Exhibit 99 ---------- FRONT COVER - ----------- FIRST QUARTER REPORT for the period ending March 31, 2003 CHEMED LOGO - ----------- Serving AMERICA'S Commercial and Residential REPAIR and MAINTENANCE Markets E - 1 INSIDE - ------ April 17, 2003 To Our Fellow Shareholders: For the first quarter, ended March 31, 2003, your company recorded net income and income from continuing operations of $.26 per share as compared with net income of $.47 per share and income from continuing operations of $.39 per share in the 2002 first quarter. First-quarter 2003 net income and income from continuing operations included capital gains from sales of investments of $.22 per share and charges related to severance payments of $.24 per share. Income from continuing operations in the same 2002 quarter included capital gains of $.08 per share from sales of investments, and net income in first-quarter 2002 also included $.08 per share from discontinued operations. Service revenues and sales from continuing operations for the 2003 first quarter were $77.6 million, 4% below 2002's $80.9 million. For the first quarter, net cash provided by operating activities totaled $5.2 million in 2003 versus $6.6 million in 2002. We are encouraged by the improvement in Chemed's first- quarter results. Our operating profit increased by 3% over the prior-year first quarter, led by an 11% increase in operating profit at our Roto-Rooter Plumbing and Drain Service business. Further, Roto-Rooter's net income of $3.6 million in the 2003 first quarter increased 4% over net income of $3.5 million in the 2002 first quarter. Revenues at Roto-Rooter amounted to $64.7 million in the first quarter of 2003, 1% below the prior-year first quarter's revenues of $65.3 million. As a result of Roto-Rooter's disposing of most of its heating and cooling businesses and non- Roto-Rooter-branded operations in 2002, revenues of this line of business declined by $1.8 million in the 2003 first quarter. Excluding these operations, revenues from Roto-Rooter company- owned branches and independent contractors totaled $59.7 million, an increase of 2% over the prior-year first quarter. Additionally, revenues from Roto-Rooter's franchising activities and product and equipment sales rose 8% versus 2002's first quarter. Marketing efforts aimed at business customers bore fruit in the first quarter, as increased commercial sales compensated for the still-soft residential business. Roto-Rooter believes that dominant yellow-pages ad placement in phone directories should increase residential service calls. Accordingly, we are increasing advertising expenditures to improve our position as these ads come up for renewal. We expect this to generate more residential business over the long term. Service America, our appliance and heating/air-conditioning repair business, recorded net income of $40,000 in the 2003 first quarter compared with $327,000 in the same 2002 quarter. Revenues at Service America declined from $15.6 million to $12.9 million, as the company continued to pare marginally profitable E - 2 service agreements. Service America continues to seek a balance between the lower number of contracts and the resources it needs to service them. When this balance is achieved, Service America should see improved operational results. Roto-Rooter is the largest plumbing and drain cleaning provider in North America. Providing excellent service at a fair price will result in job count and sales growth over the long term. Chemed's balance sheet is extremely healthy, with cash balances exceeding long-term debt. We possess the resources to support our subsidiaries' growth, pursue acquisitions of Roto- Rooter franchises, and weigh opportunities in related industries. We are relatively optimistic about our prospects for 2003 and beyond. Reflecting its confidence in Chemed's solid financial position and future earnings potential, in February, the Board of Directors declared a quarterly dividend of $.12 per share, which was paid in March. This represented Chemed's 127th consecutive quarterly dividend. We invite you to join us at the Annual Meeting of Shareholders, 2 p.m., Monday, May 19, at The Phoenix, 812 Race St., Cincinnati. (signature) (signature) Kevin J. McNamara Edward L. Hutton President and Chairman Chief Executive Officer Statements in this quarterly report or in other Chemed communications may relate to future events or Chemed's future performance. Such statements are forward-looking statements and are based on present information Chemed has related to its existing business circumstances. Investors are cautioned that such forward-looking statements are subject to inherent risk that actual results may differ materially from such forward-looking statements. Further, investors are cautioned that Chemed does not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations. Investor inquiries may be directed to: Investor Relations -- Chemed Corporation -- 2600 Chemed Center -- 255 East Fifth Street - -- Cincinnati, OH 45202-4726 -- Toll-Free: 800-2CHEMED -- www.chemed.com E - 3 BACK COVER - ---------- Chemed Corporation (513) 762-6900 ALTERNATE BACK COVER - -------------------- Chemed Corporation c/o Data Works 1150 Century Circle North Cincinnati, OH 45246 MAILING INDICIA - --------------- PRSRT STD US POSTAGE PAID CINCINNATI OH PERMIT NO 627 E - 4 CONSOLIDATED STATEMENT OF INCOME (in thousands, except per share data)(unaudited) Three Months Ended March 31, ----------------------------- 2003 2002 --------- ---------- Continuing Operations Service revenues and sales $ 77,645 $ 80,853 ---------- ---------- Cost of services provided and goods sold 46,152 48,508 General and administrative expenses 16,524 (a) 12,654 Selling and marketing expenses 11,078 11,993 Depreciation 3,052 3,492 ---------- ---------- Total costs and expenses 76,806 76,647 ---------- ---------- Income from operations 839 4,206 Interest expense (539) (773) Distributions on preferred securities (268) (270) Other income--net 4,263 (b) 2,589(b) ---------- ---------- Income before income taxes 4,295 (a,b) 5,752(b) Income taxes (1,742) (1,947) ---------- ---------- Income from continuing operations 2,553 (a,b) 3,805(b) Discontinued Operations - 867 ---------- ---------- Net Income $ 2,553 (a,b) $ 4,672(b) ========== ========== Earnings Per Share Income from continuing operations $ 0.26 (a,b) $ 0.39(b) ========== ========== Net income $ 0.26 (a,b) $ 0.47(b) ========== ========== Average number of shares outstanding 9,890 9,843 ========== ========== Diluted Earnings Per Share Income from continuing operations $ 0.26 (a,b) $ 0.39(b) ========== ========== Net income $ 0.26 (a,b) $ 0.47(b) ========== ========== Average number of shares outstanding 9,903 9,883 ========== ========== (a) Amounts include a pretax charge of $3,627,000 ($2,358,000 aftertax or $.24 per share) from severance charges in the first quarter of 2003. (b) Amounts for the first quarter of 2003 include a pretax gain of $3,544,000 ($2,151,000 aftertax or $.22 per share) from the sales of investments. Amounts for the first quarter of 2002 include a pretax gain of $1,141,000 ($775,000 aftertax or $.08 per share) from the sales of investments. E - 5CONSOLIDATED BALANCE SHEET (in thousands, except per share data) (unaudited) March 31, ----------------------- 2003 2002 -------- --------- Assets Current assets Cash and cash equivalents $ 43,625 $ 15,065 Accounts receivable less allowances 14,685 14,916 Inventories 9,090 10,033 Statutory deposits 10,536 12,558 Current deferred income taxes 7,631 8,287 Current assets of discontinued operations - 37,710 Prepaid expenses and other current assets 12,056 6,677 -------- --------- Total current assets 97,623 105,246 Investments of deferred compensation plans held in trust 15,000 15,518 Other investments 32,789 37,737 Note receivable 12,500 - Properties and equipment, at cost less accumulated depreciation 47,297 50,861 Identifiable intangible assets less accumulated amortization 2,739 3,361 Goodwill less accumulated amortization 111,403 131,496 Noncurrent assets of discontinued operations - 44,506 Other assets 17,232 13,160 -------- --------- Total Assets $336,583 $ 401,885 ======== ========= Liabilities Current liabilities Accounts payable $ 4,261 $ 5,414 Current portion of long-term debt 472 366 Income taxes 8,506 7,022 Deferred contract revenue 17,323 21,770 Accrued insurance 17,631 16,894 Current liabilities of discontinued operations - 10,788 Other current liabilities 18,515 18,455 -------- --------- Total current liabilities 66,708 80,709 Long-term debt 25,802 65,891 Deferred compensation liabilities 14,925 15,850 Noncurrent liabilities of discontinued operations - 1,953 Other liabilities 11,872 12,446 -------- --------- Total Liabilities 119,307 176,849 -------- --------- Mandatorily Redeemable Convertible Preferred Securities of the Chemed Capital Trust 14,186 14,195 -------- --------- Stockholders' Equity Capital stock 13,451 13,461 Paid-in capital 168,568 168,261 Retained earnings 134,160 142,754 Treasury stock, at cost (111,476) (112,815) Unearned compensation (4,259) (6,428) Deferred compensation payable in Company stock 2,294 2,239 Notes receivable for shares sold (933) (933) Accumulated other comprehensive income 1,285 4,302 -------- --------- Total Stockholders' Equity 203,090 210,841 -------- --------- Total Liabilities and Stockholders' Equity $336,583 $ 401,885 ======== ========= Book Value Per Share $ 20.53 $ 21.55 ======== ========= E - 6
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8-K Filing
Chemed (CHE) 8-KOther events
Filed: 24 Apr 03, 12:00am