10-K405 1 l87012ae10-k405.txt CHEMED CORPORATION FORM 10-K405 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- FORM 10-K [X} ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition period from _______________ to ______________ Commission File Number: 1-8351 CHEMED CORPORATION (Exact name of registrant as specified in its charter) Delaware 31-0791746 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2600 Chemed Center, 255 East Fifth Street, Cincinnati, Ohio 45202-4726 (Address of principal executive offices) (Zip Code) (513) 762-6900 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- --------------------- Capital Stock - Par Value $1 Per Share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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 23, 2001 ($35.00 per share), was $328,481,300. DOCUMENTS INCORPORATED BY REFERENCE Document Where Incorporated -------- ------------------ 2000 Annual Report to Stockholders (Specified Portions) Parts I, II and IV Proxy Statement for Annual Meeting Part III to be held May 21, 2001. 2 CHEMED CORPORATION 2000 FORM 10-K ANNUAL REPORT Table of Contents Page PART I Item 1. Business............................................................. 1 Item 2. Properties........................................................... 6 Item 3. Legal Proceedings.................................................... 8 Item 4. Submission of Matters to a Vote of Security Holders.................. 8 -- Executive Officers of the Registrant................................. 9 PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters..................................................10 Item 6. Selected Financial Data..............................................10 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations..................................10 Item 7A. Quantitative and Qualitative Disclosures About Market Risk...........11 Item 8. Financial Statements and Supplementary Data..........................11 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..................................11 PART III Item 10. Directors and Executive Officers of the Registrant...................11 Item 11. Executive Compensation...............................................11 Item 12. Security Ownership of Certain Beneficial Owners and Management...........................................................11 Item 13. Certain Relationships and Related Transactions.......................12 PART IV Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K..........................................................12 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. The Company received cash payments aggregating approximately $67.4 million over the four-year period following the closing, the substantial portion of which was received on December 31, 1986. On April 2, 1991, the Company completed the sale of DuBois Chemicals, Inc. ("DuBois"), a wholly owned subsidiary, to the Diversey Corporation ("Diversey"), then a subsidiary of The Molson Companies Ltd. Under the terms of the sale, Diversey agreed to pay the Company net cash payments aggregating $223,386,000, including deferred payments aggregating $32,432,000. On December 21, 1992, the Company acquired The Veratex Corporation and related businesses ("Veratex Group") from Omnicare, Inc., a publicly traded company in which Chemed currently maintains a .5 percent ownership interest. The purchase price was $62,120,000 in cash paid at closing, plus a post-closing payment of $1,514,000 (paid in April 1993) based on the net assets of Veratex. Effective January 1, 1994, the Company acquired all the capital stock of Patient Care, Inc. ("Patient Care"), for cash payments aggregating $20,582,000, plus 17,500 shares of the Company's Capital Stock. An additional cash payment of $1,000,000 was made on March 31, 1996 and another payment of $1,000,000 was made on March 31, 1997. In July 1995, the Company's Omnia Group (formerly Veratex Group) completed the sale of the business and assets of its Veratex Retail division to Henry Schein, Inc. ("HSI") for $10 million in cash plus a $4.1 million note for which payment was received in December 1995. Effective September 17, 1996, the Company completed a merger of a subsidiary of the Company, Chemed Acquisition Corp., and Roto-Rooter, Inc. pursuant to a Tender Offer commenced 1 4 on August 8, 1996 to acquire any and all of the outstanding shares of Common Stock of Roto-Rooter, Inc. for $41.00 per share in cash. On September 24, 1997, the Company completed the sale of its wholly owned businesses comprising the Omnia Group to Banta Corporation for $50 million in cash and $2.3 million in deferred payments. Effective September 30, 1997, the Company completed a merger between its 81-percent-owned subsidiary, National Sanitary Supply Company, and a wholly owned subsidiary of Unisource Worldwide, Inc. for $21.00 per share, with total payments of $138.3 million. The Company now conducts its business operations in three segments: Roto-Rooter Group ("Roto-Rooter"), Patient Care and Service America Systems, Inc. ("Service America"). FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS The required segment and geographic data for the Company's continuing operations (as described below) for the three years ended December 31, 1998, 1999 and 2000, are shown in the "Segment Data" on pages 26 and 27 of the 2000 Annual Report to Stockholders and are incorporated herein by reference. DESCRIPTION OF BUSINESS BY SEGMENT The information called for by this item is included within Note 1 of the Notes to Financial Statements appearing on page 17 of the 2000 Annual Report to Stockholders and is incorporated herein by reference. PRODUCT AND MARKET DEVELOPMENT Each segment of Chemed's business engages in a continuing program for the development and marketing of new services and products. While new products and services and new market development are important factors for the growth of each active segment of Chemed's business, Chemed does not expect that any new products and services or marketing effort, including those in the development stage, will require the investment of a material amount of Chemed's assets. RAW MATERIALS The principal raw materials needed for Chemed's United States manufacturing operations are purchased from United States sources. No segment of Chemed experienced any material raw material shortages during 2000, 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. 2 5 PATENTS, SERVICE MARKS AND LICENSES The Roto-Rooter(R) trademark and service mark have been used and advertised since 1935 by Roto-Rooter Corporation, a wholly owned subsidiary of Roto-Rooter, Inc., a 100 percent-owned subsidiary of the Company. The Roto-Rooter(R) marks are among the most highly recognized trademarks and service marks in the United States. Chemed considers the Roto-Rooter(R) marks to be a valuable asset and a significant factor in the marketing of Roto-Rooter's franchises, products and services and the products and services provided by its franchisees. COMPETITION ROTO-ROOTER All aspects of the sewer, drain, and pipe cleaning, HVAC services and plumbing repair businesses are highly competitive. Competition is, however, fragmented in most markets with local and regional firms providing the primary competition. The principal methods of competition are advertising, range of services provided, speed and quality of customer service, service guarantees, and pricing. No individual customer or market group is critical to the total sales of this segment. PATIENT CARE The home healthcare services industry and, in particular, the nursing and personal care segment is highly competitive. Patient Care competes with numerous local, regional and national home healthcare services companies. Patient Care competes on the basis of quality, cost-effectiveness and its ability to service its referral base quickly throughout its regional markets. Patient Care has contracts with several customers, the loss of any one or more of which could have a material adverse effect on this segment. SERVICE AMERICA All aspects of the HVAC and appliance repair and maintenance service industry are highly competitive. Competition is, however, fragmented in most markets with local and regional firms providing the primary competition. The principal methods of competition are advertising, range of services provided, speed and quality of customer service, service guarantees, and pricing. No individual customer or market group is critical to the total sales of this segment. RESEARCH AND DEVELOPMENT Chemed engages in a continuous program directed toward the development of new products and processes, the improvement of existing products and processes, and the development of new and different uses of existing products. The research and 3 6 development expenditures from continuing operations have not been nor are they expected to be material. GOVERNMENT REGULATIONS Roto-Rooter's franchising activities are subject to various federal and state franchising laws and regulations, including the rules and regulations of the Federal Trade Commission (the "FTC") regarding the offering or sale of franchises. The rules and regulations of the FTC require that Roto-Rooter provide all prospective franchisees with specific information regarding the franchise program and Roto-Rooter in the form of a detailed franchise offering circular. In addition, a number of states require Roto-Rooter to register its franchise offering prior to offering or selling franchises in the state. Various state laws also provide for certain rights in favor of franchisees, including (i) limitations on the franchisor's ability to terminate a franchise except for good cause, (ii) restrictions on the franchisor's ability to deny renewal of a franchise, (iii) circumstances under which the franchisor may be required to purchase certain inventory of franchisees when a franchise is terminated or not renewed in violation of such laws, and (iv) provisions relating to arbitration. Roto-Rooter's ability to engage in the plumbing repair business is also subject to certain limitations and restrictions imposed by state and local licensing laws and regulations. Service America's home and service warranty operations are regulated by the Florida and Arizona Departments of Insurance. In accordance with certain Florida regulatory requirements, Service America maintains cash with the Department of Insurance and is also required to maintain additional unencumbered reserves. In addition, Service America's air conditioning and appliance repair and maintenance business is also subject to certain limitations imposed by state and local licensing laws and regulations. Patient Care's activities are subject to various federal and state laws and regulations. Changes in the law, new interpretations of existing laws, or changes in payment methodology, may have a dramatic effect on the definition of permissible or impermissible activities, the relative costs associated with doing business and the amount of reimbursement by both government and other third-party payors. In addition to specific legislative and regulatory influences, efforts to reduce the growth of the federal budget and the Medicare and the Medicaid programs resulted in enactment of the Balanced Budget Act of 1997. This law contains several provisions affecting Medicare payment for the coverage of home healthcare services which directly or indirectly, together with Medicaid payments, accounted for 70 percent of Patient Care's net revenue in 2000. Certain of these provisions could have an adverse effect on Patient Care. In addition, state legislatures periodically consider various healthcare reform proposals. Congress and state legislatures can be expected to continue to review and assess alternative healthcare delivery systems and payment methodologies, and public debate of these issues can be expected to continue in the future. The ultimate timing or effect of such additional legislative efforts cannot be predicted and may impact Patient Care in different ways. No assurance can be given that any such efforts will not have a material adverse effect on Patient Care. Certain of Patient Care's employees are subject to state laws and regulations governing professional practice. Patient Care's operations are subject to periodic survey by governmental and private accrediting entities to assure compliance with applicable state licensing, and Medicare and Medicaid certification and accreditation 4 7 standards, as the case may be. From time to time in the ordinary course of business, Patient Care, like other healthcare companies, receives survey reports containing deficiencies for alleged failure to comply with applicable requirements. Patient Care reviews such reports and takes appropriate corrective action. The failure to effect such action or to obtain, renew or maintain any of the required regulatory approvals, certifications or licences could materially adversely affect Patient Care's business, and could prevent the programs involved from offering products and services to patients. There can be no assurance that either the states or the federal government will not impose additional regulations upon the activities of Patient Care which might materially adversely affect Patient Care. ENVIRONMENTAL MATTERS Roto-Rooter's operations are subject to various federal, state, and local laws and regulations regarding environmental matters and other aspects of the operation of a sewer and drain cleaning, HVAC and plumbing services business. For certain other activities, such as septic tank pumping, Roto-Rooter is subject to state and local environmental health and sanitation regulations. Service America's operations are also subject to various federal, state and local laws and regulations regarding environmental matters and other aspects of the operation of a HVAC and appliance repair and maintenance service industry. In connection with the sale of DuBois to the Diversey Corporation, the Company contractually assumed for a period of ten years the estimated liability for potential environmental cleanup and related costs arising from the sale of DuBois up to a maximum of $25,500,000. Based upon an updated assessment of the Company's environmental-related liability by the Company's environmental adviser, the Company has accrued $2,972,000 at December 31, 2000 to cover these costs. Prior to the sale of DuBois, DuBois had been designated as a Potentially Responsible Party ("PRP") at fourteen Superfund sites by the U.S. Environmental Protection Agency ("USEPA"). With respect to all of these sites, the Company has been unable to locate any records indicating it disposed of waste of any kind at such sites. Nevertheless, it settled claims at five such sites at minimal cost. In addition, because there was a number of other financially responsible companies designated as PRPs relative to these sites, management believes that it is unlikely that such actions will have a material effect on the Company's financial condition or results of operations. With respect to one of these sites, the Company's involvement is based on the location of one of its manufacturing plants. Currently, the USEPA and the state governmental agency are attempting to resolve jurisdictional issues, and action against PRPs is not proceeding. Chemed, to the best of its knowledge, is currently in compliance in all material respects with the environmental laws and regulations affecting its operations. Such environmental laws, regulations and enforcement proceedings have not required Chemed to make material increases in or modifications to its capital expenditures and they have not had a material adverse effect on sales or net income. Capital expenditures for the purposes of complying with environmental laws and regulations during 2001 and 2002 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, 2000, Chemed had a total of 7,591 employees. 5 8 ITEM 2. PROPERTIES Chemed has plants and offices in various locations in the United States and Canada. The major facilities operated by Chemed are listed below by industry segment. All "owned" property is held in fee and is not subject to any major encumbrance. Except as otherwise shown, the leases have terms ranging from one year to eight years. Management does not foresee any difficulty in renewing or replacing the remainder of its current leases. Chemed considers all of its major operating properties to be maintained in good operating condition and to be generally adequate for present and anticipated needs.

Location Type Owned Leased -------- ---- ----- ------ ROTO-ROOTER GROUP Cincinnati, OH (1) Office and service 19,000 sq. ft. 38,000 sq. ft. facilities West Des Moines, Office, manufacturing and 29,000 sq. ft. -- IA distribution center facilities Northeastern Office and service 31,000 sq. ft. 55,000 sq. ft. U.S. Area (2) facilities Central U.S. Office and service 28,000 sq. ft. 60,000 sq. ft. Area (3) facilities Mid-Atlantic Office and service 19,000 sq. ft. 32,000 sq. ft. U.S. Area (4) facilities Southeastern U.S. Office and service 18,000 sq. ft. 48,000 sq. ft. Area (5) facilities Western Central Office and service 19,000 sq. ft. 41,000 sq. ft. U.S. Area (6) facilities Western U.S. Office and service -- 69,000 sq. ft. Area (7) facilities Canada (8) Office and service -- 13,000 sq. ft. facilities PATIENT CARE New Jersey (9) Office -- 53,000 sq. ft. Connecticut (10) Office -- 46,000 sq. ft. New York (11) Office -- 45,000 sq. ft. Illinois (12) Office -- 2,000 sq. ft. Ohio (13) Office -- 3,000 sq. ft. Kentucky (14) Office -- 4,000 sq. ft.

6 9

Location Type Owned Leased -------- ---- ----- ------ Georgia (15) Office -- 2,000 sq. ft. Washington, DC (16) Office -- 2,000 sq. ft. Virginia (17) Office -- 3,000 sq. ft. Maryland (18) Office -- 2,000 sq. ft. SERVICE AMERICA Florida (19) Office and service 67,000 sq. ft. 46,000 sq. ft. facilities Arizona (20) Office and service 6,000 sq. ft. 10,000 sq. ft. facilities CORPORATE Cincinnati, OH (21) Corporate offices and 8,000 sq. ft. 78,000 sq. ft. related facilities

------------- (1) Includes 6,000 square feet that formerly housed a service facility. (2) Comprising locations in Stoughton, Springfield and Woburn, Massachusetts; West Stratford and Bloomfield, Connecticut; Farmingdale, Hawthorne, and Staten Island, New York; Pennsauken and Brunswick, New Jersey; Levittown and Philadelphia, Pennsylvania; Cranston, Rhode Island; and Newark, Delaware. (3) Comprising locations in Adamsville and Birmingham, Alabama; Columbus, Ohio; Indianapolis, Indiana; Memphis and Nashville, Tennessee; Wilmerding and Pittsburgh, Pennsylvania; Buffalo, Rochester and West Seneca, New York; Plainfield, Connecticut; and St. Paul, Minnesota. (4) Comprising locations in Baltimore and Jessup, Maryland; Independence, Ohio; Virginia Beach and Fairfax, Virginia; Charlotte, Raleigh and Durham, North Carolina; and Newnan, Georgia. (5) Comprising locations in Atlanta, Decatur and Kennesaw, Georgia; Ft. Lauderdale, Jacksonville, Miami, Orlando, Longwood, Tampa and Daytona Beach, Florida. (6) Comprising locations in Minneapolis and Oakdale, Minnesota; Addison, Thornton, Schaumburg and Glenview, Illinois; St. Louis, Missouri; and Little Rock, Arkansas. (7) Comprising locations in Houston, San Antonio and Austin, Texas; Commerce City, Colorado; Honolulu, Hawaii; Menlo Park, California; Seattle, Tacoma and Bremerton, Washington; and Las Vegas, Nevada 7 10 (8) Comprising locations in Port Coquitlam, British Columbia; Montreal, Quebec; and Winnipeg, Manitoba. (9) Comprising locations in Jersey City; Ridgewood, Montclair, Westfield, and West Orange, New Jersey. (10) Comprising locations in Greenwich, Madison, Naugatuch, Newington, Norwalk, New Haven, Stratford, Norwich, Gulliford, Bridgeport and Danbury, Connecticut. (11) Comprising locations in Brooklyn, Manhattan, Queens, Bronx and Staten Island, New York. (12) Comprising locations in Chicago and Glenview, Illinois. (13) Comprising location in Columbus, Ohio. (14) Comprising location in Louisville, Kentucky. (15) Comprising location in Conyers, Georgia. (16) Comprising location in Washington, D.C. (17) Comprising location in Alexandria, Virginia. (18) Comprising locations in Towson and Rockville, Maryland. (19) Comprising locations in Pompano Beach, Miami, Fort Myers, St. Petersburg, Orlando, West Palm Beach, Deerfield Beach and Delray Beach, Florida. (20) Comprising locations in Phoenix and Tucson, Arizona. (21) Excludes 49,000 square feet in current Cincinnati, Ohio office facilities that are sublet to outside parties. ITEM 3. LEGAL PROCEEDINGS On November 9, 1998, Paul Voet, who is an Executive Vice President and a director of the Company, filed a lawsuit against the Company in the Court of Common Pleas, Hamilton County, Ohio, in connection with the Company's sale of its majority owned subsidiary, National Sanitary Supply Company, alleging that the Company breached his employment agreement due to a material reduction in his title, authority or responsibility. Mr. Voet is seeking a money judgment in the principal amount of $6 million. The Company disputes these claims and believes that the disposition of this matter will not have a material effect on the financial position of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. 8 11 EXECUTIVE OFFICERS OF THE COMPANY

Name Age Office First Elected ----------------- --- ------------------------------------ ------------- Edward L. Hutton 81 Chairman and Chief Executive Officer November 3, 1993 (1) Kevin J. McNamara 47 President August 2, 1994 (2) Paul C. Voet 54 Executive Vice President May 20, 1991 (3) Timothy S. O'Toole 45 Executive Vice President and May 18, 1992 (4) Treasurer Spencer S. Lee 45 Executive Vice President May 15, 2000 (5) Sandra E. Laney 57 Senior Vice President and Chief November 3, 1993 (6) Administrative Officer Arthur V. Tucker, 51 Vice President and Controller May 20, 1991 (7) 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. (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) Mr. Lee is an Executive Vice President of the Company and has held this position since May 15, 2000. Mr. Lee is also Chairman and Chief Executive Officer of Roto-Rooter, Inc., a wholly owned subsidiary of the Company ("Roto-Rooter"), and has held this position since January 1999. Previously, he served as a Senior Vice President of Roto-Rooter Services Company from May 1997 to January 1999. From February 1985 to May 1997, he served as Vice President of Roto-Rooter Services Company. (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, 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. 9 12 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 21, 2001. 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 1999 and 2000 are set forth below.

Closing ------- Dividends Paid High Low Per Share ---------------------------------------------------------------- 2000 ---- First Quarter $31.44 $27.00 $.10 Second Quarter 31.19 27.50 .10 Third Quarter 32.31 27.75 .10 Fourth Quarter 36.56 30.94 .10 1999 ---- First Quarter $33 13/16 $25 3/4 $.53 Second Quarter 33 7/8 26 5/16 .53 Third Quarter 33 7/16 29 1/4 .53 Fourth Quarter 30 1/8 24 15/16 .53

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 23, 2001, there were approximately 3,783 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, 2000 is set forth on pages 28 and 29 of the 2000 Annual Report to Stockholders and is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 10 13 The information called for by this Item is set forth on pages 32 through 35 of the 2000 Annual Report to Stockholders and is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Company has an insignificant number of financial instruments held for trading purposes and does not hedge any of its market risks with derivative instruments. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The consolidated financial statements, together with the report thereon of PricewaterhouseCoopers LLP dated February 5, 2001, appearing on pages 11 through 27 of the 2000 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 Sandra E. Laney Rick L. Arquilla Spencer S. Lee James H. Devlin Kevin J. McNamara Charles H. Erhart, Jr. John M. Mount Joel F. Gemunder Timothy S. O'Toole Patrick P. Grace Donald E. Saunders Thomas C. Hutton Paul C. Voet Walter L. Krebs 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 2001 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 2001 Proxy Statement, which is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. 11 14 Information required under this Item is set forth in the Company's 2001 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 2001 Proxy Statement, which is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K. EXHIBITS 3.1 Certificate of Incorporation of Chemed Corporation.* 3.2 By-Laws of Chemed Corporation.* 4.1. Offer to Exchange Chemed Capital Trust Convertible Preferred Securities for Shares of Capital Stock, dated as of December 23, 1999.* 4.2 Chemed Capital Trust, dated as of December 23, 1999.* 4.3 Amended and Restated Declaration of Trust of Chemed Capital Trust, dated February 7, 2000.* 10.1 Agreement and Plan of Merger among Diversey U.S. Holdings, Inc., D. C. Acquisition Inc., Chemed Corporation and DuBois Chemicals, Inc., dated as of February 25, 1991.* 10.2 Stock Purchase Agreement between Omnicare, Inc. and Chemed Corporation, dated as of August 5, 1992.* 10.3 Agreement and Plan of Merger among National Sanitary Supply Company, Unisource Worldwide, Inc. and TFBD, Inc. dated as of August 11, 1997.* 10.4 1981 Stock Incentive Plan, as amended through May 20, 1991.*,** 10.5 1983 Incentive Stock Option Plan, as amended through May 20, 1991.*,** 10.6 1986 Stock Incentive Plan, as amended through May 20, 1991.*,** 10.7 1988 Stock Incentive Plan, as amended through May 20, 1991.*,** 10.8 1993 Stock Incentive Plan.*,** 10.9 1995 Stock Incentive Plan.*,** 10.10 1997 Stock Incentive Plan.*,** 10.11 1999 Stock Incentive Plan.*,** 12 15 10.12 1999 Long-Term Employee Incentive Plan.* 10.13 Employment Contracts with Executives.*,** 10.14 Amendment to Employment Contracts with Executives.** 10.15 Amendment No. 3 to Employment Contract with James H. Devlin.*,** 10.16 Employment Contracts with John M. Mount and Walter L. Krebs.*,** 10.18 Amendment No. 7 to Employment Agreement with Edward L. Hutton.*,** 10.19 Excess Benefits Plan, as restated and amended, effective April 1, 1997.*,** 10.20 Non-Employee Directors' Deferred Compensation Plan.*,** 10.21 Chemed/Roto-Rooter Savings & Retirement Plan, effective January 1, 1999.*,** 10.22 Stock Purchase Agreement by and Among Banta Corporation, Chemed Corporation and OCR Holding Company as of September 24, 1997.* 10.25 Directors Emeriti Plan.*,** 10.26 Second Amendment to Split Dollar Agreement with Executives.*,** 10.27 Split Dollar Agreement - II with James H. Devlin.*,** 10.28 Split Dollar Agreement with Sandra E. Laney.*,** 10.29 Split Dollar Agreement with Executives.*,** 10.30 Split Dollar Agreement with Edward L. Hutton.*,** 10.31 Split Dollar Agreement with Paul C. Voet.*,** 10.32 Split Dollar Agreement with John M. Mount.*,** 10.33 Split Dollar Agreement with Spencer S. Lee.*,** 10.34 Split Dollar Agreement with Rick L. Arquilla*,** 10.35 Form of Promissory Note under the Executive Stock Purchase Plan.*,** 10.36 Promissory Note under the Executive Stock Purchase Plan with Kevin J. McNamara** 10.37 Roto-Rooter Deferred Compensation Plan No. 1, as amended January 1,1998** 10.38 Roto-Rooter Deferred Compensation Plan No. 2** 10.39 2000 Stock Incentive Plan of Cadre Computer Resources, Inc.** 10.40 Promissory Note under Cadre Repurchase Agreement with Edward L. Hutton** 13 16 10.41 Promissory Note under Cadre Repurchase Agreement with Kevin J. McNamara** 10.42 Promissory Note under Cadre Repurchase Agreement with Sandra E. Laney** 13. 2000 Annual Report to Stockholders. 21. Subsidiaries of Chemed Corporation. 23. Consent of Independent Accountants. 24. Powers of Attorney. * This exhibit is being filed by means of incorporation by reference (see Index to Exhibits on page E-1). Each other exhibit is being filed with this Annual Report on Form 10-K. ** Management contract or compensatory plan or arrangement. FINANCIAL STATEMENT SCHEDULE See Index to Financial Statements and Financial Statement Schedule on page S-1. REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended December 31, 2000. 14 17 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CHEMED CORPORATION March 28, 2001 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,Jr. Vice President and | March 28, 2001 ----------------------- Controller | Arthur V. Tucker, Jr. (Principal Accounting Officer) | | ---- | Rick L. Arquilla* Sandra E. Laney* | | James H. Devlin* Spencer S. Lee* | | Charles H. Erhart, Jr.* Kevin J. McNamara* | | Joel F. Gemunder John M. Mount* | --Directors | Patrick P. Grace Donald E. Saunders* | | Thomas C. Hutton* Paul C. Voet* | | Walter L. Krebs* George J. Walsh III* | | | | | | ---- ---------

* Naomi C. Dallob by signing her name hereto signs this document on behalf of each of the persons indicated above pursuant to powers of attorney duly executed by such persons and filed with the Securities and Exchange Commission. March 28, 2001 /s/ Naomi C. Dallob ----------------------- --------------------------------------- Date Naomi C. Dallob (Attorney-in-Fact) 15 18 CHEMED CORPORATION AND SUBSIDIARY COMPANIES INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE 1998, 1999 AND 2000 CHEMED CORPORATION CONSOLIDATED FINANCIAL PAGE(S) STATEMENTS AND FINANCIAL STATEMENT SCHEDULE Report of Independent Accountants............................... 11* Statement of Accounting Policies.................................12* Consolidated Statement of Income.................................13* Consolidated Balance Sheet.......................................14* Consolidated Statement of Cash Flows.............................15* Consolidated Statement of Changes in Stockholders' Equity........16* Consolidated Statement of Comprehensive Income...................16* Notes to Financial Statements....................................17-25* Segment Data.....................................................26-27* Report of Independent Accountants on Financial Statement Schedule.......................................................S-2 Schedule II -- Valuation and Qualifying Accounts.................S-3-S-4 * Indicates page numbers in Chemed Corporation 2000 Annual Report to Stockholders. --------------- The consolidated financial statements of Chemed Corporation listed above, appearing in the 2000 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 19 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, 2001 appearing on page 11 of the 2000 Annual Report to Stockholders of Chemed Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in Item 14 of this Form 10-K. In our opinion, the Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. /s/ PricewaterhouseCoopers LLP ------------------------------ PRICEWATERHOUSECOOPERS LLP Cincinnati, Ohio February 5, 2001 S-2 20

SCHEDULE II CHEMED CORPORATION AND SUBSIDIARY COMPANIES VALUATION AND QUALIFYING ACCOUNTS (in thousands) Dr/(Cr) Additions ------------------------------------- (Charged) (Charged) Applicable Credited Credited to Balance at to Costs to Other Companies Balance Beginning and Accounts Acquired Deductions at End Description of Period Expenses (a) in Period (b) of Period -------------------------------------------------------------------------------------------------------------- Allowances for doubtful accounts (c) For the year 2000......... $ (4,554) $(2,342) $ - $ - $ 1,759 $ (5,137) ========= ======== ======== ========= ======= ========= For the year 1999......... $ (3,601) $(2,235) $ - $ (25) $ 1,307 $ (4,554) ========= ======== ======== ========= ======= ========= For the year 1998......... $ (2,626) $(2,452) $ - $ (15) $ 1,492 $ (3,601) ========= ======== ======== ========= ======== ========= Allowances for doubtful accounts - notes receivable (d) For the year 2000......... $ (23) $ - $ - $ - $ - $ (23) ========= ======== ======== ========= ======= ========= For the year 1999......... $ (23) $ - $ - $ - $ - $ (23) ========= ======== ======== ========= ======= ========= For the year 1998......... $ (23) $ - $ - $ - $ - $ (23) ========= ======== ======== ========= ======= =========

S-3 21

(Charged) (Charged) Applicable Credited Credited to Balance at to Costs to Other Companies Balance Beginning and Accounts Acquired Deductions at End Description of Period Expenses (a) in Period (b) of Period -------------------------------------------------------------------------------------------------------------- Valuation allowance for available-for-sale securities For the year 2000......... $ 5,220 $ - $ 3,159 $ - $ (3,399) $ 4,980 ========= ======== ========= ========= ========= ======== For the year 1999......... $ 20,406 $ - $(10,525) $ - $ (4,661) $ 5,220 ========= ======== ========= ========= ========= ======== For the year 1998......... $ 30,705 $ - $ 2,290 $ - $(12,589) $ 20,406 ========= ======== ========= ========= ========= ========

------------------------- (a) With respect to the valuation allowance for available-for-sale securities, amounts charged or credited to other accounts comprise net unrealized holding gains arising during the period. (b) With respect to allowances for doubtful accounts, deductions include accounts considered uncollectible or written off, payments, companies divested, etc. With respect to valuation allowance for available-for-sale securities, deductions comprise net realized gains on sales of investments. (c) Classified in consolidated balance sheet as a reduction of accounts receivable. (d) Classified in consolidated balance sheet as a reduction of other assets. S-4 22 INDEX TO EXHIBITS

Page Number or Incorporation by Reference -------------------------- Exhibit File No. and Previous Number Filing Date Exhibit No. ------- ------------ ----------- 3.1 Certificate of Incorporation of Form S-3 4.1 Chemed Corporation Reg. No. 33-44177 11/26/91 3.2 By-Laws of Chemed Corporation Form 10-K 2 3/28/89 4.1 Offer to Exchange Chemed Capital Form T-3 T3E.1 Trust Convertible Trust Preferred 12/23/99 Securities for Shares of Capital Stock, dated as of 12/23/99 4.2 Chemed Capital Trust, dated Schedule 13E-4 (b)(1) as of 12/23/99 12/23/99 4.3 Amended and Restated Schedule 13E-4A (b)(2) Declaration of Trust of Chemed 2/7/00, Amendment Capital Trust, dated February No. 2 7, 2000 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 10.3 Agreement and Plan of Merger Form 8-K 1 among National Sanitary 10/13/97 Supply Company, Unisource Worldwide, Inc. and TFBD, Inc. 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

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Page Number or Incorporation by Reference -------------------------- Exhibit File No. and Previous Number Filing Date Exhibit No. ------- ------------ ----------- 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 1995 Stock Incentive Plan Form 10-K 10.14 3/28/96 10.10 1997 Stock Incentive Plan Form 10-K 10.10 3/27/98 10.11 1999 Stock Incentive Plan Form 10-K 10.11 3/29/00 10.12 1999 Long-Term Employee Form 10-K 10.12 Incentive Plan 3/29/00 10.13 Employment Contracts with Form 10-K 10.12 Executives 3/28/89 10.14 Amendment to Employment Contracts with Executives * 10.15 Amendment No. 3 to Employment Form 10-K 10.22 Contract with James H. Devlin 3/27/98 10.16 Employment Contracts with John Form 10-K 10.23 M. Mount and Walter L. Krebs 3/27/98 10.18 Amendment No. 7 to Employment Form 10-K 10.18 Agreement with Edward L. Hutton 3/27/97 10.19 Excess Benefits Plan, as restated Form 10-K 10.9 and amended, effective April 1, 3/27/98 1997 10.20 Non-Employee Directors' Deferred Form 10-K 10.10 Compensation Plan 3/24/88 10.21 Chemed/Roto-Rooter Savings & Form 10-K 10.25 Retirement Plan, effective 3/25/99 January 1, 1999

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Page Number or Incorporation by Reference -------------------------- Exhibit File No. and Previous Number Filing Date Exhibit No. ------- ------------ ----------- 10.22 Stock Purchase Plan by and Form 8-0K 10.21 among Banta Corporation, Chemed 10/13/97 Corporation and OCR Holding Company 10.25 Directors Emeriti Plan Form 10-Q 10.11 5/12/88 10.26 Second Amendment to Split Dollar Form 10-K 10.26 Agreement with Executives 3/29/00 10.27 Split Dollar Agreement - II Form 10-K 10.27 with James H. Devlin 3/25/99 10.28 Split Dollar Agreement with Form 10-K 10.27 Sandra E. Laney 3/25/99 10.29 Split Dollar Agreements Form 10-K 10.15 with Executives 3/28/96 10.30 Split Dollar Agreement with Form 10-K 10.16 Edward L. Hutton 3/28/96 10.31 Split Dollar Agreement with Form 10-K 10.17 Paul C. Voet 3/28/96 10.32 Split Dollar Agreement with Form 10-K 10.32 John M. Mount 3/29/00 10.33 Split Dollar Agreement with Form 10-K 10.33 Spencer S. Lee 3/29/00 10.34 Split Dollar Agreement with Form 10-K 10.34 Rick L. Arquilla 3/29/00 10.35 Form of Promissory Note under Form 10-K 10.35 the Executive Stock Purchase Plan 3/29/00 10.36 Form of Promissory Note under * the Executive Stock Purchase Plan with Kevin J. McNamara 10.37 Roto-Rooter Deferred Compensation * Plan No. 1, as amended January 1, 1998

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Page Number or Incorporation by Reference -------------------------- Exhibit File No. and Previous Number Filing Date Exhibit No. ------- ------------ ----------- 10.38 Roto-Rooter Deferred Compensation * Plan No. 2 10.39 2000 Stock Incentive Plan * of Cadre Computer Resources, Inc. 10.40 Form of Promissory Note under * Cadre Repurchase Agreement with Edward L. Hutton 10.41 Form of Promissory Note under * Cadre Repurchase Agreement with Kevin J. McNamara 10.42 Form of Promissory Note under * Cadre Repurchase Agreement with Sandra E. Laney 13 2000 Annual Report to Stockholders * 21 Subsidiaries of Chemed Corporation * 23 Consent of Independent Accountants * 24 Powers of Attorney *

------------------------------------ * Filed herewith. 4