<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
[x] For the fiscal year ended December 31, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Transition period from ______________ to ______________
Commission File Number: 0-14-827
----------------------------
NATIONAL SANITARY SUPPLY COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 31-1079482
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2900 Chemed Center 45202-4729
255 East Fifth Street (Zip Code)
Cincinnati, Ohio
(Registrant's telephone number, including area code): (513) 762-6500
-----------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: TITLE OF EACH CLASS
-------------------
Common Stock, $1.00 per value
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. [X]
Aggregate market value of the Registrant's voting stock held by
non-affiliates, based upon the closing price of said stock on the NASDAQ Stock
Market on February 29, 1996 ($13.50 per share): $80,304,777.
As of March 15, 1996, 6,136,678 shares of the Common Stock, $1.00 par
value, of the Registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Annual Report to Shareholders for the year ended
December 31, 1995, are incorporated by reference in Parts I, II and IV of this
Report.
Portions of the Proxy Statement relating to the Annual Meeting of
Shareholders to be held May 20, 1996, are incorporated by reference into Part
III of this Report.
Exhibit Index at Page E-1
Page 1 of 13 Pages
<PAGE> 2
NATIONAL SANITARY SUPPLY COMPANY
1995 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PAGE
PART I
<TABLE>
<S> <C> <C>
Item 1. Business............................................. 3
Item 2. Properties........................................... 5
Item 3. Legal Proceedings.................................... 6
Item 4. Submission of Matters to a Vote of Security Holders.. 6
---- Executive Officers of the Company.................... 7
PART II
Item 5. Market for the Company's Common Stock and Related
Stockholder Matters.................................. 9
Item 6. Selected Financial Data.............................. 9
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 9
Item 8. Financial Statements and Supplementary Data.......... 9
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................. 9
PART III
Item 10. Directors and Executive Officers of the Company...... 10
Item 11. Executive Compensation............................... 10
Item 12. Security Ownership of Certain Beneficial Owners
and Management....................................... 10
Item 13. Certain Relationships and Related Transactions....... 10
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.................................. 11
</TABLE>
Page 2 of 13 Pages
<PAGE> 3
PART I
ITEM 1. BUSINESS
General
- --------
From its founding in 1929 until November 15, 1983, the business of
National Sanitary Supply Company (the "Company") was privately owned and
operated by three separate companies: National Sanitary Supply Company,
Sanichem Manufacturing Company, and La-Ru Truck Rental Company, Inc. In
September 1983 the Company was incorporated in Delaware as a wholly-owned
subsidiary of Chemed Corporation (a diversified public corporation with
interests in residential and commercial plumbing supply products distribution,
medical and dental supply distribution for private practices, and home health
care services) for the purpose of acquiring these three companies. (As used
herein, "Predecessor Companies" refers collectively to the three predecessor
companies; "Company" refers to National Sanitary Supply Company, its
wholly-owned subsidiaries and its predecessors; and "Chemed" refers to Chemed
Corporation.)
In June 1986 the Company sold in a public offering 1,000,000 shares of its
common stock, par value $1 per share (the "Common Stock"). As of December 31,
1995, Chemed owned 84 percent of the outstanding shares of Common Stock, or
5,144,151 of the 6,098,280 shares outstanding.
In September 1988 the Company acquired by merger Century Papers, Inc.,
which is now a wholly-owned subsidiary ("Century"). Century is a regional
distributor engaged in purchasing, warehousing, selling and delivering to its
customers a variety of industrial paper, food service, and plastic products,
sanitary maintenance and specialty chemicals and equipment, and packaging
supplies and equipment.
On June 17, 1992 the Company formed National Sanitary Supply Development,
Inc. ("NSSD"), a Delaware corporation, to aid its expansion program in the
Midwest.
The Company conducts its business in one segment.
Description of Business
- -----------------------
The Company is the nation's largest specialized distributor of sanitary
maintenance supplies. The Company's products are sold primarily through
approximately 760 field sales personnel employed by the Company to a wide
variety of commercial, institutional, and industrial customers. In 1995, the
Company serviced approximately 110,000 customers located principally in
Arizona, California, Colorado, Indiana, Louisiana, Michigan, Mississippi,
Missouri, Nevada, New Mexico, Ohio, Oklahoma, Oregon, Tennessee, Texas, Utah
and Washington. Federal, state and local governmental agencies accounted for
approximately 6 percent of the Company's total sales for 1995. These sales are
attributable to over 1,200 different agencies whose purchasing decisions
generally are made separately. The Company also had one customer, Sonic, Inc.,
a fast-food restaurant chain, which accounted for approximately 15 percent of
1995 sales. This chain consists of over 1,370 franchised and 130 company-owned
restaurants. Mr. Edward L. Hutton, Chairman of the Company, was a director of
Sonic, Inc. in 1995. Sales to this customer primarily consisted of low margin
food service products such as paper napkins, plates and cups. On November 22,
1995 the Company announced the expected loss of a majority of sales to Sonic,
Inc. during the first half of 1996. Other than sales to the aforementioned
entities, no one customer accounts for more than 2 percent of net sales.
Other information called for by this item is included within Notes 1 and 2
of the Notes to Consolidated Financial Statements appearing on pages 15 and 16
of the 1995 Annual Report to Stockholders and is incorporated herein by
reference.
Products and Supplies
- ---------------------
Page 3 of 13 Pages
<PAGE> 4
The Company's product line consists primarily of a wide variety of
sanitary maintenance supplies used by commercial, institutional, and industrial
facilities. In addition, the Company also distributes, primarily through
Century, food service disposable products, packaging materials, and business
paper for use in institutional and industrial establishments. Except for the
various chemical products that are manufactured by and for the Company, the
products sold by the Company are purchased from outside suppliers.
Approximately 23 percent of the Company's total sales in 1995 were of
chemical and equipment products, including specialty and general purpose
cleaners, floor finishes, hand soaps, deodorants, disinfectants, floor
machines, vacuums and carpet extractors. A portion of these products is
marketed under the "National Sanitary Supply Co." proprietary label, a
federally registered trademark. Most of the proprietary-label chemical
products are manufactured by the Company.
Approximately 15 percent of the Company's total 1995 sales were of a wide
variety of general maintenance products needed in the housekeeping function
such as mops, buckets, brooms, brushes, trash can liners, floor mats and pads.
Approximately 28 percent of the Company's total 1995 sales were of paper
products, such as towels and tissues used in public restrooms.
The remaining 34 percent of the Company's total 1995 sales included food
service products such as paper napkins, plates and cups; packaging and business
paper products such as tapes, boxes, computer paper, copier paper and
stationery; and special order and non-stock items.
The Company purchases products from many different manufacturers. In
certain product lines, such as paper products, a significant portion of
purchases is made from one supplier. Although the Company has no long-term
supply contracts, it expects to continue relationships with its existing
suppliers. Because there are numerous sources of similar products, management
does not believe that the loss of any one supplier would have a material
adverse effect on the business.
Distribution System
- --------------------
The Company maintains over 70 distribution center and sales branch
locations throughout the western, southwestern and midwestern United States.
From the distribution centers, generally consisting of both a sales office and
warehouse facility, products are distributed directly to National's customers,
principally by a fleet of Company-owned vehicles. In addition to these
distribution facilities, the Company maintains sales branch offices that carry
a relatively small inventory of products, which are delivered directly to
customers on an emergency basis.
Manufacturinging
- ----------------
The Company markets a line of chemical cleaning, sanitation, and
maintenance compounds under the "National Sanitary Supply Co." proprietary
label. Most of these products are manufactured by the Company in its facility
in Los Angeles, with some being manufactured for the Company under contract.
The Company's manufacturing operations are not labor intensive. The
Company operates two shifts at its manufacturing facility and could increase
its overall production substantially without incurring significant capital
expenditures.
The chemicals used in the Company's manufacturing processes are purchased
from a number of suppliers. The Company does not believe that the loss of any
one chemical supplier would have a material adverse effect on its business and
believes that alternative sources could be found in a relatively short period
of time.
Employees
- ---------
As of December 31, 1995, the Company employed 1,722 persons, of whom 758
were field sales personnel; 334 were clerical personnel; and the remainder were
production personnel, warehousing and shipping personnel, and headquarters
management and administrative personnel. The Company generally considers its
Page 4 of 13 Pages
<PAGE> 5
relationship with its employees as good. 8% of its employees are represented
by labor unions.
Competition
- -----------
The market for sanitary maintenance and paper supplies is highly
competitive and entry is relatively easy. Competition is, however, highly
fragmented in most geographic markets. In the United States, over 9,000 firms
compete in the sanitary maintenance supply distribution business on a local or
regional basis. Competition also exists indirectly from wholesale price clubs,
manufacturers selling directly to customers, and foodservice distributors.
The principal competitive factors in this market are the level of service
provided; range of products offered; speed, efficiency and reliability of
delivery; and price.
Environmental Matters
- ----------------------
The Company's operations are subject to various federal, state, and local
laws and regulations regarding the environmental aspects of the manufacture and
distribution of chemical components. The Company, to the best of its
knowledge, is currently in compliance in all material respects with the
environmental laws and regulations affecting its operations. Capital
expenditures for the purpose of environmental protection during 1996 and 1997
are not expected to be material in amount.
ITEM 2. PROPERTIES
The Company operates three different types of facilities: branch sales
offices, regional distribution centers, and a combination distribution center
and manufacturing facility. Branch sales offices provide office facilities for
sales representatives whose territories are located in outlying areas as well
as storage facilities for maintaining a small inventory of products for
emergency shipments. Regional distribution centers generally consist of not
only a sales office but also a warehouse facility that delivers products to
customers in a wide geographic area including those markets covered by the
related sales branch offices. The third type of facility performs the same
function as a regional distribution center with the added responsibility of
manufacturing and delivering products to regional distribution centers. The
following table provides a summary of the major facilities operated by the
Company as of December 31, 1995:
Page 5 of 13
<PAGE> 6
<TABLE>
<CAPTION>
SQUARE FEET
-------------------
TYPE/LOCATION OWNED LEASED
- -------------------------- ----- ------
<S> <C> <C>
Distribution/Manufacturing
- --------------------------
California - Los Angeles 165,000 25,000
Regional Distribution Centers
- -----------------------------
Arizona - Tempe 69,000 -
California - San Francisco (Area) - 66,000
Colorado - Denver - 53,000
Indiana - Marion 30,000 -
Mississippi - Tupelo - 33,000
Jackson - 26,000
Missouri: Kansas City - 25,000
St. Louis - 16,000
Nevada - Las Vegas 24,000 -
New Mexico - Albuquerque - 21,000
Ohio: Fairfield - 38,000
Toledo - 65,000
Oklahoma - Oklahoma City - 75,000
Oregon - Portland 56,000 -
Tennessee - Memphis - 66,000
Knoxville - 17,000
Texas: Amarillo - 25,000
Beaumont - 14,000
Corpus Christi - 58,000
Dallas 54,000 -
El Paso 18,000 -
Houston - 102,000
Laredo - 10,000
McAllen - 9,000
New Braunfels - 54,000
Utah - Salt Lake City - 20,000
Washington - Seattle - 15,000
Branch Sales Offices (a) 3,000 182,000
- --------------------
<FN>
(a) Represents forty-three (43) separate branch sales offices located
throughout the western, midwestern, and southwestern United States.
</TABLE>
The owned property is held in fee and is not subject to any major
encumbrance. Leased properties are occupied under rental agreements having
terms ranging up to ten years and with month-to-month tenancies. Certain of the
leases provide for payment by the Company of insurance, property taxes, and
building operating expenses and for options to purchase and options to renew.
The Company does not believe that failure to obtain the renewal of any lease
would have a material adverse effect on its business.
Management considers all of the facilities to be in good operating
condition and to be generally adequate for the Company's present and
anticipated needs.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
Page 6 of 13 Pages
<PAGE> 7
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE OFFICE FIRST ELECTED
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Edward L. Hutton 76 Chairman November, 1983 (1)
Kevin J. McNamara 42 Vice Chairman August, 1986 (2)
Paul C. Voet 49 President and Chief Executive Officer November, 1983 (3)
Robert B. Garber 69 Vice Chairman 1973 (4)
W. Dwight Jackson 49 Executive Vice President; General November, 1994 (5)
Manager of Century
Kenneth F. Vuylsteke 48 Executive Vice President; General January, 1992 (6)
Manager of National West
Gary H. Sander 45 Vice President, Treasurer and Chief August, 1988 (8)
Financial Officer
Arthur J. Bennert, Jr. 38 Vice President-Marketing April, 1991 (8)
</TABLE>
Page 7 of 13 Pages
<PAGE> 8
(1) Mr. E. L. Hutton is Chairman of the Company and Chairman and Chief
Executive Officer of Chemed. He has held the latter two positions since
November 1993. Previously, from April 1970 to November 1993, he held the
positions of President and Chief Executive Officer of Chemed. He is the
father of Mr. Thomas C. Hutton, a Vice President of Chemed and a director
of the Company.
(2) Mr. McNamara is Vice Chairman of the Company and President of Chemed. From
August 1986 to August 1994 he was General Counsel and Assistant Secretary
of the Company. He served as Executive Vice President, General Counsel and
Secretary of Chemed from November 1993 to August 1994, serving as Chemed's
Vice Chairman from May 1992 to November 1993.
(3) Mr. Voet is President and Chief Executive Officer of the Company and is
also an Executive Vice President of Chemed. He was Vice Chairman and Chief
Executive Officer of the Company from November 1986 to January 1992. He
served as Chemed's Vice Chairman from 1988 until November 1993.
(4) Mr. Garber is a Vice Chairman of the Company. He was President and Chief
Operating Officer of the Company from April 1986 to January 1992.
(5) Mr. Jackson is an Executive Vice President of the Company and is Executive
Vice President and General Manager of Century. He has held these positions
since November and October 1994, respectively. He was Director of Sales
for Scott Paper Co.'s Southwest Division from January 1990 to October 1994.
(6) Mr. Vuylsteke is an Executive Vice President of the Company and General
Manager of its National West division and has held these positions since
January 1992 and July 1991, respectively. He was Vice President and
General Manager of the Company's Northwest division from February 1989 to
July 1991.
(7) Mr. Sander is Vice President, Treasurer and Chief Financial Officer of the
Company, and has held these positions since August 1988.
(8) Mr. Bennert is Vice President-Marketing of the Company. From April 1991
to February, 1996, he was Vice President of Corporate Planning.
- --------------------
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 20, 1996.
Page 8 of 13 Pages
<PAGE> 9
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
MARKET AND PRICE RANGE OF COMMON STOCK, DIVIDENDS
The Company's Common Stock (par value $1 per share) is included in the
NASDAQ Stock Market and is traded under the symbol NSSX. The range of the high
and low trade prices for the Company's Common Stock and dividends paid per
share for each quarter of 1994 and 1995 are set forth below:
<TABLE>
<CAPTION>
==========================================================================================================
CLOSING DIVIDENDS PAID
HIGH LOW PER SHARE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1995
First Quarter $13.50 $12.00 $ .065
Second Quarter 13.00 12.00 .065
Third Quarter 13.50 12.00 .075
Fourth Quarter 14.00 11.75 .075
1994
First Quarter 13.50 12.25 .06
Second Quarter 13.50 12.25 .06
Third Quarter 13.25 12.25 .065
Fourth Quarter 12.50 12.25 .065
==========================================================================================================
</TABLE>
Future dividends are necessarily dependent upon the Company's earnings and
financial condition, and other factors not presently determinable.
<TABLE>
<CAPTION>
APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK
Approximate Number of Record
Title of Class Holders (as of March 15, 1996)
-------------- ------------------------------
<S> <C>
Common Stock 210 *
($1 par Value)
<FN>
*Includes only stockholders of record; does not include those whose shares are
held in nominee name or within clearinghouse positions of brokers, banks and
other institutions. The Company believes its stockholders number more than
500.
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA.
The information called for by this Item for the five years ended December
31, 1995, appearing on page 1 of the 1995 Annual Report to Stockholders 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 21 through
22 of the 1995 Annual Report to Stockholders and is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information called for by this Item set forth on pages 10 through 20
of the 1995 Annual Report to Stockholders, and the Unaudited Quarterly Data
appearing on page 14 of the 1995 Annual Report to Stockholders, are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
Page 9 of 13 Pages
<PAGE> 10
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
The directors of the Company are:
<TABLE>
<S> <C> <C>
E.L. Hutton N. Gilliatt T.S. O'Toole
P.C. Voet W.J. Hoekman D.W. Robbins, Jr.
R.B. Garber T.C. Hutton G.H. Sander
A.J. Bennert, Jr. W.D. Jackson J.E. Schnee
J.A. Cunningham C.O. Lane K.F. Vuylsteke
N.C. Dallob S.E. Laney
C.H. Erhart K.J. McNamara
</TABLE>
The information required under this Item with respect to directors, with the
exception of J.E. Schnee, is set forth under "Election of Directors" in the
Company's 1996 Proxy Statement which is incorporated herein by reference. Mr.
Schnee, age 54, is Professor of Management at the University of Cincinnati
College of Business Adminstration ("College") and has held this position since
September 1988. From September 1988 to May 1994, he also served as Dean of the
College. He is a director of Roto-Rooter.
The information required under this Item with respect to executive officers is
set forth under Part I hereof. The information required under this item set
forth under "Compliance with Section 16(a) of the Securities and Exchange Act
of 1934", in the Company's 1996 Proxy Statement, is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information required under this Item is set forth under "Executive
Compensation" in the Company's 1996 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 under "Security
Ownership of Certain Beneficial Owners and Management" in the Company's 1996
Proxy Statement which is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required under this Item is set forth under "Certain
Arrangements and Transactions" in the Company's 1996 Proxy Statement which is
incorporated herein by reference.
Page 10 of 13 Pages
<PAGE> 11
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
EXHIBITS
3.1. Certificate of Incorporation of Chemed Supply, Inc., dated September
19, 1983.*
3.2. Certificate of Merger of La-Ru Truck Rental Company, Inc. into
Chemed Supply, Inc., dated November 15, 1983.*
3.3. Certificate of Amendment of the Certificate of Incorporation, as
amended, of National Sanitary Supply Company, dated July 13, 1987.*
3.4. Amended and Restated By-Laws of the Company as of November 3, 1993.*
10.1. 1986 Stock Incentive Plan of the Company, as amended through August
4, 1993.*,***
10.2. Executive Salary Protection Plan of the Company.*,***
10.3. Form of Executive Salary Protection Agreement.*,***
10.4. Amended Tax Procedures and Services Agreement as of January 1, 1993
between the Company and Chemed Corporation.*
10.5. Employment Agreement, dated November 3, 1993, between Charles O.
Lane and the Company.*,***
10.6. Employment Agreement, dated November 6, 1995, between Thomas M. Lane
and the Company.***
18.1. Letter regarding change in accounting principles.*
10.7. 1988 Stock Incentive Plan adopted May 19, 1988, as amended through
August 4, 1993.*,***
10.8. $1,600,000 Promissory Note issued by Century Papers, Inc. to Chemed
Corporation on November 10, 1988.*
10.9. $9,400,000 Promissory Note issued by the Company to Chemed
Corporation on November 10, 1988.*
10.10. $8,000,000 Promissory Note issued by the Company to Chemed on
January 1, 1993.*
10.11. Benefit Equalization Plan, as amended November 6, 1991.*,***
10.12. Employment Contracts with Executives.*,***
10.13. Amendment No. 3 to Employment Contracts with Executives.***
10.14. Assignment of $1,600,000 Promissory Note from Century Papers, Inc.
to the Company of May 1, 1992.*
10.15. Employees Thrift and Profit Sharing Plan.*,***
10.16. Trust Agreement of Employees Thrift and Profit Sharing Plan.*,***
10.17. Employment Agreement, dated November 1, 1994, between W. Dwight
Jackson and Century Papers, Inc.*,***
10.18 1995 Stock Incentive Plan of the Company. ***
Page 11 of 13 Pages
<PAGE> 12
10.19 Split Dollar Life Insurance Agreements. ***
11.1. Computation of earnings per share.
13.1. 1995 Annual Report to Stockholders.
21.1. Subsidiaries of the Company.
23.1. Consent of Independent Accountants.
24.1. Powers of Attorney.
27.1. 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 report.
*** Management contract or Executive Compensation Plan or Arrangement.
+ Not filed herewith.
FINANCIAL STATEMENT SCHEDULES
See Index to Financial Statements and Financial Statement Schedules on
page S-1.
REPORTS ON FORM 8-K
A report on Form 8-K was filed November 22, 1995 reporting under Item 5
the expected loss of sales to Sonic, Inc., a large customer during the first
half of 1996.
Page 12 of 13 Pages
<PAGE> 13
SIGNATURES
Pursuant to the requirement of Section 13 or 15(b) 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.
NATIONAL SANITARY SUPPLY COMPANY
March 28, 1996 By: /s/ Paul C. Voet
-------------------------------------
Paul C. Voet
President 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>
/s/ Edward L. Hutton Chairman and a Director
- --------------------- (Principal Executive Officer)
Edward L. Hutton
/s/ Paul C. Voet President & Chief Executive
- --------------------- Officer and a Director March 28, 1996
Paul C. Voet (Principal Executive Officer) --------------
/s/ Gary H. Sander Vice President, Treasurer,
- --------------------- Chief Financial Officer,
Gary H. Sander and a Director
(Principal Financial and Accounting
Officer)
</TABLE>
<TABLE>
<CAPTION>
Directors
<S> <C> <C>
Arthur J. Bennert, Jr. * Thomas C. Hutton *
James A. Cunningham * W. Dwight Jackson *
Charles H. Erhart, Jr. * Charles O. Lane *
Robert F. Garber * Sandra E. Laney * March 28, 1996
--------------
N. Gilliatt * Kevin J. McNamara *
Will J. Hoekman * Timothy S. O'Toole *
D. Walter Robbins, Jr. *
Jerome E. Schnee *
Kenneth F. Vuylsteke *
</TABLE>
* Naomi C. Dallob, General Counsel and Secretary of the Company, 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 28, 1996 /s/ Naomi C. Dallob
- -------------- ----------------------------------
Date Naomi C. Dallob
(Attorney-in-Fact and a Director)
Page 13 of 13 Pages
<PAGE> 14
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 Chemed S-1 3a(i)
Supply, Inc., dated September 19, 1983. Registration
No. 33-5604
5/12/86
3.2 Certificate of Merger of La-Ru Truck S-1 3a(ii)
Rental Company, Inc. into Chemed Registration
Supply, Inc., dated November 15, 1983. No. 33-5604
5/12/86
3.3 Certificate of Amendment of the Form 10-Q 2
Certificate of Incorporation, as 8/13/87
amended, of National Sanitary Supply
Company, dated July 13, 1987.
3.4 Amended and Restated By-Laws of the Form 10-K 4
Company as of November 3, 1993. 3/28/94
10.1 1986 Stock Incentive Plan of the Form 10-Q 2
Company, as amended through August 4, 8/13/93
1993.
10.2 Executive Salary Protection Plan of S-1 10e
the Company. Registration
No. 33-5604
5/12/86
10.3 Form of Executive Salary Protection S-1 10f
Agreement. Registration
No. 33-5604
5/12/86
10.4 Amended Tax Procedures and Services Form 10-K 12
Agreement as of January 1, 1993 3/29/93
between the Company and Chemed
Corporation.
10.5 Employment Agreement, dated November Form 10-K 10
3, 1993, between Charles O. Lane 3/28/94
and the Company.
10.6 Employment Agreement, dated November *
6, 1995, between Thomas M. Lane and
the Company.
</TABLE>
E-1
<PAGE> 15
<TABLE>
<CAPTION>
Page Number
or
Incorporation by Reference
-----------------------------
Exhibit File No. and Previous
Number Filing Date Exhibit No.
- ------- ------------ -----------
<S> <C> <C> <C>
18.1 Letter regarding change in accounting Form 10-Q 3
principles. 5/13/88
10.7 1988 Stock Incentive Plan of the Form 10-Q 3
Company, as amended through August 4, 8/13/93
1993.
10.8 $1,600,000 Promissory Note issued by Form 10-K 38
Century Papers, Inc. to Chemed 3/29/89
Corporation on November 10, 1988.
10.9 $9,400,000 Promissory Note issued by Form 10-K 39
the Company to Chemed Corporation on 3/29/89
November 10, 1988.
10.10 $8,000,000 Promissory Note issued by Form 10-K 2
the Company to Chemed Corporation on 3/13/93
January 1, 1993.
10.11 Benefit Equalization Plan, as amended Form 10-K 38
November 6, 1991. 3/27/92
10.12 Employment Contracts with Executives Form 10-K 39
3/29/93
10.13 Amendment No. 3 to Employment Contracts *
with Executives
10.14 Assignment of $1,600,000 Promissory Form 10-K 40
Note from Century Papers, Inc. to the 3/29/93
Company of May 1, 1992
10.15 Employees Thrift and Profit Sharing Plan Form S-8 4.1
9/30/94
10.16 Trust Agreement of Employees Thrift and Form S-8 4.2
Profit Sharing Plan 9/30/94
10.17 Employment Agreement, dated November 1, Form 10-K 10.18
1994 between W. Dwight Jackson and 3/28/95
Century Papers, Inc.
10.18 1995 Stock Incentive Plan of the Company *
11.1 Computation of earnings per share *
10.19 Split Dollar Agreements *
13.1 1995 Annual Report to Stockholders *
21.1 Subsidiaries of the Company. *
</TABLE>
E-2
<PAGE> 16
<TABLE>
<S> <C> <C>
23.1 Consent of Independent Accountants *
24.1 Powers of Attorney *
27.1 Financial Data Schedule *
</TABLE>
_______________
*Filed Herewith
E-3
<PAGE> 17
NATIONAL SANITARY SUPPLY COMPANY
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
1993, 1994 AND 1995
Page(s)
<TABLE>
<S> <C>
National Sanitary Supply Company Financial
Statements and Financial Statement Schedules
Report of Independent Accountants . . . . . . . . . . . . . . 10*
Consolidated Balance Sheet. . . . . . . . . . . . . . . . . . 11*
Consolidated Statement of Income. . . . . . . . . . . . . . . 12*
Consolidated Statement of Cash Flows. . . . . . . . . . . . . 13*
Consolidated Statement of Stockholders' Equity. . . . . . . . 14*
Notes to Consolidated Financial Statements. . . . . . . . . . 15-20*
Report of Independent Accountants on Financial Statement
Schedules . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Schedule VIII - Valuation and Qualifying Accounts & Reserves. S-3
</TABLE>
*Indicates page numbers in the National Sanitary Supply Company 1995 Annual
Report to Stockholders.
_________________________________________________________________________
The financial statements of National Sanitary Supply Company listed above,
appearing in the accompanying 1995 Annual Report to Stockholders, are
incorporated herein by reference. The financial statement schedules should be
read in conjunction with the 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
The Board of Directors of
National Sanitary Supply Company
Our audits of the consolidated financial statements referred to in our
report dated February 5, 1996 appearing on page 10 of the 1995 Annual Report to
Stockholders of National Sanitary Supply Company (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, this 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/ PRICE WATERHOUSE LLP
- -----------------------
PRICE WATERHOUSE LLP
Cincinnati, Ohio
February 5, 1996
<PAGE> 19
NATIONAL SANITARY SUPPLY COMPANY
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
SCHEDULE VIII
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- ---------------------------------------------------------------------------------------------------
Additions
-------------------------
Charged to Charged to
Balance at Costs and Other Balance
Name Beginning Expenses Accounts(a) Deductions(b) at End
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Allowance for Doubtful
notes and accounts
receivable (deducted from
related asset account)
year ended:
December 31,1995 $1,428 $1,145 - $1,115 $1,458
December 31,1994 1,290 970 - 832 1,428
December 31,1993 1,181 1,003 - 894 1,290
- ---------------------------------------------------------------------------------------------------
<FN>
(a) Relates to companies acquired.
(b) Accounts and notes written off.
</TABLE>
<PAGE> 1
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
Agreement made this 6th day of November, 1995, by and between Thomas
M. Lane, residing at 185 S. Citrus Avenue, Los Angeles, Califoria 90036 (the
"Employee"), and National Sanitary Supply Company, a Delaware corporation
having its executive offices at 2900 Chemed Center, 255 East Fifth Street,
Cincinnati, Ohio 45202 ("National").
WHEREAS, National desires to continue to employ the Employee in an
executive capacity to continue and carry out the expansion of the businesses of
National, and the Employee desires to work for National in such capacity on the
terms and conditions hereinafter provided;
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties hereto agree as
follows:
1. For the period commencing January 1, 1996 and ending on December
31, 1997, subject to earlier termination as provided in Section 8 hereof,
National shall employ the Employee and the Employee shall work in such
executive capacity as the Chief Executive Officer of National shall specify.
Except for normal and customary trips in the ordinary course of business, and
except as otherwise mutually agreed, Employee's place of employment shall be in
the Los Angeles, California area.
2. While the Employee works for National, in accordance with the
provisions of Section 1 hereof, National shall pay the Employee a base annual
salary at the rate of not less than $50,000 per annum. In addition, the
Employee will be considered annually for an incentive compensation payment as
determined by National's Board of Directors. National shall make available to
the Employee medical insurance and certain other fringe benefits which it makes
available to its salaried employees generally. Employee shall be entitled to
reimbursement of his reasonable business and travel expenses on the same basis
and subject to the same conditions as such expenses are reimbursed to other
executives of National.
3. The Employee shall not (except in the performance of his duties
hereunder) at any time during the term of this
<PAGE> 2
agreement make or cause to be made any copies, pictures, duplicates, facsimiles
or other reproductions or recordings or any abstracts or summaries of any
reports, studies, memoranda, correspondence, manuals, records, plans or other
written, printed or otherwise recorded materials of any kind whatever belonging
to or in the possession of National or any subsidiary of National. The
Employee shall have no right, title or interest in any such material, and the
Employee agrees that (except in the performance of his duties hereunder) he
will not, without the prior written consent of National, remove any such
material from any premises of National, or any parent or subsidiary of
National, and that he will surrender all such material to National immediately
upon the termination of his employment.
4. Without the prior written consent of National, the Employee
shall not at any time (whether during or after his employment with National)
use for his own benefit or purposes or for the benefit or purposes of any other
person, firm, partnership, association, corporation or business organization,
entity or enterprise, or disclose (except in the performance of his duties
hereunder) in any manner to any person, firm, partnership, association,
corporation or business organization, entity or enterprise, any trade secrets,
information, data, know-how or knowledge (including, but not limited to, that
relating to costs, products, equipment, marketing or laboratory methods,
formulae, suppliers, customers, personnel training programs, business expansion
plans or financing or marketing methods) proprietary to National, or any
subsidiary of National.
5. The Employee shall promptly disclose to National (and to no one
else) all improvements, discoveries, ideas and inventions that may be of
significance to National or to any subsidiary of National, made or conceived
alone or in conjunction with others (whether or not patentable, whether or not
made or conceived at the request of or upon the suggestion of National during
or out of his usual hours of work or in or about the premises of National or
elsewhere, and whether made or conceived prior or subsequent to the execution
of this agreement) while in the employ of National or made or conceived within
one year after the termination of his employment by National if resulting from,
suggested by or relating to such employment. All such improvements,
discoveries, ideas and inventions shall be the sole and exclusive property of
National and are hereby assigned to
2
<PAGE> 3
National. At the request of National and at its cost, the Employee shall
assist National, or any person or persons from time to time designated by it,
to obtain the grant of patents in the United States and/or in such other
country or countries as may be designated by National, covering such
improvements, discoveries, ideas and inventions and shall in connection
therewith and in connection with the defense of any patents execute such
applications, statements or other documents, furnish such information and data
and take all such other action (including, but not limited to, the giving of
testimony) as National may from time to time reasonably request.
6. During the continuance of Employee's employment with National and
for a period of two years after Employee has ceased to be an employee of
National, or of any subsidiary of National, whether or not pursuant to this
agreement, the Employee shall not without the prior written consent of
National:
a. directly or indirectly engage in, or
b. assist or have an active interest in whether as
proprietor, partner, investor, shareholder, officer, director or any type of
principal whatever, or
c. enter the employment of or act as an agent for or advisor or
consultant to any person, firm, partnership, association, corporation or
business organization, entity or enterprise that is, or is about to become,
directly or indirectly engaged in any business in any area described in Exhibit
A to this agreement whether in operation or in the planning or development
stage, that competes with or is substantially similar to any business that
National or any subsidiary of National has operated, or had in the planning or
development stage, during the 120-day period immediately prior to the
Employee's ceasing to an employee of or consultant to National or any
subsidiary of National, provided that the restrictions contained in this
Section 6 shall not apply to any area described in Exhibit A to this agreement
that does not meet the following requirements:
(1) National or a subsidiary of National shall have
operated such business in such area, or had such business in the planning or
development stage therein, during the 120-day period immediately prior to the
Employee's ceasing to be
3
<PAGE> 4
an active employee of, or consultant to, National or any subsidiary of
National, and
(2) the Employee, during such 120-day period, shall
have had substantial planning, development, administrative or operational
responsibilities for such business of National or any subsidiary of National in
such area.
If the scope of any restriction contained in this Section 6 is too
broad to permit enforcement of such restriction to its full extent, then such
restriction shall be enforced to the maximum extent permitted by law, and the
Employee hereby consents and agrees that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction.
7. The Employee acknowledges and agrees that National's
remedy at law for any breach of any of the Employee's obligations under
Sections 3, 4, 5 and 6 hereof would be inadequate, and agrees and consents that
temporary and permanent injunctive relief may be granted in any proceeding that
may be brought to enforce any provision of any of such Sections, without the
necessity of actual damage. The provisions of Sections 4 and 6 hereof shall
survive the termination of this agreement.
8. At National's option the Employee's employment hereunder
and his aforesaid base salary and incentive bonus compensation shall terminate
and cease to accrue forthwith upon:
(i) his death, or
(ii) his inability (other than temporary inability
which shall not exceed an aggregate of ninety (90) days during any consecutive
12-month period) to perform his duties hereunder, or
(iii) any failure by him to observe or perform his
agreements herein contained, or his neglect of the faithful performance of
his duties hereunder, if such failure or neglect is not corrected within 45
days of Employee's receipt of written notice of same.
4
<PAGE> 5
9. This agreement sets forth the entire agreement and
understanding of the parties concerning the subject matter hereof and
supersedes all prior agreements and understandings between the parties hereto.
No representation, promise, inducement or statement of intention has been made
by or on behalf of either party hereto that is not set forth in this agreement.
This agreement may not be amended or modified except with a written instrument
executed by the parties hereto.
10. The terms and provisions of this agreement shall be binding on
and inure to the benefit of the Employee, his heirs at law, legatees,
distributees, executors, administrators and other legal representatives, and
shall be binding on and inure to the benefit of National and its subsidiaries,
successors and assigns. The Employee expressly agrees that National may assign
this agreement and all of National's rights and obligations hereunder without
the consent of Employee (i) to Chemed, or a parent of Chemed, or (ii) to any
successor in interest to the business and assets of National. The Employee may
not assign, pledge or encumber in any way all or part of his interest under
this agreement without the prior written consent of National. The failure of
either party hereto at any time or from time to time to require performance of
any of the other party's obligations under this agreement shall in no manner
affect the right to enforce any provision of this agreement at a subsequent
time, and the waiver of any rights arising out of any breach shall not be
construed as a waiver of any rights arising out of any subsequent breach.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this
instrument on the day first above written.
EMPLOYEE
/s/ Jeffrey Ross /s/ Thomas Lane
- ---------------------- -------------------------
Witness Thomas M. Lane
ATTEST: NATIONAL SANITARY SUPPLY COMPANY
/s/ Naomi Dallob By: /s/ Paul C. Voet
- ---------------------- --------------------
Secretary
6
<PAGE> 7
EXHIBIT A
TO
EMPLOYMENT AGREEMENT
The States of Arizona, California, Colorado, Indiana, Kansas,
Louisiana, Michigan, Missouri, Mississippi, Nevada, New Mexico, Ohio, Oklahoma,
Oregon, Tennessee, Texas, Utah and Washington.
<PAGE> 1
EXHIBIT 10.13
AMENDMENT NO. 3
TO EMPLOYMENT AGREEMENT
AGREEMENT dated as of May 15, 1995 between _______________
("Employee") and Chemed Corporation (the "Company").
WHEREAS, Employee and the Company have entered into an Employment
Agreement dated as of May 19, 1992 and amended May 17, 1993 and May 16, 1994,
("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 15, 1995, as
follows:
A. The base salary amount per annum as 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 therefor.
B. The date of May 31, 1997 set forth in Section 1.2 of the
Employment Agreement, is hereby deleted and the date of May
31, 1998 is hereby substituted therefor.
C. Section 3.1(b) is hereby deleted and Section 3.1(c) is
renumbered as Section 3.1(b) reading as follows:
SECTION 3.1(b) The termination by the Company of the
Employee's employment for Cause pursuant to Section 3.2.
The termination by the Company of Employee's
employment hereunder for any reason other than those
specified in paragraphs (a) and (b) above
<PAGE> 2
shall hereinafter be referred to as a termination
"Without Cause". Any disability of an Employee shall
not be grounds for termination.
D. Section 3.2 is hereby deleted.
Except as specifically amended in this Amendment No. 3 to Employment
Agreement, the Employment Agreement shall continue in full force and effect in
accordance with its original 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
___________________________________
BY: Paul C. Voet
Executive Vice President
<PAGE> 3
EXHIBIT A
<TABLE>
<CAPTION>
Current
Current Current Expiration
Salary & Stock Award Date of
Name and Position Age Bonus Compensation (b) Agreement
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kenneth F. Vuylsteke 48 $145,000 $25,777 5/31/97
Executive Vice President/ 42,000
General Manager of
National West
Gary H. Sander 45 $ 95,000 $23,302 5/31/97
Vice President, Chief 26,000
Financial Officer &
Treasurer (a)
Arthur J. Bennert, Jr. 37 $ 82,500 $18,105 5/31/97
Vice President - Corporation 16,000
Planning (a)
- -----------------
<FN>
(a) Employment Agreements executed with Chemed Corporation; reimbursement
to be provided by the Company.
(b) Amount of unrestricted Company stock awards recognized in lieu of
incentive compensation in 1994.
</TABLE>
<PAGE> 1
EXHIBIT 10.18
NATIONAL SANITARY SUPPLY COMPANY
1995 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 Common 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
identity 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.
COMMON STOCK: The Common Stock of the Corporation, par value
$1.00 per share, or such other class of shares or other securities as may be
applicable pursuant to the provisions of section 8.
CORPORATION: National Sanitary Supply Company, a Delaware
corporation.
FAIR MARKET VALUE: As applied to any date, the last trading
price of a share of Common Stock on the principal stock exchange on which the
Common Stock is listed or, if it is not so listed, as reported by the National
Association of Securities Dealers Automated Quotation System on such date or,
if no sales were made on such date, on the next preceding date on which there
were sales of Common Stock; provided, however, that, if the Common Stock is not
so listed or quoted, Fair Market Value shall
PAGE A-1
<PAGE> 2
be determined in accordance with the method approved by the 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 accordance with such regulations and shall
mean the value as so determined.
INCENTIVE COMMITTEE: The Incentive Committee designated to
administer this Plan pursuant to the provisions of section 10.
INCENTIVE COMPENSATION: Bonuses and 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, Common 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 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 Incentive Committee shall be
deemed a determination by the 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 Common Stock.
PERFORMANCE UNIT: A unit representing a share of Common 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 Common 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
Page A-2
<PAGE> 3
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 1995 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 Common 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 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 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 Common Stock
which may be issued or transferred pursuant to Stock Incentives granted under
this Plan shall not exceed 400,000 shares.
Page A-3
<PAGE> 4
(b) The maximum aggregate number of shares of Common Stock
which may be issued or transferred under the Plan to directors of the
Corporation or of a Subsidiary shall not exceed 300,000 shares.
(c) Authorized but unissued shares of Common Stock and shares
of Common Stock held in the treasury, whether acquired by the Corporation
specifically for use under this Plan or otherwise, may be used, as the
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
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 Common 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 Common Stock subject to such Stock Award shall be
valued at not less than 100% of the
Page A-4
<PAGE> 5
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 Common 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 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 Incentive Committee may provide for payment to such
Key Employee, either in cash or in shares of Common 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 Common 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 or other
disposition of the Stock Award or of the shares issued or transferred pursuant
to such Stock Award, as the Incentive Committee shall 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 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:
Page A-5
<PAGE> 6
(a) 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
Incentive Committee (and subject to such terms and conditions as are specified
in the Option or by the Incentive Committee), in shares of Common Stock or in a
combination of cash and such shares. Shares of Common 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 l00% of the Fair Market Value of a share of Common Stock on the date the
Option is granted.
(b) 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 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. Subject to the
first sentence of this paragraph, 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
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. Subject to the preceding provisions of this
paragraph, 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 Chemed Corporation or 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 or Chemed Corporation, pursuant to which 20 percent or more of
the shares of the Corporation's Common Stock or Chemed Corporation's Capital
Stock have been purchased; (3) the stockholders of the Corporation or Chemed
Corporation have
Page A-6
<PAGE> 7
approved (i) an agreement to merge or consolidate with or into another
corporation and the Corporation or Chemed Corporation is not the surviving
corporation or (ii) an agreement to sell or otherwise dispose of all or
substantially all of the assets of Chemed Corporation or 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.
(c) Each Option shall be exercisable during the life of the
optionee only by him or any assignee or transferee permitted by Section 6(f),
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 Section 6(f). 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 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
Incentive Committee, be deemed a termination of employment within the meaning
of this paragraph (c); provided, however, that an Option may not be exercised
during any such leave of absence. Notwithstanding the foregoing provisions of
this paragraph (c) or any other provision of this Plan, no Option shall be
exercisable after expiration of the term for which the Option was granted,
Page A-7
<PAGE> 8
which shall in no event exceed ten years. Where an Option is granted for a
term of less than ten years, the 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. Such an extension shall
not be deemed the grant of an Option under this Plan.
(d) Options shall be granted for such lawful consideration as the
Incentive Committee shall determine.
(e) 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 Common Stock issued or transferred upon the
exercise of an Option.
(f) 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 Incentive
Committee and subject to such terms and conditions as are specified in the
Option or by the 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
Page A-8
<PAGE> 9
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 cancelled
over the aggregate purchase price of such shares, or (ii) issue or transfer
shares of Common Stock to the holder with a Fair Market Value, at such time or
times, equal to such excess.
(g) Each Option shall be evidenced by a written instrument, which
shall contain such terms and conditions, and shall be in such form, as the
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 Incentive Committee, may include restrictions
and limitations in addition to those provided for in this Plan.
(h) 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 Incentive Committee may authorize from time to time, including the
surrender of shares of Common Stock or the withholding of shares of Common
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 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
Page A-9
<PAGE> 10
Incentive shall be evidenced by a written instrument in such form as the
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 Common Stock shall be
effected, or the outstanding shares of Common 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 Common Stock entitled to receive a dividend payable in Common
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
15, 2005.
10. ADMINISTRATION:
(a) The Plan shall be administered by the Incentive Committee,
which shall consist of no fewer than three persons designated by the Board of
Directors. Grants of Stock Incentives may be made by the Incentive Committee
either in or without consultation with employees, but, anything in this Plan to
the contrary notwithstanding, the 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.
Page A-10
<PAGE> 11
(b) The 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 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
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 Common 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
Page A-11
<PAGE> 12
through him, shall have any right, title or interest in or to any shares of
Common Stock allocated or reserved for the purposes of this Plan or subject to
any Stock Incentive except as to such shares of Common Stock, if any, as shall
have been issued or transferred to him.
(d) The Corporation or a Subsidiary may, with the approval of
the 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 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 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 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
Incentive Committee, on the date it is delivered by the Subsidiary or on such
other date between said two dates, as the 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
Page A-12
<PAGE> 13
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 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 Common 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 Common
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)
withdraws the administration of this Plan from the Incentive Committee, (iv)
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, (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.
(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.
Page A-13
<PAGE> 1
Exhibit 10.19
NATIONAL SANITARY SUPPLY COMPANY
SPLIT DOLLAR AGREEMENT
This Agreement, made on June 1, 1995, by and between National
Sanitary Supply Company ("the Corporation"), a Delaware corporation with
offices at 2900 Chemed Center, 255 E. Fifth Street, Cincinnati, Ohio 45202 and
_________________________ ("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
<PAGE> 2
Equity Life Insurance Plan on the life of the
Employee for $_____________ ("Policy").
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
2
<PAGE> 3
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, 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
3
<PAGE> 4
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
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
4
<PAGE> 5
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 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
5
<PAGE> 6
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" 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
6
<PAGE> 7
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.
(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
7
<PAGE> 8
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.
(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
8
<PAGE> 9
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 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
9
<PAGE> 10
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.
10
<PAGE> 11
Executed by the parties at Cincinnati, Ohio, as of June 1, 1995.
NATIONAL SANITARY SUPPLY COMPANY
________________________ By: __________________________
Witness Signature, Corporate Title
________________________ By: ___________________________
Witness Employee/Insured
11
<PAGE> 12
SCHEDULE TO EXHIBIT 10.19
<TABLE>
<CAPTION>
NAME POSITION POLICY FACE AMOUNT
<S> <C> <C>
Kenneth F. Vuylsteke Executive Vice President $1,220,000
W. Dwight Jackson Executive Vice President 1,000,000
Gary H. Sander Vice President, Chief
Financial Officer and
Treasurer 760,000
Arthur J. Bennert, Jr. Vice President-Marketing 600,000
</TABLE>
12
<PAGE> 1
EXHIBIT 11.1
NATIONAL SANITARY SUPPLY COMPANY
COMPUTATION OF EARNINGS PER SHARE (a)
(thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1995 1994 1993
------ -------- ------
<S> <C> <C> <C>
Computation of Earnings Per Common
and Common Equivalent Share
- ---------------------------------------
Net Income $5,745 $4,753 $4,277
====== ====== ======
Average Number of Shares of
Common Stock Outstanding 6,073 5,974 5,897
Incremental Effect of Unexercised
Stock Options 81 99 102
------ ------ ------
Average Number of Shares of Common Stock
and Common Stock Equivalents Outstanding 6,154 6,073 5,999
====== ====== ======
Earnings per Common and Common
Equivalent Share $0.93 $0.78 $0.71
====== ====== ======
Computation of Earnings Per Common Share
Assuming Full Dilution
- ---------------------------------------
Net Income $5,745 $4,753 $4,277
====== ====== ======
Average Number of Shares of
Common Stock Outstanding 6,073 5,974 5,897
Incremental Effect of Unexercised
Stock Options 94 101 138
------ ------ ------
Average Number of Shares of Common Stock
Assuming Full Dilution 6,167 6,075 6,035
====== ====== ======
Earnings Per Common Share Assuming
Full Dilution $0.93 $0.78 $0.71
====== ====== ======
</TABLE>
(a) This calculation is submitted in accordance with the Securities Exchange
Act of 1934. Because the incremental effect of unexercised stock
options results in dilution of less than 3%, the per share data presented
in the consolidated statement of income excludes the impact of common
stock equivalents.
<PAGE> 1
FINANCIAL REVIEW
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Consolidated Balance Sheet 11
Consolidated Statement of Income 12
Consolidated Statement of Cash Flows 13
Consolidated Statement of Stockholders' Equity 14
Consolidated Quarterly Results (Unaudited) 14
Notes to Consolidated Financial Statements 15
Management's Discussion and Analysis 21
</TABLE>
PRICE WATERHOUSE LLP
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of National Sanitary Supply Company
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income, cash flows, and stockholders' equity
present fairly, in all material respects, the financial position of National
Sanitary Supply Company and its subsidiaries at December 31, 1995 and 1994, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1995, in conformity with generally accepted
accounting principles. 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 generally accepted auditing standards 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/ Price Waterhouse LLP
Cincinnati, Ohio
February 5, 1996
<PAGE> 2
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
NATIONAL SANITARY SUPPLY COMPANY
December 31 (thousands, except per share data) 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,491 $ 1,713
Accounts receivable, less allowances
(1995--$1,458; 1994--$1,428) 42,083 41,655
Inventories 28,285 28,344
Deferred income taxes 2,305 1,831
Prepaid expenses and other current assets 1,074 1,527
--------- ---------
Total current assets 75,238 75,070
Properties and equipment, at cost, less accumulated depreciation 21,453 21,851
Goodwill, less accumulated amortization 25,795 26,650
Other assets 753 501
--------- ---------
Total assets $ 123,239 $ 124,072
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 21,950 $ 21,538
Accrued liabilities 14,574 12,552
Loans payable to Chemed Corporation 6,989 13,721
Current portion of notes to Chemed Corporation 1,000 1,000
--------- ---------
Total current liabilities 44,513 48,811
Notes to Chemed Corporation 15,000 16,000
Deferred income taxes 506 441
Other noncurrent liabilities 1,353 1,259
--------- ---------
Total liabilities 61,372 66,511
--------- ---------
Stockholders' equity:
Preferred stock - 1,000,000 shares authorized, $1 par value
(none issued) -- --
Common stock - 7,000,000 shares authorized, $1 par value
(issued: 1995--6,554,543 shares; 1994--6,396,756 shares) 6,555 6,397
Paid-in capital 26,763 25,312
Retained earnings 32,487 28,695
Treasury stock, at cost (1995--456,263 shares; 1994--373,783 shares) (3,938) (2,843)
--------- ---------
Total stockholders' equity 61,867 57,561
--------- ---------
Total liabilities and stockholders' equity $ 123,239 $ 124,072
--------- ---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 3
CONSOLIDATED STATEMENT OF INCOME
NATIONAL SANITARY SUPPLY COMPANY
<TABLE>
<CAPTION>
Years Ended December 31 (thousands, except per share data) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $ 340,913 $ 308,280 $ 296,865
Cost of sales 234,707 210,541 202,535
----------------------------------------------
Gross profit 106,206 97,739 94,330
----------------------------------------------
Expenses and other income:
Operating expenses 93,488 86,573 84,369
Amortization of goodwill 871 874 868
Chemed Corporation interest expense 2,184 2,381 2,220
Other income, net (156) (178) (471)
----------------------------------------------
Total expenses and other income 96,387 89,650 86,986
----------------------------------------------
Income before income taxes 9,819 8,089 7,344
Income taxes 4,074 3,336 3,067
----------------------------------------------
Net income $ 5,745 $ 4,753 $ 4,277
----------------------------------------------
Earnings per share $ .95 $ .80 $ .73
----------------------------------------------
Cash dividends per share $ .28 $ .25 $ .23
----------------------------------------------
Average shares outstanding 6,073 5,974 5,897
----------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
CONSOLIDATED STATEMENT OF CASH FLOWS
NATIONAL SANITARY SUPPLY COMPANY
<TABLE>
<CAPTION>
Years Ended December 31 (thousands of dollars) 1995 1994 1993
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 5,745 $ 4,753 $ 4,277
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 3,560 3,210 3,467
Amortization of goodwill and deferred charges 1,288 1,315 1,285
Deferred income tax provision (279) (22) 172
Provision for losses on accounts receivable 1,145 970 1,003
Changes in operating assets and liabilities,
excluding amounts acquired in
business combinations:
Increase in accounts receivable (1,573) (5,781) (1,409)
(Increase)/decrease in inventories 59 (1,112) 279
(Increase)/decrease in other assets 171 (390) (175)
Increase/(decrease) in accounts payable 412 3,169 (950)
Increase/(decrease) in other liabilities 1,819 (643) (903)
------------------------------
Net cash provided by operating activities 12,347 5,469 7,046
------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Business combinations (53) (646) (481)
Capital expenditures (3,393) (6,715) (2,688)
Other 231 116 158
------------------------------
Net cash used for investing activities (3,215) (7,245) (3,011)
------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from/(payments on) loans payable
to Chemed Corporation (6,732) 4,019 3,219
Principal payments on notes to Chemed Corporation (1,000) (1,000) (6,000)
Principal payments on other long-term debt (48) (46) (147)
Dividends paid (1,701) (1,494) (1,357)
Proceeds from/(purchase of) treasury stock (47) 525 --
Proceeds from/(purchase of) common stock 174 375 (14)
------------------------------
Net cash provided by/(used for) financing activities (9,354) 2,379 (4,299)
------------------------------
Increase/(decrease) in cash and cash equivalents (222) 603 (264)
Cash and cash equivalents at beginning of period 1,713 1,110 1,374
------------------------------
Cash and cash equivalents at end of period $ 1,491 $ 1,713 $ 1,110
------------------------------
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for interest $ 2,271 $ 2,297 $ 2,306
Cash paid during the year for income taxes 3,949 4,208 2,357
------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
NATIONAL SANITARY SUPPLY COMPANY
<TABLE>
<CAPTION>
Common Paid-in Retained Treasury
(thousands of dollars, except per share data) Stock Capital Earnings Stock Total
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1992 $6,242 $23,816 $ 23,042 $(2,639) $ 50,461
Net income -- -- 4,277 -- 4,277
Dividends ($.23 per share) -- -- (1,357) -- (1,357)
Minimum pension liability adjustment -- -- (494) -- (494)
Stock options exercised/awards granted 82 553 -- (374) 261
--------------------------------------------------
Balance at December 31, 1993 6,324 24,369 25,468 (3,013) 53,148
Net income -- -- 4,753 -- 4,753
Dividends ($.25 per share) -- -- (1,494) -- (1,494)
Minimum pension liability adjustment -- -- (32) -- (32)
Treasury stock sold -- 201 -- 324 525
Stock options exercised/
awards granted or terminated 73 742 -- (154) 661
--------------------------------------------------
Balance at December 31, 1994 6,397 25,312 28,695 (2,843) 57,561
Net income -- -- 5,745 -- 5,745
Dividends ($.28 per share) -- -- (1,701) -- (1,701)
Minimum pension liability adjustment -- -- (252) -- (252)
Treasury stock purchased -- -- -- (47) (47)
Stock options exercised/
awards granted 158 1,451 -- (1,048) 561
--------------------------------------------------
Balance at December 31, 1995 $6,555 $26,763 $ 32,487 $(3,938) $ 61,867
--------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
CONSOLIDATED QUARTERLY RESULTS (UNAUDITED)
NATIONAL SANITARY SUPPLY COMPANY
<TABLE>
<CAPTION>
First Second Third Fourth Total
(thousands, except per share data) Quarter Quarter Quarter Quarter Year
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Sales $80,793 $85,571 $89,396 $85,153 $340,913
Gross profit 25,462 26,629 27,705 26,410 106,206
Net income 759 1,370 1,977 1,639 5,745
-----------------------------------------------------------------
Earnings per share $ .13 $ .23 $ .33 $ .27 $ .95
-----------------------------------------------------------------
Dividends per share $ .065 $ .065 $ .075 $ .075 $ .280
-----------------------------------------------------------------
Average shares outstanding 6,050 6,073 6,079 6,091 6,073
-----------------------------------------------------------------
1994
Sales $71,460 $76,975 $81,232 $78,613 $308,280
Gross profit 22,261 24,115 25,260 26,103 97,739
Net income 574 1,104 1,654 1,421 4,753
-----------------------------------------------------------------
Earnings per share $ .10 $ .19 $ .28 $ .24 $ .80
-----------------------------------------------------------------
Dividends per share $ .060 $ .060 $ .065 $ .065 $ .250
-----------------------------------------------------------------
Average shares outstanding 5,937 5,961 5,982 6,016 5,974
-----------------------------------------------------------------
</TABLE>
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of National Sanitary Supply Company and its wholly owned subsidiaries
("National"). All intercompany accounts and transactions have been eliminated.
Chemed Corporation ("Chemed") owned 84% of National's outstanding common
stock on December 31, 1995.
BUSINESS SEGMENT. National operates in one business segment. All significant
revenues relate to the sale and distribution of sanitary maintenance and paper
supplies including cleaners, floor finishes, handsoaps, paper towels and
tissues, cleaning equipment, packaging supplies, business paper, and general
maintenance products used by commercial, institutional, and industrial
businesses. Except for significant customers disclosed elsewhere herein,
National sells to a wide variety of customers in the western, southwestern, and
midwestern areas of the United States, thus reducing the Company's credit risk.
Credit risks are monitored by management following policies deemed reasonable in
the circumstances.
CASH EQUIVALENTS include highly liquid investments with maturities of three
months or less when purchased.
INVENTORIES, which are substantially composed of finished goods and general
merchandise, are stated at the lower of cost or market, with cost determined
using the weighted average unit cost method. Certain selling and administrative
costs are capitalized into inventory and are included in cost of sales as the
related sales are recorded. As of December 31, 1995, the inventories included
capitalized general and administrative expenses of $288,000, and as of December
31, 1994, $312,000. The aggregate amount of general and administrative expenses
incurred was $29,752,000 in 1995, $27,236,000 in 1994, and $26,487,000 in 1993.
DEPRECIATION, RETIREMENT, AND MAINTENANCE POLICIES. Depreciation is computed
using the straight-line method based on the following useful lives:
Building and improvements 20-35 years
Leasehold improvements Life of lease
Transportation equipment 4-7 years
Office and warehouse equipment 3-15 years
When assets are retired or otherwise disposed of, their cost and the
applicable accumulated depreciation and amortization are removed from the
accounts, and the resulting gain or loss is reflected in income. Expenditures
for maintenance, repairs, renewals, and betterments that do not materially
prolong the useful life of assets are expensed.
GOODWILL and other intangible assets arise from business combinations accounted
for as purchase transactions and are amortized using the straight-line method
over the periods to be benefited, but not in excess of 40 years. National
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 business unit indicate that goodwill or other
intangible assets have been impaired, a write-down to fair value is made.
6
<PAGE> 7
SALES are recognized when products are delivered to the customer. One customer,
a fast-food restaurant chain, accounted for approximately $50,000,000,
$42,000,000, and $38,000,000 of National's 1995, 1994, and 1993 sales,
respectively. This chain consists of over 1,370 franchises and 130 company-owned
restaurants. Sales to this customer primarily consisted of low-margin
foodservice products such as paper napkins, plates, and cups. On November 22,
1995, National announced the expected loss of the majority of sales to this
customer during the first half of 1996. The customer decided to consolidate its
procurement of disposable foodservice products previously purchased from
National with food items purchased through foodservice distributors.
INCOME TAXES. In accordance with an agreement with Chemed, federal and state
income taxes are provided on a separate company basis, although National's
taxable income is included in the U.S. federal and certain state income tax
returns of Chemed. The provisions of SFAS No. 109 are followed in recording
income tax expense.
EARNINGS PER SHARE data are computed on the weighted average number of shares of
common stock outstanding during the period. The dilution that results from the
effect of common stock equivalents is not material.
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.
FINANCIAL INSTRUMENTS. For cash and cash equivalents, accounts receivable and
accounts payable, the carrying amount is a reasonable estimate of fair value
because of the liquidity and short-term nature of these instruments. The fair
value of notes to Chemed, determined by discounting the future cash outlays
associated with each obligation based on current interest rates for debt with
similar remaining terms and maturities, is $16,865,000 at December 31, 1995.
RECLASSIFICATIONS. Certain amounts in the 1994 and 1993 financial statements
have been reclassified to conform with the 1995 presentation.
2. BUSINESS COMBINATIONS
During 1994, National acquired two sanitary maintenance supply businesses in two
separate transactions. During 1993, National purchased the assets of a small
sanitary maintenance supply company. The impact of these acquired businesses on
National's 1994 and 1993 results of operations was not material. All of the
aforementioned business combinations were accounted for as purchase transactions
with the excess purchase price over the fair value of the net tangible and
intangible assets acquired classified as goodwill.
3. RELATED PARTY TRANSACTIONS
Chemed provides to National certain administrative, financial, legal, internal
audit, insurance, and staff functions, the costs of which are included in the
accompanying financial statements. The fees for these services are allocated and
determined based on Chemed's cost and are deemed reasonable by management.
Service fees paid to Chemed amounted to $567,000 in 1995, $580,000 in 1994, and
$512,000 in 1993.
National has entered into an agreement with Chemed under which National's
excess funds are deposited with Chemed, bear interest at a rate based on U.S.
Treasury Notes, and are payable upon demand. Any advances made by Chemed to
National, unless otherwise specifically agreed to in writing, also bear interest
at the same rate and are payable on demand. The net amount of interest expense
paid to Chemed totaled $629,000 in 1995, $719,000 in 1994, and $444,000 in 1993.
National has also obtained long-term financing from Chemed on which interest
expense amounted to $1,555,000 in 1995, $1,662,000 in 1994, and $1,776,000 in
1993.
7
\
<PAGE> 8
4. BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
December 31 (thousands of dollars) 1995 1994
- -------------------------------------------------------------------------------------
<S> <C> <C>
PROPERTIES AND EQUIPMENT
Land $ 3,515 $ 3,524
Buildings and leasehold improvements 12,533 12,441
Transportation equipment 8,898 9,181
Office and warehouse equipment 15,631 14,641
Projects under construction 1,948 1,421
-------- --------
Total property and equipment 42,525 41,208
Accumulated depreciation (21,072) (19,357)
-------- --------
Net properties and equipment $ 21,453 $ 21,851
-------- --------
GOODWILL $ 33,548 $ 33,532
Less accumulated amortization (7,753) (6,882)
-------- --------
Net goodwill $ 25,795 $ 26,650
-------- --------
ACCRUED LIABILITIES
Accrued commissions, wages, and benefits $ 4,609 $ 3,438
Accrued insurance 5,699 5,347
Federal and state income taxes 1,129 1,000
Interest payable to Chemed 420 468
Other accrued expenses 2,717 2,299
-------- --------
Total accrued liabilities $ 14,574 $ 12,552
-------- --------
NOTES TO CHEMED
11% note with semiannual interest payments, due
in equal annual installments through 2003 $ 8,000 $ 9,000
8% note with quarterly interest payments,
due on January 1, 1998 8,000 8,000
-------- --------
Total notes to Chemed 16,000 17,000
Less current portion 1,000 1,000
-------- --------
Noncurrent portion of notes to Chemed $ 15,000 $ 16,000
-------- --------
</TABLE>
Scheduled aggregate annual payments of notes to Chemed are $1,000,000 each
year for 1996 and 1997, $9,000,000 for 1998, $1,000,000 each year for 1999 and
2000, and $3,000,000 thereafter.
8
<PAGE> 9
5. LEASES
National leases the majority of its office and warehouse facilities under
operating leases with terms generally from one to ten years, and in most cases,
management expects that these leases will be renewed or replaced by other leases
in the normal course of business. The Company also enters into short-term
operating leases for transportation and office equipment. Rent expense incurred
under operating leases amounted to $4,067,000 in 1995, $3,748,000 in 1994, and
$3,420,000 in 1993. Rents related to Chemed transactions for transportation
equipment and National's Cincinnati headquarters facility totaled $392,000,
$220,000, and $125,000 in 1995, 1994, and 1993, respectively.
Aggregate minimum rental payments required under future operating leases that
had initial or remaining noncancelable terms in excess of one year as of
December 31, 1995 total $7,914,000 scheduled as follows: $2,746,000 for 1996;
$2,000,000 for 1997; $1,303,000 for 1998; $889,000 for 1999; $540,000 for 2000;
and $436,000 thereafter.
6. INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
Years Ended December 31 (thousands of dollars) 1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense:
U.S. Federal $ 3,631 $ 2,850 $2,338
State and local 722 508 557
----------------------------------
Total current tax expense 4,353 3,358 2,895
Deferred tax expense/(income) (279) (22) 172
----------------------------------
Total income tax provision $ 4,074 $ 3,336 $3,067
----------------------------------
</TABLE>
The differences between the federal income tax rate and the effective tax rate
are as follows:
<TABLE>
<CAPTION>
Years Ended December 31 1995 1994 1993
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory U.S. Federal income tax rate 34.0% 34.0% 34.0%
State and local income taxes,
less federal income tax benefit 4.8 4.1 5.0
Purchase accounting differences 3.0 3.7 4.0
All other items, net (0.3) (0.6) (1.2)
------------------------
Effective tax rate 41.5% 41.2% 41.8%
------------------------
</TABLE>
Deferred tax assets/(liabilities) are comprised of the following:
<TABLE>
<CAPTION>
December 31 (thousands of dollars) 1995 1994
- ---------------------------------------------------------------------------------
<S> <C> <C>
Accrued liabilities $ 1,560 $ 1,467
Bad debt reserves 496 432
Defined benefit pension plans including
the minimum pension liability adjustment 332 241
Amortization of intangible assets 188 261
--------------------
Gross deferred tax assets 2,576 2,401
--------------------
Depreciation (458) (568)
Deferred gain on sale of building (277) (285)
Other (42) (158)
--------------------
Gross deferred tax liabilities (777) (1,011)
--------------------
Deferred tax assets $ 1,799 $ 1,390
--------------------
</TABLE>
The change in deferred tax assets and liabilities includes the deferred tax
provision for income taxes and pension liability adjustments.
9
<PAGE> 10
7. STOCK INCENTIVE PLANS
National has three stock incentive plans covering the issuance or transfer of up
to 1,150,000 shares of its common stock. The latest plan, covering 400,000
shares, was adopted in May 1995. Under these plans, stock incentives may be
granted in the form of a stock option or stock award. Options are granted at a
price equal to the market value of National's common stock on the date of the
grant and become exercisable in four equal annual installments between six
months and one year following the date of the grant. Stock awards are issued to
key employees at no cost and generally are restricted as to the transfer of
ownership. Restrictions covering stock awards lapse proportionately over a
three-year period. The following summarizes the activity in the stock incentive
plans for 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------------------------------------------------------
Number Average Number Average
of Shares Price of Shares Price
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options:
Outstanding at January 1 463,439 $ 8.39 535,383 $ 8.29
Granted 201,750 12.00 -- --
Exercised (126,237) 8.05 (50,835) 7.35
Terminated (3,125) 9.14 (21,109) 8.41
-----------------------------------------------------
Outstanding at December 31 535,827 9.82 463,439 8.39
-----------------------------------------------------
Exercisable at December 31 384,508 8.96 438,890 8.45
-----------------------------------------------------
Awards:
Outstanding at January 1 35,143 10.45 47,915 7.84
Granted 31,550 12.28 27,700 12.25
Terminated -- -- (5,035) 10.54
Vested (23,407) 9.59 (35,437) 8.31
-----------------------------------------------------
Not vested at December 31 43,286 12.25 35,143 10.45
-----------------------------------------------------
Shares available for
granting at December 31 206,702 36,877
-----------------------------------------------------
</TABLE>
SFAS No. 123, "Accounting for Stock-Based Compensation," establishes a fair
value based method of accounting for stock-based compensation plans and is
required to be adopted in 1996 for all stock-based compensation plans other than
transactions that are within the scope of APB No. 25, "Accounting for Stock
Issued to Employees." Adoption of SFAS No. 123 for stock-based compensation
plans for transactions with employees is optional. Because the Company plans to
continue to use APB No. 25 to account for its stock-based compensation plans,
the adoption of the remaining provisions of SFAS No. 123 in 1996 is not
anticipated to have a material effect on its financial position or results of
operations.
8. PENSION AND PROFIT SHARING PLANS
DEFINED CONTRIBUTION PLANS. Substantially all nonunion employees participate in
Chemed's Employee Stock Ownership Plan (ESOP). Under the ESOP, a portion of the
Chemed capital stock held by the ESOP is allocated to a participant's account as
Chemed's ESOP loans are repaid. The allocation is based on eligible
compensation. The cost of the ESOP to National is based on 75% of the prior-year
average Chemed stock price. For 1995, the stock price was $25.16, resulting in a
cost to National of $1,502,000, for 1994, the stock price was $22.31, resulting
in a cost to National of $1,346,000, and for 1993, the stock price was $20.70,
resulting in a cost of $1,090,000.
10
<PAGE> 11
All nonunion employees are eligible to participate in National's Savings and
Investment Plan. Each participant may contribute up to 6% of eligible
compensation, and National contributes an additional 25% of the participant's
contribution. These employees also participate in profit sharing plans. Under
the provisions of these plans National may contribute, at the discretion of its
Board of Directors, up to a maximum of 15% of a participant's eligible
compensation.
Union employees in National's western operations participate in the Western
Conference of Teamsters Pension Trust Fund, a multi-employer defined
contribution plan.
The expenses relating to the defined contribution plans, including the ESOP,
amounted to $2,169,000 in 1995, $1,981,000 in 1994, and $1,363,000 in 1993.
DEFINED BENEFIT PLANS. In National's Century Papers, Inc. subsidiary, all
employees with at least one year of service on or before December 31, 1991
participate in a noncontributory defined benefit plan. Effective December 31,
1991, the Company froze the employee benefits accrued under this defined benefit
plan. As a result, the projected benefit obligation equals the accumulated
benefit obligation and is fully vested. Benefits are based on years of service
and the employee's highest consecutive five-year average compensation prior to
December 31, 1991. Century's funding policy is to contribute annually an amount
not greater than the maximum that can be deducted for federal income tax
purposes. Plan assets are primarily invested in government debt securities.
The provisions of SFAS No. 87, "Employers' Accounting for Pensions," require
the recognition of a liability equal to the amount by which the accumulated
benefit obligation exceeds the fair value of plan assets. Recognition of an
additional liability is required to the extent of prepaid pension cost. National
has recorded an adjustment needed to recognize the minimum liability in
accordance with SFAS No. 87. Because the adjustment exceeds the unrecognized
prior service cost, the balance, net of tax benefits, is recorded as a reduction
in stockholders' equity.
The following table summarizes the funded status of Century's defined benefit
plan and amounts recognized in the consolidated balance sheet:
<TABLE>
<CAPTION>
December 31 (thousands of dollars) 1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Projected/accumulated benefit obligation $ 6,131 $ 5,861
Plan assets at fair value (5,265) (5,292)
----------------------
Plan assets less than projected/accumulated benefit obligation 866 569
Unrecognized net loss (1,553) (1,280)
Unrecognized net asset 375 484
Adjustment needed to recognize minimum liability 1,178 796
----------------------
Accrued pension cost $ 866 $ 569
----------------------
Adjustment needed to recognize minimum liability $ 1,178 $ 796
Tax benefit 400 270
----------------------
Additional pension liability adjustment
to stockholders' equity $ 778 $ 526
----------------------
Assumptions:
Discount rate 7.00% 7.25%
Long-term rate of return on plan assets 7.00 7.50
</TABLE>
The components of net periodic pension cost for Century's defined benefit
plan follow:
<TABLE>
<CAPTION>
Years ended December 31 (thousands of dollars) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest cost $ 415 $ 409 $ 412
Return on assets (414) (126) (293)
Net amortization and deferral 221 (230) (95)
----------------------------
Net periodic pension cost $ 222 $ 53 $ 24
----------------------------
</TABLE>
11
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
1995 COMPARED WITH 1994
National's sales for 1995 increased 11% to $340,913,000. The sales growth was
achieved through broad-based volume gains at most locations and improved product
pricing. During 1995, National experienced substantial cost increases in certain
commodity-oriented paper and plastic product categories. Most of these cost
increases were passed on to customers in the form of higher prices, however,
some increases were not passed on and as a result the gross profit margin
decreased from 31.7% in 1994 to 31.2% in 1995.
Operating expenses as a percentage of sales decreased from 28.1% in 1994 to
27.4% in 1995, reflecting tighter control over expenses, especially in non-sales
personnel costs.
The reduction in Chemed interest expense of $197,000 to $2,184,000 resulted
from a reduction in average loan balances with Chemed.
The effective tax rate for 1995 was 41.5% compared with 41.2% in 1994. Higher
state and local income taxes primarily account for the increase.
National's net income in 1995 increased 21% to $5,745,000. The sales increase
coupled with tigher control over expenses primarily account for the increase in
net income.
1994 COMPARED WITH 1993
In 1994, National's sales increased 4% to $308,280,000. The sales increase
reflects better economic conditions during the second half of 1994, particularly
in Southern California which was affected by the January 1994 earthquake. The
industry-wide deflationary product pricing, which hampered sales growth for
several years especially in certain commodity-oriented product categories, began
to turn around as prices began increasing during the second half of 1994. For
the full year 1994, prices averaged approximately 1% less than 1993. The cost
for most products also declined in 1994, and as a result, the gross profit
margin of 31.7% was comparable with the prior year.
Operating expenses as a percentage of sales decreased from 28.4% in 1993 to
28.1% in 1994. The decrease reflects tighter control over most expense items
including decreases in the cost of medical benefits and workers compensation.
Chemed interest expense increased $161,000 to $2,381,000 due to both an
increase in the average loan balance and higher short-term interest rates.
National's effective tax rate decreased from 41.8% to 41.2% primarily as a
result of lower state and local income taxes.
National's net income in 1994 increased 11% to $4,753,000. The higher sales
and tighter control over most expense items primarily accounts for the increase
in net income.
INFLATION
Part of National's product line consists of certain commodity-oriented product
categories which are subject to price and cost fluctuations based on economic
conditions. For several years prior to 1995, both the price and cost for these
items declined. During this same period, the Company experienced inflationary
increases in operating expenses. National expects to continue to mitigate these
economic factors by operating more efficiently, by promoting higher margin
products, and by periodically increasing prices, when possible.
12
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
Working capital was $30,725,000 with a current ratio of 1.7:1 at December 31,
1995 as compared with working capital of $26,259,000 with a current ratio of
1.5:1 at December 31, 1994. The increase in the current ratio was due primarily
to the decrease in loans payable to Chemed offset somewhat by an increase in
accrued liabilities. The decrease in loans payable to Chemed reflects an excess
cash flow from operating and investing activities. The increase in accrued
liabilities primarily reflects higher accruals for incentive-oriented
compensation and insurance.
The increase in accounts receivable at December 31, 1994 reflects a higher
sales volume in the fourth quarter and a small increase in the number of days
receivables outstanding. Inventories and accounts payable at December 31, 1994
reflect the impact of year-end product purchases which did not occur at the end
of 1993.
National has made the scheduled year-end payment of $1,000,000 on its
long-term obligation with Chemed in each of the last three years. The Company
expects to continue making the required payments on all its debt obligations
with funds generated from operations or, if necessary, to arrange for new or
additional loans from Chemed or other parties.
At December 31, 1995, debt as a percentage of total capital was 27%, 8%
points below the prior year reflecting the reduction in loans payable to Chemed.
Debt as a percentage of total capital increased 1% point in 1994 to 35%
primarily due to the borrowing necessary to purchase two Los Angeles facilities
at a cost of $3,275,000.
Management believes that acquisitions will be financed with funds generated
from operations in the future and, if necessary, with borrowing from Chemed or
other parties.
Currently, National has not established independent bank credit relationships.
Management believes, however, that it would be able to obtain this credit should
the need arise. Management also believes the public securities market could
provide additional funds. Under certain loan agreements and guarantees that
Chemed had in place at December 31, 1995, Chemed and National, as a
majority-owned subsidiary of Chemed, are subject to certain financial
restrictions. Because of Chemed's control of National, these restrictions could
limit National's ability to incur debt and to use properties to secure debt. As
of December 31, 1995, Chemed was permitted to incur additional debt of
$99,147,000 of which debt of subsidiaries could not be more than $37,752,000.
Based on National's expectations with respect to its future financial needs, it
is not anticipated that these restrictions will inhibit the Company's ability to
achieve its financial objectives.
OUTLOOK FOR 1996
The loss of a majority of sales to a large customer during the first half of
1996 will temper National's sales and profit growth for the coming year. The
customer, a fast-food restaurant chain, decided to consolidate its procurement
of low-margin disposable foodservice products previously purchased from National
with food items purchased through foodservice distributors.
13
<PAGE> 14
OFFICERS
EDWARD L. HUTTON
Chairman
PAUL C. VOET
President and Chief Executive Officer
KEVIN J. McNAMARA
Vice Chairman
ROBERT B. GARBER
Vice Chairman
W. DWIGHT JACKSON
Executive Vice President;
General Manager of Century Papers, Inc.
KENNETH F. VUYLSTEKE
Executive Vice President;
General Manager of National West
GARY H. SANDER
Vice President, Chief Financial
Officer, and Treasurer
ARTHUR J. BENNERT, JR.
Vice President-Marketing
THOMAS M. LANE
Vice President-Administration and
Assistant Secretary
NAOMI C. DALLOB
Secretary and General Counsel
MARK W. STEPHENS
Assistant Treasurer
DIRECTORS
EDWARD L. HUTTON
Chairman of National; Chairman and Chief
Executive Officer of Chemed Corporation
PAUL C. VOET
President and Chief Executive Officer
of National; Executive Vice President of
Chemed Corporation
KEVIN J. McNAMARA
Vice Chairman of National;
President of Chemed Corporation
ROBERT B. GARBER
Vice Chairman of National
ARTHUR J. BENNERT, JR.
Vice President-Marketing of National
JAMES A. CUNNINGHAM
Senior Investment Banker,
Schroder Wertheim & Company, Inc.
NAOMI C. DALLOB
Secretary and General Counsel of
National; Vice President and Secretary
of Chemed Corporation
CHARLES H. ERHART, JR.
Former President of W.R. Grace & Co.
(retired)
NEAL GILLIATT
President of Neal Gilliatt/Stuart
Watson, Inc.
WILL J. HOEKMAN
Executive Vice President-Banking of
Firstar Bank Iowa, N.A.
THOMAS C. HUTTON
Vice President of Chemed Corporation
W. DWIGHT JACKSON
Executive Vice President of National;
General Manager of Century Papers, Inc.
CHARLES O. LANE
Former Executive Vice President of National
(retired)
SANDRA E. LANEY
Senior Vice President and Chief Administrative Officer
of Chemed Corporation
TIMOTHY S. O'TOOLE
Executive Vice President and Treasurer
of Chemed Corporation
D. WALTER ROBBINS, JR.
Consultant
GARY H. SANDER
Vice President, Chief Financial Officer,
and Treasurer of National
JEROME E. SCHNEE
Professor of Management, University of Cincinnati,
College of Business Administration
KENNTH F. VUYLSTEKE
Executive Vice President of National;
General Manager of National West
14
<PAGE> 15
STOCKHOLDER INFORMATION
CORPORATE HEADQUARTERS
2900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202-4790
(513) 762-6500
TRANSFER AGENT & REGISTRAR
Chemical Mellon Shareholder Services, L.L.C.
Overpeck Centre
85 Challenger Road
Ridgefield Park, New Jersey 07660
(800) 756-3353
STOCKHOLDER INQUIRIES
All questions relating to stock ownership, dividends,
and address changes should be directed to:
Chemical Mellon Shareholder Services, L.L.C.
PO Box 590
Ridgefield Park, New Jersey 07660
All questions relating to lost certificates should be directed to:
Chemical Mellon Shareholder Services, L.L.C.
Estoppel Department
Overpeck Centre
85 Challenger Road
Ridgefield Park, New Jersey 07660
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
Cincinnati, Ohio 45202
FORM 10-K
Additional information about National Sanitary Supply Company is available in
the Annual Report on Form 10-K. Copies will be furnished without charge by
writing to: Investor Relations, National Sanitary Supply Company, 2900 Chemed
Center, 255 East Fifth Street, Cincinnati, Ohio 45202-4790.
ANNUAL MEETING
The Annual Meeting of the Stockholders of National Sanitary Supply Company will
be held Monday, May 20, 1996, at 11:30 a.m. in the Grand Ballroom of The Phoenix
Club, 812 Race Street, Cincinnati, Ohio.
NUMBER OF STOCKHOLDERS
The number of National Sanitary Supply Company stockholders of record was 210 on
December 31, 1995 and 229 on December 31, 1994. (These figures do not include
stockholders with shares held under beneficial ownership in nominee name or
within clearinghouse positions of brokerage firms and banks.)
MARKET FOR COMMON STOCK
The company's common stock is included in the Nasdaq National Market system and
is traded under the symbol NSSX.
COMMON STOCK DATA
The following table sets forth the high and low closing prices for National
Sanitary Supply Company common stock for each quarter of 1995 and 1994.
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Closing Price: High Low High Low
First Quarter $13.50 $12.00 $13.50 $12.25
Second Quarter 13.00 12.00 13.50 12.25
Third Quarter 13.50 12.00 13.25 12.25
Fourth Quarter 14.00 11.50 12.50 12.25
</TABLE>
15
<PAGE> 1
EXHIBIT 21.1
EXHIBIT 21.1
SUBSIDIARIES OF NATIONAL SANITARY SUPPLY COMPANY
The following is a list of subsidiaries of the Company as of December
31, 1995. Each of the companies is incorporated under the laws of the state
following its name. The percentage given represents the voting securities of
each company owned by the Company or its subsidiary as of December 31, 1995.
All of the companies listed below are included in the consolidated
financial statements as of December 31, 1995.
<TABLE>
<S> <C>
Century Papers, Inc. (Texas, 100%)
Cardinal Paper Company (Oklahoma, 100% by Century Papers, Inc.)
National Sanitary Supply
Development, Inc. (Delaware, 100%)
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 (Nos. 33-5604, 33-28593 and 33-55693) of
National Sanitary Supply Company of our report dated February 5, 1996 appearing
on page 10 of the 1995 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/ PRICE WATERHOUSE LLP
- -----------------------
PRICE WATERHOUSE LLP
Cincinnati, Ohio
March 28, 1996
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned director of National Sanitary Supply Company
("Company") hereby appoints Edward L. Hutton, Paul C. Voet and Naomi C. Dallob
as his or 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, 1995, 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.
Date: March 4, 1996
/s/ Robert B. Garber
--------------------
Robert B. Garber
<PAGE> 2
POWER OF ATTORNEY
The undersigned director of National Sanitary Supply Company
("Company") hereby appoints Edward L. Hutton, Paul C. Voet and Naomi C. Dallob
as his or 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, 1995, 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.
Date: March 4, 1996
/s/ Arthur J. Bennert, Jr.
--------------------------
Arthur J. Bennert, Jr.
<PAGE> 3
POWER OF ATTORNEY
The undersigned director of National Sanitary Supply Company
("Company") hereby appoints Edward L. Hutton, Paul C. Voet and Naomi C. Dallob
as his or 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, 1995, 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.
Date: March 6, 1996
/s/ James A. Cunningham
-----------------------
James A. Cunningham
<PAGE> 4
POWER OF ATTORNEY
The undersigned director of National Sanitary Supply Company
("Company") hereby appoints Edward L. Hutton, Paul C. Voet and Naomi C. Dallob
as his or 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, 1995, 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.
Date: March 6, 1996
/s/ Charles H. Erhart, Jr.
--------------------------
Charles H. Erhart, Jr.
<PAGE> 5
POWER OF ATTORNEY
The undersigned director of National Sanitary Supply Company
("Company") hereby appoints Edward L. Hutton, Paul C. Voet and Naomi C. Dallob
as his or 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, 1995, 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.
Date: March 1, 1996
/s/ Neal Gilliatt
-----------------
Neal Gilliatt
<PAGE> 6
POWER OF ATTORNEY
The undersigned director of National Sanitary Supply Company
("Company") hereby appoints Edward L. Hutton, Paul C. Voet and Naomi C. Dallob
as his or 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, 1995, 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.
Date: March 1, 1996
/s/ Will J. Hoekman
-------------------
Will J. Hoekman
<PAGE> 7
POWER OF ATTORNEY
The undersigned director of National Sanitary Supply Company
("Company") hereby appoints Edward L. Hutton, Paul C. Voet and Naomi C. Dallob
as his or 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, 1995, 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.
Date: March 1, 1996
/s/ Thomas C. Hutton
--------------------
Thomas C. Hutton
<PAGE> 8
POWER OF ATTORNEY
The undersigned director of National Sanitary Supply Company
("Company") hereby appoints Edward L. Hutton, Paul C. Voet and Naomi C. Dallob
as his or 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, 1995, 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.
Date: March 1, 1996
/s/ W. Dwight Jackson
---------------------
W. Dwight Jackson
<PAGE> 9
POWER OF ATTORNEY
The undersigned director of National Sanitary Supply Company
("Company") hereby appoints Edward L. Hutton, Paul C. Voet and Naomi C. Dallob
as his or 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, 1995, 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.
Date: March 6, 1996
/s/ Charles O. Lane
-------------------
Charles O. Lane
<PAGE> 10
POWER OF ATTORNEY
The undersigned director of National Sanitary Supply Company
("Company") hereby appoints Edward L. Hutton, Paul C. Voet and Naomi C. Dallob
as his or 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, 1995, 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.
Date: March 6, 1996
/s/ Sandra E. Laney
-------------------
Sandra E. Laney
<PAGE> 11
POWER OF ATTORNEY
The undersigned director of National Sanitary Supply Company
("Company") hereby appoints Edward L. Hutton, Paul C. Voet and Naomi C. Dallob
as his or 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, 1995, 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.
Date: March 1, 1996
/s/ Kevin J. McNamara
---------------------
Kevin J. McNamara
<PAGE> 12
POWER OF ATTORNEY
The undersigned director of National Sanitary Supply Company
("Company") hereby appoints Edward L. Hutton, Paul C. Voet and Naomi C. Dallob
as his or 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, 1995, 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.
Date: March 1, 1996
/s/ Timothy S. O'Toole
----------------------
Timothy S. O'Toole
<PAGE> 13
POWER OF ATTORNEY
The undersigned director of National Sanitary Supply Company
("Company") hereby appoints Edward L. Hutton, Paul C. Voet and Naomi C. Dallob
as his or 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, 1995, 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.
Date: March 2, 1996
/s/ D. Walter Robbins, Jr.
--------------------------
D. Walter Robbins, Jr.
<PAGE> 14
POWER OF ATTORNEY
The undersigned director of National Sanitary Supply Company
("Company") hereby appoints Edward L. Hutton, Paul C. Voet and Naomi C. Dallob
as his or 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, 1995, 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.
Date: March 1, 1996
/s/ Jerome E. Schnee
--------------------
Jerome E. Schnee
<PAGE> 15
POWER OF ATTORNEY
The undersigned director of National Sanitary Supply Company
("Company") hereby appoints Edward L. Hutton, Paul C. Voet and Naomi C. Dallob
as his or 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, 1995, 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.
Date: March 1, 1996
/s/ Kenneth F. Vuylsteke
------------------------
Kenneth F. Vuylsteke
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-K
FOR THE YEAR ENDED DECEMBER 31, 1995 FOR NATIONAL SANITARY SUPPLY COMPANY AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000793500
<NAME> NATIONAL SANITARY SUPPLY COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,491
<SECURITIES> 0
<RECEIVABLES> 38,438
<ALLOWANCES> (1,458)
<INVENTORY> 28,285
<CURRENT-ASSETS> 75,238
<PP&E> 42,525
<DEPRECIATION> (21,072)
<TOTAL-ASSETS> 123,239
<CURRENT-LIABILITIES> 44,513
<BONDS> 15,000
<COMMON> 6,555
0
0
<OTHER-SE> 55,213
<TOTAL-LIABILITY-AND-EQUITY> 123,239
<SALES> 340,913
<TOTAL-REVENUES> 340,913
<CGS> 234,707
<TOTAL-COSTS> 234,707
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,145
<INTEREST-EXPENSE> 2,228
<INCOME-PRETAX> 9,819
<INCOME-TAX> 4,074
<INCOME-CONTINUING> 5,745
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,745
<EPS-PRIMARY> .95
<EPS-DILUTED> .95
</TABLE>
