases, management expects that these leases
will be renewed or replaced by other leases in the normal course of business.
All major plants and warehouses and substantially all equipment are owned by the
Company.
The following is a summary of future minimum rental payments and sublease
rentals to be received under operating leases that have initial or remaining
noncancelable terms in excess of one year at December 31, 1999 (in thousands):
<TABLE>
<CAPTION>
<S> <C>
2000 $ 8,760
2001 7,811
2002 6,884
2003 5,750
2004 5,122
After 2004 7,265
-------
Total minimum rental payments 41,592
Less minimum sublease rentals (4,781)
-------
Net minimum rental payments $36,811
=======
</TABLE>
22
<PAGE> 15
Chemed Corporation and Subsidiary Companies
Total rental expense incurred under operating leases for continuing
operations follows (in thousands):
<TABLE>
<CAPTION>
For the Years Ended
December 31,
-----------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Total rental payments $ 12,265 $ 9,540 $ 9,993
Less sublease rentals (1,914) (1,602) (2,426)
-------- -------- --------
Net rental expense $ 10,351 $ 7,938 $ 7,567
======== ======== ========
</TABLE>
12. FINANCIAL INSTRUMENTS
The following methods and assumptions are used in estimating the fair
value of each class of the Company's financial instruments:
o For cash and cash equivalents, accounts receivable, statutory deposits
and accounts payable, the carrying amount is a reasonable estimate of
fair value because of the liquidity and short-term nature of these
instruments.
o For other investments and other assets, fair value is based upon
quoted market prices for these or similar securities, if available.
Included in other investments, below, is the Company's investment in
privately held Vitas Healthcare Corporation ("Vitas"), which provides
noncurative care to chronically ill patients. Since it is not
considered practicable to obtain an appraisal of the value of Vitas
Common Stock Purchase Warrants ("Warrants"), it has been assumed that
the market value of the Warrants is equal to book value at December
31, 1999, and December 31, 1998 ($1,500,000). The value of the Vitas
9% Cumulative Preferred Stock ("Preferred") is based on the present
value of the mandatory redemption payments, using an interest rate of
9.0%, a rate which management believes is reasonable in view of risk
factors attendant to the investment. During 1998, the Company and
Vitas agreed to extend the redemption date of the Preferred to April
1, 2000. It is considered reasonably possible that the redemption date
will again be extended in the year 2000.
o The fair value of the Company's long-term debt is estimated by
discounting the future cash outlays associated with each debt
instrument using interest rates currently available to the Company for
debt issues with similar terms and remaining maturities.
The estimated fair values of the Company's financial instruments are as
follows (in thousands):
<TABLE>
<CAPTION>
Carrying Fair
December 31, Amount Value
- ------------ ------ -----
<S> <C> <C>
1999
OTHER INVESTMENTS(a) $37,849 $37,489
LONG-TERM DEBT 90,299 89,680
1998
Other investments(a) $55,778 $55,778
Long-term debt 84,800 90,058
</TABLE>
(a) Amounts include $27,243,000 invested in the Preferred, which is recorded
in other investments.
The Company has classified its investments in equity securities and
certain debt securities as either trading or available-for-sale. The trading
category includes those investments which are held principally for sale in the
near term. All other investments are classified in the available-for-sale
category. Investments included in cash equivalents are considered to be trading
securities, and all other investments are considered to be available-for-sale.
Disclosures regarding the Company's investments, all of which are
equity securities classified as available-for-sale, are summarized below (in
thousands):
<TABLE>
<CAPTION>
December 31,
----------------
1999 1998
------- -------
<S> <C> <C>
Aggregate fair value $37,849 $55,778
Gross unrealized holding gains 5,290 20,466
Gross unrealized holding losses 70 60
Amortized cost 32,629 35,372
</TABLE>
The chart below summarizes information with respect to
available-for-sale securities sold during the period (in thousands):
<TABLE>
<CAPTION>
For the Years Ended
December 31,
-------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Proceeds from sale $ 7,701 $14,963 $14,060
Gross realized gains 4,675 12,857 12,248
Gross realized losses 14 268 13
</TABLE>
23
<PAGE> 16
13. EARNINGS PER SHARE
Diluted earnings per share were calculated as follows (in thousands, except
per share data):
<TABLE>
<CAPTION>
Income from Continuing Operations Net Income
-------------------------------------- ---------------------------------------
Income Shares Income Income Shares Income
For the Years Ended December 31, (Numerator) (Denominator) Per Share (Numerator) (Denominator) Per Share
- ----------------------------- ---------- ------------- --------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1999
Earnings $19,696 10,470 $1.88 $19,696 10,470 $1.88
===== =====
Nonvested stock awards -- 43 -- 43
Dilutive stock options -- 1 -- 1
------- ------ ------- ------
Diluted earnings $19,696 10,514 $1.87 $19,696 10,514 $1.87
======= ====== ===== ======= ====== =====
1998
Earnings $19,909 10,058 $1.98 $19,909 10,058 $1.98
===== =====
Nonvested stock awards -- 37 -- 37
Dilutive stock options -- 5 -- 5
------- ------ ------- ------
Diluted earnings $19,909 10,100 $1.97 $19,909 10,100 $1.97
======= ====== ===== ======= ====== =====
1997
Earnings $17,077 9,940 $1.72 $30,237 9,940 $3.04
===== =====
Nonvested stock awards -- 34 -- 34
Dilutive stock options -- 40 -- 40
Subsidiary stock options -- -- (10) --
------- ------ ------- ------
Diluted earnings $17,077 10,014 $1.71 $30,227 10,014 $3.02
======= ====== ===== ======= ====== =====
</TABLE>
Earnings per share and diluted earnings per share from discontinued
operations in 1997 were $1.32 and $1.31, respectively.
During 1999, the following options, whose exercise prices were greater than
the average market price during most of the year (and therefore excluded from
the computation of diluted earnings per share), were outstanding at December 31,
1999:
<TABLE>
<CAPTION>
Number of Exercise
Grant Date Options Price
----------- ---------- --------
<S> <C> <C>
May 1999 497,625 $32.19
May 1997 171,688 35.94
March 1998 165,112 39.13
May 1996 162,793 38.75
May 1995 89,713 32.19
February 1995 68,000 33.63
March 1994 37,925 32.13
April 1998 12,000 40.53
May 1998 1,750 37.78
</TABLE>
During 1998, the following options, whose exercise prices were greater than
the average market price during the last six months of the year (and therefore
excluded from the computation of diluted earnings per share), were outstanding
at December 31, 1998:
<TABLE>
<CAPTION>
Number of Exercise
Grant Date Options Price
----------- ---------- --------
<S> <C> <C>
May 1997 196,063 $35.94
March 1998 179,600 39.13
May 1996 164,150 38.75
April 1998 14,000 40.53
May 1998 2,000 37.78
</TABLE>
During 1997, all stock options outstanding were dilutive at some time during
the year.
14. STOCK INCENTIVE PLANS
The Company has eight Stock Incentive Plans under which 2,850,000 shares of
Chemed Capital Stock are issued to key employees pursuant to the grant of stock
awards and/or options to purchase such shares. All options granted under these
plans provide for a purchase price equal to the market value of the stock at the
date of grant. Two plans, covering a total of 700,000 shares, were adopted in
May 1999.
Under the plan adopted in 1983, both nonstatutory and incentive stock options
have been granted. Incentive stock options granted under the 1983 plan become
exercisable in full six months following the date of the grant; nonstatutory
options granted under the 1983 plan become exercisable in four annual
installments commencing six months after the date of grant. Under the Long Term
Incentive Plan, adopted in 1999, up to 250,000 shares may be issued to employees
who are not officers or directors of the Company or its subsidiaries.
The other plans are not qualified, restricted or incentive stock option plans
under the Internal Revenue Code. Options generally become exercisable six months
following the date of grant in either three or four equal annual installments.
24
<PAGE> 17
Chemed Corporation and Subsidiary Companies
Data relating to the Company's capital stock issued to employees follow:
<TABLE>
<CAPTION>
1999 1998 1997
----------------------- --------------------- ---------------------
NUMBER Number Number
OF AVERAGE of Average of Average
SHARES PRICE Shares Price Shares Price
--------- --------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Stock options:
Outstanding at January 1.................... 772,001 $ 36.31 680,013 $ 34.93 644,025 $ 33.70
Granted..................................... 510,650 32.19 199,250 39.23 212,800 35.94
Exercised................................... -- -- (93,599) 32.43 (166,712) 31.45
Forfeited................................... (55,895) 36.10 (13,663) 36.87 (10,100) 34.94
--------- ------- -------
Outstanding at December 31.................. 1,226,756 34.60 772,001 36.31 680,013 34.93
========= ======= =======
Exercisable at December 31.................. 722,375 35.21 482,746 35.29 369,279 34.03
========= ======= =======
Stock awards issued............................ 57,816 31.38 25,039 39.65 86,149 35.48
========= ======= =======
</TABLE>
The weighted average contractual life of options outstanding at December
31, 1999, was 7.7 years. The range of exercise prices for these options was from
$21.94 to $40.53. At December 31, 1999, there were 310,906 shares available for
granting of stock options and awards.
Total compensation cost recognized for stock awards for continuing
operations was $1,620,000 in 1999 (1998--$1,309,000; 1997--$886,000). The shares
of capital stock were issued to key employees and directors at no cost and
generally are restricted as to the transfer of ownership. Restrictions covering
between 7% and 33% of each holder's shares lapse annually.
Statement of Financial Accounting Standards No.123, Accounting for
Stock-Based Compensation, requires the presentation of pro forma data assuming
all options granted after December 31, 1994, are recorded at fair value.
Summarized below are pro forma data developed by applying the Black-Scholes
valuation method to the Company's stock options (in thousands, except per share
data):
<TABLE>
<CAPTION>
For the Years Ended
December 31,
----------------------------------------
Pro Forma Results 1999 1998 1997
- ----------------- ---------- ---------- ----------
<S> <C> <C> <C>
Net income $ 18,972 $ 19,138 $ 29,802
Earnings per share 1.81 1.90 3.00
Diluted earnings
per share 1.80 1.89 2.98
Per share average
fair value of
options granted 3.43 5.21 5.74
Assumptions
- ----------------
Average risk-free
interest rate 5.8% 5.6% 6.6%
Expected volatility 19.7 19.0 21.4
Expected life
of options 6 yrs. 6 yrs. 6 yrs.
</TABLE>
For all periods, it was assumed that the annual dividend would be increased
$.01 per share per quarter in the fourth quarter of every odd-numbered year.
This assumption was based on the facts and circumstances which existed at the
time options were granted and should not be construed to be an indication of
future dividend amounts to be paid.
In view of the fact that the fair value method of accounting is applied to
option grants only after 1994, the above pro forma data do not reflect the full
impact of applying such fair value method to all of Chemed's stock options.
During 1999, the Company purchased 101,500 shares of its capital stock in
open-market transactions and sold these shares to certain employees at fair
market value in exchange for interest-bearing notes secured by the shares. The
outstanding principal of $2,731,000 at December 31, 1999, is classified as a
reduction of stockholders' equity.
15. SUBSEQUENT EVENT
In December 1999, the Company commenced an Exchange Offer whereby
stockholders were permitted to exchange up to 2,000,000 shares of capital stock
for Convertible Trust Preferred Securities ("Trust Securities") on a one-for-one
basis. When the Exchange Offer expired on January 31, 2000, approximately
576,000 capital shares were exchanged for Trust Securities with a redemption
value of approximately $15.5 million.
The Trust Securities pay an annual cash distribution of $2.00 per security
(payable at the quarterly rate of $.50 per security commencing in March 2000)
and are convertible into capital stock at a price of $37 per security. The Trust
Securities mature in 30 years and are callable after three years.
The impact of the Exchange Offer on earnings per share is not material.
25
<PAGE> 18
SEGMENT DATA
Chemed Corporation and Subsidiary Companies
<TABLE>
<CAPTION>
(in thousands)
For the Years Ended December 31, 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues by Type of Service
Roto-Rooter
Plumbing repair and maintenance ........................... $102,218 $ 80,150 $ 59,986
Sewer and drain cleaning .................................. 96,629 75,599 66,843
HVAC repair and maintenance ............................... 14,928 12,164 5,334
Industrial and municipal sewer and drain cleaning ......... 11,857 10,527 9,028
Other products and services ............................... 17,187 13,610 12,692
-------- -------- --------
Total Roto-Rooter ................................... 242,819 192,050 153,883
-------- -------- --------
Patient Care
Home health aides ......................................... 90,580 85,732 86,038
Registered nurses ......................................... 19,900 16,151 18,114
Live-in aides ............................................. 8,138 9,618 9,707
Other services ............................................ 10,262 6,781 7,284
-------- -------- --------
Total Patient Care .................................. 128,880 118,282 121,143
-------- -------- --------
Service America
Repair service contracts .................................. 57,520 56,753 54,318
Demand repair services .................................... 16,380 14,198 12,385
-------- -------- --------
Total Service America ............................... 73,900 70,951 66,703
======== ======== ========
Other ........................................................... 7,994 -- --
-------- -------- --------
Total service revenues and sales .................... $453,593 $381,283 $341,729
======== ======== ========
Aftertax Earnings by Segment(a)
Roto-Rooter ............................................... $ 14,562 $ 10,530 $ 9,491
Patient Care .............................................. 3,244(e) 3,432 3,212
Service America ........................................... 2,342 2,286 2,196
Other ..................................................... 42 -- --
-------- -------- --------
Total segment earnings .............................. 20,190 16,248 14,899
Corporate
Gains on sales of investments ....................... 2,960 7,945 7,652
Overhead ............................................ (4,701) (4,955) (4,794)
Net investing and financing income/(expense) ........ 1,247 1,408 (1,482)
Acquisition expenses ................................ -- (495) --
Discontinued operations ............................. -- -- 13,160
Other ............................................... -- (242) 802
-------- -------- --------
Net income .................................... $ 19,696 $ 19,909 $ 30,237
======== ======== ========
Interest Income
Roto-Rooter ............................................... $ 19 $ 191 $ 24
Patient Care .............................................. 15 13 48
Service America ........................................... 979 1,126 1,029
-------- -------- --------
Subtotal ............................................ 1,013 1,330 1,101
Corporate ................................................. 847 2,913 2,687
Intercompany eliminations ................................. (271) (194) (101)
-------- -------- --------
Total interest income ......................... $ 1,589 $ 4,049 $ 3,687
======== ======== ========
</TABLE>
26
<PAGE> 19
SEGMENT DATA (CONTINUED)
<TABLE>
<CAPTION>
1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest Expense
Roto-Rooter ............................................... $ 2,119 $ 957 $ 145
Patient Care .............................................. 760 536 613
Service America ........................................... -- -- --
-------- -------- --------
Subtotal ............................................ 2,879 1,493 758
Corporate ................................................. 6,587 6,759 10,351
Intercompany eliminations ................................. (2,608) (1,459) (557)
-------- -------- --------
Total interest expense ........................ $ 6,858 $ 6,793 $ 10,552
======== ======== ========
Income Tax Provision
Roto-Rooter ............................................... $ 11,713 $ 8,744 $ 7,684
Patient Care .............................................. 1,159 1,144 1,764
Service America ........................................... 2,404 2,405 2,309
Other ..................................................... 27 -- --
-------- -------- --------
Subtotal ............................................ 15,303 12,293 11,757
Corporate ................................................. (4,046) (77) (953)
-------- -------- --------
Total income tax provision .................... $ 11,257 $ 12,216 $ 10,804
======== ======== ========
Identifiable Assets
Roto-Rooter ............................................... $183,797 $175,036 $148,352
Patient Care .............................................. 86,277 67,961 63,154
Service America ........................................... 69,632 71,049 70,266
Other ..................................................... 3,354 -- --
-------- -------- --------
Total identifiable assets ........................... 343,060 314,046 281,772
Corporate assets(b) ....................................... 78,243 115,658 167,066
-------- -------- --------
Total assets .................................. $421,303 $429,704 $448,838
======== ======== ========
Additions to Long-Lived Assets(c)
Roto-Rooter ............................................... $ 17,208 $ 27,969 $ 16,965
Patient Care .............................................. 12,001 9,744 8,765
Service America ........................................... 5,111 3,294 6,032
Other ..................................................... 416 -- --
-------- -------- --------
Subtotal ............................................ 34,736 41,007 31,762
Corporate assets .......................................... 1,010 506 2,262
-------- -------- --------
Total additions ............................... $ 35,746 $ 41,513 $ 34,024
======== ======== ========
Depreciation and Amortization(d)
Roto-Rooter ............................................... $ 11,707 $ 9,378 $ 7,387
Patient Care .............................................. 2,686 2,160 1,951
Service America ........................................... 3,790 3,726 3,775
Other ..................................................... 396 -- --
-------- -------- --------
Subtotal ............................................ 18,579 15,264 13,113
Corporate assets(b) ....................................... 1,550 2,020 2,050
-------- -------- --------
Total depreciation and amortization ........... $ 20,129 $ 17,284 $ 15,163
======== ======== ========
</TABLE>
(a) Aftertax earnings represent the net income of the business segments,
excluding acquisition expenses.
(b) Corporate assets consist primarily of cash and cash equivalents, marketable
securities, properties and equipment and other investments.
(c) Long-lived assets include goodwill, identifiable intangible assets and
property and equipment.
(d) Depreciation and amortization include amortization of goodwill, identifiable
intangible assets and other assets.
(e) Amount includes $872,000 aftertax income from favorable adjustments to prior
years' cost reports.
27
<PAGE> 20
SELECTED FINANCIAL DATA
Chemed Corporation and Subsidiary Companies
<TABLE>
<CAPTION>
(in thousands, except per share data, employee numbers,
footnote data, ratios and percentages)
1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Summary of Operations
Continuing operations
Total service revenues and sales ........................... $453,593 $381,283 $341,729
Gross profit ............................................... 176,834 144,135 129,082
Depreciation ............................................... 13,129 10,649 8,622
Income from operations ..................................... 26,785 19,340 19,482
Income from continuing operations
before capital gains(d) ................................. 16,736 11,964 9,425
Income from continuing operations .......................... 19,696 19,909 17,077
Discontinued operations(a) .................................... -- -- 13,160
Cumulative effect of a change in accounting principle ......... -- -- --
Net income .................................................... 19,696 19,909 30,237
Earnings per share:
Income from continuing operations
before capital gains(d) ................................. $ 1.60 $ 1.19 $ .95
Income from continuing operations .......................... 1.88 1.98 1.72
Net income ................................................. 1.88 1.98 3.04
Average number of shares outstanding ....................... 10,470 10,058 9,940
Diluted earnings per share:
Income from continuing operations
before capital gains(d) ................................. $ 1.59 $ 1.18 $ .94
Income from continuing operations .......................... 1.87 1.97 1.71
Net income ................................................. 1.87 1.97 3.02
Average number of shares outstanding ....................... 10,514 10,100 10,014
Cash dividends per share ...................................... $ 2.12 $ 2.12 $ 2.09
Financial Position--Year-End
Cash, cash equivalents and marketable securities .............. $ 17,282 $ 41,358 $ 70,958
Working capital ............................................... 13,374 33,533 83,103
Properties and equipment,
at cost less accumulated depreciation ...................... 71,728 61,721 53,089
Total assets .................................................. 421,303 429,704 448,838
Long-term debt ................................................ 78,580 80,407 83,720
Stockholders' equity .......................................... 212,044 223,356 228,120
Book value per share .......................................... $ 20.40 $ 21.45 $ 22.64
Book value per share assuming dilution ........................ 20.31 21.36 22.54
Other Statistics--Continuing Operations
Net cash provided/(used) by continuing operations ............. $ 27,542 $ 20,778 $ 23,747
Capital expenditures .......................................... 22,411 21,997 20,117
Number of employees(b) ........................................ 7,817 7,671 6,849
Number of service and sales representatives ................... 5,796 5,759 5,101
Dividend payout ratio(c) ...................................... 112.8% 107.1% 68.8%
Debt to total capital ratio ................................... 29.9 27.5 28.1
Return on average equity(c) ................................... 9.1 8.9 13.8
Return on average total capital employed(c) ................... 7.7 7.7 9.9
Current ratio ................................................. 1.14 1.37 1.88
</TABLE>
(a) Discontinued operations include National Sanitary Supply Company and The
Omnia Group, discontinued in 1997; accrual adjustments in 1997 relating to
the gain on the sale of Omnicare Inc. ("Omnicare"); Omnicare, discontinued
in 1994; accrual adjustments from 1992 through 1996 related to the gain on
the sale of DuBois Chemicals Inc. ("DuBois"); DuBois, sold in 1991; and
adjustments to accruals in 1991 related to operations discontinued in 1986.
(b) Numbers reflect full-time-equivalent employees.
(c) These computations are based on net income and, with respect to return on
average capital employed, various related adjustments.
(d) Amounts exclude gains on sales of investments.
28
<PAGE> 21
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$301,213 $270,449 $240,994 $136,428 $104,688 $ 84,774
118,440 103,412 90,189 54,325 44,750 39,034
7,353 6,505 5,833 3,914 2,854 2,811
17,481 14,102 10,703 7,388 4,599 996
7,386 5,833 3,650 3,289 6,761 4,204
25,117 11,715 7,027 7,563 8,660 6,788
7,211 11,467 36,895 10,266 6,991 46,179
-- -- -- 1,651 -- --
32,328 23,182 43,922 19,480 15,651 52,967
$ .75 $ .59 $ .37 $ .34 $ .69 $ .42
2.56 1.19 .71 .78 .89 .68
3.30 2.36 4.47 2.00 1.60 5.27
9,801 9,830 9,830 9,756 9,783 10,043
$ .74 $ .58 $ .36 $ .33 $ .68 $ .42
2.54 1.18 .70 .76 .88 .67
3.26 2.33 4.42 1.97 1.59 5.27
9,879 9,898 9,907 9,824 9,838 10,055
$ 2.08 $ 2.06 $ 2.04 $ 2.01 $ 2.00 $ 1.97
$ 14,028 $ 30,497 $ 24,866 $ 20,133 $ 51,142 $ 82,994
8,996 7,159 (14,573) (29,070) 5,574 48,991
40,661 37,860 35,677 33,873 26,419 25,951
509,361 476,732 453,801 385,922 363,960 330,712
158,140 85,317 92,033 97,906 103,580 77,007
217,891 208,657 186,320 137,151 133,511 139,407
$ 21.89 $ 21.18 $ 18.89 $ 14.00 $ 13.68 $ 14.08
21.76 21.06 18.76 13.91 13.62 14.07
$ 13,519 $ 5,385 $ 13,378 $ 6,029 $ 8,583 $ 10,828
10,988 9,219 9,606 7,420 3,835 7,008
5,884 5,278 4,497 2,711 1,726 1,666
4,315 3,835 3,203 1,832 1,090 1,069
63.0% 87.3% 45.6% 101.0% 125.0% 37.4%
44.6 32.8 36.6 44.2 45.2 34.8
15.3 11.9 28.4 14.3 11.6 42.5
10.9 9.3 16.4 9.7 8.7 24.4
1.10 1.07 .86 .68 1.08 1.82
</TABLE>
29
<PAGE> 22
SUPPLEMENTAL REVENUE AND PROFIT STATISTICS
BY BUSINESS SEGMENT
Chemed Corporation and Subsidiary Companies
(in thousands, except percentages and footnote data)
<TABLE>
<CAPTION>
Continuing Operations
----------------------------------------------------------------
Roto- Patient Service
Rooter Care America Other Total
- ------------------------------------------------------------------------------------------------------------------------------
SERVICE REVENUES AND SALES
<S> <C> <C> <C> <C> <C>
1999 . . . . . . . . . . . . . . . . . . . . $242,819 $128,880 $ 73,900 $ 7,994 $453,593
1998 . . . . . . . . . . . . . . . . . . . . 192,050 118,282 70,951 -- 381,283
1997 . . . . . . . . . . . . . . . . . . . . 153,883 121,143 66,703 -- 341,729
1996 . . . . . . . . . . . . . . . . . . . . 140,163 99,565 61,485 -- 301,213
1995 . . . . . . . . . . . . . . . . . . . . 121,999 90,727 57,723 -- 270,449
1994 . . . . . . . . . . . . . . . . . . . . 109,098 69,064 62,832 -- 240,994
1993 . . . . . . . . . . . . . . . . . . . . 95,555 -- 40,873 -- 136,428
1992 . . . . . . . . . . . . . . . . . . . . 86,185 -- 18,503 -- 104,688
1991 . . . . . . . . . . . . . . . . . . . . 79,217 -- 5,557 -- 84,774
% OF TOTAL
1999 . . . . . . . . . . . . . . . . . . . . 54% 28% 16% 2% 100%
1991 . . . . . . . . . . . . . . . . . . . . 93 -- 7 -- 100
OPERATING PROFIT(a)
1999 . . . . . . . . . . . . . . . . . . . $ 26,310 $ 5,157(d) $ 3,679 $ 71 $ 35,217
1998 . . . . . . . . . . . . . . . . . . . 19,244(b) 5,104 3,491 -- 27,839
1997 . . . . . . . . . . . . . . . . . . . 17,256 5,541 3,443 -- 26,240
1996 . . . . . . . . . . . . . . . . . . . 15,707 5,592 2,503 -- 23,802
1995 . . . . . . . . . . . . . . . . . . . 13,134(c) 4,923 1,906 -- 19,963
1994 . . . . . . . . . . . . . . . . . . . 12,071 2,772 3,061 -- 17,904
1993 . . . . . . . . . . . . . . . . . . . 9,854 -- 3,708 -- 13,562
1992 . . . . . . . . . . . . . . . . . . . 8,626 -- 1,841 -- 10,467
1991 . . . . . . . . . . . . . . . . . . . 7,328 -- 581 -- 7,909
% OF TOTAL
1999 . . . . . . . . . . . . . . . . . . . 75% 15% 10% -- 100%
1991 . . . . . . . . . . . . . . . . . . . 93 -- 7 -- 100
</TABLE>
(a) Operating profit is total service revenues and sales less operating
expenses and includes 100% of all consolidated operations. In computing
operating profit, none of the following items has been added or deducted:
general corporate expenses, interest expense, and other income--net.
(b) Amount includes $752,000 of expenses incurred in connection with
pooling-of-interest business combinations in 1998.
(c) Amount includes nonrecurring charges of $538,000 incurred as a result of
discussions related to Chemed's proposal to acquire the 42% minority
interest in Roto-Rooter.
(d) Amount includes $1,453,000 pretax income from favorable adjustments to
prior years' cost reports.
30
<PAGE> 23
UNAUDITED SUMMARY OF QUARTERLY RESULTS
Chemed Corporation and Subsidiary Companies
<TABLE>
<CAPTION>
(in thousands, except per share data)
First Second Third Fourth Total
1999 Quarter Quarter Quarter Quarter Year
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total service revenues and sales(a) .................. $105,735 $111,385 $114,428 $122,045 $453,593
--------- --------- --------- --------- ---------
Gross profit(a) ...................................... $ 40,676 $ 43,012 $ 44,390 $ 48,756 $176,834
--------- --------- --------- --------- ---------
Income from operations ............................... $ 5,792 $ 6,199 $ 7,844 $ 6,950 $ 26,785
Interest expense ..................................... (1,594) (1,507) (1,448) (2,309) (6,858)
Other income--net .................................... 4,609 3,735 1,128 1,554 11,026
--------- --------- --------- --------- ---------
Income before income taxes ........................ 8,807 8,427 7,524 6,195 30,953
Income taxes ......................................... (3,452) (3,313) (3,112) (1,380) (11,257)
--------- --------- --------- --------- ---------
Net Income ........................................... $ 5,355 $ 5,114 $ 4,412 $ 4,815 $ 19,696
========= ========= ========= ========= =========
Earnings Per Share
Net income ........................................ $ .51 $ .49 $ .42 $ .46 $ 1.88
========= ========= ========= ========= =========
Average number of shares outstanding .............. 10,471 10,473 10,480 10,455 10,470
========= ========= ========= ========= =========
Diluted Earnings Per Share
Net income ........................................ $ .51 $ .49 $ .42 $ .46 $ 1.87
========= ========= ========= ========= =========
Average number of shares outstanding .............. 10,516 10,512 10,527 10,500 10,514
========= ========= ========= ========= =========
</TABLE>
(a) Amounts for each of the first three quarters of 1999 were reclassified to
conform with the fourth quarter presentation.
<TABLE>
<CAPTION>
1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total service revenues and sales ..................... $88,412 $94,943 $96,517 $101,411 $381,283
--------- --------- --------- --------- ---------
Gross profit ......................................... $32,536 $36,582 $36,695 $ 38,322 $144,135
--------- --------- --------- --------- ---------
Income from operations ............................... $ 3,745 $ 5,246 $ 5,891 $ 4,458 $ 19,340
Interest expense ..................................... (1,758) (1,841) (1,798) (1,396) (6,793)
Other income--net .................................... 8,333 5,612 3,691 1,942 19,578
--------- --------- --------- --------- ---------
Income before income taxes ........................ 10,320 9,017 7,784 5,004 32,125
Income taxes ......................................... (4,069) (3,451) (3,092) (1,604) (12,216)
--------- --------- --------- --------- ---------
Net Income ........................................... $ 6,251 $ 5,566 $ 4,692 $ 3,400 $ 19,909
========= ========= ========= ========= =========
Earnings Per Share
Net income ........................................ $ .63 $ .56 $ .47 $ .33 $ 1.98
========= ========= ========= ========= =========
Average number of shares outstanding .............. 9,989 10,005 10,003 10,231 10,058
========= ========= ========= ========= =========
Diluted Earnings Per Share
Net income ........................................ $ .62 $ .55 $ .47 $ .33 $ 1.97
========= ========= ========= ========= =========
Average number of shares outstanding .............. 10,090 10,057 10,032 10,274 10,100
========= ========= ========= ========= =========
</TABLE>
31
<PAGE> 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Chemed Corporation and Subsidiary Companies
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Significant factors affecting the Company's consolidated cash flows during
1999 and financial position at December 31, 1999, include the following:
o Operations generated cash of $27.5 million;
o Capital expenditures totaled $22.4 million;
o The Company used $15.5 million of cash to finance purchase business
combinations;
o Sales of investments generated cash proceeds of $7.7 million; and
o The Company increased its long-term borrowings by $7.0 million.
The ratio of total debt to total capital was approximately 30% at December
31, 1999, and 28% at December 31, 1998. The Company's current ratio at December
31, 1999, was 1.1 as compared with 1.4 at December 31, 1998. This decline is
primarily attributable to the expenditure of $15.5 million of cash on business
combinations and capital expenditures of $22.4 million, offset by a $7.0 million
net increase in long-term debt during the year.
The Company had $101.6 million of unused lines of credit with various banks
at December 31, 1999.
CASH FLOW
The Company's cash flows for 1999 and 1998 are summarized as follows (in
millions):
<TABLE>
<CAPTION>
For the Years Ended
December 31,
-------------------
1999 1998
------- -------
<S> <C> <C>
Cash from continuing operations $ 27.5 $ 20.8
Proceeds from sales of investments 7.7 15.0
Cash dividends (22.5) (21.7)
------ ------
Cash excess after cash dividends 12.7 14.1
Capital expenditures (22.4) (22.0)
Business combinations (15.5) (14.8)
Net increase/(decrease) in
long-term debt (excluding
ESOP debt obligations) 7.0 (2.9)
Net uses from
discontinued operations (2.5) (5.6)
Other--net (3.4) 1.6
------ ------
Decrease in cash
and cash equivalents $(24.1) $(29.6)
====== ======
</TABLE>
For 1999, the cash excess from operations and sales of investments, less cash
dividend payments, was $12.7 million as compared with $14.1 million in 1998.
This excess was available to assist in funding the Company's capital expenditure
requirements.
In November 1999, the Board of Directors ("Board") announced a change in its
dividend policy in order to position the Company to take full advantage of
growth possibilities in 2000 and beyond. Under the new policy, in February 2000
the quarterly cash dividend, which has been $.53 per share for the past nine
quarters, was lowered to $.10 per share for the first quarter of 2000 (payable
on March 10 to holders of record February 18, 2000).
Also in November, the Board announced an Exchange Offer whereby stockholders
were permitted to exchange shares of capital stock for shares of Convertible
Trust Preferred Securities ("Trust Securities") on a one-for-one basis. The
Trust Securities pay an annual cash distribution of $2.00 per security and are
convertible into capital stock at a price of $37 per security. The offer expired
on January 31, 2000. Approximately 576,000 capital shares were exchanged for
Trust Securities with a redemption value of approximately $15.5 million. The
Trust Securities mature in 30 years and are callable after three years.
It is projected that the new dividend policy, combined with the distribution
requirement of the Trust Securities, will reduce the projected outlay for cash
dividends in 2000 by approximately $17 million as compared with the dividend
outlay for 1999. This cash will be used to accelerate acquisitions and to
finance internal growth. Nonetheless, the dividend rate is set each quarter with
a long-term perspective, taking into consideration the Company's financial
position, earnings and cash flow, as well as interest rates, market conditions
and other economic factors.
COMMITMENTS AND CONTINGENCIES
In connection with the sale of DuBois Chemicals Inc. ("DuBois"), the Company
provided allowances and accruals relating to several long-term costs, including
income tax matters, lease commitments and environmental costs. In the aggregate,
the Company believes these allowances and accruals are adequate as of
December 31, 1999.
32
<PAGE> 25
Chemed Corporation and Subsidiary Companies
Based on a recent assessment of Chemed's environmental-related liability
under the DuBois sale agreement, Chemed's adviser has estimated Chemed's
liability to be $4.2 million. As of December 31, 1999, the Company is
contingently liable for additional cleanup and related costs up to a maximum of
$16.9 million, for which no provision has been recorded.
The Company's various loan agreements and guarantees of indebtedness
contain certain restrictive covenants; however, management believes that such
covenants will not adversely affect the operations of the Company. Under the
most restrictive of these covenants, the Company projects that it can incur
additional debt of approximately $65 million as of December 31, 1999.
Since 1991, the Company has carried an investment in the mandatorily
redeemable preferred stock ($27 million par value) of Vitas Healthcare
Corporation ("Vitas"), a privately held provider of hospice services to the
terminally ill. During its three most recent fiscal years, Vitas has increased
net income and is continuing to pursue various long-term financing alternatives.
During 1998, Vitas and the Company agreed to extend the redemption dates on the
preferred stock to April 1, 2000, to facilitate Vitas' pursuit of long-term
financing alternatives. It is considered reasonably possible that the redemption
date will again be extended in 2000.
During 1999, Vitas made payments of $1.7 million on preferred dividends due
in 1999. An additional $1.2 million was paid in January 2000, leaving $715,000
in arrears as of January 31, 2000. Payment of the arrearage is anticipated
during the first half of 2000. On the basis of information currently available,
management believes its investment in Vitas is fully recoverable and that no
impairment exists.
It is management's opinion that the Company has no long-range commitments
that would have a significant impact on its liquidity, financial condition or
the results of its operations. Due to the nature of the environmental
liabilities, it is not possible to forecast the timing of the cash payments for
these potential liabilities. Based on the Company's available credit lines,
sources of borrowing and liquid investments, management believes its sources of
capital and liquidity are satisfactory for the Company's needs for the
foreseeable future.
RESULTS OF OPERATIONS
Set forth below by business segment are the growth in sales and service
revenues and the aftertax earnings margin:
<TABLE>
<CAPTION>
Percent Increase/(Decrease)
in Service Revenues and Sales
-----------------------------
1999 1998
vs.1998 vs.1997
------- -------
<S> <C> <C>
Roto-Rooter 26% 25%
Patient Care 9 (2)
Service America 4 6
Total 19 12
Aftertax Earnings
as a Percent of
Service Revenues and Sales
(Aftertax Margin)
-----------------------------
1999 1998 1997
---- ---- ----
Roto-Rooter 6.0% 5.5% 6.2%
Patient Care 2.5 2.9 2.7
Service America 3.2 3.2 3.3
Total 4.5 4.3 4.4
</TABLE>
1999 VERSUS 1998
The Roto-Rooter segment recorded service revenues and sales of $242,819,000
during 1999, an increase of 26% versus revenues of $192,050,000 in 1998. This
growth was attributable primarily to Roto-Rooter's plumbing and sewer and drain
cleaning businesses, both of which recorded 28% revenue increases for the 1999
period. Excluding businesses acquired in 1999 and 1998, this segment's total
revenues and net income for 1999 increased 14% and 30%, respectively, versus
amounts recorded in 1998. Including acquisitions, Roto-Rooter recorded a 38%
increase in aftertax earnings for 1999. The operating margin of this segment
increased .5%, primarily due to an increase in the gross profit margin.
Revenues of the Patient Care segment increased 9% from $118,282,000 in 1998
to $128,880,000 in 1999. Excluding the revenues of businesses acquired in 1998
and 1999, revenues for 1999 declined 2% versus revenues for 1998. This revenue
decline was anticipated and is primarily attributable to the implementation of
the Medicare provisions of the Balanced Budget Act of 1997. Higher workers'
compensation costs, as a percent of revenues, are primarily responsible for the
decline in the aftertax margin from 2.9% in 1998 to 2.5% in 1999.
33
<PAGE> 26
The Service America segment recorded total revenues of $73,900,000 during
1999, an increase of 4% versus revenues of $70,951,000 recorded in 1998. Retail
sales of Service America for 1999, which account for approximately 22% of total
sales, increased 15% versus such sales for 1998. Aftertax earnings for 1999
increased 2% versus aftertax earnings for 1998. The aftertax margin of this
segment was 3.2% in both 1999 and 1998.
Income from operations increased from $19,340,000 in 1998 to $26,785,000 in
1999, primarily as a result of significantly higher operating profit recorded by
Roto-Rooter during 1999.
Also reflecting strong operational performance by Roto-Rooter in 1999,
earnings before interest, taxes, depreciation and amortization ("EBITDA")
excluding capital gains and acquisition expenses totaled $52,109,000 in 1999, an
increase of 21% versus EBITDA for 1998.
Interest expense for 1999 totaled $6,858,000 versus expense of $6,793,000
recorded in 1998.
Other income declined from $19,578,000 in 1998 to $11,026,000 in 1999,
primarily as a result of lower gains on the sales of investments and lower
interest income in 1999.
The Company's effective income tax rate was 36.4% in 1999 as compared with
38.0% in 1998. The decline in the effective rate was largely attributable to
adjustments recorded during 1999 from the finalization of federal income tax
audits for prior years.
Income from continuing operations declined from $19,909,000 ($1.98 per share)
in 1998 to $19,696,000 ($1.88 per share) in 1999. Excluding acquisition expenses
in 1998 ($495,000 or $.05 per share) and realized investment gains ($2,960,000
in 1999 and $7,945,000 in 1998), income from continuing operations increased 34%
from $12,459,000 in 1998 ($1.24 per share) to $16,736,000 ($1.60 per share) in
1999.
1998 VERSUS 1997
The Roto-Rooter segment recorded service revenues and sales of $192,050,000
during 1998, an increase of 25% versus revenues of $153,883,000 in 1997. This
growth was attributable primarily to revenue increases of 34% and 13%,
respectively, in Roto-Rooter's plumbing and sewer and drain cleaning businesses
for 1998. Excluding businesses acquired in 1997 and 1998, this segment's total
revenues for 1998 increased 10% versus revenues recorded in 1997. Roto-Rooter
recorded an 11% increase in aftertax earnings for 1998 versus 1997, despite a
decline in its aftertax margin from 6.2% in 1997 to 5.5% in 1998. This margin
decline is due primarily to a lower gross margin in 1998, partially offset by
lower general and administrative expenses as a percentage of total revenues. The
lower gross margin is primarily due to a shift in product mix to plumbing repair
and HVAC services.
Revenues of the Patient Care segment declined 2% from $121,143,000 in 1997 to
$118,282,000 in 1998. Excluding the revenues of businesses acquired in 1997 and
1998, revenues for 1998 declined 8% versus revenues for 1997. These revenue
declines were anticipated and were attributable primarily to the implementation
of the Medicare provisions of the Balanced Budget Act of 1997. Good expense
control nearly offset the decline in Patient Care's gross margin and thus
contributed to the 7% increase in Patient Care's aftertax earnings for 1998. In
addition, a favorable income tax adjustment relating to the settlement of
certain state tax issues in 1998 aided in increasing Patient Care's aftertax
margin from 2.7% in 1997 to 2.9% in 1998.
The Service America segment recorded total revenues of $70,951,000 during
1998, an increase of 6% versus revenues of $66,703,000 recorded in 1997.
Aftertax earnings for 1998 increased 4% versus aftertax earnings for 1997. The
aftertax margin of this segment was 3.2% in 1998 as compared with 3.3% in 1997.
Income from operations declined from $19,482,000 in 1997 to $19,340,000 in
1998, primarily as a result of incurring $752,000 of acquisition expenses in
connection with pooling-of-interests transactions in 1998.
34
<PAGE> 27
EBITDA excluding capital gains and acquisition expenses totaled $43,126,000
in 1998, an increase of 8% versus EBITDA for 1997.
Interest expense for 1998 totaled $6,793,000, a decline of $3,759,000 versus
expense of $10,552,000 recorded in 1997, largely as a result of the reduction of
the Company's long-term debt.
Other income increased from $18,951,000 in 1997 to $19,578,000 in 1998,
primarily as a result of higher gains on the sales of investments in 1998
combined with higher interest income in 1998.
The Company's effective income tax rate was 38.0% in 1998 as compared with
38.8% in 1997.
Income from continuing operations increased from $17,077,000 ($1.72 per
share) in 1997 to $19,909,000 ($1.98 per share) in 1998. Excluding acquisition
expenses in 1998 ($495,000 or $.05 per share) and realized investment gains
($7,945,000 in 1998 and $7,652,000 in 1997), income from continuing operations
increased 32% from $9,425,000 in 1997 ($.95 per share) to $12,459,000 ($1.24 per
share) in 1998.
Net income for 1998 was $19,909,000 ($1.98 per share) and included aftertax
acquisition expenses of $495,000 ($.05 per share). Net income for 1997 was
$30,237,000 ($3.04 per share) and included $13,160,000 ($1.32 per share) from
discontinued operations (primarily related to The Omnia Group and National
Sanitary Supply Company).
YEAR 2000
The Company's Year 2000 ("Y2K") Project ("Project") has addressed the issue
of computer systems and hardware being unable to distinguish between the years
1900 and 2000. Mission-critical systems of all company operations were Y2K-ready
by December 31, 1999. In addition, in December 1999, Patient Care and its
Medicaid intermediaries began processing claims electronically with Y2K-ready
systems. Through January 31, 2000, the Company has experienced no significant
Y2K issues either internally or with its trading partners.
While the Company currently anticipates its systems and its key trading
partners' systems will operate without major incident throughout 2000, there can
be no assurance that the failure of systems outside its control or immediate
sphere of influence will not materially impact its operations.
REGULATORY ENVIRONMENT
Healthcare reform legislation enacted by Congress challenges healthcare
providers to provide quality services while facing mounting pressure to contain
costs associated with entitlement programs funded by the federal government.
Patient Care is adapting to the demands of this regulatory environment by
eliminating certain high-cost programs and by leveraging its existing
infrastructure to increase productivity.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 REGARDING FORWARD-LOOKING INFORMATION
This report contains forward-looking statements which are subject to certain
risks and uncertainties that could cause actual results to differ materially
from these statements and trends. Such factors include, but are not limited to,
the projected impact of reduced cash dividends, future dividend policy,
projected workers' compensation costs, contingent environmental liability, full
realization of deferred income tax assets, the projected impact of future
acquisitions upon company operations and the adequacy of Y2K-readiness of
systems outside the Company's sphere of influence. The Company's ability to deal
with the unknown outcomes of these events may affect the reliability of its
projections and other financial matters.
35
<PAGE> 28
CORPORATE OFFICERS AND DIRECTORS
CORPORATE OFFICERS
EDWARD L. HUTTON
Chairman & Chief Executive Officer
KEVIN J. MCNAMARA
President
TIMOTHY S. O'TOOLE
Executive Vice President & Treasurer
PAUL C. VOET
Executive Vice President
SANDRA E. LANEY
Senior Vice President & Chief Administrative Officer
ARTHUR V. TUCKER, JR.
Vice President & Controller
NAOMI C. DALLOB
Vice President & Secretary
JAMES H. DEVLIN
Vice President
THOMAS C. HUTTON
Vice President
SPENCER S. LEE
Vice President
DAVID J. LOHBECK
Vice President
JOHN M. MOUNT
Vice President
DAVID G. SPARKS
Vice President
JANELLE M. JESSIE
Assistant Vice President
ANTHONY D. VAMVAS III
Assistant Vice President
PAULA W. KITTNER
Assistant Treasurer
MARK W. STEPHENS
Assistant Treasurer
MARIANNE LAMEY
Assistant Controller
LAURA A. VOLKER
Assistant Controller
LISA A. DITTMAN
Assistant Secretary
JOYCE A. LAWRENCE
Assistant Secretary
DIRECTORS
EDWARD L. HUTTON
Chairman & Chief Executive Officer,
Chemed Corporation
KEVIN J. MCNAMARA
President, Chemed Corporation
RICK L. ARQUILLA
President & Chief Operating Officer,
Roto-Rooter Services Company
JAMES H. DEVLIN
Vice President, Chemed Corporation
CHARLES H. ERHART, JR.
Former President, W.R. Grace & Co. (retired)
JOEL F. GEMUNDER
President, Omnicare Inc.
PATRICK P. GRACE
Executive Vice President, Kingdom Group LLC;
President, MLP Capital Inc.
THOMAS C. HUTTON
Vice President, Chemed Corporation
WALTER L. KREBS
Former Senior Vice President & Chief Financial Officer,
Service America Systems Inc. (retired)
SANDRA E. LANEY
Senior Vice President & Chief Administrative Officer,
Chemed Corporation
SPENCER S. LEE
Vice President, Chemed Corporation;
Chairman & Chief Executive Officer, Roto-Rooter Inc.
JOHN M. MOUNT
Vice President, Chemed Corporation;
President & Chief Executive Officer,
Service America Systems Inc.
TIMOTHY S. O'TOOLE
Executive Vice President & Treasurer,
Chemed Corporation;
Chairman & Chief Executive Officer, Patient Care Inc.
DONALD E. SAUNDERS
President, DuBois Chemicals Division,
DiverseyLever Inc.
PAUL C. VOET
Executive Vice President, Chemed Corporation
GEORGE J. WALSH III
Partner, Gould & Wilkie LLP
(Law Firm, New York, New York)
DIRECTORS EMERITI
NEAL GILLIATT
HERMAN B WELLS
36
<PAGE> 29
CORPORATE INFORMATION
CORPORATE HEADQUARTERS
Chemed Corporation
2600 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202-4726
513-762-6900
www.chemed.com
- --------------------------------------------------------------------------------
TRANSFER AGENTS & REGISTRARS
Chemed Capital Stock:
Norwest Bank Minnesota, N.A.
Shareowner Services
All questions relating to administration of CHEMED
CAPITAL STOCK ownership must be handled by NORWEST.
- - Mailing Address:
Norwest Bank Minnesota, N.A.
Shareowner Services
P.O. Box 64854
St. Paul, Minnesota 55164-0854
- - Telephone: TOLL-FREE 800-468-9716
- - E-mail: [email protected]
Norwest also maintains a Web site at www.norwest.com/business-stocktransfer
from which answers to frequently asked questions and various forms may be
obtained.
CONVERTIBLE TRUST PREFERRED SECURITIES:
Firstar Bank, N.A.
Corporate Trust Services
All questions relating to administration of
CONVERTIBLE TRUST PREFERRED SECURITIES ownership must
be handled by FIRSTAR.
- - Mailing Address:
Firstar Bank, N.A.
Corporate Trust Services
Suite 301
1555 North RiverCenter Drive
Milwaukee, Wisconsin 53212
- - Telephone: TOLL-FREE 800-637-7549
Preferred Security holders may also contact Firstar via
its Web site at www.firstarcorporatetrust.com, selecting
the option to "Contact Us."
- --------------------------------------------------------------------------------
CORPORATE INQUIRIES
Questions concerning company operations and financial results should be
directed to Timothy S. O'Toole, Executive Vice President & Treasurer, at Chemed
corporate headquarters by writing or by calling 800-2CHEMED (800-224-3633) or
513-762-6702.
Annual and quarterly reports, press releases, and other printed materials
may be obtained from Chemed Investor Relations by writing or by calling 800-
2CHEMED (800-224-3633) or 513-762-6463. Printed materials may also be viewed and
downloaded from Chemed's Web site at www.chemed.com.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Cincinnati, Ohio 45202
- --------------------------------------------------------------------------------
FORM 10-K
Additional information about Chemed is available in the Annual Report on
Form 10-K. Chemed Investor Relations will furnish copies without charge.
- --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN FOR HOLDERS
OF 25 OR MORE SHARES
The Chemed Automatic Dividend Reinvestment Plan is available to Chemed
shareholders of record owning a minimum of 25 shares of Chemed Capital Stock. A
plan brochure, including fee schedule, and enrollment information are available
from the Dividend Reinvestment Agent, Norwest Bank Minnesota, N.A., at the
address listed above. Convertible Trust Preferred Securities are not eligible to
participate in this Plan.
- --------------------------------------------------------------------------------
ANNUAL MEETING
The Annual Meeting of Shareholders of Chemed Capital Stock will be held on
Monday, May 15, 2000, at 2 p.m. in the Grand Ballroom of The Phoenix Club, 812
Race Street, Cincinnati, Ohio.
- --------------------------------------------------------------------------------
NUMBER OF SHAREHOLDERS
The approximate number of shareholders of record of Chemed Capital Stock
was 4,864 on December 31, 1999, and 5,271 on December 31, 1998. (These numbers
do not include shareholders with shares held under beneficial ownership or
within clearinghouse positions of brokerage firms and banks.)
- --------------------------------------------------------------------------------
STOCK EXCHANGE LISTING
The company's capital stock is listed on the New York
Stock Exchange under the ticker symbol CHE.
- --------------------------------------------------------------------------------
CAPITAL STOCK & DIVIDEND DATA
The high and low closing prices for Chemed Capital Stock during 1999 and
1998 and dividends per share paid by quarter during these years are shown below:
Closing
-------------------------- Dividends
High Low Paid
- --------------------------------------------------------------------------------
1999
First Quarter $33 13/16 $25 3/4 $ .53
Second Quarter 33 7/8 26 5/16 .53
Third Quarter 33 7/16 29 1/4 .53
Fourth Quarter 30 1/8 24 15/16 .53
1998
First Quarter $42 5/16 $38 $ .53
Second Quarter 41 1/4 32 9/16 .53
Third Quarter 34 11/16 25 9/16 .53
Fourth Quarter 34 7/8 28 1/8 .53
<PAGE> 30
CHEMED CORPORATION
2600 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202-4726
Visit our company Web sites at www.chemed.com,
www.rotorooter.com, www.patientcare.com,
www.serviceamerica.com, and www.ccr.com.
(Recycled Paper Logo) Printed on recycled paper
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF CHEMED CORPORATION
The following is a list of subsidiaries of the Company as of December 31,
1999. Other subsidiaries which have been omitted from the list would not, when
considered in the aggregate, constitute a significant subsidiary. Each of the
companies is incorporated under the laws of the state following its name. The
percentage given for each company represents the percentage of voting securities
of such company owned by the Company or, where indicated, subsidiaries of the
Company as at December 31, 1999.
All of the majority owned companies listed below are included in the
consolidated financial statements as of December 31, 1999.
ACD, Inc. (Florida, 100% by Starburst, Inc.)
AJJ, Inc. (Florida, 100% by Starburst, Inc.)
ARR, Enterprises, Inc. (Texas, 100% by Starburst, Inc.)
Cadre Computer Resources, Inc. (Delaware, 100%)
Caring Companions, Inc. (Illinois, 100% by Patient Care, Inc.
Catons' Plumbing, Heating & Air Conditioning, Inc. (Maryland, 100%)
by Roto-Rooter Services Company)
Complete Plumbing Services, Inc. (New York, 49% by Roto-Rooter
Services Company; included within the consolidated financial
statements as a consolidated subsidiary)
Consolidated HVAC, Inc. (Ohio, 100% by Roto-Rooter Services Company)
Dell Healthcare, Inc. (Illinois, 100% by Patient Care, Inc.)
Elder Care Solutions, Inc. (Kentucky, 100% by Patient Care, Inc.)
Jet Resource, Inc. (Delaware, 100%)
Medical Personnel Services, Inc. (Maryland, 100% by Patient Care, Inc.)
National Home Care, Inc. (New York, 100% by Patient Care, Inc.)
Nurotoco of Massachusetts, Inc. (Massachusetts, 100% by Roto-Rooter
Services Company)
Nurotoco of New Jersey, Inc. (Delaware, 80% by Roto-Rooter Services
Company)
OCR Holding Company (Nevada, 100%)
OCR Michigan, Inc. (Delaware, 100% by OCR Holding Company)
Patient Care, Inc. (Delaware, 100%)
Patient Care Medical Services, Inc. (New Jersey, 100% by Patient
Care, Inc.)
Patient Care Medical Services, Inc. (Ohio, 100% by Patient
Care, Inc.)
Priority Care, Inc. (Connecticut, 100% by Patient Care, Inc.)
Roto-Rooter Canada, Ltd. (British Columbia, 100% by Roto-Rooter Services
Company)
Roto-Rooter Corporation (Iowa, 100% by Roto-Rooter, Inc.)
Roto-Rooter Development Company (Delaware, 100% by Roto-Rooter
Corporation)
Roto-Rooter, Inc. (Delaware, 100%)
Roto-Rooter Management Company (Delaware, 100% by Roto-Rooter, Inc.)
Roto-Rooter Services Company (Iowa, 100% by Roto-Rooter, Inc.)
RR Plumbing Services Corporation (New York, 49% by Roto-Rooter Services
Company; included within the consolidated financial statements as a
consolidated subsidiary)
R.R. UK, Inc. (Delaware, 100% by Roto-Rooter, Inc.)
Service America Network, Inc. (Florida, 100% by Service America Systems,
Inc.)
Service America Systems, Inc. (Florida, 100% by Chemed Corporation)
Starburst, Inc. (Texas, 100% by Roto-Rooter Services Company)
Sure-Flow, Inc. (California, 100% by Roto-Rooter Services Company)
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-28594, 33-9549, 2-87202, 2-80712, 33-65244,
33-61063, 333-34525, 333-87071 and 333-87073) of Chemed Corporation of our
report dated February 1, 2000 appearing on page 11 of the 1999 Annual Report to
Stockholders which is incorporated in this Annual Report on Form 10-K. We also
consent to the incorporation by reference of our report on the Financial
Statement Schedule, which appears on page S-2 of this Form 10-K.
/s/ PricewaterhouseCoopers
- ---------------------------
PricewaterhouseCoopers
Cincinnati, Ohio
March 29, 2000
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
The undersigned director of CHEMED CORPORATION ("Company")
hereby appoints EDWARD L. HUTTON, KEVIN J. MCNAMARA and NAOMI C. DALLOB as his
true and lawful attorneys-in-fact for the purpose of signing the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and all
amendments thereto, to be filed with the Securities and Exchange Commission.
Each of such attorneys-in-fact is appointed with full power to act without the
other.
Dated: March 13, 2000
/s/ Rick L. Arquilla
----------------------------------
Rick L. Arquilla
<PAGE> 2
POWER OF ATTORNEY
The undersigned director of CHEMED CORPORATION ("Company")
hereby appoints EDWARD L. HUTTON, KEVIN J. MCNAMARA and NAOMI C. DALLOB as his
true and lawful attorneys-in-fact for the purpose of signing the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and all
amendments thereto, to be filed with the Securities and Exchange Commission.
Each of such attorneys-in-fact is appointed with full power to act without the
other.
Dated: March 8, 2000
/s/ James H. Devlin
----------------------------------
James H. Devlin
<PAGE> 3
POWER OF ATTORNEY
The undersigned director of CHEMED CORPORATION ("Company")
hereby appoints EDWARD L. HUTTON, KEVIN J. MCNAMARA and NAOMI C. DALLOB as his
true and lawful attorneys-in-fact for the purpose of signing the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and all
amendments thereto, to be filed with the Securities and Exchange Commission.
Each of such attorneys-in-fact is appointed with full power to act without the
other.
Dated: March 8, 2000
/s/ Charles H. Erhart, Jr.
------------------------------------
Charles H. Erhart, Jr.
<PAGE> 4
POWER OF ATTORNEY
The undersigned director of CHEMED CORPORATION ("Company")
hereby appoints EDWARD L. HUTTON, KEVIN J. MCNAMARA and NAOMI C. DALLOB as his
true and lawful attorneys-in-fact for the purpose of signing the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and all
amendments thereto, to be filed with the Securities and Exchange Commission.
Each of such attorneys-in-fact is appointed with full power to act without the
other.
Dated: March 20, 2000
/s/ Joel F. Gemunder
----------------------------------
Joel F. Gemunder
<PAGE> 5
POWER OF ATTORNEY
The undersigned director of CHEMED CORPORATION ("Company")
hereby appoints EDWARD L. HUTTON, KEVIN J. MCNAMARA and NAOMI C. DALLOB as his
true and lawful attorneys-in-fact for the purpose of signing the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and all
amendments thereto, to be filed with the Securities and Exchange Commission.
Each of such attorneys-in-fact is appointed with full power to act without the
other.
Dated: 13, 2000
/s/ Patrick P. Grace
------------------------------------
Patrick P. Grace
<PAGE> 6
POWER OF ATTORNEY
The undersigned director of CHEMED CORPORATION ("Company")
hereby appoints EDWARD L. HUTTON, KEVIN J. MCNAMARA and NAOMI C. DALLOB as his
true and lawful attorneys-in-fact for the purpose of signing the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and all
amendments thereto, to be filed with the Securities and Exchange Commission.
Each of such attorneys-in-fact is appointed with full power to act without the
other.
Dated: 17, 2000
/s/ Thomas C. Hutton
----------------------------------
Thomas C. Hutton
<PAGE> 7
POWER OF ATTORNEY
The undersigned director of CHEMED CORPORATION ("Company")
hereby appoints EDWARD L. HUTTON, KEVIN J. MCNAMARA and NAOMI C. DALLOB as his
true and lawful attorneys-in-fact for the purpose of signing the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and all
amendments thereto, to be filed with the Securities and Exchange Commission.
Each of such attorneys-in-fact is appointed with full power to act without the
other.
Dated: March 9, 2000
/s/ Walter L. Krebs
----------------------------------
Walter L. Krebs
<PAGE> 8
POWER OF ATTORNEY
The undersigned director of CHEMED CORPORATION ("Company")
hereby appoints EDWARD L. HUTTON, KEVIN J. MCNAMARA and NAOMI C. DALLOB as her
true and lawful attorneys-in-fact for the purpose of signing the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and all
amendments thereto, to be filed with the Securities and Exchange Commission.
Each of such attorneys-in-fact is appointed with full power to act without the
other.
Dated: 20, 2000
/s/ Sandra E. Laney
----------------------------------
Sandra E. Laney
<PAGE> 9
POWER OF ATTORNEY
The undersigned director of CHEMED CORPORATION ("Company")
hereby appoints EDWARD L. HUTTON, KEVIN J. MCNAMARA and NAOMI C. DALLOB as his
true and lawful attorneys-in-fact for the purpose of signing the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and all
amendments thereto, to be filed with the Securities and Exchange Commission.
Each of such attorneys-in-fact is appointed with full power to act without the
other.
Dated: March 7, 2000
/s/ Spencer S. Lee
-----------------------------------
Spencer S. Lee
<PAGE> 10
POWER OF ATTORNEY
The undersigned director of CHEMED CORPORATION ("Company")
hereby appoints EDWARD L. HUTTON, KEVIN J. MCNAMARA and NAOMI C. DALLOB as his
true and lawful attorneys-in-fact for the purpose of signing the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and all
amendments thereto, to be filed with the Securities and Exchange Commission.
Each of such attorneys-in-fact is appointed with full power to act without the
other.
Dated: March 8, 2000
/s/ John M. Mount
--------------------------------
John M. Mount
<PAGE> 11
POWER OF ATTORNEY
The undersigned director of CHEMED CORPORATION ("Company")
hereby appoints EDWARD L. HUTTON, KEVIN J. MCNAMARA and NAOMI C. DALLOB as his
true and lawful attorneys-in-fact for the purpose of signing the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and all
amendments thereto, to be filed with the Securities and Exchange Commission.
Each of such attorneys-in-fact is appointed with full power to act without the
other.
Dated: March 10, 2000
/s/ Timothy S. O'Toole
-----------------------------------
Timothy S. O'Toole
<PAGE> 12
POWER OF ATTORNEY
The undersigned director of CHEMED CORPORATION ("Company")
hereby appoints EDWARD L. HUTTON, KEVIN J. MCNAMARA and NAOMI C. DALLOB as his
true and lawful attorneys-in-fact for the purpose of signing the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and all
amendments thereto, to be filed with the Securities and Exchange Commission.
Each of such attorneys-in-fact is appointed with full power to act without the
other.
Dated: March 13, 2000
/s/ Donald E. Saunders
-------------------------------------
Donald E. Saunders
<PAGE> 13
POWER OF ATTORNEY
The undersigned director of CHEMED CORPORATION ("Company")
hereby appoints EDWARD L. HUTTON, KEVIN J. MCNAMARA and NAOMI C. DALLOB as his
true and lawful attorneys-in-fact for the purpose of signing the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and all
amendments thereto, to be filed with the Securities and Exchange Commission.
Each of such attorneys-in-fact is appointed with full power to act without the
other.
Dated: March 8, 2000
/s/ Paul C. Voet
--------------------------------------
Paul C. Voet
<PAGE> 14
POWER OF ATTORNEY
The undersigned director of CHEMED CORPORATION ("Company")
hereby appoints EDWARD L. HUTTON, KEVIN J. MCNAMARA and NAOMI C. DALLOB as his
true and lawful attorneys-in-fact for the purpose of signing the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, and all
amendments thereto, to be filed with the Securities and Exchange Commission.
Each of such attorneys-in-fact is appointed with full power to act without the
other.
Dated: March 9, 2000
/s/ George J. Walsh III
-------------------------------------
George J. Walsh III
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM FORM 8-K OF CHEMED
CORPORATION FOR THE QUARTER ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000019584
<NAME> CHEMED CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 17,282
<SECURITIES> 0
<RECEIVABLES> 60,443
<ALLOWANCES> (4,554)
<INVENTORY> 9,794
<CURRENT-ASSETS> 111,802
<PP&E> 127,138
<DEPRECIATION> (55,410)
<TOTAL-ASSETS> 421,303
<CURRENT-LIABILITIES> 98,428
<BONDS> 78,580
0
0
<COMMON> 13,665
<OTHER-SE> 198,379
<TOTAL-LIABILITY-AND-EQUITY> 421,303
<SALES> 0
<TOTAL-REVENUES> 453,593
<CGS> 0
<TOTAL-COSTS> 276,759
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,262
<INTEREST-EXPENSE> 6,858
<INCOME-PRETAX> 30,953
<INCOME-TAX> 11,257
<INCOME-CONTINUING> 19,696
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,696
<EPS-BASIC> 1.88
<EPS-DILUTED> 1.87
</TABLE>
