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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 [Fee Required]
For the fiscal year ended December 31, 1993
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 No. 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)
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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 18, 1994 ($34-3/4 per
share), was $285,189,149.
At March 18, 1994, 9,845,166 shares of Chemed Corporation Capital Stock
(par value $1 per share) were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT WHERE INCORPORATED
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1993 Annual Report to Stockholders Parts I, II and IV
(specified portions)
Proxy Statement for Annual Meeting Part III
to be held May 16, 1994
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CHEMED CORPORATION
1993 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PAGE
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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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, 1993, the Company had received cash payments totaling
$203,580,000.
On December 21, 1992, the Company acquired The Veratex Corporation and
related businesses ("Veratex Group") from Omnicare, Inc., a publicly traded
affiliate in which Chemed maintains a 25.7%-ownership interest (27% ownership
interest at December 31, 1993). 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.
During 1993, the Company conducted its business operations in three
segments: National Sanitary Supply Company ("National Sanitary Supply"),
Roto-Rooter, Inc. ("Roto-Rooter"), and Veratex Group ("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 of up to
$10,400,000 may be made, the amount being contingent upon the earnings of
Patient Care during the three-year period ending December 31, 1995.
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, 1991,
1992 and 1993, are shown in the "Sales and Profit Statistics by Business
Segment" and the "Additional Segment Data" on pages 32, 33 and 36 of the 1993
Annual Report to Stockholders and are incorporated herein by reference.
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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 1993 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 1993, 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 59%-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
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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 1993.
These sales are attributable to over 4,000 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 13 percent of sales
in 1993. This customer is a fast-food restaurant chain consisting of
approximately 1,150 franchises and 120 company-owned restaurants. Sales to
this customer consisted primarily of low-margin food-service products such as
paper napkins, plates and cups. 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.
VERATEX
In distributing medical and dental products, Veratex competes with
numerous mail-order businesses; medical, dental and veterinary supply houses;
and manufacturers of disposable paper, cotton and gauze products. Veratex
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.
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.
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. The Company has accrued $15,500,000
with respect to these potential liabilities. Prior to the sale of DuBois,
DuBois had been designated as a Potentially
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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 1994 and 1995 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, 1993, Chemed had a total of 4,834 employees; 4,796 were
located in the United States and 38 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 thirteen 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
-------- ---- ----- ------
NATIONAL SANITARY SUPPLY
Los Angeles, CA Office, manufacturing and -- 190,000 sq. ft.
distribution center
Tempe, AZ Office and distribution center 69,000 sq. ft. --
San Francisco Office and distribution center -- 66,000 sq. ft.
(Area), CA
Denver, CO Office and distribution center -- 56,000 sq. ft.
Marion, IN Office and distribution center 30,000 sq. ft. --
Tupelo, MS Office and distribution center -- 33,000 sq. ft.
Kansas City, MO Office and distribution center -- 25,000 sq. ft.
St. Louis, MO Office and distribution center -- 16,000 sq. ft.
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Location Type Owned Leased
-------- ---- ----- ------
(NATIONAL SANITARY SUPPLY - CONTINUED)
Las Vegas, NV Office and distribution center 24,000 sq. ft. --
Albuquerque, NM Office and distribution center -- 38,000 sq. ft.
Dayton, OH Office and distribution center -- 19,000 sq. ft.
Toledo, OH Office and distribution center -- 65,000 sq. ft.
Oklahoma City, OK Office and distribution center 15,000 sq. ft. 76,000 sq. ft.
Portland, OR Office and distribution center 56,000 sq. ft. --
Memphis, TN Office and distribution center -- 66,000 sq. ft.
Amarillo, TX Office and distribution center -- 25,000 sq. ft.
Austin, TX Office and distribution center -- 18,000 sq. ft.
Beaumont, TX Office and distribution center -- 14,000 sq. ft.
Corpus Christi, TX Office and distribution center -- 60,000 sq. ft.
Dallas, TX Office and distribution center 54,000 sq. ft. --
El Paso, TX Office and distribution center 18,000 sq. ft. --
Houston, TX Office and distribution center -- 102,000 sq. ft.
Laredo, TX Office and distribution center -- 10,000 sq. ft.
McAllen, TX Office and distribution center -- 9,000 sq. ft.
San Antonio, TX Office and distribution center -- 40,000 sq. ft.
Salt Lake City, UT Office and distribution center -- 20,000 sq. ft.
Seattle, WA Office and distribution center -- 15,000 sq. ft.
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Location Type Owned Leased
-------- ---- ----- ------
Branch Sales Branch sales offices 3,000 sq. ft. 189,000 sq. ft.
Offices (1)
ROTO-ROOTER
Cincinnati, OH Office and service facilities 6,000 sq. ft. 21,000 sq. ft.
West Des Moines, IA Office, manufacturing and distribution 29,000 sq. ft. --
facilities
Northeastern Office and service facilities 43,000 sq. ft. 22,000 sq. ft.
U.S. Area (2)
Central U.S. Office and service facilities 36,000 sq. ft. 23,000 sq. ft.
Area (3)
Mid-Atlantic U.S. Office and service facilities 55,000 sq. ft. 91,000 sq. ft.
Area (4)
Western U.S. Area (5) Office and service facilities 26,000 sq. ft. 36,000 sq. ft.
Canada (6) Office and service facilities -- 7,000 sq. ft.
VERATEX
Troy, MI Office and distribution center -- 81,000 sq. ft.
Detroit, MI Manufacturing facility 64,000 sq. ft. --
Lexington, KY Office and distribution center -- 152,000 sq. ft.
Lakeland, FL (7) Office, manufacturing and distribution -- 76,000 sq. ft.
center
Rialto, CA Office, manufacturing and distribution 132,000 sq. ft. --
center
CORPORATE
Cincinnati, OH (8) Corporate offices and related -- 42,000 sq. ft.
facilities
New York, NY Corporate offices -- 2,000 sq. ft.
<FN>
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(1) Comprising forty separate facilities 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, Bayside and Mount Kisco, New York; and Cranston, Rhode Island.
(3) Comprising locations in Atlanta, Georgia; Birmingham, Alabama; Charlotte, North Carolina; Hillard and Cleveland, Ohio; Memphis
and Nashville, Tennessee; Wilmerding, Pennsylvania; and St. Louis, Missouri.
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(4) Comprising locations in Pennsauken and North Brunswick, New Jersey;
Jacksonville, Medley, Pompano Beach, Ft. Myers, St. Petersburg, Boca
Raton, Deerfield Beach, Daytona Beach 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; Pearl City, Hawaii;
Minneapolis, Minnesota; Tacoma, Washington; and Phoenix, Arizona.
(6) Comprising locations in Delta, British Columbia and Boucherville, Quebec.
(7) Comprising of former office, manufacturing and warehouse facilities that
are presently under lease to an outside third party.
(8) Excludes 88,000 square feet in current Cincinnati, Ohio, office
facilities that are sublet to an outside party -- portions of this space
may revert to the Company beginning in 1998. Includes 31,000 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 74 Chairman and Chief Executive Officer November 3, 1993 (1)
Jon D. Krahulik 49 President and Chief Operating Officer November 3, 1993 (2)
Paul C. Voet 47 Executive Vice President May 20, 1991 (3)
Timothy S. O'Toole 38 Executive Vice President and May 18, 1992 (4)
Treasurer
Kevin J. McNamara 40 Executive Vice President, Secretary November 3, 1993 (5)
and General Counsel
Sandra E. Laney 50 Senior Vice President and Chief November 3, 1993 (6)
Administrative Officer
Arthur V. Tucker 44 Vice President and Controller May 20, 1991 (7)
<FN>
(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, an uncle of
Mr. J. D. Krahulik, the President and Chief Operating Officer and a director of the Company, and an uncle of Mr. A. C. Hutton,
a Vice President and a nominee for director of the Company.
(2) Mr. J. D. Krahulik is the President and Chief Operating Officer of the Company and has held this position since November 1993.
Previously, from February 1993 to November 1993 he served the Company as Vice Chairman of the Board of Directors of the
Company. From December 1990 to November 1993 he was an Associate Justice of the Supreme Court of Indiana, and prior to that
he was a partner in the law firm of Bingham, Summers Welsh & Spilman (Indianapolis, Indiana) from 1975 to December 1990. Mr.
J. D. Krahulik is the nephew of Mr. E. L. Hutton, Chairman, Chief Executive Officer and a director of the Company, a cousin of
Mr. T. C. Hutton, a Vice President and a director of the Company, and a cousin of Mr. A. C. Hutton, a Vice President and a
nominee for director of the Company.
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(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. From May 1988 to February 1989, he served as Vice
President and a Director of Taxes of the Company.
(5) Mr. K. J. McNamara is an Executive Vice President, Secretary and General
Counsel of the Company and has held these positions since November 1993,
August 1986 and August 1986, respectively. He previously held the
positions of Vice Chairman of the Company, from May 1992 to November
1993, and Vice President of the Company, from August 1986 to May 1992.
(6) 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.
(7) Mr. A. V. Tucker 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 16, 1994.
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 1992 and 1993 are set forth below.
Closing Dividends Paid
High Low Per Share
------------------------------------------------------------------------------
1993
First Quarter $29-1/2 $26-1/4 $.50
Second Quarter 30-7/8 25-3/4 .50
Third Quarter 31-3/4 29-7/8 .50
Fourth Quarter 32-3/4 29-3/4 .51
1992
First Quarter 29-3/8 25 .50
Second Quarter 29-3/8 26-1/4 .50
Third Quarter 32 25-7/8 .50
Fourth Quarter 27-3/8 24-3/8 .50
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 18, 1994, there were approximately 6,096 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.
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ITEM 6. SELECTED FINANCIAL DATA.
The information called for by this Item for the five years ended December
31, 1993 is set forth on pages 34 and 35 of the 1993 Annual Report to
Stockholders and the information for such five years 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 1993 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 1, 1994, appearing on pages 17 through 30 of
the 1993 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:
J. Peter Grace Jon D. Krahulik
Edward L. Hutton Sandra E. Laney
James A. Cunningham Kevin J. McNamara
James H. Devlin John M. Mount
Charles H. Erhart, Jr. Timothy S. O'Toole
Joel F. Gemunder D. Walter Robbins, Jr.
Neal Gilliatt Arthur V. Tucker
William R. Griffin Paul C. Voet
Will J. Hoekman Hugh A. Westbrook
Thomas C. Hutton
Except with respect to the age and business experience of Messrs. Gilliatt,
Hoekman, and Tucker, the information required under this Item with respect to
directors is set forth in the Company's 1994 Proxy Statement which is
incorporated herein by reference. The information with respect to Messrs.
Gilliatt and Hoekman is set forth below and the information with respect to Mr.
Tucker is in footnote (7) under "Executive Officers of the Company" in Part I
of this Annual Report on Form 10-K.
(1) Mr. Gilliatt is President of Neal Gilliatt/Stuart Watson, Inc., New York,
New York (Management Consulting) and has held this position since April
1982. On April 1, 1982, he retired as Chairman of the Executive
Committee of the Interpublic Group of Companies, Inc., New York, New York
(advertising and related communications), having held that position since
February 1980. Mr. Gilliatt is a director of Consolidated Products,
Inc., National Sanitary Supply, Omnicare and Roto-Rooter. Mr. Gilliatt
is 76.
(2) Mr. Hoekman is a Senior Vice President of Firstar Bank, Des Moines, Iowa,
and has held this position since November 1980. Mr. Hoekman is a
director of Roto-Rooter. Mr. Hoekman is 48.
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ITEM 11. EXECUTIVE COMPENSATION.
Information required under this Item is set forth in the Company's 1994
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 1994
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 1994
Proxy Statement, which is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 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.*
10.3 1978 Stock Incentive Plan, as amended through May 20, 1991.*,**
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. 5 to Employment Contracts with Executives.**
11. Statement re: Computation of Earnings Per Common Share.
13. 1993 Annual Report to Stockholders.
21. Subsidiaries of Chemed Corporation.
10
13
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 SCHEDULES
See Index to Financial Statements and Financial Statement Schedules on
page S-1.
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended December 31,
1993.
11
14
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 29, 1994 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 Director (Principal Executive
Edward L. Hutton 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 Vice President and Controller and a March 29, 1994
----------------------- Director
Arthur V. Tucker (Principal Accounting Officer)
J. Peter Grace* Thomas C. Hutton*
James A. Cunningham* Jon D. Krahulik*
James H. Devlin* Sandra E. Laney*
Charles H. Erhart, Jr.* Kevin J. McNamara* --Directors
Joel F. Gemunder* John M. Mount*
Neal Gilliatt* D. Walter Robbins, Jr.*
William R. Griffin* Paul C. Voet*
Will J. Hoekman* Hugh A. Westbrook
<FN>
- ------------------------
* Kevin J. McNamara by signing his 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 29, 1994 /s/ Kevin J. McNamara
- ----------------------- --------------------------------
Date Kevin J. McNamara
(Attorney-in-Fact)
12
15
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
1991, 1992 AND 1993
CHEMED CORPORATION CONSOLIDATED FINANCIAL PAGE(S)
STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
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
Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Schedule I -- Marketable Securities - Other Investments . . . . . . . . . . . . . . . . . . . . . S-3
Schedule VIII -- Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . S-4
Schedule X -- Supplementary Income Statement Information . . . . . . . . . . . . . . . . . . . . S-5
<FN>
* Indicates page numbers in Chemed Corporation 1993 Annual Report to Stockholders.
- ------------------------
The consolidated financial statements of Chemed Corporation listed above,
appearing in the 1993 Annual Report to Stockholders, are incorporated herein by
reference. The Financial Statement Schedules 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
16
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of Chemed Corporation
Our audits of the consolidated financial statements referred to in our report
dated February 1, 1994 appearing on page 17 of the 1993 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 Schedules listed in Item 14
of this Form 10-K. In our opinion, these Financial Statement Schedules present
fairly, in all material respects, the information set forth therein when read
in conjunction with the related consolidated financial statements.
/s/ Price Waterhouse
PRICE WATERHOUSE
Cincinnati, Ohio
February 1, 1994
S-2
17
CHEMED CORPORATION AND SUBSIDIARY COMPANIES SCHEDULE I
MARKETABLE SECURITIES -- OTHER INVESTMENTS
(in thousands except share and warrant data)
- ------------------------------------------------------------------------------------------------------------------------
Amount Included in
Name of Issuer and Amortized Market Value at December 31, 1993
Title of Issue Number of shares Cost of Issue December 31, 1993 Balance Sheet
- ------------------------------------------------------------------------------------------------------------------------
Gradison Government Income Fund 73,774 shares $ 1,000 $ 993 $ 1,000
Other - 200 200 200
-------------------
Total Marketable Securities $ 1,200
===================
Vitas Healthcare Corporation: (a)
9 % Cumulative Nonconvertible
Preferred Stock 270,000 shares $ 26,020 $ 28,195 $ 26,020
Warrants 2 warrants 1,500 4,730 1,500
EXEL, Ltd.: (b)
Common Stock 416,000 shares 4,160 18,460 4,160
Future Healthcare, Inc.:
Other - 5,977 9,686 5,977
-------------------
Total Other Investments $ 37,657
===================
- -----------------------------------------------------------------------------------------------------------------------
Number of shares/ Amount Included in
Name of Issuer and Principal Amount Amortized Market Value at December 31, 1992
Title of Issue of Bonds and Notes Cost of Issue December 31, 1992 Balance Sheet
- -----------------------------------------------------------------------------------------------------------------------
U.S. Treasury Notes (c) $ 20,000 $ 20,976 $ 20,859 $ 20,976
Overland Express Variable Rate
Government Fund 1,087,739 shares 11,000 10,823 11,000
American Adjustable Rate Term Trust 100,000 shares 1,000 988 1,000
Other - 201 201 201
-------------------
Total Marketable Securities $ 33,177
===================
Vitas Healthcare Corporation: (a)
9 % Cumulative Nonconvertible
Preferred Stock 270,000 shares $ 25,744 $ 25,744 $ 25,744
Warrants 2 warrants 1,500 1,500 1,500
EXEL, Ltd.: (b)
Common Stock 500,000 shares 5,000 23,625 5,000
Options 75,000 shares - 2,794 -
Future Healthcare, Inc.:
Other - 3,259 4,620 3,259
-------------------
Total Other Investments $ 35,503
===================
<FN>
- ------------------
(a) Initial investment in this privately held corporation was made in
December 1991. At December 31, 1992, fair value was not readily
determinable without commissioning an independent appraisal which was not
considered cost justified. During 1993, Vitas Healthcare Corporation
(Vitas) obtained additional outside financing and obtained a valuation
of its common stock from an independent investment banking firm. The
market value at December 31, 1993, is based on the difference between
that appraisal and Chemed's exercise price. The value of the 9%
Cumulative Preferred Stock is based on the present value of the mandatory
redemption payments, using an interest rate of 7.5%, a rate which
management believes to be reasonable given Vitas' financial performance
and current market conditions.
(b) Trading restrictions on these shares expired in February 1993 and July
1993.
(c) All securities of the U.S. Government are grouped together and shown as a
single item.
S-3
18
SCHEDULE VIII
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
VALUATION AND QUALIFYING ACCOUNTS (a)
(in thousands)
===============================================================================================
Additions
-------------------------
Charged Applicable
(Credited) to
Balance at to Costs Companies Balance
Beginning and Acquired Deductions at End
Description of Period Expenses in Period (b) of Period
- -----------------------------------------------------------------------------------------------
Allowances for
doubtful accounts (c)-
For the year 1993.......... $ 1,837 $ 1,766 $ 19 $ (1,231) $ 2,391
========= ========= ========= ========= =========
For the year 1992.......... $ 1,910 $ 1,616 $ 222 $ (1,911) $ 1,837
========= ========= ========= ========= =========
For the year 1991.......... $ 1,695 $ 1,774 $ - $ (1,559) $ 1,910
========= ========= ========= ========= =========
Valuation accounts for
investments in subsidiaries
and affiliates (d)-
For the year 1993.......... $ - $ - $ - $ - $ -
========= ========= ========= ========= =========
For the year 1992.......... $ 68 $ - $ - $ (68) $ -
========= ========= ========= ========= =========
For the year 1991.......... $ 68 $ - $ - $ - $ 68
========= ========= ========= ========= =========
Allowances for doubtful
accounts - notes
receivable (d)-
For the year 1993.......... $ 312 $ 253 $ - $ (72) $ 493
========= ========= ========= ========= =========
For the year 1992.......... $ 319 $ - $ - $ (7) $ 312
========= ========= ========= ========= =========
For the year 1991.......... $ 422 $ - $ - $ (103) $ 319
========= ========= ========= ========= =========
<FN>
- ------------------
(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
19
SCHEDULE X
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION (a)
(in thousands)
=========================================================================
Charged to Costs and Expenses
Item 1993 1992 1991
- -------------------------------------------------------------------------
Maintenance and repairs.................. $ 4,835 $ 3,967 $ 3,742
======= ======= =======
Advertising costs........................ $ 9,465 $ 6,203 $ 5,744
======= ======= =======
<FN>
(a) Amounts are presented on a continuing operations basis.
S-5
20
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 Chemed Form S-3 4.1
Corporation Reg. No. 33-44177
11/26/91
3.2 By-Laws of Chemed Corporation Form 10-K 3
3/23/89
10.1 Agreement and Plan of Merger among Diversey U. Form 8-K 1
S. Holdings, Inc., D. C. Acquisition Inc., 3/11/91
Chemed Corporation and DuBois Chemicals, Inc.,
dated as of February 25, 1991
10.2 Stock Purchase Agreement between Omnicare, Inc. Form 10-K 5
and Chemed Corporation dated as of August 5, 3/25/93
1992
10.3 1978 Stock Incentive Plan, as amended through Form 10-K 6
May 20, 1991 3/27/92
10.4 1981 Stock Incentive Plan, as amended through Form 10-K 7
May 20, 1991 3/27/92
10.5 1983 Incentive Stock Option Plan, as amended Form 10-K 8
through May 20, 1991 3/27/92
10.6 1986 Stock Incentive Plan, as amended through Form 10-K 9
May 20, 1991 3/27/92
10.7 1988 stock Incentive Plan, as amended through Form 10-K 10
May 20, 1991 3/27/92
10.8 1993 Stock Incentive Plan *
10.9 Executive Salary Protection Plan, as amended Form 10-K 11
through November 3, 1988 3/28/89
10.10 Excess Benefits Plan, as amended effective Form 10-Q 3
November 1, 1985 11/12/85
10.11 Non-Employee Directors' Deferred Compensation Form 10-K 12
Plan 3/24/88
10.12 Directors Emeriti Plan Form 10-Q 2
5/12/88
10.13 Employment Contracts with Executives Form 10-K 18
3/28/89
10.14 Amendment No. 5 to Employment Contracts with *
Executives
11 Statement re: Computation of Earnings Per *
Common Share
13 1993 Annual Report to Stockholders *
21
21 Subsidiaries of Chemed Corporation *
23 Consent of Independent Accountants *
24 Powers of Attorney *
<FN>
- -----------------------
* Filed herewith