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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
or
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition period from _______________ to ______________
Commission File Number: 1-8351
CHEMED CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 31-0791746
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2600 Chemed Center, 255 East Fifth Street, Cincinnati, Ohio 45202-4726
(Address of principal executive offices) (Zip Code)
(513) 762-6900
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Capital Stock - Par Value $1 Per Share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes X No
--- ---
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). Yes X No
--- ---
The aggregate market value of the voting stock held by non-affiliates
of the registrant, based upon the average bid and asked price of said stock on
the New York Stock Exchange - Composite Transaction Listing on June 28, 2002
($37.02 per share), was $354,574,950.
At March 21, 2003, 9,901,179 shares of Chemed Corporation Capital Stock
(par value $1 per share) were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT WHERE INCORPORATED
-------- ------------------
2002 Annual Report to Stockholders (Specified Portions) Parts I, II and IV
Proxy Statement for Annual Meeting to be held May 19, 2003 Part III
CHEMED CORPORATION
2002 FORM 10-K ANNUAL REPORT
Table of Contents
Page
PART I
Item 1. Business...............................................................................................1
Item 2. Properties.............................................................................................5
Item 3. Legal Proceedings......................................................................................7
Item 4. Submission of Matters to a Vote of Security Holders....................................................7
-- Executive Officers of the Registrant...................................................................7
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters....................................................................................8
Item 6. Selected Financial Data................................................................................9
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................................................................9
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.............................................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 Registrant....................................................10
Item 11. Executive Compensation................................................................................11
Item 12. Security Ownership of Certain Beneficial Owners and
Management............................................................................................11
Item 13. Certain Relationships and Related Transactions........................................................11
Item 14. Controls & Procedures.................................................................................11
PART IV
Item 15. Exhibits, Financial Statement Schedule and Reports
on Form 8-K...........................................................................................11
ITEM 1. BUSINESS
GENERAL
Chemed Corporation was incorporated in Delaware in 1970 as a subsidiary
of W. R. Grace & Co. and succeeded to the business of W. R. Grace & Co.'s
Specialty Products Group as of April 30, 1971 and remained a subsidiary of W. R.
Grace & Co. until March 10, 1982. As used herein, "Company" refers to Chemed
Corporation, "Chemed" refers to Chemed Corporation and its subsidiaries and
"Grace" refers to W. R. Grace & Co. and its subsidiaries.
On March 10, 1982, the Company transferred to Dearborn Chemical
Company, a wholly owned subsidiary of the Company, the business and assets of
the Company's Dearborn Group, including the stock of certain subsidiaries within
the Dearborn Group, plus $185 million in cash, and Dearborn Chemical Company
assumed the Dearborn Group's liabilities. Thereafter, on March 10, 1982 the
Company transferred all of the stock of Dearborn Chemical Company to Grace in
exchange for 16,740,802 shares of the capital stock of the Company owned by
Grace with the result that Grace no longer has any ownership interest in the
Company.
On December 31, 1986, the Company completed the sale of substantially
all of the business and assets of Vestal Laboratories, Inc., a wholly owned
subsidiary. The Company received cash payments aggregating approximately $67.4
million over the four-year period following the closing, the substantial portion
of which was received on December 31, 1986.
On April 2, 1991, the Company completed the sale of DuBois Chemicals,
Inc. ("DuBois"), a wholly owned subsidiary, to the Diversey Corporation
("Diversey"), then a subsidiary of The Molson Companies Ltd. Under the terms of
the sale, Diversey agreed to pay the Company net cash payments aggregating
$223,386,000, including deferred payments aggregating $32,432,000.
On December 21, 1992, the Company acquired The Veratex Corporation and
related businesses ("Veratex Group") from Omnicare, Inc. The purchase price was
$62,120,000 in cash paid at closing, plus a post-closing payment of $1,514,000
(paid in April 1993) based on the net assets of Veratex.
Effective January 1, 1994, the Company acquired all the capital stock
of Patient Care, Inc. ("Patient Care"), for cash payments aggregating
$20,582,000, plus 17,500 shares of the Company's Capital Stock. An additional
cash payment of $1,000,000 was made on March 31, 1996 and another payment of
$1,000,000 was made on March 31, 1997.
In July 1995, the Company's Omnia Group (formerly Veratex Group)
completed the sale of the business and assets of its Veratex Retail division to
Henry Schein, Inc. ("HSI") for $10 million in cash plus a $4.1 million note for
which payment was received in December 1995.
Effective September 17, 1996, the Company completed a merger of a
subsidiary of the Company, Chemed Acquisition Corp., and Roto-Rooter, Inc.
pursuant to a Tender Offer commenced on August 8, 1996 to acquire any and all of
the outstanding shares of Common Stock of Roto-Rooter, Inc. for $41.00 per share
in cash.
On September 24, 1997, the Company completed the sale of its wholly
owned businesses comprising the Omnia Group to Banta Corporation for $50 million
in cash and $2.3 million in deferred payments.
Effective September 30, 1997, the Company completed a merger between
its 81-percent-owned subsidiary, National Sanitary Supply Company, and a wholly
owned subsidiary of Unisource Worldwide, Inc. for $21.00 per share, with total
payments of $138.3 million.
Effective October 11, 2002, the Company sold its Patient Care, Inc.
subsidiary ("Patient Care") to an investor group that included Schroder Ventures
Life Sciences Group, Oak Investment Partners, Prospect Partners and Salix
Ventures. Patient Care provides home-healthcare services primarily in the New
York-New Jersey-Connecticut area. The cash proceeds to the Company total
$57,500,000, of which $5,000,000 was placed in escrow pending settlement of
Patient Care's receivables with third-party payers. Of this amount, $2,500,000
is to be evaluated and distributed as of October 2003 and $2,500,000 as of
1
October 2004. Also, the Company estimates that the purchaser owes an additional
$1,251,000 based on the value of Patient Care's balance sheet on the date of
sale. The final value of this adjustment is to be determined in 2003. In
addition, the Company received a senior subordinated note receivable ("Note")
for $12,500,000 and a common stock purchase warrant ("Warrant") for 2% of the
outstanding stock of the purchasing company. The Note is due October 11, 2007,
and bears interest at the annual rate of 7.5% through September 30, 2004, 8.5%
from October 1, 2004, through September 30, 2005, and 9.5% thereafter. The
Warrant has an estimated fair value of $1,445,000.
The Company now conducts its business operations in two segments:
Roto-Rooter Group ("Roto-Rooter") and Service America Systems, Inc. ("Service
America").
FORWARD LOOKING STATEMENTS
This Annual Report contains or incorporates by reference certain
forward looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Chemed intends such statements to be subject to
the safe harbors created by that legislation. Such statements involve risks and
uncertainties that affect Chemed's results of operations.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The required segment and geographic data for the Company's continuing
operations (as described below) for the three years ended December 31, 2000,
2001 and 2002 are shown in the "Segment Data" on pages 28 and 29 of the 2002
Annual Report to Stockholders and are incorporated herein by reference.
DESCRIPTION OF BUSINESS BY SEGMENT
The information called for by this item is included within Note 2 of
the Notes to Financial Statements appearing on page 16 of the 2002 Annual Report
to Stockholders and is incorporated herein by reference.
PRODUCT AND MARKET DEVELOPMENT
Each segment of Chemed's business engages in a continuing program for
the development and marketing of new services and products. While new products
and services and new market development are important factors for the growth of
each active segment of Chemed's business, Chemed does not expect that any new
products and services or marketing effort, including those in the development
stage, will require the investment of a material amount of Chemed's assets.
RAW MATERIALS
The principal raw materials needed for Chemed's United States
manufacturing operations are purchased from United States sources. No segment of
Chemed experienced any material raw material shortages during 2002, although
such shortages may occur in the future. Products manufactured and sold by
Chemed's active business segments generally may be reformulated to avoid the
adverse impact of a specific raw material shortage.
PATENTS, SERVICE MARKS AND LICENSES
The Roto-Rooter(R) trademarks and service marks have been used and
advertised since 1935 by Roto-Rooter Corporation, a wholly owned subsidiary of
Roto-Rooter, Inc., a 100 percent-owned subsidiary of the Company. The
Roto-Rooter(R) marks are among the most highly recognized trademarks and service
marks in the United States. Chemed considers the Roto-Rooter(R) marks to be a
valuable asset and a significant factor in the marketing of Roto-
2
Rooter's franchises, products and services and the products and services
provided by its franchisees. Chemed and its subsidiaries also own certain trade
secrets including training manuals, pricing information, customer information,
and software source codes.
COMPETITION
ROTO-ROOTER
All aspects of the sewer, drain, and pipe cleaning, HVAC services and
plumbing repair businesses are highly competitive. Competition is, however,
fragmented in most markets with local and regional firms providing the primary
competition. The principal methods of competition are advertising, range of
services provided, name recognition, speed and quality of customer service,
service guarantees, and pricing.
No individual customer or market group is critical to the total sales
of this segment.
SERVICE AMERICA
All aspects of the HVAC and appliance repair and maintenance service
industry are highly competitive. Competition is, however, fragmented in most
markets with local and regional firms providing the primary competition. The
principal methods of competition are advertising, range of services provided,
speed and quality of customer service, service guarantees, and pricing.
No individual customer or market group is critical to the total sales
of this segment.
RESEARCH AND DEVELOPMENT
Chemed engages in a continuous program directed toward the development
of new products and processes, the improvement of existing products and
processes, and the development of new and different uses of existing products.
The research and development expenditures from continuing operations have not
been nor are they expected to be material.
GOVERNMENT REGULATIONS
Roto-Rooter's franchising activities are subject to various federal and
state franchising laws and regulations, including the rules and regulations of
the Federal Trade Commission (the "FTC") regarding the offering or sale of
franchises. The rules and regulations of the FTC require that Roto-Rooter
provide all prospective franchisees with specific information regarding the
franchise program and Roto-Rooter in the form of a detailed franchise offering
circular. In addition, a number of states require Roto-Rooter to register its
franchise offering prior to offering or selling franchises in the state. Various
state laws also provide for certain rights in favor of franchisees, including
(i) limitations on the franchisor's ability to terminate a franchise except for
good cause, (ii) restrictions on the franchisor's ability to deny renewal of a
franchise, (iii) circumstances under which the franchisor may be required to
purchase certain inventory of franchisees when a franchise is terminated or not
renewed in violation of such laws, and (iv) provisions relating to arbitration.
Roto-Rooter's ability to engage in the plumbing repair business is also subject
to certain limitations and restrictions imposed by state and local licensing
laws and regulations.
Service America's home and service warranty operations are regulated by
the Florida and Arizona Departments of Insurance. In accordance with certain
Florida regulatory requirements, Service America maintains cash with the
Department of Insurance and is also required to maintain additional unencumbered
reserves. In addition, Service America's air conditioning and appliance repair
and maintenance business is also subject to certain limitations imposed by state
and local licensing laws and regulations.
3
ENVIRONMENTAL MATTERS
Roto-Rooter's operations are subject to various federal, state, and
local laws and regulations regarding environmental matters and other aspects of
the operation of a sewer and drain cleaning, HVAC and plumbing services
business. For certain other activities, such as septic tank and grease trap
pumping, Roto-Rooter is subject to state and local environmental health and
sanitation regulations. Service America's operations are also subject to various
federal, state and local laws and regulations regarding environmental matters
and other aspects of the operation of a HVAC and appliance repair and
maintenance service industry.
At December 31, 2002, the Company's accrual for its estimated liability
for potential environmental cleanup and related costs arising from the sale of
DuBois Chemcials Inc. ("Dubois") amounted to $2,093,000. Of this balance,
$1,043,000 is included in other liabilities and $1,050,000 is included in other
current liabilities. The Company is contingently liable for additional
DuBois-related environmental cleanup and related costs up to a maximum of
$18,013,000. On the basis of a continuing evaluation of the Company's potential
liability, management believes that it is not probable this additional liability
will be paid. Accordingly, no provision for this contingent liability has been
recorded. Although it is not presently possible to reliably project the timing
of payments related to the Company's potential liability for environmental
costs, management believes that any adjustments to its recorded liability will
not materially adversely affect its financial position or results of operations.
Chemed, to the best of its knowledge, is currently in compliance in all
material respects with the environmental laws and regulations affecting its
operations. Such environmental laws, regulations and enforcement proceedings
have not required Chemed to make material increases in or modifications to its
capital expenditures and they have not had a material adverse effect on sales or
net income. Capital expenditures for the purposes of complying with
environmental laws and regulations during 2003 and 2004 with respect to
continuing operations are not expected to be material in amount; there can be no
assurance, however, that presently unforeseen legislative or enforcement actions
will not require additional expenditures.
EMPLOYEES
On December 31, 2002, Chemed had a total of 3,335 employees.
AVAILABLE INFORMATION
The Company's internet address is www.chemed.com. The Company's annual
report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form
8-K, and amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Exchange Act are electronically available through the
Company's website as soon as reasonably practicable after such reports are filed
with, or furnished to, the SEC.
ITEM 2. PROPERTIES
Chemed has plants and offices in various locations in the United
States. The major facilities operated by Chemed are listed below by industry
segment. All "owned" property is held in fee and is not subject to any major
encumbrance. Except as otherwise shown, the leases have terms ranging from one
year to sixteen years. Management does not foresee any difficulty in renewing or
replacing the remainder of its current leases. Chemed considers all of its major
operating properties to be maintained in good operating condition and to be
generally adequate for present and anticipated needs.
LOCATION TYPE OWNED LEASED
-------- ---- ----- ------
ROTO-ROOTER GROUP
Cincinnati, OH Office and service 22,000 sq. ft. 44,000 sq. ft.
facilities
4
LOCATION TYPE OWNED LEASED
-------- ---- ----- ------
ROTO-ROOTER GROUP
West Des Moines, Office, manufacturing and 29,000 sq. ft. --
IA distribution center facilities
Northeastern Office and service 31,000 sq. ft. 58,000 sq. ft.
U.S. Area (1) facilities
Central U.S. Office and service 35,000 sq. ft. 74,000 sq. ft.
Area (2) facilities
Southern U.S. Office and service 25,000 sq. ft. 83,000 sq. ft.
Area (3) facilities
Western Office and service 19,000 sq. ft. 86,000 sq. ft.
U.S. Area (4) facilities
SERVICE AMERICA
Florida (5) Office and service 67,000 sq. ft. 21,000 sq. ft.
facilities
Arizona (6) Office and service -- 10,000 sq. ft.
facilities
CORPORATE
Cincinnati, OH (7) Corporate offices and 8,000 sq. ft. 41,000 sq. ft.
related facilities
- -------------------
(1) Comprising locations in Stoughton, Springfield and Woburn,
Massachusetts; West Stratford and Bloomfield, Connecticut; Farmingdale,
Hawthorne, and Staten Island, New York; Pennsauken and Brunswick, New
Jersey; Levittown and Philadelphia, Pennsylvania; Cranston, Rhode
Island; and Newark, Delaware.
(2) Comprising locations in Columbus and Independence, Ohio; Indianapolis,
Indiana; Memphis and Nashville, Tennessee; Wilmerding and North Hills,
Pennsylvania; Rochester and West Seneca, New York; Baltimore, Derwood
and Jessup, Maryland; Manassas and Virginia Beach, Virginia; and
Charlotte, Raleigh and Durham, North Carolina.
(3) Comprising locations in Atlanta, Decatur, Newnan and Kennesaw, Georgia;
Birmingham, Alabama; Ft. Lauderdale, Jacksonville, Miami, Orlando,
Longwood, Medley, Tampa and Daytona Beach, Florida; and Houston, San
Antonio and Austin, Texas.
(4) Comprising locations in St. Paul, Minneapolis and Oakdale, Minnesota;
Addison, Thornton, Schaumburg and Glenview, Illinois; St. Louis,
Missouri; Commerce City, Colorado; Honolulu, Hawaii; Menlo Park,
California; Seattle, Tacoma and Bremerton, Washington; and Las Vegas,
Nevada.
(5) Comprising locations in Pompano Beach, Miami, Fort Myers, Orlando,
Deerfield Beach, Jupiter, Tampa and Delray Beach, Florida.
(6) Comprising location in Phoenix, Arizona. Excludes 6,000 square feet in
Tucson, Arizona sublet to outside party.
(7) Excludes 69,000 square feet in current Cincinnati, Ohio office
facilities that are sublet to outside parties.
5
ITEM 3. LEGAL PROCEEDINGS
The Company is party to lawsuits in the normal course of business, none
of which is expected to have a material impact on operating results. This
includes a class action lawsuit filed in the Third Judicial Circuit Court of
Madison County, Illinois in June of 2000 by Robert Harris, alleging certain
Roto-Rooter plumbing was performed by unlicensed employees. The Company contests
these allegations and believes them baseless. Due to the complex legal and other
issues involved, it is not presently possible to estimate the amount of
liability, if any, related to this matter.
On April 5, 2002 Michael Linn, an attorney, filed a class action
complaint against the Company in the Court of Common Pleas, Cuyahoga County,
Ohio. He alleges Roto-Rooter Services Company's miscellaneous parts charge,
ranging from $4.95 to 12.95 per job, violates the Ohio Consumer Sales Practices
Act. The Company contends that the charge, which is included within the estimate
approved by its customers, is a fully disclosed component of its pricing. On
February 25, 2003 the trial court certified a class of customers who paid the
charge from October 1999 to July 2002. The Company is appealing this order and
believes the ultimate disposition of this lawsuit will not have a material
effect on its financial position.
The District Attorney of Suffolk County, New York is contemplating
legal proceedings against Roto-Rooter Services Company, an indirect subsidiary
of the Company, arising out of the disposal of restaurant grease trap waste,
originating in adjacent Nassau County, in Suffolk County disposal sites. The
Company believes the disposition of this matter will not have a material effect
on its financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE COMPANY
NAME AGE OFFICE FIRST ELECTED
- ------------------ --- ------------------------------------ ---------------
Edward L. Hutton 83 Chairman November 3, 1993 (1)
Kevin J. McNamara 49 President and Chief Executive Officer August 2, 1994 (2)
Timothy S. O'Toole 47 Executive Vice President and May 18, 1992 (3)
Treasurer
Spencer S. Lee 47 Executive Vice President May 15, 2000 (4)
Sandra E. Laney 59 Executive Vice President and Chief November 3, 1993 (5)
Administrative Officer
Arthur V. Tucker, 53 Vice President and Controller May 20, 1991 (6)
Jr.
(1) Mr. E. L. Hutton is the Chairman of the Company and has held this
position since November 1993. Previously, from April 1970 to May 2001,
Mr. E. L. Hutton also served as Chief Executive Officer and from April
1970 to November 1993, he held the position of President of the
Company. Mr. E. L. Hutton is the father of Mr. T. C. Hutton, a director
and a Vice President of the Company.
(2) Mr. K. J. McNamara is President and Chief Executive Officer of the
Company and has held these positions since August 1994 and May 2001,
respectively. Previously, he served as an Executive Vice President,
Secretary and General Counsel of the Company, since November 1993,
August 1986 and August 1986, respectively. He previously held the
position of Vice President of the Company, from August 1986 to May
1992.
(3) Mr. T. S. O'Toole is an Executive Vice President and the Treasurer of
the Company and has held these positions since May 1992 and February
1989, respectively.
(4) Mr. Lee is an Executive Vice President of the Company and has held this
position since May 15, 2000. Mr. Lee is also Chairman and Chief
Executive Officer of Roto-Rooter, Inc., a wholly owned subsidiary of
the Company ("Roto-Rooter"), and has
6
held this position since January 1999. Previously, he served as a
Senior Vice President of Roto-Rooter Services Company from May 1997 to
January 1999.
(5) Ms. S. E. Laney retired as an Executive Vice President and the Chief
Administrative Officer of the Company on March 1, 2003, having held
these positions since May 2001 and May 1991, respectively. Previously,
from November 1993 to May 2001, she held the position of Senior Vice
President of the Company.
(6) Mr. A. V. Tucker, Jr. is a Vice President and Controller of the Company
and has held these positions since February 1989. From May 1983 to
February 1989, he held the position of Assistant Controller of the
Company.
Each executive officer holds office until the annual election at the
next annual organizational meeting of the Board of Directors of the Company
which is scheduled to be held on May 19, 2003.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's Capital Stock (par value $1 per share) is traded on the
New York Stock Exchange under the symbol CHE. The range of the high and low sale
prices on the New York Stock Exchange and dividends paid per share for each
quarter of 2001 and 2002 are set forth below.
CLOSING
DIVIDENDS PAID
HIGH LOW PER SHARE
---------------------------------------------------------------------------------
2002
----
First Quarter $38.30 $33.52 $.11
Second Quarter 39.35 38.60 .11
Third Quarter 37.04 29.85 .11
Fourth Quarter 37.84 29.65 .12
2001
----
First Quarter $39.00 $33.00 $.11
Second Quarter 38.50 30.90 .11
Third Quarter 36.10 26.70 .11
Fourth Quarter 34.00 27.75 .11
Future dividends are necessarily dependent upon the Company's earnings
and financial condition, compliance with certain debt covenants and other
factors not presently determinable.
The information called for by this Item with respect to the Company's
Capital Stock authorized under the Company's stock incentive plans is set forth
on page 26 of the 2002 Annual Report to Stockholders and is incorporated herein
by reference.
As of March 21, 2003, there were approximately 3,567 stockholders of
record of the Company's Capital Stock. This number only includes stockholders of
record and does not include stockholders with shares beneficially held in
nominee name or within clearinghouse positions of brokers, banks or other
institutions.
ITEM 6. SELECTED FINANCIAL DATA
The information called for by this Item for the five years ended December
31, 2002 is set forth on pages 30 and 31 of the 2002 Annual Report to
Stockholders and is incorporated herein by reference.
7
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 34
through 39 of the 2002 Annual Report to Stockholders and is incorporated herein
by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has an insignificant number of financial instruments held
for trading purposes and does not hedge any of its market risks with derivative
instruments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, together with the report thereon
of PricewaterhouseCoopers LLP dated February 7, 2003, appearing on pages 9
through 14 of the 2002 Annual Report to Stockholders, along with the
Supplementary Data (Unaudited Summary of Quarterly Results) appearing on page
33, are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors of the Company are:
Edward L. Hutton Sandra E. Laney
Kevin J. McNamara Spencer S. Lee
Rick L. Arquilla John M. Mount
Charles H. Erhart, Jr. Timothy S. O'Toole
Joel F. Gemunder Donald E. Saunders
Patrick P. Grace George J. Walsh III
Thomas C. Hutton Frank E. Wood
Walter L. Krebs
Except for Messrs. Arquilla, Krebs, Lee and Mount, the additional
information required under this Item with respect to the directors and executive
officers is set forth in the Company's 2003 Proxy Statement and in Part I hereof
under the caption "Executive Officers of the Registrant" and is incorporated
herein by reference. The additional information with respect to Messrs.
Arquilla, Krebs, Lee and Mount is set forth below:
Mr. Arquilla, who is 49 years old, is President and Chief Operating
Officer of Roto-Rooter Services Company, an indirectly wholly owned subsidiary
of the Company, and has held this position since January 1999. He served as
Senior Vice Presidet of Rooter Services Company, from May 1997 to January 1999.
He has served as a director since May 1999.
Mr. Krebs, who is 70 years old, retired as Senior Vice
President-Finance, Chief Financial Officer and Treasurer of Service America
Systems, Inc., a wholly owned subsidiary of the Company ("Service America"), in
July 1999, having held that position since October 1997. Previously, he was a
Director-Financial Services of DiverseyLever, Inc. (formerly known as Diversey
Corporation), Detroit, Michigan (specialty chemicals) ("Diversey") from April
1991 to April 1996. Previously, from January 1990 to April 1991, he was a Senior
Vice President and the Chief Financial Officer of the Company's then
8
wholly owned subsidiary, DuBois Chemicals, Inc. ("DuBois"). He has served as a
director from May 1989 to April 1991 and since May 1995.
Mr. Lee, who is 47 years old, is an Executive Vice President of the
Company and has held this position since May 2000. He is also Chairman and Chief
Executive Officer of Roto-Rooter, Inc., a wholly owned subsidiary of the Company
("Roto-Rooter"), and has held this position since January 1999. Previously, he
served as a Senior Vice President of Roto-Rooter Services Company from May 1997
to January 1999. He has served as a director since May 1999.
Mr. Mount, who is 61 years old, is a Vice President of the Company and
has held this position since November 1997. He is also President and Chief
Executive Officer of Service America and has held these positions since October
1997. Previously, he was a Principal of Lynch-Mount Associates, Cincinnati, Ohio
(management consulting), from November 1993 to October 1997. From April 1991 to
November 1993, Mr. Mount was Senior Vice President of Diversey and President of
Diversey's DuBois Industrial division. Previously, from May 1989 to April 1991,
Mr. Mount was an Executive Vice President of the Company and President of
DuBois. He held the latter position from September 1986 to April 1991. He has
served as a director from May 1986 to April 1991 and since February 1994.
ITEM 11. EXECUTIVE COMPENSATION
Information required under this Item is set forth in the Company's 2003
Proxy Statement, which is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required under this Item is set forth in the Company's 2003
Proxy Statement, which is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required under this Item is set forth in the Company's 2003
Proxy Statement, which is incorporated herein by reference.
ITEM 14. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in the Company's
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms, and that such information
is accumulated and communicated to the Company's management to allow timely
decisions regarding required disclosure. Management necessarily applies its
judgment in assessing the costs and benefits of such controls and procedures
which, by their nature, can provide only reasonable assurance regarding
management's control objectives.
Within 90 days prior to the date of this report, the Company carried
out an evaluation, under the supervision of the Company's President and Chief
Executive Officer, with the participation of its Executive Vice President and
Treasurer and its Vice President and Controller, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures
pursuant to Exchange Act Rule 13a-14. Based upon this evaluation, the Company's
President and Chief Executive Officer, Executive Vice President and Treasurer
and Vice President and Controller concluded the Company's disclosure controls
and procedures are effective in timely alerting them to material information
relating to the Company and its consolidated subsidiaries required to be
included in the Company's Exchange Act reports. There have been no significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of this evaluation.
9
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
EXHIBITS
3.1 Certificate of Incorporation of Chemed Corporation.*
3.2 By-Laws of Chemed Corporation.*
4.1 Offer to Exchange Chemed Capital Trust Convertible Preferred Securities for Shares of Capital Stock, dated as of
December 23, 1999.*
4.2 Chemed Capital Trust, dated as of December 23, 1999.*
4.3 Amended and Restated Declaration of Trust of Chemed Capital Trust, dated February 7, 2000.*
10.1 Agreement and Plan of Merger among Diversey U.S. Holdings, Inc., D. C. Acquisition Inc., Chemed Corporation and
DuBois Chemicals, Inc., dated as of February 25, 1991.*
10.2 Stock Purchase Agreement between Omnicare, Inc. and Chemed Corporation, dated as of August 5, 1992.*
10.3 Agreement and Plan of Merger among National Sanitary Supply Company, Unisource Worldwide, Inc. and TFBD, Inc. dated
as of August 11, 1997.*
10.4 Stock Purchase Agreement dated as of May 8, 2002 by and between PCI Holding Corp. and Chemed Corporation. *
10.5 Amendment No. 1 to Stock Purchase Agreement dated as of October 11, 2002 by and among PCI Holding Corp., PCI-A
Holding Corp. and Chemed Corporation. *
10.6 Senior Subordinated Promissory Note dated as of October 11, 2002 by and among PCI Holding Corp. and Chemed
Corporation. *
10.7 Common Stock Purchase Warrant dated as of October 11, 2002 by and between PCI Holding Corp. and Chemed Corporation. *
10.8 1981 Stock Incentive Plan, as amended through May 20, 1991.*,**
10.9 1983 Incentive Stock Option Plan, as amended through May 20, 1991.*,**
10.10 1986 Stock Incentive Plan, as amended through May 20, 1991.*,**
10.11 1988 Stock Incentive Plan, as amended through May 20, 1991.*,**
10.12 1993 Stock Incentive Plan.*,**
10.13 1995 Stock Incentive Plan.*,**
10.14 1997 Stock Incentive Plan.*,**
10.15 1999 Stock Incentive Plan.*,**
10.16 1999 Long-Term Employee Incentive Plan as amended through May 20, 2002.**
10.17 2002 Stock Incentive Plan.**
10.18 2002 Executive Long-Term Incentive Plan.**
10.19 Employment Contracts with Executives.*,**
10
10.20 Amendment to Employment Agreements with Kevin J. McNamara, Thomas C. Hutton and Sandra E. Laney dated
August 7, 2002.**
10.21 Amendment to Employment Agreements with Timothy S. O'Toole and Arthur V. Tucker dated August 7, 2002.**
10.22 Amendment to Employment Agreements with Spencer S. Lee and Rick L. Arquilla dated August 7, 2002.**
10.23 Amendment No. 4 to Employment Agreement with John M. Mount dated August 7, 2002.**
10.24 Amendment to Employment Agreements with Executives dated January 1, 2002.*, **
10.25 Employment Contract with John M. Mount.*, **
10.26 Consulting Agreement between Timothy S. O'Toole and PCI Holding Corp. effective October 11, 2002.**
10.27 Amendment No. 16 to Employment Agreement with Sandra E. Laney dated March 1, 2003.**
10.28 Excess Benefits Plan, as restated and amended, effective April 1, 1997.*,**
10.29 Non-Employee Directors' Deferred Compensation Plan.*,**
10.30 Chemed/Roto-Rooter Savings & Retirement Plan, effective January 1, 1999.*,**
10.31 First Amendment to Chemed/Roto-Rooter Savings & Retirement Plan, effective September 6, 2000.*, **
10.32 Second Amendment to Chemed/Roto-Rooter Savings & Retirement Plan, effective January 1, 2001.*, **
10.33 Third Amendment to Chemed/Roto-Rooter Savings & Retirement Plan, effective December 12, 2001.*, **
10.34 Stock Purchase Agreement by and Among Banta Corporation, Chemed Corporation and OCR Holding Company as of September
24, 1997.*
10.35 Directors Emeriti Plan.*,**
10.36 Second Amendment to Split Dollar Agreement with Executives.*,**
10.37 Split Dollar Agreement with Sandra E. Laney.*,**
10.38 Split Dollar Agreement with Executives.*,**
10.39 Split Dollar Agreement with Edward L. Hutton.*,**
10.40 Split Dollar Agreement with John M. Mount.*,**
10.41 Split Dollar Agreement with Spencer S. Lee.*,**
10.42 Split Dollar Agreement with Rick L. Arquilla.*,**
10.43 Form of Promissory Note under the Executive Stock Purchase Plan.**
10.44 Promissory Note under the Executive Stock Purchase Plan with Kevin J. McNamara.**
10.45 Roto-Rooter Deferred Compensation Plan No. 1, as amended January 1,1998.*,**
11
10.46 Roto-Rooter Deferred Compensation Plan No. 2.*,**
13. 2002 Annual Report to Stockholders.
21. Subsidiaries of Chemed Corporation.
23. Consent of Independent Accountants.
24. Powers of Attorney.
99.1 Certification by Kevin J. McNamara pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification by Timothy S. O'Toole pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.3 Certification by Arthur V. Tucker, Jr. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
* This exhibit is being filed by means of incorporation by reference (see
Index to Exhibits on page E-1). Each other exhibit is being filed with
this Annual Report on Form 10-K.
** Management contract or compensatory plan or arrangement.
FINANCIAL STATEMENT SCHEDULE
See Index to Financial Statements and Financial Statement Schedule on
page S-1.
REPORTS ON FORM 8-K
The Company filed a Form 8-K dated October 18, 2002 with respect to its
October 11, 2002 sale of Patient Care, Inc. ("Patient Care"), formerly a wholly
owned subsidiary of the Company. Pro forma financial statements contained
therein present the financial position and results of operations of the Company
excluding Patient Care as of June 30, 2002, for the six months ended June 30,
2002 and 2001, and for the year ended December 31, 2001.
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CHEMED CORPORATION
March 28, 2003 By /s/ Kevin J. McNamara
---------------------------
Kevin J. McNamara
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.
SIGNATURE TITLE DATE
- --------------------------------------- ----------------------------------------- -----------------------
-----|
/s/Kevin J. McNamara President and Chief Executive Officer |
- ---------------------- and a Director (Principal Executive |
Kevin J. McNamara Officer) |
|
/s/Timothy S. O'Toole Executive Vice President and Treasurer |
- ---------------------- and a Director |
Timothy S. O'Toole (Principal Financial Officer) |
|
/s/Arthur V. Tucker, Jr. Vice President and Controller | March 28, 2003
- ------------------------ (Principal Accounting |
Arthur V. Tucker, Jr. Officer) |
-----| |
Edward L. Hutton* Sandra E. Laney* | |
Rick L. Arquilla* Spencer S. Lee* | |
Charles H. Erhart, Jr.* John M. Mount* | |
Joel F. Gemunder* Donald E. Saunders* | |
Patrick P. Grace* George J. Walsh III* | --Directors |
Thomas C. Hutton* Frank E. Wood* | |
Walter L. Krebs* -----| -----|
- ----------------
* Naomi C. Dallob by signing her name hereto signs this document on behalf
of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
March 28, 2003 /s/ Naomi C. Dallob
- ----------------------- --------------------------------
Date Naomi C. Dallob
(Attorney-in-Fact)
CERTIFICATIONS PURSUANT TO RULE 13A-14 OF THE EXCHANGE ACT OF 1934
I, Kevin J. McNamara, certify that:
1. I have reviewed this annual report on Form 10-K of Chemed
Corporation;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
13
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations, and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors:
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: March 28, 2003 /s/ Kevin J. McNamara
-----------------------------------
Kevin J. McNamara
(President & Chief Executive Officer)
I, Timothy S. O'Toole, certify that:
1. I have reviewed this annual report on Form 10-K of Chemed
Corporation;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations, and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
14
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors:
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: March 28, 2003 /s/ Timothy S. O'Toole
--------------------------
Timothy S. O'Toole
(Executive Vice President and Treasurer)
I, Arthur V. Tucker, Jr., certify that:
1. I have reviewed this annual report on Form 10-K of Chemed
Corporation;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations, and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
15
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors:
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: March 28, 2003 /s/ Arthur V. Tucker, Jr.
-----------------------------------
Arthur V. Tucker, Jr.
(Vice President and Controller)
16
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
2000, 2001 AND 2002
CHEMED CORPORATION CONSOLIDATED FINANCIAL PAGE(S)
STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
Report of Independent Accountants.................................9*
Consolidated Statement of Operations.............................10*
Consolidated Balance Sheet.......................................11*
Consolidated Statement of Changes in Stockholders' Equity........12-13*
Consolidated Statement of Comprehensive Income...................12*
Consolidated Statement of Cash Flows.............................14*
Notes to Financial Statements....................................15-27*
Segment Data.....................................................28-29*
Report of Independent Accountants on Financial Statement
Schedule.......................................................S-2
Schedule II -- Valuation and Qualifying Accounts.................S-3-S-4
* Indicates page numbers in Chemed Corporation 2002 Annual Report to
Stockholders.
The consolidated financial statements of Chemed Corporation listed above,
appearing in the 2002 Annual Report to Stockholders, are incorporated herein by
reference. The Financial Statement Schedule should be read in conjunction with
the consolidated financial statements listed above. Schedules not included have
been omitted because they are not applicable or the required information is
shown in the financial statements or notes thereto as listed above.
S-1
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
TO THE BOARD OF DIRECTORS
OF CHEMED CORPORATION
OUR AUDITS OF THE CONSOLIDATED FINANCIAL STATEMENTS REFERRED TO IN OUR REPORT
DATED FEBRUARY 7, 2003 APPEARING ON PAGE 9 OF THE 2002 ANNUAL REPORT TO
STOCKHOLDERS OF CHEMED CORPORATION (WHICH REPORT AND CONSOLIDATED FINANCIAL
STATEMENTS ARE INCORPORATED BY REFERENCE IN THIS ANNUAL REPORT ON FORM 10-K)
ALSO INCLUDED AN AUDIT OF THE FINANCIAL STATEMENT SCHEDULE LISTED IN THE INDEX
TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE ON PAGE S-1. IN OUR
OPINION, THE FINANCIAL STATEMENT SCHEDULE PRESENTS FAIRLY, IN ALL MATERIAL
RESPECTS, THE INFORMATION SET FORTH THEREIN WHEN READ IN CONJUNCTION WITH THE
RELATED CONSOLIDATED FINANCIAL STATEMENTS.
/S/ PRICEWATERHOUSECOOPERS LLP
- ------------------------------
PRICEWATERHOUSECOOPERS LLP
CINCINNATI, OHIO
FEBRUARY 7, 2003
S-2
SCHEDULE II
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
DR/(CR)
ADDITIONS
---------------------
(CHARGED) (CHARGED) APPLICABLE
CREDITED CREDITED TO
BALANCE AT TO COSTS TO OTHER COMPANIES BALANCE
BEGINNING AND ACCOUNTS ACQUIRED DEDUCTIONS AT END
DESCRIPTION OF PERIOD EXPENSES (a) IN PERIOD (b) OF PERIOD
- -------------------------------------------------------------------------------------------------------------
Allowances for doubtful
accounts (d)
For the year 2002......... $ (4,091) $(1,808) $ - $ - $ 2,590 $ (3,309)
========= ======== ======== ========= ======= =========
For the year 2001......... $ (3,637) $(2,866) $ - $ - $ 2,412 $ (4,091)
========= ======== ======== ========= ======= =========
For the year 2000......... $ (2,854) $(2,236) $ - $ - $ 1,453 $ (3,637)
========= ======== ======== ========= ======== =========
Allowances for doubtful
accounts - notes
receivable (e)
For the year 2002......... $ (900) $ 478 $ - $ - $ $ (422)
========= ======== ======== ========= ======= =========
For the year 2001......... $ (23) $ (900) $ - $ - $ 23 $ (900)
========= ======== ======== ========= ======= =========
For the year 2000......... $ (23) $ - $ - $ - $ - $ (23)
========= ======== ======== ========= ======= =========
S-3
(CHARGED) (CHARGED) APPLICABLE
CREDITED CREDITED TO
BALANCE AT TO COSTS TO OTHER COMPANIES BALANCE
BEGINNING AND ACCOUNTS ACQUIRED DEDUCTIONS AT END
DESCRIPTION OF PERIOD EXPENSES(a) (b) IN PERIOD (c) OF PERIOD
- -------------------------------------------------------------------------------------------------------------
Valuation allowance for
available-for-sale securities
For the year 2002......... $ 6,483 $(1,200) $ 326 $ - $ (1,141) $ 4,468
========= ======== ========= ========= ========= ========
For the year 2001......... $ 4,980 $ - $ 2,496 $ - $ (993) $ 6,483
========= ======== ========= ========= ========= ========
For the year 2000......... $ 5,220 $ - $ 3,159 $ - $ (3,399) $ 4,980
========= ======== ========= ========= ========= ========
- -------------------------
(a) With respect to the valuation allowance for available-for-sale
securities, amounts charged to cost and expenses in 2002 comprise a
write down for investment impairment.
(b) With respect to the valuation allowance for available-for-sale
securities, amounts charged or credited to other accounts comprise
net unrealized holding gains arising during the period.
(c) With respect to allowances for doubtful accounts, deductions
include accounts considered uncollectible or written off, payments,
companies divested, etc. with respect to valuation allowance for
available-for-sale securities, deductions comprise net realized
gains on sales of investments.
(d) Classified in consolidated balance sheet as a reduction of accounts
receivable.
(e) Classified in consolidated balance sheet as a reduction of other
assets.
S-4
INDEX TO EXHIBITS
PAGE NUMBER
OR
INCORPORATION BY REFERENCE
----------------------------------
EXHIBIT FILE NO. AND PREVIOUS
NUMBER FILING DATE EXHIBIT NO.
- ------- ------------ -----------
3.1 Certificate of Incorporation of Form S-3 4.1
Chemed Corporation Reg. No. 33-44177
11/26/91
3.2 By-Laws of Chemed Corporation Form 10-K 2
3/28/89
4.1 Offer to Exchange Chemed Capital Form T-3 T3E.1
Trust Convertible Trust Preferred 12/23/99
Securities for Shares of Capital
Stock, dated as of 12/23/99
4.2 Chemed Capital Trust, dated Schedule 13E-4 (b)(1)
as of 12/23/99 12/23/99
4.3 Amended and Restated Schedule 13E-4A (b)(2)
Declaration of Trust of Chemed 2/7/00, Amendment
Capital Trust, dated February No. 2
7, 2000
10.1 Agreement and Plan of Merger Form 8-K 1
among Diversey U.S. Holdings, 3/11/91
Inc., D.C. Acquisition Inc.,
Chemed Corporation and DuBois
Chemicals, Inc., dated as of
February 25, 1991
10.2 Stock Purchase Agreement between Form 10-K 5
Omnicare, Inc. and Chemed 3/25/93
Corporation dated as of August 5,
1992
10.3 Agreement and Plan of Merger Form 8-K 1
among National Sanitary 10/13/97
Supply Company, Unisource
Worldwide, Inc. and TFBD, Inc.
10.4 Stock Purchase Agreement dated Form 8-K 2.1
as of May 8, 2002 by and between 10/11/02
PCI Holding Corp. and Chemed
Corporation
1
PAGE NUMBER
OR
INCORPORATION BY REFERENCE
----------------------------------
EXHIBIT FILE NO. AND PREVIOUS
NUMBER FILING DATE EXHIBIT NO.
- ------- ------------ -----------
10.5 Amendment No. 1 to Stock Purchase Form 8-K 2.2
Agreement dated as of October 11, 10/11/02
2002 by and among PCI Holding
Corp., PCI-A Holding Corp. and
Chemed Corporation
10.6 Senior Subordinated Promissory Form 8-K 2.3
Note dated as of October 11, 2002 10/11/02
by and among PCI Holding Corp.
and Chemed Corporation
10.7 Common Stock Purchase Warrant Form 8-K 2.4
dated as of October 11, 2002 by 10/11/02
and between PCI Holding Corp.
and Chemed Corporation
10.8 1981 Stock Incentive Plan, as Form 10- K 7
amended through May 20, 1991 3/27/92, **
10.9 1983 Incentive Stock Option Plan, Form 10-K 8
as amended through May 20, 1991 3/27/92, **
10.10 1986 Stock Incentive Plan, as Form 10-K 9
amended through May 20, 1991 3/27/92, **
10.11 1988 Stock Incentive Plan, as Form 10-K 10
amended through May 20, 1991 3/27/92, **
10.12 1993 Stock Incentive Plan Form 10-K 10.8
3/29/94, **
10.13 1995 Stock Incentive Plan Form 10-K 10.14
3/28/96, **
10.14 1997 Stock Incentive Plan Form 10-K 10.10
3/27/98, **
10.15 1999 Stock Incentive Plan Form 10-K 10.11
3/29/00, **
10.16 1999 Long-Term Employee
Incentive Plan as amended *, **
through May 20, 2002
10.17 2002 Stock Incentive Plan *, **
2
PAGE NUMBER
OR
INCORPORATION BY REFERENCE
----------------------------------
EXHIBIT FILE NO. AND PREVIOUS
NUMBER FILING DATE EXHIBIT NO.
- ------- ------------ -----------
10.18 2002 Executive Long-Term *, **
Incentive Plan
10.19 Employment Contracts with Form 10-K 10.12
Executives 3/28/89, **
10.20 Amendment to Employment *, **
Agreements with Kevin J.
McNamara, Thomas C. Hutton
and Sandra E. Laney
dated August 7, 2002
10.21 Amendment to Employment *, **
Agreements with Timothy
S. O'Toole and Arthur V.
Tucker dated August 7, 2002
10.22 Amendment to Employment *, **
Agreements with Spencer S. Lee
and Rick L. Arquilla, dated
August 7, 2002
10.23 Amendment No. 4 to Employment *, **
Agreement with John M. Mount
dated August 7, 2002
10.24 Amendment to Employment Form 10-K 10.16
Agreement with Executives dated 3/28/02, **
January 1, 2002
10.25 Employment Contract with John Form 10-K 10.23
M. Mount 3/27/98, **
10.26 Consulting Agreement between *, **
Timothy S. O'Toole and PCI
Holding Corp.
10.27 Amendment No. 16 to Employment *, **
Agreement with Sandra E. Laney
dated March 1, 2003
10.28 Excess Benefits Plan, as restated Form 10-K 10.9
and amended, effective April 1, 3/27/98, **
1997
3
PAGE NUMBER
OR
INCORPORATION BY REFERENCE
----------------------------------
EXHIBIT FILE NO. AND PREVIOUS
NUMBER FILING DATE EXHIBIT NO.
- ------- ------------ -----------
10.29 Non-Employee Directors' Deferred Form 10-K 10.10
Compensation Plan 3/24/88, **
10.30 Chemed/Roto-Rooter Savings & Form 10-K 10.25
Retirement Plan, effective 3/25/99, **
January 1, 1999
10.31 First Amendment to Chemed/ Form 10-K 10.22
Roto-Rooter Savings & Retirement 3/28/02, **
Plan effective September 6, 2000
10.32 Second Amendment to Chemed/ Form 10-K 10.23
Roto-Rooter Savings & Retirement 3/28/02, **
Plan effective January 1, 2001
10.33 Third Amendment to Chemed/ Form 10-K 10.24
Roto-Rooter Savings & Retirement 3/28/02, **
Plan effective December 12, 2001
10.34 Stock Purchase Plan by and Form 8-K 10.21
among Banta Corporation, Chemed 10/13/97
Corporation and OCR Holding
Company
10.35 Directors Emeriti Plan Form 10-Q 10.11
5/12/88, **
10.36 Second Amendment to Split Dollar Form 10-K 10.26
Agreement with Executives 3/29/00, **
10.37 Split Dollar Agreement with Form 10-K 10.27
Sandra E. Laney 3/25/99, **
10.38 Split Dollar Agreements Form 10-K 10.15
with Executives 3/28/96, **
10.39 Split Dollar Agreement with Form 10-K 10.16
Edward L. Hutton 3/28/96, **
10.40 Split Dollar Agreement with Form 10-K 10.32
John M. Mount 3/29/00, **
10.41 Split Dollar Agreement with Form 10-K 10.33
Spencer S. Lee 3/29/00, **
4
PAGE NUMBER
OR
INCORPORATION BY REFERENCE
----------------------------------
EXHIBIT FILE NO. AND PREVIOUS
NUMBER FILING DATE EXHIBIT NO.
- ------- ------------ -----------
10.42 Split Dollar Agreement with Form 10-K 10.34
Rick L. Arquilla 3/29/00, **
10.43 Form of Promissory Note under *, **
the Executive Stock Purchase Plan
10.44 Form of Promissory Note under
the Executive Stock Purchase Plan *, **
with Kevin J. McNamara
10.45 Roto-Rooter Deferred Compensation Form 10-K 10.37
Plan No. 1, as amended January 1, 3/28/01, **
1998
10.46 Roto-Rooter Deferred Compensation Form 10-K 10.38
Plan No. 2 3/28/01, **
13. 2002 Annual Report to Stockholders *
21 Subsidiaries of Chemed Corporation *
23 Consent of Independent Accountants *
24 Powers of Attorney *
99.1 Certification by Kevin J. McNamara *
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99.2 Certification by Timothy S. O'Toole *
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99.3 Certification by Arthur V. Tucker, *
Jr. pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
* Filed herewith.
**Management contract or compensatory plan or arrangement.
5