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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
[X] THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
or
Transition Report Pursuant to Section 13 or 15(d) of the
[ ] Securities Exchange Act of 1934
For the Transition period from to
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Commission File Number: 1-8351
CHEMED CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 31-0791746
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2600 Chemed Center, 255 East Fifth Street, Cincinnati, Ohio 45202-4726
(Address of principal executive offices) (Zip Code)
(513) 762-6900
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------
Capital Stock - Par Value $1 Per Share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
The aggregate market value of the voting stock held by non-affiliates of the
registrant, based upon the closing price of said stock on the New York Stock
Exchange Composite Transaction Listing on March 19, 1997 ($36.37 per share),
was $356,412,720.
At March 19, 1997, 10,032,289 shares of Chemed Corporation Capital Stock
(par value $1 per share) were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT WHERE INCORPORATED
1996 Annual Report to Stockholders (Specified Portions) Parts I, II and IV
Proxy Statement for Annual Meeting Part III
to be held May 19, 1997.
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CHEMED CORPORATION
1996 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PAGE
PART I
Item 1. Business............................................................. 1
Item 2. Properties........................................................... 5
Item 3. Legal Proceedings.................................................... 9
Item 4. Submission of Matters to a Vote of Security Holders.................. 9
Executive Officers of the Registrant................................. 9
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.................................................. 10
Item 6. Selected Financial Data.............................................. 10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................. 10
Item 8. Financial Statements and Supplementary Data.......................... 11
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................................. 11
PART III
Item 10. Directors and Executive Officers of the Registrant.................... 11
Item 11. Executive Compensation................................................ 11
Item 12. Security Ownership of Certain Beneficial Owners and
Management............................................................ 11
Item 13. Certain Relationships and Related Transactions........................ 11
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports
on Form 8-K........................................................... 12
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PART I
ITEM 1. BUSINESS
GENERAL
Chemed Corporation was incorporated in Delaware in 1970 as a subsidiary
of W. R. Grace & Co. and succeeded to the business of W. R. Grace & Co.'s
Specialty Products Group as of April 30, 1971 and remained a subsidiary of W. R.
Grace & Co. until March 10, 1982. As used herein, "Company" refers to Chemed
Corporation, "Chemed" refers to Chemed Corporation and its subsidiaries and
"Grace" refers to W. R. Grace & Co. and its subsidiaries.
On March 10, 1982, the Company transferred to Dearborn Chemical Company,
a wholly owned subsidiary of the Company, the business and assets of the
Company's Dearborn Group, including the stock of certain subsidiaries within the
Dearborn Group, plus $185 million in cash, and Dearborn Chemical Company assumed
the Dearborn Group's liabilities. Thereafter, on March 10, 1982 the Company
transferred all of the stock of Dearborn Chemical Company to Grace in exchange
for 16,740,802 shares of the capital stock of the Company owned by Grace with
the result that Grace no longer has any ownership interest in the Company.
On December 31, 1986, the Company completed the sale of substantially all
of the business and assets of Vestal Laboratories, Inc., a wholly owned
subsidiary ("Vestal"). 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"), 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. As of
December 31, 1996, the Company had received cash payments totaling $221,738,000.
On December 21, 1992, the Company acquired The Veratex Corporation and
related businesses ("Veratex Group") from Omnicare, Inc., a publicly traded
company in which Chemed currently maintains a 1 percent ownership interest. The
purchase price was $62,120,000 in cash paid at closing, plus a post-closing
payment of $1,514,000 (paid in April 1993) based on the net assets of Veratex.
Effective January 1, 1994, the Company acquired all the capital stock of
Patient Care, Inc. ("Patient Care"), for cash payments aggregating $20,582,000,
including deferred payments with a present value of $6,582,000, plus 17,500
shares of the Company's Capital Stock. An additional cash payment of $1,000,000
was made on March 31, 1996 and another payment of $1,000,000 will be 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
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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.
During 1996, the Company conducted its business operations in four
segments: National Sanitary Supply Company ("National Sanitary Supply"),
Roto-Rooter Group ("Roto- Rooter"), Omnia Group ("Omnia") and Patient Care.
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, 1994,
1995 and 1996, are shown in the "Sales and Profit Statistics by Business
Segment" and the "Additional Segment Data" on pages 34, 35 and 38 of the 1996
Annual Report to Stockholders and are incorporated herein by reference.
DESCRIPTION OF BUSINESS BY SEGMENT
The information called for by this item is included within Note 1 of the
Notes to Financial Statements appearing on page 25 of the 1996 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 products. While new product 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 product 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 each active segment of Chemed's
United States manufacturing operations are purchased from United States sources.
No segment of Chemed experienced any material raw material shortages during
1996, although such shortages may occur in the future. Products manufactured and
sold by Chemed's active business segments generally may be reformulated to avoid
the adverse impact of a specific raw material shortage.
PATENTS, SERVICE MARKS AND LICENSES
The Roto-Rooter(R) trademark and service mark have been used and
advertised since 1935 by Roto-Rooter Corporation, a wholly owned subsidiary of
Roto-Rooter, Inc., a 100 percent-owned subsidiary of the Company. The
Roto-Rooter(R) marks are among the most highly recognized trademarks and service
marks in the United States. Chemed considers the Roto-Rooter(R) marks to be a
valuable asset and a significant factor in the marketing of Roto-Rooter's
franchises, products and services and the products and services provided by its
franchisees.
INVENTORIES
Chemed maintains local warehousing and delivery arrangements throughout
the United States to provide prompt delivery service to its customers.
Inventories on hand for each active segment are not considered high in relation
to industry standards for the
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business involved. In general, terms and conditions of sale for each segment
follow usual and customary industry standards.
COMPETITION
NATIONAL SANITARY SUPPLY
Chemed considers National Sanitary Supply (with its subsidiaries Century
Papers, Inc. and NSS Development) to be a leader in the janitorial maintenance
supply distribution market in the western, southwestern and midwestern United
States (Arizona, California, Colorado, Indiana, Louisiana, Michigan,
Mississippi, Missouri, Nevada, New Mexico, Ohio, Oklahoma, Oregon, Tennessee,
Texas, Utah and Washington). This subsidiary markets a broad line of cleaning
chemicals, paper goods, plastic products, waste handling products and other
janitorial supplies to a wide range of customers. 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, approximately 9,000 firms compete in the sanitary maintenance
supply distribution business on a local or regional basis. 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.
There is a number of local janitorial supply companies that compete with
National Sanitary Supply in its market. The principal competitive factors in the
janitorial supply market in order of importance are breadth of product line,
prompt delivery and price. While remaining price competitive, National Sanitary
Supply maintains a product line that is generally broader than its competitors
and has earned an excellent reputation for prompt delivery and customer service.
Federal, state and local governmental agencies accounted for
approximately 8 percent of National Sanitary Supply's total sales for 1996.
These sales are attributable to over 1,200 different agencies whose purchasing
decisions are made separately. While it is believed that the loss of the sales
to these agencies in the aggregate would be material, the decentralized
purchasing decisions make the loss of a significant number of such accounts at
any given time unlikely. Other than sales to the aforementioned entities, in
1996 no one customer accounted for more than 4 percent of net sales.
ROTO-ROOTER
All aspects of the sewer, drain, and pipe cleaning and appliance and
plumbing repair businesses are highly competitive. Competition is, however,
fragmented in most markets with local and regional firms providing the primary
competition. The principal methods of competition are advertising, range of
services provided, speed and quality of customer service, service guarantees,
and pricing.
No individual customer or market group is critical to the total sales of
this segment.
OMNIA
In distributing medical and dental products, Omnia competes with
manufacturers and distributors of disposable paper, cotton and gauze products.
Omnia competes in this market on the basis of customer service, product quality
and price. At times, its pricing policy has been subject to considerable
competitive pressures, limiting the ability to implement price increases.
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Omnia has contracts with several customers, the loss of any one or more
of which could have a material adverse effect on this segment.
PATIENT CARE
The home healthcare services industry and, in particular, the nursing and
personal care segment is highly competitive. Patient Care competes with numerous
local, regional and national home healthcare services companies. Patient Care
competes on the basis of quality, cost-effectiveness and its ability to service
its referral base quickly throughout its regional markets.
Patient Care has contracts with several customers, the loss of any one or
more of which could have a material adverse effect on this segment.
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.
ENVIRONMENTAL MATTERS
Chemed's operations are subject to various federal, state and local laws
and regulations regarding the environmental aspects of the manufacture and
distribution of chemical products. 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.
In connection with the sale of DuBois to the Diversey Corporation, the
Company contractually assumed for a period of ten years the estimated liability
for potential environmental cleanup and related costs arising from the sale of
DuBois up to a maximum of $25,500,000. Based upon an updated assessment of the
Company's environmental-related liability by the Company's environmental
adviser, the Company has accrued a total of $10,835,000 for this potential
liability, of which $3,430,000 has been paid to Diversey Corporation through
December 31, 1996. Prior to the sale of DuBois, DuBois had been designated as a
Potentially Responsible Party ("PRP") at fourteen Superfund sites by the U.S.
Environmental Protection Agency ("USEPA"). With respect to all of these sites,
the Company has been unable to locate any records indicating it disposed of
waste of any kind at such sites. Nevertheless, it settled claims at five such
sites at minimal cost. In addition, because there was a number of other
financially responsible companies designated as PRPs relative to these sites,
management believes that it is unlikely that such actions will have a material
effect on the Company's financial condition or results of operations. With
respect to one of these sites, the Company's involvement is based on the
location of one of its manufacturing plants. Currently, the USEPA and the state
governmental agency are attempting to resolve jurisdictional issues, and action
against PRPs is not proceeding.
Capital expenditures for the purposes of complying with environmental
laws and regulations during 1997 and 1998 with respect to continuing operations
are not expected
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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, 1996, Chemed had a total of 7,886 employees; 7,808 were
located in the United States and 78 were in Canada.
ITEM 2. PROPERTIES
Chemed has plants and offices in various locations in the United States
and Canada. The major facilities operated by Chemed are listed below by
industry segment. All "owned" property is held in fee and is not subject to
any major encumbrance. Except as otherwise shown, the leases have terms
ranging from one year to ten 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 (1) Office and service 16,000 sq. ft. 23,000 sq. ft.
facilities
West Des Moines, IA Office, manufacturing and 29,000 sq. ft. --
distribution center facilities
Northeastern Office and service facilities 32,000 sq. ft. 43,000 sq. ft.
U.S. Area (2)
Central U.S. Office and service facilities 17,000 sq. ft. 24,000 sq. ft.
Area (3)
Mid-Atlantic Office and service facilities 18,000 sq. ft. 23,000 sq. ft.
U.S. Area (4)
Midwestern U.S. Office and service facilities 10,000 sq. ft. 25,000 sq. ft.
Area (5)
Southeastern U.S. Office and service facilities 46,000 sq. ft. 80,000 sq. ft.
Area (6)
Western U.S. Office and service facilities 19,000 sq. ft. 43,000 sq. ft.
Area (7)
Canada (8) Office and service facilities -- 13,000 sq. ft.
NATIONAL SANITARY SUPPLY COMPANY
Los Angeles, CA Office, manufacturing and 145,000 sq. ft. 76,000 sq. ft.
distribution center
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Location Type Owned Leased
-------- ---- ----- ------
(NATIONAL SANITARY SUPPLY COMPANY - CONTINUED)
San Francisco, Office and distribution -- 67,000 sq. ft.
CA (Area) center
Tempe, AZ Office and distribution 69,000 sq. ft. --
center
Denver, CO Office and distribution -- 53,000 sq. ft.
center
Marion, IN Office and distribution 30,000 sq. ft. --
center
Tupelo, MS Office and distribution -- 33,000 sq. ft.
center
St. Louis, MO Office and distribution -- 16,000 sq. ft.
center
Las Vegas, NV Office and distribution 24,000 sq. ft. --
center
Albuquerque, NM Office and distribution -- 21,000 sq. ft.
center
Fairfield, OH Office and distribution -- 38,000 sq. ft.
center
Toledo, OH Office and distribution -- 65,000 sq. ft.
center
Portland, OR Office and distribution 56,000 sq. ft. --
center
Memphis, TN Office and distribution -- 66,000 sq. ft.
center
Amarillo, TX Office and distribution -- 28,000 sq. ft.
center
Beaumont, TX Office and distribution -- 14,000 sq. ft.
center
Corpus Christi, Office and distribution -- 58,000 sq. ft.
TX center
Dallas, TX Office and distribution 54,000 sq. ft. --
center
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Location Type Owned Leased
-------- ---- ----- ------
(NATIONAL SANITARY SUPPLY COMPANY - CONTINUED)
El Paso, TX Office and distribution 18,000 sq. ft. --
center
Houston, TX Office and distribution -- 102,000 sq. ft.
center
Laredo, TX Office and distribution -- 10,000 sq. ft.
center
McAllen, TX Office and distribution -- 9,000 sq. ft.
center
New Braunfels, Office and distribution -- 54,000 sq. ft.
TX center
Oklahoma City, OK Office and distribution -- 75,000 sq. ft.
center
Kansas City, MO Office and distribution -- 25,000 sq. ft.
center
Salt Lake City, Office and distribution -- 20,000 sq. ft.
UT center
Seattle, WA Office and distribution -- 15,000 sq. ft.
center
Western, Branch sales offices 3,000 sq. ft. 187,000 sq. ft.
Midwestern and
Southwestern
U.S. (9)
OMNIA
Troy, MI (10) Office -- 68,000 sq. ft.
Detroit, MI Manufacturing facility 64,000 sq. ft. --
Lexington, KY Office and distribution -- 157,000 sq. ft.
center
Lakeland, FL Office, manufacturing and -- 76,000 sq. ft.
distribution center
Rialto, CA (11) Office, manufacturing and 132,000 sq. ft. --
distribution center
PATIENT CARE
New Jersey (12) Office -- 57,000 sq. ft.
Connecticut (13) Office -- 9,000 sq. ft.
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Location Type Owned Leased
-------- ---- ----- ------
(PATIENT CARE - CONTINUED)
New York (11) Office -- 43,000 sq. ft.
Louisville, KY Office -- 6,000 sq. ft.
CORPORATE
CORPORATE (15)
- --------------
Cincinnati, OH Corporate offices and -- 48,000 sq. ft.
related facilities
- ----------
(1) Excludes 6,000 square feet that formerly housed a service facility. This
location is now leased to an outside third party.
(2) Comprising locations in Stoughton and Woburn, Massachusetts; Stratford and
Bloomfield, Connecticut; West Seneca, West Hempstead, Staten Island,
Rochester, Farmingdale and Hawthorne, New York; and Cranston, Rhode Island.
(3) Comprising locations in Atlanta and Decatur, Georgia; Birmingham, Alabama;
Little Rock, Arkansas; Memphis and Nashville, Tennessee; Charlotte, North
Carolina; and St. Louis, Missouri.
(4) Comprising locations in Pennsauken and North Brunswick, New Jersey;
Levittown, Pennsylvania; Fairfax, Virginia; Newark, Delaware; and
Baltimore and Jessup, Maryland.
(5) Comprising locations in Cleveland and Columbus, Ohio; Newnan, Georgia; and
Wilmerding, Pennsylvania.
(6) Comprising locations in Jacksonville, Longwood, Pompano Beach, Miami, Fort
Myers, St. Petersburg, Boca Raton, Dayton Beach, and Orlando, Florida;
Raleigh, North Carolina; and Virginia Beach, Virginia.
(7) Comprising locations in Houston and San Antonio, Texas; Addison,
Schaumburg and Posen, Illinois; Commerce City, Colorado; Honolulu, Hawaii;
Minneapolis, Minnesota; Tacoma, Washington; Phoenix and Tucson, Arizona;
and Fresno, California.
(8) Comprising locations in Delta, British Columbia; Boucherville, Quebec; and
Winnipeg, Manitoba.
(9) Comprising facilities in Anaheim, Bakersfield, Baldwin Park, Chatsworth,
Chico, Colton, Fresno, Grover Beach, Palm Springs, Sacramento, San Diego,
Santa Barbara and Santa Rosa, California; Tucson and Yuma, Arizona;
Farmington, Gallup and Santa Fe, New Mexico; St. George, Utah; Bend,
Eugene, Pendleton and Salem, Oregon; Eagle, Fort Collins, Grand Junction
and Colorado Springs, Colorado; Dayton, Ohio; Austin, Bryan, Freeport, Fort
Worth, Lubbock, Lufkin, Tyler and Victoria, Texas; Columbus, Mississippi;
Baton Rouge, Lake Charles and Lafayette, Louisiana; Indianapolis and Fort
Wayne, Indiana; and Ann Arbor and Detroit, Michigan.
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(10) Excludes 28,000 square feet of office space that housed the Veratex
Retail operation which was sold in July 1995. The lease on these
facilities expires in 1997. Approximately 4,000 square feet of this
space have been sublet to an outside third party and the remainder is
vacant as of December 31, 1996.
(11) Excludes 36,000 square feet of office, manufacturing and warehouse
facilities in Pomona, California that are leased to an outside third
party.
(12) Comprising locations in Princeton, Ridgewood, Montclair, Orange,
Providence, Westfield and West Orange, New Jersey.
(13) Comprising locations in Greenwich, Madison and Newington, Connecticut.
(14) Comprising locations in Brooklyn, Manhattan, Queens, Bronx and Staten
Island, New York.
(15) Excludes 92,000 square feet in current Cincinnati, Ohio office
facilities that are sublet to outside parties - portions of this space
may revert to the Company beginning in the year 2000. Includes 38,000
square feet leased for the Company's corporate office facilities.
ITEM 3. LEGAL PROCEEDINGS
None.
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 77 Chairman and Chief Executive Officer November 3, 1993 (1)
Kevin J. McNamara 43 President August 2, 1994 (2)
Paul C. Voet 50 Executive Vice President May 20, 1991 (3)
Timothy S. O'Toole 41 Executive Vice President and May 18, 1992 (4)
Treasurer
Sandra E. Laney 53 Senior Vice President and Chief November 3, 1993 (5)
Administrative Officer
Arthur V. Tucker, 47 Vice President and Controller May 20, 1991 (6)
Jr.
(1) Mr. E. L. Hutton is the Chairman and Chief Executive Officer of the
Company and has held these positions since November 1993. Previously,
from April 1970 to November 1993, Mr. E. L. Hutton held the positions
of President and Chief Executive Officer of the Company. Mr. E. L.
Hutton is the father of Mr. T. C. Hutton, a director and a Vice
President of the Company.
(2) Mr. K. J. McNamara is President of the Company and has held this
position since August 1994. Previously, he served as an Executive Vice
President, Secretary and General Counsel of the Company, since November
1993, August 1986 and August 1986, respectively. He previously held the
position of Vice President of the Company, from August 1986 to May
1992.
(3) Mr. P. C. Voet is an Executive Vice President of the Company and has
held this position since May 1991. From May 1988 to November 1993, he
served the Company as Vice Chairman. Mr. Voet is President and Chief
Executive Officer of National Sanitary Supply.
(4) Mr. T. S. O'Toole is an Executive Vice President and the Treasurer of
the Company and has held these positions since May 1992 and February
1989, respectively. Mr. O'Toole is Chairman and Chief Executive Officer
of Patient Care, Inc. and has held these positions since April 1995.
(5) Ms. S. E. Laney is Senior Vice President and the Chief Administrative
Officer of the Company and has held these positions since November 1993
and May 1991, respectively. Previously, from May 1984 to November 1993,
she held the position of Vice President of the Company.
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(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, 1997.
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 1995 and 1996 are set forth below.
Closing
------- Dividends Paid
High Low Per Share
1996 ---- --- --------------
----
First Quarter $40-1/8 $36-7/8 $.52
Second Quarter 39 35-7/8 .52
Third Quarter 39-1/8 35-1/2 .52
Fourth Quarter 39 35-1/8 .52
1995
----
First Quarter $33-7/8 $31-1/4 $.51
Second Quarter 35-7/8 30-3/4 .51
Third Quarter 36-1/2 33-1/2 .52
Fourth Quarter 40-1/8 34-5/8 .52
Future dividends are necessarily dependent upon the Company's earnings
and financial condition, compliance with certain debt covenants and other
factors not presently determinable.
As of March 19, 1997, there were approximately 5,633 stockholders of
record of the Company's Capital Stock. This number only includes stockholders of
record and does not include stockholders with shares beneficially held for them
in nominee name or within clearinghouse positions of brokers, banks or other
institutions.
ITEM 6. SELECTED FINANCIAL DATA.
The information called for by this Item for the five years ended December
31, 1996 is set forth on pages 36 and 37 of the 1996 Annual Report to
Stockholders and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information called for by this Item is set forth on pages 40 through
43 of the 1996 Annual Report to Stockholders and is incorporated herein by
reference.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements, together with the report thereon
of Price Waterhouse dated February 4, 1997, appearing on pages 19 through 35 and
38 of the 1996 Annual Report to Stockholders, along with the Supplementary Data
(Unaudited Summary of Quarterly Results) appearing on page 39, 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 Walter L. Krebs
James A. Cunningham Sandra E. Laney
James H. Devlin Kevin J. McNamara
Charles H. Erhart, Jr. John M. Mount
Joel F. Gemunder Timothy S. O'Toole
Lawrence J. Gillis D. Walter Robbins, Jr.
Patrick P. Grace Paul C. Voet
Thomas C. Hutton George J. Walsh III
Except for information relating to Mr. Cunningham, the additional
information required under this Item with respect to the directors and executive
officers is set forth in the Company's 1997 Proxy Statement and in Part I hereof
under the caption "Executive Officers of the Registrant" and is incorporated
herein by reference. Mr. Cunningham, who is 52 years old, is a Senior Chemical
Adviser with Schroder Wertheim & Co. Incorporated, New York, New York (an
investment banking, asset management and securities firm) and has held this
position since March 1992. Previously, he was Managing Director of Furman Selz
Incorporated, New York, New York (an institutional investment company) and held
this position from October 1990 to March 1992. Mr. Cunningham is a director of
National Sanitary Supply Company.
ITEM 11. EXECUTIVE COMPENSATION.
Information required under this Item is set forth in the Company's 1997
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 1997
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 1997
Proxy Statement, which is incorporated herein by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K.
EXHIBITS
3.1 Certificate of Incorporation of Chemed Corporation.*
3.2 By-Laws of Chemed Corporation.*
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.*
10.4 1981 Stock Incentive Plan, as amended through May 20, 1991.*,**
10.5 1983 Incentive Stock Option Plan, as amended through May 20,
1991.*,**
10.6 1986 Stock Incentive Plan, as amended through May 20, 1991.*,**
10.7 1988 Stock Incentive Plan, as amended through May 20, 1991.*,**
10.8 1993 Stock Incentive Plan.*,**
10.9 Excess Benefits Plan, as amended effective November 1, 1985.*,**
10.10 Non-Employee Directors' Deferred Compensation Plan.*,**
10.11 Directors Emeriti Plan.*,**
10.12 Employment Contracts with Executives.*,**
10.13 Amendment No. 8 to Employment Contracts with Executives.**
10.14 1995 Stock Incentive Plan.*,**
10.15 Split Dollar Agreement with Executives.*,**
10.16 Split Dollar Agreement with Edward L. Hutton.*,**
10.17 Split Dollar Agreement with Paul C. Voet.*,**
10.18 Amendment No. 7 to Employment Agreement with Edward L.
Hutton.**
11. Statement re: Computation of Earnings Per Common Share.
13. 1996 Annual Report to Stockholders.
21. Subsidiaries of Chemed Corporation.
12
15
23. Consent of Independent Accountants.
24. Powers of Attorney.
27. Financial Data Schedule +
* This exhibit is being filed by means of incorporation by reference (see
Index to Exhibits on page E-1). Each other exhibit is being filed with
this Annual Report on Form 10-K.
** Management contract or compensatory plan or arrangement.
+ Not filed herewith.
FINANCIAL STATEMENT SCHEDULE
See Index to Financial Statements and Financial Statement Schedule on page
S-1.
REPORTS ON FORM 8-K
A Form 8-K was filed October 2, 1996 announcing Chemed
Corporation's acquisition of all the outstanding shares of Common Stock of
Roto-Rooter, Inc. for $41.00 per share in cash.
13
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CHEMED CORPORATION
March 27, 1997 By /s/ Edward L. Hutton
--------------------
Edward L. Hutton
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Edward L. Hutton Chairman and Chief ----
- ------------------------ Executive Officer and a
Edward L. Hutton Director (Principal
Executive Officer)
/s/ Timothy S. O'Toole Executive Vice President
- ------------------------ and Treasurer and a
Timothy S. O'Toole Director
(Principal Financial
Officer)
/s/ Arthur V.Tucker, Jr. Vice President and March 27, 1997
- ----------------------- Controller
Arthur V. Tucker, Jr. (Principal Accounting
Officer)
----
James A. Cunningham* Walter L. Krebs*
James H. Devlin* Sandra E. Laney*
Charles H. Erhart, Jr.* Kevin J. McNamara*
Joel F. Gemunder John M. Mount* --Directors
Lawrence J. Gillis* D. Walter Robbins, Jr.*
Patrick P. Grace* Paul C. Voet*
Thomas C. Hutton* George J. Walsh III* ---- ----
- ----------
* 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 27, 1997 /s/ Naomi C. Dallob
- --------------------- -----------------------
Date Naomi C. Dallob
(Attorney-in-Fact)
14
17
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
1994, 1995 AND 1996
CHEMED CORPORATION CONSOLIDATED FINANCIAL PAGE(S)
STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
Report of Independent Accountants............................... 19*
Statement of Accounting Policies.................................20*
Consolidated Statement of Income.................................21*
Consolidated Balance Sheet.......................................22*
Consolidated Statement of Cash Flows.............................23*
Consolidated Statement of Changes in Stockholders' Equity........24*
Notes to Financial Statements....................................25-33*
Sales and Profit Statistics by Business Segment..................34-35*
Additional Segment Data..........................................38*
Report of Independent Accountants on Financial Statement
Schedule.......................................................S-2
Schedule II -- Valuation and Qualifying Accounts.................S-3
* Indicates page numbers in Chemed Corporation 1996 Annual Report to
Stockholders.
- ----------------
The consolidated financial statements of Chemed Corporation listed above,
appearing in the 1996 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
18
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of Chemed Corporation
Our audits of the consolidated financial statements referred to in our report
dated February 4, 1997 appearing on page 19 of the 1996 Annual Report to
Stockholders of Chemed Corporation (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule listed in Item 14 of
this Form 10-K. In our opinion, the Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
/s/ Price Waterhouse LLP
- ------------------------
PRICE WATERHOUSE LLP
Cincinnati, Ohio
February 4, 1997
S-2
19
SCHEDULE II
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
VALUATION AND QUALIFYING ACCOUNTS (a)
(in thousands)
Dr/(Cr)
Additions
-----------------------------------
(Charged) Applicable
Credited (Charged) to
Balance at to Costs Credited Companies Balance
Beginning and to Other Acquired Deductions at End
Description of Period Expenses Accounts in Period (b) of Period
- --------------------------------------------------------------------------------------------------------------
Allowances for doubtful
accounts (c) -
For the year 1996......... $ (3,519) $(1,511) $ (78) $ ( 16) $ 2,199 $ (2,925)
========= ======== ======= ========= ======== =========
For the year 1995......... $ (2,974) $(2,443) $ (72) $ - $ 1,970 $ (3,519)
========= ======== ======= ========= ======== =========
For the year 1994......... $ (2,391) $(1,774) $ - $ (218) $ 1,409 $ (2,974)
========= ======== ======= ========= ======== =========
Allowances for doubtful
accounts - notes
receivable (d) -
For the year 1996......... $ (247) $ 8 $ 78 $ - $ 41 $ (120)
========= ======== ======== ========= ======== =========
For the year 1995......... $ (267) $ (64) $ 72 $ - $ 12 $ (247)
========= ======== ======== ========= ======== =========
For the year 1994......... $ (493) $ (81) $ - $ - $ 307 $ (267)
========= ======== ======== ========= ======== =========
S-3
20
(a) Amounts are presented on a continuing operations basis.
(b) Deductions include accounts considered uncollectible or written off,
payments, companies divested, etc.
(c) Classified in consolidated balance sheet as a reduction of accounts
receivable.
(d) Classified in consolidated balance sheet as a reduction of other
assets.
S-4
21
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
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
10.4 1981 Stock Incentive Plan, as Form 10- K 7
amended through May 20, 1991 3/27/92
10.5 1983 Incentive Stock Option Plan, Form 10-K 8
as amended through May 20, 1991 3/27/92
10.6 1986 Stock Incentive Plan, as Form 10-K 9
amended through May 20, 1991 3/27/92
10.7 1988 Stock Incentive Plan, as Form 10-K 10
amended through May 20, 1991 3/27/92
10.8 1993 Stock Incentive Plan Form 10-K 10.8
3/29/94
10.9 Excess Benefits Plan, as amended Form 10-Q 10.10
effective November 1, 1985 11/12/85
10.10 Non-Employee Directors' Deferred Form 10-K 10.11
Compensation Plan 3/24/88
10.11 Directors Emeriti Plan Form 10-Q 10.12
5/12/88
1
22
Page Number
or
Incorporation by Reference
------------------------------------
Exhibit File No. and Previous
Number Filing Date Exhibit No.
- ------ ----------- -----------
10.12 Employee Contracts with Form 10-K 10.13
Executives 3/28/89
10.13 Amendment No. 8 to Employment *
Contracts with Executives
10.14 1995 Stock Incentive Plan Form 10-K 10.15
3/28/96
10.15 Split Dollar Agreements Form 10-K 10.16
3/28/96
10.16 Split Dollar Agreement with Form 10-K 10.17
Edward L. Hutton 3/28/96
10.17 Split Dollar Agreement with Form 10-K 10.18
Paul C. Voet 3/28/96
10.18 Amendment No. 7 to Employment *
Agreement with Edward L. Hutton
11 Statement re: Computation of *
Earnings Per Common Share
13 1996 Annual Report to Stockholders *
21 Subsidiaries of Chemed Corporation *
23 Consent of Independent Accountants *
24 Powers of Attorney *
27 Financial Data Schedule *
- --------------
* Filed herewith.
+ Not filed herewith.
2