1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- 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, 1995 or / / Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (No Fee Required) For the Transition period from to -------------- ------------- Commission File Number: 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. X 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 11, 1996 ($37.625 per share), was $362,985,080. At March 11, 1996, 9,880,122 shares of Chemed Corporation Capital Stock (par value $1 per share) were outstanding. DOCUMENTS INCORPORATED BY REFERENCE DOCUMENT WHERE INCORPORATED -------- ------------------ 1995 Annual Report to Stockholders (Specified Portions) Parts I, II and IV Proxy Statement for Annual Meeting Part III to be held May 20, 1996.
2 CHEMED CORPORATION 1995 FORM 10-K ANNUAL REPORT TABLE OF CONTENTS <TABLE> <CAPTION> PAGE <S> <C> PART I Item 1. Business............................................................. 1 Item 2. Properties........................................................... 4 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 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.................... 9 Item 11. Executive Compensation................................................ 9 Item 12. Security Ownership of Certain Beneficial Owners and Management............................................................ 9 Item 13. Certain Relationships and Related Transactions........................ 9 PART IV Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K........................................................... 10 </TABLE>
3 PART I ITEM 1. BUSINESS GENERAL Chemed Corporation was incorporated in Delaware in 1970 as a subsidiary of W. R. Grace & Co. and succeeded to the business of W. R. Grace & Co.'s Specialty Products Group as of April 30, 1971 and remained a subsidiary of W. R. Grace & Co. until March 10, 1982. As used herein, "Company" refers to Chemed Corporation, "Chemed" refers to Chemed Corporation and its subsidiaries and "Grace" refers to W. R. Grace & Co. and its subsidiaries. On March 10, 1982, the Company transferred to Dearborn Chemical Company, a wholly owned subsidiary of the Company, the business and assets of the Company's Dearborn Group, including the stock of certain subsidiaries within the Dearborn Group, plus $185 million in cash, and Dearborn Chemical Company assumed the Dearborn Group's liabilities. Thereafter, on March 10, 1982 the Company transferred all of the stock of Dearborn Chemical Company to Grace in exchange for 16,740,802 shares of the capital stock of the Company owned by Grace with the result that Grace no longer has any ownership interest in the Company. On December 31, 1986, the Company completed the sale of substantially all of the business and assets of Vestal Laboratories, Inc., a wholly owned subsidiary ("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, 1995, the Company had received cash payments totaling $215,738,000. 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 2.8 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. Additional cash payments aggregating $2,000,000 will be made in equal amounts on March 31, 1996 and 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 payment for which was received in December 1995. An additional payment of up to $2 million, contingent upon the combined sales of Veratex Retail and HSI's retail group for the year-ended July 7, 1996, may be due from HSI in 1996. During 1995, the Company conducted its business operations in four segments: National Sanitary Supply Company ("National Sanitary Supply"), Roto-Rooter, Inc. ("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, 1993, 1994 and 1995, are shown in the "Sales and Profit Statistics by Business Segment" and the "Additional Segment Data" on pages 32, 33 and 36 of the 1995 Annual Report to Stockholders and are incorporated herein by reference. 1
4 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 23 of the 1995 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 1995, 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 58 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 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 are 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 6 percent of National Sanitary Supply's total sales for 1995. These sales are 2
5 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. National Sanitary Supply also had sales to one customer, Sonic Corporation, which comprised approximately 15 percent of sales in 1995. This customer is a fast-food restaurant chain consisting of approximately 1,370 franchises and 130 company-owned restaurants. Sales to this customer consisted primarily of low-margin food-service products such as paper napkins, plates and cups. On November 22, 1995, the Company announced the expected loss of a majority of sales to Sonic Corporation during the first quarter of 1996. Other than sales to the aforementioned entities, no one customer accounts for more than two 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. 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 3
6 environmental cleanup and related costs arising from the sale of DuBois up to a maximum of $25,500,000. The Company had accrued $15,500,000 with respect to these potential liabilities. 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 were 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 1996 and 1997 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, 1995, Chemed had a total of 7,335 employees; 7,278 were located in the United States and 57 were in Canada. 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 eleven 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. <TABLE> <CAPTION> Location Type Owned Leased -------- ---- ----- ------ NATIONAL SANITARY SUPPLY COMPANY <S> <C> <C> <C> Los Angeles, CA Office, manufacturing and 165,000 sq. ft. 25,000 sq. ft. distribution center Tempe, AZ Office and distribution 69,000 sq. ft. -- center San Francisco Office and distribution -- 66,000 sq. ft. (Area), CA center Denver, CO Office and distribution -- 53,000 sq. ft. center Marion, IN Office and distribution 30,000 sq. ft. -- center Jackson, MS Office and distribution -- 26,000 sq. ft. center Tupelo, MS Office and distribution -- 33,000 sq. ft. center </TABLE> 4
7 <TABLE> <CAPTION> Location Type Owned Leased -------- ---- ----- ------ (NATIONAL SANITARY SUPPLY COMPANY - CONTINUED) <S> <C> <C> <C> Kansas City, MO Office and distribution -- 25,000 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 Oklahoma City, Office and distribution -- 75,000 sq. ft. OK center Portland, OR Office and distribution 56,000 sq. ft. -- center Memphis, TN Office and distribution -- 66,000 sq. ft. center Knoxville, TN Office and distribution -- 17,000 sq. ft. center Amarillo, TX Office and distribution -- 25,000 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 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 Salt Lake City, Office and distribution -- 20,000 sq. ft. UT center Seattle, WA Office and distribution -- 15,000 sq. ft. center </TABLE> 5
8 <TABLE> <CAPTION> Location Type Owned Leased -------- ---- ----- ------ (NATIONAL SANITARY SUPPLY COMPANY - CONTINUED) <S> <C> <C> <C> Branch Sales Branch sales offices 3,000 sq. ft. 182,000 sq. ft. Offices (1) ROTO-ROOTER, INC. Cincinnati, OH Office and service 24,000 sq. ft. 24,000 sq. ft. facilities West Des Moines Office, manufacturing and 29,000 sq. ft. -- IA distribution facilities Northeastern Office and service 43,000 sq. ft. 47,000 sq. ft. U.S. Area (2) facilities Central U.S. Office and service 27,000 sq. ft. 41,000 sq. ft. Area (3) facilities Mid-Atlantic Office and service 54,000 sq. ft. 81,000 sq. ft. U.S. Area (4) facilities Western U.S. Office and service 19,000 sq. ft. 38,000 sq. ft. Area (5) facilities Canada (6) Office and service -- 13,000 sq. ft. facilities OMNIA Troy, MI (7) Office -- 15,000 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 (8) Office, manufacturing and 132,000 sq. ft. -- distribution center PATIENT CARE New Jersey (9) Office - 60,000 sq. ft. Connecticut (10) Office - 11,000 sq. ft. New York (11) Office - 34,000 sq. ft. CORPORATE CORPORATE (12) - -------------- Cincinnati, OH Corporate offices and -- 48,000 sq. ft. related facilities </TABLE> 6
9 ________________________ <TABLE> <S> <C> (1) Comprising forty-three separate branch sales offices located throughout the western, midwestern, and southwestern United States. (2) Comprising locations in Baltimore and Jessup, Maryland; 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 Decator, Georgia; Birmingham, Alabama; 0Charlotte, North Carolina; Hilliard and Cleveland, Ohio; Memphis and Nashville, Tennessee; Wilmerding, Pennsylvania; St. Louis, Missouri; and Little Rock, Arkansas. (4) Comprising locations in Pennsauken and North Brunswick, New Jersey; Jacksonville, Medley, Pompano Beach, Ft. Myers, St. Petersburg, Boca Raton, Daytona Beach, Miami and Orlando, Florida; Virginia Beach and Fairfax, Virginia; Levittown, Pennsylvania; Raleigh, North Carolina; and Newark, Delaware. (5) Comprising locations in Houston and San Antonio, Texas; Addison, Elk Grove Village and Posen, Illinois; Denver, Colorado; Honolulu, Hawaii; Minneapolis, Minnesota; Tacoma, Washington; and Phoenix, Arizona. (6) Comprising locations in Delta, British Columbia; Winnipeg, Manitoba; and Boucherville, Quebec. (7) Excludes 81,000 square feet of office and distribution facilities that housed the Veratex Retail operation, which was sold in July 1995. The lease on these facilities expires in 1997. These facilities are vacant as of December 31, 1995, while opportunities to sublet the property are explored. (8) Excludes 36,000 square feet of office, manufacturing and warehouse facilities in Pomona, California that are sublet to an outside third party. (9) Comprising locations in Milburn, Princeton, Ridgewood, Somerville, Spring Lake, Trenton, Montclair, Upper Montclair, Westfield, Orange and West Orange, New Jersey. (10) Comprising locations in Greenwich, Madison, Newington and Danbury, Connecticut. (11) Comprising locations in Brooklyn, Manhattan, Queens, Bronx and Staten Island, New York. (12) 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. </TABLE> ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. EXECUTIVE OFFICERS OF THE COMPANY <TABLE> <CAPTION> Name Age Office First Elected - ------------------ --- ------------------------------------ --------------- <S> <C> <C> Edward L. Hutton 76 Chairman and Chief Executive Officer November 3, 1993 (1) Kevin J. McNamara 42 President August 2, 1994 (2) Paul C. Voet 49 Executive Vice President May 20, 1991 (3) Timothy S. O'Toole 40 Executive Vice President and May 18, 1992 (4) Treasurer </TABLE> 7
10 Sandra E. Laney 52 Senior Vice President and Chief November 3, 1993 (5) Administrative Officer Arthur V. Tucker, 46 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. (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, 1996. 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 1994 and 1995 are set forth below. <TABLE> <CAPTION> Closing ------- Dividends Paid High Low Per Share ---------------------------------------------------------------------------- 1995 ---- <S> <C> <C> <C> 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 1994 ---- First Quarter $34-3/4 $30-5/8 $.51 Second Quarter 35-3/4 31-5/8 .51 Third Quarter 36 32-1/2 .51 Fourth Quarter 35-1/2 31 .51 </TABLE> 8
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. As of March 11, 1996, there were approximately 5,950 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, 1995 is set forth on pages 34 and 35 of the 1995 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 37 through 40 of the 1995 Annual Report to Stockholders and is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The consolidated financial statements, together with the report thereon of Price Waterhouse dated February 5, 1996, appearing on pages 17 through 30 of the 1995 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 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 William R. Griffin D. Walter Robbins, Jr. Thomas C. Hutton Paul C. Voet 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 1996 Proxy Statement and in Part I hereof under the caption "Executive Officers of the Registrant" and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION. Information required under this Item is set forth in the Company's 1996 Proxy Statement, which is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information required under this Item is set forth in the Company's 1996 Proxy Statement, which is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Information required under this Item is set forth in the Company's 1996 Proxy Statement, which is incorporated herein by reference. 9
12 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K. <TABLE> <CAPTION> EXHIBITS <S> <C> 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 Executive Salary Protection Plan, as amended through November 3, 1988.*,** 10.10 Excess Benefits Plan, as amended effective November 1, 1985.*,** 10.11 Non-Employee Directors' Deferred Compensation Plan.*,** 10.12 Directors Emeriti Plan.*,** 10.13 Employment Contracts with Executives.*,** 10.14 Amendment No. 7 to Employment Contracts with Executives.** 10.15 1995 Stock Incentive Plan.** 10.16 Split Dollar Agreement with Executives.** 10.17 Split Dollar Agreement with Edward L. Hutton.** 10.18 Split Dollar Agreement with Paul C. Voet.** 10.19 Amendment No. 6 to Employment Agreement with Edward L. Hutton.*,** 11. Statement re: Computation of Earnings Per Common Share. 13. 1995 Annual Report to Stockholders. 21. Subsidiaries of Chemed Corporation. 23. Consent of Independent Accountants. 24. Powers of Attorney. 27. Financial Data Schedule + </TABLE> * This exhibit is being filed by means of incorporation by reference (see Index to Exhibits on page E-1). Each other exhibit is being file with this Annual Report on Form 10-K. ** Management contract or compensatory plan or arrangement. + Not filed herewith. 10
13 FINANCIAL STATEMENT SCHEDULE See Index to Financial Statements and Financial Statement Schedule on page S-1. REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended December 31, 1995. 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 26, 1996 By /s/ Edward L. Hutton --------------------------------- Edward L. Hutton Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. <TABLE> <CAPTION> Signature Title Date --------- ----- ---- <S> <C> <C> <C> /s/ Edward L. Hutton Chairman and Chief ----------------------- Executive Officer Edward L. Hutton and a Director (Principal Executive 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 26, 1996 ----------------------- (Principal Accounting Officer) Arthur V. Tucker, Jr. 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 William R. Griffin* D. Walter Robbins, Jr.* Thomas C. Hutton* Paul C. Voet* George J. Walsh III* - ------------------------ </TABLE> * Naomi C. Dallob by signing her name hereto signs this document on behalf of each of the persons indicated above pursuant to powers of attorney duly executed by such persons and filed with the Securities and Exchange Commission. March 26, 1996 /s/ Naomi C. Dallob - ----------------------- ----------------------------- Date Naomi C. Dallob (Attorney-in-Fact) 11
14 CHEMED CORPORATION AND SUBSIDIARY COMPANIES INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE 1993, 1994 AND 1995 CHEMED CORPORATION CONSOLIDATED FINANCIAL PAGE(S) STATEMENTS AND FINANCIAL STATEMENT SCHEDULE <TABLE> <CAPTION> <S> <C> Report of Independent Accountants............................... 17* Statement of Accounting Policies................................. 18* Consolidated Statement of Income................................. 19* Consolidated Balance Sheet....................................... 20* Consolidated Statement of Cash Flows............................. 21* Consolidated Statement of Changes in Stockholders' Equity........ 22* Notes to Financial Statements.................................... 23-30* Sales and Profit Statistics by Business Segment.................. 32-33* Additional Segment Data.......................................... 36* Report of Independent Accountants on Financial Statement Schedule...................................................... S-2 Schedule II -- Valuation and Qualifying Accounts................ S-3 </TABLE> * Indicates page numbers in Chemed Corporation 1995 Annual Report to Stockholders. ________________________ The consolidated financial statements of Chemed Corporation listed above, appearing in the 1995 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
15 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 5, 1996 appearing on page 17 of the 1995 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 5, 1996 S-2
16 SCHEDULE II CHEMED CORPORATION AND SUBSIDIARY COMPANIES VALUATION AND QUALIFYING ACCOUNTS (a) (in thousands) Dr/(Cr) <TABLE> <CAPTION> 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 - -------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> Allowances for doubtful accounts (c) - 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) ========= ======== ======= ========= ======== ========= For the year 1993......... $ (1,837) $(1,766) $ - $ ( 19) $ 1,231 $ (2,391) ========= ======== ======= ========= ======== ========= Allowances for doubtful accounts - notes receivable (d) - For the year 1995......... $ (267) $ (64) $ 72 $ - $ 12 $ (247) ========= ======== ======== ========= ======== ========= For the year 1994......... $ (493) $ (81) $ - $ - $ 307 $ (267) ========= ======== ======== ========= ======== ========= For the year 1993......... $ (312) $ (253) $ - $ - $ 72 $ (493) ========= ======== ======== ========= ======== ========= </TABLE> _________________________ (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-3
17 INDEX TO EXHIBITS <TABLE> <CAPTION> Page Number or Incorporation by Reference -------------------------------- Exhibit File No. and Previous Number Filing Date Exhibt No. - ------- ------------ ----------- <S> <C> <C> <C> 3.1 Certificate of Incorporation of Form S-3 4.1 Chemed Corporation Reg. No. 33-44177 11/26/91 3.2 By-Laws of Chemed Corporation Form 10-K 3 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 Executive Salary Protection Form 10-K 11 Plan, as amended through 3/28/89 November 3, 1988 10.10 Excess Benefits Plan, as amended Form 10-Q 3 effective November 1, 1985 11/12/85 10.11 Non-Employee Directors' Deferred Form 10-K 12 Compensation Plan 3/24/88 10.12 Directors Emeriti Plan Form 10-Q 2 5/12/88 10.13 Employee Contracts with Form 10-K 18 Executives 3/28/89 10.14 Amendment No. 7 to Employment * Contracts with Executives 10.15 1995 Stock Incentive Plan * </TABLE>
18 <TABLE> <CAPTION> Page Number or Incorporation by Reference ----------------------------- Exhibit File No. and Previous Number Filing Date Exhibit No. - ------- ------------ ----------- <S> <C> <C> <C> 10.16 Split Dollar Agreements * 10.17 Split Dollar Agreement with * Edward L. Hutton 10.18 Split Dollar Agreement with * Paul C. Voet 10.19 Amendment No. 6 to Employment Form 10-K 10.14 Agreement with Edward L. Hutton 3/28/95 11 Statement re: Computation of * Earnings Per Common Share 13 1995 Annual Report to Stockholders * 21 Subsidiaries of Chemed Corporation * 23 Consent of Independent Accountants * 24 Powers of Attorney * 27 Financial Data Schedule + - -------------------- </TABLE> * Filed herewith. + Not filed herewith. 2