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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
or
[_] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition period from _______________ to ______________
Commission File Number: 1-8351
CHEMED CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 31-0791746
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2600 Chemed Center, 255 East Fifth Street, Cincinnati, Ohio 45202-4726
(Address of principal executive offices) (Zip Code)
(513) 762-6900
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Capital Stock - Par Value $1 Per Share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.________
The aggregate market value of the voting stock held by non-affiliates
of the registrant, based upon the closing price of said stock on the New York
Stock Exchange - Composite Transaction Listing on March 22, 2002 ($37.80 per
share), was $361,902,908.
At March 22, 2002, 9,855,252 shares of Chemed Corporation Capital Stock
(par value $1 per share) were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document Where Incorporated
-------- ------------------
2001 Annual Report to Stockholders
(Specified Portions) Parts I, II and IV
Proxy Statement for Annual Meeting to be
held May 20, 2002 Part III
CHEMED CORPORATION
2001 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...............8
-- Executive Officers of the Registrant..............................8
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters...............................................9
Item 6. Selected Financial Data..........................................10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............................10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.......10
Item 8. Financial Statements and Supplementary Data......................10
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure..............................10
PART III
Item 10. Directors and Executive Officers of the Registrant...............10
Item 11. Executive Compensation...........................................1l
Item 12. Security Ownership of Certain Beneficial Owners and
Management.......................................................11
Item 13. Certain Relationships and Related Transactions...................11
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports
on Form 8-K......................................................11
Item 1. Business
General
Chemed Corporation was incorporated in Delaware in 1970 as a subsidiary
of W. R. Grace & Co. and succeeded to the business of W. R. Grace & Co.'s
Specialty Products Group as of April 30, 1971 and remained a subsidiary of W. R.
Grace & Co. until March 10, 1982. As used herein, "Company" refers to Chemed
Corporation, "Chemed" refers to Chemed Corporation and its subsidiaries and
"Grace" refers to W. R. Grace & Co. and its subsidiaries.
On March 10, 1982, the Company transferred to Dearborn Chemical
Company, a wholly owned subsidiary of the Company, the business and assets of
the Company's Dearborn Group, including the stock of certain subsidiaries within
the Dearborn Group, plus $185 million in cash, and Dearborn Chemical Company
assumed the Dearborn Group's liabilities. Thereafter, on March 10, 1982 the
Company transferred all of the stock of Dearborn Chemical Company to Grace in
exchange for 16,740,802 shares of the capital stock of the Company owned by
Grace with the result that Grace no longer has any ownership interest in the
Company.
On December 31, 1986, the Company completed the sale of substantially
all of the business and assets of Vestal Laboratories, Inc., a wholly owned
subsidiary. The Company received cash payments aggregating approximately $67.4
million over the four-year period following the closing, the substantial portion
of which was received on December 31, 1986.
On April 2, 1991, the Company completed the sale of DuBois Chemicals,
Inc. ("DuBois"), a wholly owned subsidiary, to the Diversey Corporation
("Diversey"), then a subsidiary of The Molson Companies Ltd. Under the terms of
the sale, Diversey agreed to pay the Company net cash payments aggregating
$223,386,000, including deferred payments aggregating $32,432,000.
On December 21, 1992, the Company acquired The Veratex Corporation and
related businesses ("Veratex Group") from Omnicare, Inc., a publicly traded
company in which Chemed currently maintains a .2 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, 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.
1
Effective September 30, 1997, the Company completed a merger between
its 81-percent-owned subsidiary, National Sanitary Supply Company, and a wholly
owned subsidiary of Unisource Worldwide, Inc. for $21.00 per share, with total
payments of $138.3 million.
The Company now conducts its business operations in three segments:
Roto-Rooter Group ("Roto-Rooter"), Patient Care and Service America Systems,
Inc. ("Service America").
Financial Information about Industry Segments
The required segment and geographic data for the Company's continuing
operations (as described below) for the three years ended December 31, 1999,
2000 and 2001 are shown in the "Segment Data" on pages 26 and 27 of the 2001
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 16 of the 2001 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 2001, 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.
2
Competition
Roto-Rooter
All aspects of the sewer, drain, and pipe cleaning, HVAC services and
plumbing repair businesses are highly competitive. Competition is, however,
fragmented in most markets with local and regional firms providing the primary
competition. The principal methods of competition are advertising, range of
services provided, speed and quality of customer service, service guarantees,
and pricing.
No individual customer or market group is critical to the total sales
of this segment.
Patient Care
The home healthcare services industry and, in particular, the nursing
and personal care segment is highly competitive. Patient Care competes with
numerous local, regional and national home healthcare services companies.
Patient Care competes on the basis of quality, cost-effectiveness and its
ability to service its referral base quickly throughout its regional markets.
Patient Care has contracts with several customers, the loss of any one
or more of which could have a material adverse effect on this segment.
Service America
All aspects of the HVAC and appliance repair and maintenance service
industry are highly competitive. Competition is, however, fragmented in most
markets with local and regional firms providing the primary competition. The
principal methods of competition are advertising, range of services provided,
speed and quality of customer service, service guarantees, and pricing.
No individual customer or market group is critical to the total sales
of this segment.
Research and Development
Chemed engages in a continuous program directed toward the development
of new products and processes, the improvement of existing products and
processes, and the development of new and different uses of existing products.
The research and development expenditures from continuing operations have not
been nor are they expected to be material.
Government Regulations
Roto-Rooter's franchising activities are subject to various federal and
state franchising laws and regulations, including the rules and regulations of
the Federal Trade Commission (the "FTC") regarding the offering or sale of
franchises. The rules and regulations of the FTC require that Roto-Rooter
provide all prospective franchisees 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,
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(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.
Patient Care's activities are subject to various federal and state laws
and regulations. Changes in the law, new interpretations of existing laws, or
changes in payment methodology, may have a dramatic effect on the definition of
permissible or impermissible activities, the relative costs associated with
doing business and the amount of reimbursement by both government and other
third-party payors. In addition to specific legislative and regulatory
influences, efforts to reduce the growth of the federal budget and the Medicare
and the Medicaid programs resulted in enactment of the Balanced Budget Act of
1997. This law contains several provisions affecting Medicare payment for the
coverage of home healthcare services which directly or indirectly, together with
Medicaid payments, accounted for 70 percent of Patient Care's net revenue in
2001. Certain of these provisions could have an adverse effect on Patient Care.
In addition, state legislatures periodically consider various healthcare reform
proposals. Congress and state legislatures can be expected to continue to review
and assess alternative healthcare delivery systems and payment methodologies,
and public debate of these issues can be expected to continue in the future. The
ultimate timing or effect of such additional legislative efforts cannot be
predicted and may impact Patient Care in different ways. No assurance can be
given that any such efforts will not have a material adverse effect on Patient
Care.
Certain of Patient Care's employees are subject to state laws and
regulations governing professional practice. Patient Care's operations are
subject to periodic survey by governmental and private accrediting entities to
assure compliance with applicable state licensing, and Medicare and Medicaid
certification and accreditation standards, as the case may be. From time to time
in the ordinary course of business, Patient Care, like other healthcare
companies, receives survey reports containing deficiencies for alleged failure
to comply with applicable requirements. Patient Care reviews such reports and
takes appropriate corrective action. The failure to effect such action or to
obtain, renew or maintain any of the required regulatory approvals,
certifications or licences could materially adversely affect Patient Care's
business, and could prevent the programs involved from offering products and
services to patients. There can be no assurance that either the states or the
federal government will not impose additional regulations upon the activities of
Patient Care which might materially adversely affect Patient Care.
Environmental Matters
Roto-Rooter's operations are subject to various federal, state, and
local laws and regulations regarding environmental matters and other aspects of
the operation of a sewer and drain cleaning, HVAC and plumbing services
business. For certain other activities, such as septic tank pumping, Roto-Rooter
is subject to state and local environmental health
4
and sanitation regulations. Service America's operations are also subject to
various federal, state and local laws and regulations regarding environmental
matters and other aspects of the operation of a HVAC and appliance repair and
maintenance service industry.
In connection with the sale of DuBois to the Diversey Corporation, the
Company contractually assumed for a period of ten years the estimated liability
for potential environmental cleanup and related costs arising from the sale of
DuBois up to a maximum of $25,500,000. Based upon managements' updated
assessment of the Company's environmental-related liability, the Company has
accrued $2,286,000 at December 31, 2001 to cover these costs. Although no
assurances can be given, the Company does not believe that the costs associated
with any additional Dubois-related environmental issues will have a material
effect on the Company's financial condition or results of operation.
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 2002 and 2003 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, 2001, Chemed had a total of 7,595 employees.
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 seventeen 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. 41,000 sq. ft.
facilities
West Des Moines, Office, manufacturing and 29,000 sq. ft. --
IA distribution center facilities
Northeastern Office and service 31,000 sq. ft. 58,000 sq. ft.
U.S. Area (1) facilities
5
Central U.S. Office and service 35,000 sq. ft. 74,000 sq. ft.
Area (2) facilities
Southern U.S. Office and service 18,000 sq. ft. 90,000 sq. ft.
Area (3) facilities
Western Office and service 19,000 sq. ft. 84,000 sq. ft.
U.S. Area (4) facilities
Patient Care
New Jersey (5) Office -- 52,000 sq. ft.
Connecticut (6) Office -- 46,000 sq. ft.
New York (7) Office -- 45,000 sq. ft.
Illinois (8) Office -- 3,000 sq. ft.
Ohio (9) Office -- 4,000 sq. ft.
Kentucky (10) Office -- 3,000 sq. ft.
Georgia (11) Office -- 2,000 sq. ft.
Washington, DC (12) Office -- 2,000 sq. ft.
Virginia (13) Office -- 3,000 sq. ft.
Maryland (14) Office -- 2,000 sq. ft.
Service America
Florida (15) Office and service 67,000 sq. ft. 33,000 sq. ft.
facilities
Arizona (16) Office and service -- 10,000 sq. ft.
facilities
Corporate
Cincinnati, OH (17) Corporate offices and 8,000 sq. ft. 58,000 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;
6
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, Newman 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 Jersey City; Ridgewood, Montclair, Westfield,
and West Orange, New Jersey.
(6) Comprising locations in Greenwich, Madison, Naugatuch, Newington,
Norwalk, New Haven, Stratford, Stamford, Norwich, Gulliford, Bridgeport
and Danbury, Connecticut.
(7) Comprising locations in Brooklyn, Manhattan, Queens, Bronx and Staten
Island, New York.
(8) Comprising locations in Chicago and Glenview, Illinois.
(9) Comprising location in Columbus, Ohio.
(10) Comprising location in Louisville, Kentucky.
(11) Comprising location in Conyers, Georgia.
(12) Comprising location in Washington, D.C.
(13) Comprising location in Alexandria, Virginia.
(14) Comprising locations in Towson and Rockville, Maryland.
(15) Comprising locations in Pompano Beach, Miami, Fort Myers, Orlando,
Deerfield Beach, Jupiter, Tampa and Delray Beach, Florida.
(16) Comprising location in Phoenix, Arizona. Excludes 6,000 square feet in
Tucson, Arizona sublet to outside party.
(17) Excludes 69,000 square feet in current Cincinnati, Ohio office
facilities that are sublet to outside parties.
Item 3. Legal Proceedings
None
7
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 82 Chairman November 3, 1993 (1)
Kevin J. McNamara 48 President and Chief Executive Officer August 2, 1994 (2)
Timothy S. O'Toole 46 Executive Vice President and May 18, 1992 (3)
Treasurer
Spencer S. Lee 46 Executive Vice President May 15, 2000 (4)
Sandra E. Laney 58 Executive Vice President and Chief November 3, 1993 (5)
Administrative Officer
Arthur V. Tucker, 52 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. Mr. O'Toole is Chairman and Chief Executive Officer
of Patient Care, Inc. and has held these positions since April 1995.
(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 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. From February 1985 to
May 1997, he served as Vice President of Roto-Rooter Services Company.
(5) Ms. S. E. Laney is an Executive Vice President and the Chief
Administrative Officer of the Company and has 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.
8
(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 20, 2002.
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 2000 and 2001 are set forth below.
Closing
---------------------- Dividends Paid
High Low Per Share
---------------------------------------------------------------
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
2000
----
First Quarter $31.44 $27.00 $.10
Second Quarter 31.19 27.50 .10
Third Quarter 32.31 27.75 .10
Fourth Quarter 36.56 30.94 .10
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 this Item with respect to the Company's
Capital Stock authorized under the Company's stock incentive plans is set forth
on pages 24 through 25 of the 2001 Annual Report to Stockholders and is
incorporated herein by reference.
As of March 22, 2002, there were approximately 3,653 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.
9
Item 6. Selected Financial Data
The information called for by this Item for the five years ended
December 31, 2001 is set forth on pages 28 and 29 of the 2001 Annual Report to
Stockholders and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The information called for by this Item is set forth on pages 32
through 35 of the 2001 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 4, 2002, appearing on pages 9
through 27 of the 2001 Annual Report to Stockholders, along with the
Supplementary Data (Unaudited Summary of Quarterly Results) appearing on page
31, 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
Kevin J. McNamara Sandra E. Laney
Rick L. Arquilla Spencer S. Lee
Charles H. Erhart, Jr. John M. Mount
Joel F. Gemunder Timothy S. O'Toole
Patrick P. Grace Donald E. Saunders
Thomas C. Hutton George J. Walsh III
The additional information required under this Item with respect to the
directors and executive officers is set forth in the Company's 2002 Proxy
Statement and in Part I hereof under the caption "Executive Officers of the
Registrant" and is incorporated herein by reference.
10
Item 11. Executive Compensation
Information required under this Item is set forth in the Company's 2002
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 2002
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 2002
Proxy Statement, which is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
Exhibits
3.1 Certificate of Incorporation of Chemed Corporation.*
3.2 By-Laws of Chemed Corporation.*
4.1 Offer to Exchange Chemed Capital Trust Convertible Preferred
Securities for Shares of Capital Stock, dated as of December
23, 1999.*
4.2 Chemed Capital Trust, dated as of December 23, 1999.*
4.3 Amended and Restated Declaration of Trust of Chemed Capital
Trust, dated February 7, 2000.*
10.1 Agreement and Plan of Merger among Diversey U.S. Holdings,
Inc., D. C. Acquisition Inc., Chemed Corporation and DuBois
Chemicals, Inc., dated as of February 25, 1991.*
10.2 Stock Purchase Agreement between Omnicare, Inc. and Chemed
Corporation, dated as of August 5, 1992.*
10.3 Agreement and Plan of Merger among National Sanitary Supply
Company, Unisource Worldwide, Inc. and TFBD, Inc. dated as of
August 11, 1997.*
10.4 1981 Stock Incentive Plan, as amended through May 20,
1991.*,**
10.5 1983 Incentive Stock Option Plan, as amended through May 20,
1991.*,**
10.6 1986 Stock Incentive Plan, as amended through May 20,
1991.*,**
11
10.7 1988 Stock Incentive Plan, as amended through May 20,
1991.*,**
10.8 1993 Stock Incentive Plan.*,**
10.9 1995 Stock Incentive Plan.*,**
10.10 1997 Stock Incentive Plan.*,**
10.11 1999 Stock Incentive Plan.*,**
10.12 1999 Long-Term Employee Incentive Plan.*
10.13 Employment Contracts with Executives.*,**
10.14 Amendment to Employment Agreements with Edward L. Hutton,
Kevin J. McNamara, Sandra E. Laney and Thomas C. Hutton, dated
May 21, 2001.**
10.15 Amendment to Employment Agreement with Spencer S. Lee and Rick
L. Arquilla, dated May 21, 2001.**
10.16 Amendment to Employment Agreement with Executives, dated
January 1, 2002.**
10.17 Employment Agreement with John M. Mount.*,**
10.18 Amendment No. 7 to Employment Agreement with Edward L.
Hutton.*,**
10.19 Excess Benefits Plan, as restated and amended, effective April
1, 1997.*,**
10.20 Non-Employee Directors' Deferred Compensation Plan.*,**
10.21 Chemed/Roto-Rooter Savings & Retirement Plan, effective
January 1, 1999.*,**
10.22 First Amendment to Chemed/Roto-Rooter Savings & Retirement
Plan, effective September 6, 2000.**
10.23 Second Amendment to Chemed/Roto-Rooter Savings & Retirement
Plan, effective January 1, 2001.**
10.24 Third Amendment to Chemed/Roto-Rooter Savings & Retirement
Plan, effective December 12, 2001.**
10.25 Stock Purchase Agreement by and Among Banta Corporation,
Chemed Corporation and OCR Holding Company as of September 24,
1997.*
10.26 Directors Emeriti Plan.*,**
10.27 Second Amendment to Split Dollar Agreement with
Executives.*,**
10.28 Split Dollar Agreement with Sandra E. Laney.*,**
10.29 Split Dollar Agreement with Executives.*,**
12
10.30 Split Dollar Agreement with Edward L. Hutton.*,**
10.31 Split Dollar Agreement with John M. Mount.*,**
10.32 Split Dollar Agreement with Spencer S. Lee.*,**
10.33 Split Dollar Agreement with Rick L. Arquilla.*,**
10.34 Form of Promissory Note under the Executive Stock Purchase
Plan.**
10.35 Promissory Note under the Executive Stock Purchase Plan with
Kevin J. McNamara.*,**
10.36 Roto-Rooter Deferred Compensation Plan No. 1, as amended
January 1,1998.*,**
10.37 Roto-Rooter Deferred Compensation Plan No. 2.*,**
13. 2001 Annual Report to Stockholders.
21. Subsidiaries of Chemed Corporation.
23. Consent of Independent Accountants.
24. Powers of Attorney.
* 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 November 30, 2001 with respect to
its restructuring plan.
13
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, 2002 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, 2002
- ------------------------------------- (Principal Accounting |
Arthur V. Tucker, Jr. Officer) |
|
-------+ |
Edward L. Hutton* Walter L. Krebs* | |
Rick L. Arquilla* Sandra E. Laney* | |
Charles H. Erhart, Jr.* Spencer S. Lee* |--Directors |
Joel F. Gemunder* John M. Mount* | |
Patrick P. Grace* Donald E. Saunders* | |
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 28, 2002 /s/ Naomi C. Dallob
- -------------------- ------------------------------------------
Date Naomi C. Dallob
(Attorney-in-Fact)
14
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
1999, 2000 AND 2001
Chemed Corporation Consolidated Financial Page(s)
Statements and Financial Statement Schedule
Report of Independent Accountants.................................9*
Statement of Accounting Policies.................................10*
Consolidated Statement of Operations.............................11*
Consolidated Balance Sheet.......................................12*
Consolidated Statement of Cash Flows.............................13*
Consolidated Statement of Changes in Stockholders' Equity........14-15*
Consolidated Statement of Comprehensive Income...................14*
Notes to Financial Statements....................................16-25*
Segment Data.....................................................26-27*
Report of Independent Accountants on Financial Statement
Schedule.......................................................S-2
Schedule II -- Valuation and Qualifying Accounts.................S-3-S-4
* Indicates page numbers in Chemed Corporation 2001 Annual Report to
Stockholders.
The consolidated financial statements of Chemed Corporation listed above,
appearing in the 2001 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 4, 2002 appearing on page 9 of the 2001 Annual Report to
Stockholders of Chemed Corporation (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule listed in Item 14 of
this Form 10-K. In our opinion, the Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Cincinnati, Ohio
February 4, 2002
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 (c)
For the year 2001........... $ (5,137) $(2,546) $ - $ - $ 2,742 $ (4,941)
======== ======= ======== ========= ======= ========
For the year 2000........... $ (4,554) $(2,342) $ - $ - $ 1,759 $ (5,137)
======== ======= ======== ========= ======= ========
For the year 1999........... $ (3,601) $(2,235) $ - $ (25) $ 1,307 $ (4,554)
======== ======= ======== ========= ======= ========
Allowances for doubtful
accounts - notes
receivable (d)
For the year 2001........... $ (23) $ (900) $ - $ - $ 23 $ (900)
======== ======= ======== ========= ======= ========
For the year 2000........... $ (23) $ - $ - $ - $ - $ (23)
======== ======= ======== ========= ======= ========
For the year 1999........... $ (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) in Period (b) of Period
- --------------------------------------------------------------------------------------------------------------
Valuation allowance for
available-for-sale securities
For the year 2001......... $ 4,980 $ - $ 2,496 $ - $ (993) $ 6,483
========= ======== ========= ========= ======== ========
For the year 2000......... $ 5,220 $ - $ 3,159 $ - $ (3,399) $ 4,980
========= ======== ========= ========= ======== ========
For the year 1999......... $ 20,406 $ - $ 10,525 $ - $ (4,661) $ 5,220
========= ======== ========= ========= ======== ========
- -------------------------
(a) 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.
(b) 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.
(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