X |
Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended June 30, 2010
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Delaware
|
31-0791746
|
(State or other jurisdiction of incorporation or
organization)
|
(IRS Employer Identification No.)
|
2600 Chemed Center, 255 E. Fifth Street, Cincinnati, Ohio
|
45202
|
|
(Address of principal executive offices)
|
(Zip code)
|
Yes
|
X
|
No
|
Yes
|
X
|
No
|
Large accelerated filer
|
X
|
Accelerated filer
|
Non-accelerated filer
|
Smaller reporting company
|
Yes
|
No
|
X
|
Class
|
Amount
|
Date
|
Capital Stock $1 Par Value
|
22,787,983 Shares
|
June 30, 2010
|
Page No.
|
|||||
3 | |||||
4 | |||||
5 | |||||
6 | |||||
16 | |||||
30 | |||||
30 | |||||
30 | |||||
30 | |||||
31 | |||||
31 | |||||
31 | |||||
31 | |||||
31 |
UNAUDITED CONSOLIDATED BALANCE SHEET
|
||||||||
(in thousands, except share and per share data)
|
||||||||
June 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 109,080 | $ | 112,416 | ||||
Accounts receivable less allowances of $13,808 (2009 - $12,595)
|
101,736 | 53,461 | ||||||
Inventories
|
7,978 | 7,543 | ||||||
Current deferred income taxes
|
14,453 | 13,701 | ||||||
Prepaid income taxes
|
351 | 749 | ||||||
Prepaid expenses
|
10,423 | 10,388 | ||||||
Total current assets
|
244,021 | 198,258 | ||||||
Investments of deferred compensation plans
|
26,282 | 24,158 | ||||||
Properties and equipment, at cost, less accumulated depreciation of $123,209 (2009 - $115,181)
|
78,437 | 75,358 | ||||||
Identifiable intangible assets less accumulated amortization of $26,582 (2009 - $25,349)
|
56,620 | 57,920 | ||||||
Goodwill
|
450,105 | 450,042 | ||||||
Other assets
|
10,498 | 13,734 | ||||||
Total Assets
|
$ | 865,963 | $ | 819,470 | ||||
LIABILITIES
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$ | 49,131 | $ | 52,071 | ||||
Income taxes
|
4,783 | 63 | ||||||
Accrued insurance
|
34,729 | 35,161 | ||||||
Accrued compensation
|
41,613 | 34,662 | ||||||
Other current liabilities
|
11,669 | 14,127 | ||||||
Total current liabilities
|
141,925 | 136,084 | ||||||
Deferred income taxes
|
24,353 | 25,924 | ||||||
Long-term debt
|
155,608 | 152,127 | ||||||
Deferred compensation liabilities
|
25,374 | 23,637 | ||||||
Other liabilities
|
5,736 | 4,536 | ||||||
Total Liabilities
|
352,996 | 342,308 | ||||||
STOCKHOLDERS' EQUITY
|
||||||||
Capital stock - authorized 80,000,000 shares $1 par; issued 30,202,452 shares (2009 - 29,890,628 shares)
|
30,202 | 29,891 | ||||||
Paid-in capital
|
351,672 | 335,890 | ||||||
Retained earnings
|
436,098 | 403,366 | ||||||
Treasury stock - 7,517,328 shares (2009 - 7,275,070 shares), at cost
|
(307,003 | ) | (293,941 | ) | ||||
Deferred compensation payable in Company stock
|
1,998 | 1,956 | ||||||
Total Stockholders' Equity
|
512,967 | 477,162 | ||||||
Total Liabilities and Stockholders' Equity
|
$ | 865,963 | $ | 819,470 | ||||
See accompanying notes to unaudited financial statements.
|
UNAUDITED CONSOLIDATED STATEMENT OF INCOME
|
||||||||||||||||
(in thousands, except per share data)
|
||||||||||||||||
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Service revenues and sales
|
$ | 314,995 | $ | 295,255 | $ | 623,808 | $ | 590,193 | ||||||||
Cost of services provided and goods sold (excluding depreciation)
|
223,702 | 207,337 | 442,839 | 414,350 | ||||||||||||
Selling, general and administrative expenses
|
49,956 | 49,580 | 98,494 | 95,373 | ||||||||||||
Depreciation
|
6,194 | 5,338 | 11,663 | 10,663 | ||||||||||||
Amortization
|
1,287 | 1,618 | 2,511 | 3,154 | ||||||||||||
Other operating expenses
|
- | 3,444 | - | 3,989 | ||||||||||||
Total costs and expenses
|
281,139 | 267,317 | 555,507 | 527,529 | ||||||||||||
Income from operations
|
33,856 | 27,938 | 68,301 | 62,664 | ||||||||||||
Interest expense
|
(2,999 | ) | (3,142 | ) | (5,951 | ) | (5,986 | ) | ||||||||
Other income--net
|
10 | 3,358 | 196 | 3,082 | ||||||||||||
Income before income taxes
|
30,867 | 28,154 | 62,546 | 59,760 | ||||||||||||
Income taxes
|
(12,012 | ) | (10,904 | ) | (24,333 | ) | (23,171 | ) | ||||||||
Net income
|
$ | 18,855 | $ | 17,250 | $ | 38,213 | $ | 36,589 | ||||||||
Earnings Per Share
|
||||||||||||||||
Net income
|
$ | 0.83 | $ | 0.77 | $ | 1.69 | $ | 1.63 | ||||||||
Average number of shares outstanding
|
22,644 | 22,417 | 22,608 | 22,406 | ||||||||||||
Diluted Earnings Per Share
|
||||||||||||||||
Net income
|
$ | 0.82 | $ | 0.76 | $ | 1.66 | $ | 1.61 | ||||||||
Average number of shares outstanding
|
23,080 | 22,672 | 23,012 | 22,660 | ||||||||||||
Cash Dividends Per Share
|
$ | 0.12 | $ | 0.06 | $ | 0.24 | $ | 0.12 | ||||||||
See accompanying notes to unaudited financial statements.
|
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
|
||||||||
(in thousands)
|
||||||||
Six Months Ended
|
||||||||
June 30,
|
||||||||
2010
|
2009
|
|||||||
Cash Flows from Operating Activities
|
||||||||
Net income
|
$ | 38,213 | $ | 36,589 | ||||
Adjustments to reconcile net income to net cash provided
|
||||||||
by operating activities:
|
||||||||
Depreciation and amortization
|
14,174 | 13,817 | ||||||
Provision for uncollectible accounts receivable
|
4,863 | 5,459 | ||||||
Stock option expense
|
4,397 | 4,485 | ||||||
Amortization of discount on convertible notes
|
3,481 | 3,253 | ||||||
Provision for deferred income taxes
|
(2,364 | ) | 317 | |||||
Noncash long-term incentive compensation
|
1,580 | - | ||||||
Changes in operating assets and liabilities, excluding
|
||||||||
amounts acquired in business combinations:
|
||||||||
Increase in accounts receivable
|
(53,169 | ) | (11,575 | ) | ||||
Increase in inventories
|
(435 | ) | (668 | ) | ||||
Decrease/(increase) in prepaid expenses
|
(35 | ) | 902 | |||||
Increase/(decrease) in accounts payable and other current liabilities
|
3,035 | (4,005 | ) | |||||
Increase/(decrease) in income taxes
|
6,902 | (4,267 | ) | |||||
Decrease/(increase) in other assets
|
(1,935 | ) | 2,264 | |||||
Increase/(decrease) in other liabilities
|
2,938 | (3,481 | ) | |||||
Excess tax benefit on share-based compensation
|
(1,802 | ) | (313 | ) | ||||
Other sources
|
434 | 343 | ||||||
Net cash provided by operating activities
|
20,277 | 43,120 | ||||||
Cash Flows from Investing Activities
|
||||||||
Capital expenditures
|
(11,942 | ) | (8,136 | ) | ||||
Proceeds from sales of property and equipment
|
89 | 1,496 | ||||||
Business combinations, net of cash acquired
|
(30 | ) | (1,859 | ) | ||||
Other uses
|
(286 | ) | (475 | ) | ||||
Net cash used by investing activities
|
(12,169 | ) | (8,974 | ) | ||||
Cash Flows from Financing Activities
|
||||||||
Purchases of treasury stock
|
(10,125 | ) | (526 | ) | ||||
Dividends paid
|
(5,481 | ) | (2,711 | ) | ||||
Proceeds from issuance of capital stock
|
3,475 | 68 | ||||||
Excess tax benefit on share-based compensation
|
1,802 | 313 | ||||||
Decrease in cash overdrafts payable
|
(1,314 | ) | (781 | ) | ||||
Repayment of long-term debt
|
- | (9,599 | ) | |||||
Net decrease in revolving line of credit
|
- | (8,200 | ) | |||||
Other sources
|
199 | 294 | ||||||
Net cash used by financing activities
|
(11,444 | ) | (21,142 | ) | ||||
(Decrease)/Increase in Cash and Cash Equivalents
|
(3,336 | ) | 13,004 | |||||
Cash and cash equivalents at beginning of year
|
112,416 | 3,628 | ||||||
Cash and cash equivalents at end of period
|
$ | 109,080 | $ | 16,632 | ||||
See accompanying notes to unaudited financial statements.
|
Three months ended
|
Six months ended
|
||||||||||||||||
June 30,
|
June 30,
|
||||||||||||||||
2010
|
2009
|
2010
|
2009
|
||||||||||||||
Service Revenues and Sales
|
|
|
|||||||||||||||
VITAS
|
$ | 226,638 | $ | 211,303 | $ | 449,578 | $ | 419,720 | |||||||||
Roto-Rooter
|
88,357 | 83,952 | 174,230 | 170,473 | |||||||||||||
Total
|
$ | 314,995 | $ | 295,255 | $ | 623,808 | $ | 590,193 | |||||||||
After-tax Earnings
|
|||||||||||||||||
VITAS
|
$ | 18,281 | $ | 17,122 | $ | 36,719 | $ | 34,292 | |||||||||
Roto-Rooter
|
8,860 | 8,798 | 16,673 | 17,027 | |||||||||||||
Total
|
27,141 | 25,920 | 53,392 | 51,319 | |||||||||||||
Corporate
|
(8,286 | ) | (8,670 | ) | (15,179 | ) | (14,730 | ) | |||||||||
Net income
|
$ | 18,855 | $ | 17,250 | $ | 38,213 | $ | 36,589 |
For the Three Months Ended
June 30,
|
Net Income
|
Shares
|
Earnings per
Share
|
||||||||||
2010
|
|||||||||||||
Earnings
|
$ | 18,855 | 22,644 | $ | 0.83 | ||||||||
Dilutive stock options
|
- | 348 | |||||||||||
Nonvested stock awards
|
- | 88 | |||||||||||
Diluted earnings
|
$ | 18,855 | 23,080 | $ | 0.82 | ||||||||
2009
|
|||||||||||||
Earnings
|
$ | 17,250 | 22,417 | $ | 0.77 | ||||||||
Dilutive stock options
|
- | 214 | |||||||||||
Nonvested stock awards
|
- | 41 | |||||||||||
Diluted earnings
|
$ | 17,250 | 22,672 | $ | 0.76 |
For the Six Months Ended
June 30,
|
Net Income
|
Shares
|
Earnings per
Share
|
|||||||||
2010
|
||||||||||||
Earnings
|
$ | 38,213 | 22,608 | $ | 1.69 | |||||||
Dilutive stock options
|
- | 319 | ||||||||||
Nonvested stock awards
|
- | 85 | ||||||||||
Diluted earnings
|
$ | 38,213 | 23,012 | $ | 1.66 | |||||||
2009
|
||||||||||||
Earnings
|
$ | 36,589 | 22,406 | $ | 1.63 | |||||||
Dilutive stock options
|
- | 216 | ||||||||||
Nonvested stock awards
|
- | 38 | ||||||||||
Diluted earnings
|
$ | 36,589 | 22,660 | $ | 1.61 |
Shares
|
Incremental | |||||||||||||||||||||
Underlying
|
Total Treasury
|
Shares Due
|
Shares Issued/
|
|||||||||||||||||||
1.875%
|
Method
|
to the Company
|
Received by the
|
|||||||||||||||||||
Share
|
Convertible
|
Warrant
|
Incremental
|
under Notes
|
Company upon
|
|||||||||||||||||
Price
|
Notes
|
Shares
|
Shares (a)
|
Hedges
|
Conversion (b)
|
|||||||||||||||||
$ | 80.73 | 11,398 | - | 11,398 | (12,194 | ) | (796 | ) | ||||||||||||||
$ | 90.73 | 266,091 | - | 266,091 | (284,657 | ) | (18,566 | ) | ||||||||||||||
$ | 100.73 | 470,215 | - | 470,215 | (503,022 | ) | (32,807 | ) | ||||||||||||||
$ | 110.73 | 637,470 | 118,682 | 756,152 | (681,947 | ) | 74,205 | |||||||||||||||
$ | 120.73 | 777,018 | 314,621 | 1,091,639 | (831,231 | ) | 260,408 | |||||||||||||||
$ | 130.73 | 895,216 | 480,584 | 1,375,800 | (957,676 | ) | 418,124 |
a)
|
Represents the number of incremental shares that must be included in the calculation of fully diluted shares under U.S. GAAP.
|
b)
|
Represents the number of incremental shares to be issued by the Company upon conversion of the 1.875% Convertible Notes, assuming concurrent settlement of the note hedges and warrants.
|
June 30,
2010
|
December 31,
2009
|
|||||||
Principal amount of convertible debentures
|
$ | 186,956 | $ | 186,956 | ||||
Unamortized debt discount
|
(31,348 | ) | (34,829 | ) | ||||
Carrying amount of convertible debentures
|
$ | 155,608 | $ | 152,127 | ||||
Additional paid in capital (net of tax)
|
$ | 31,310 | $ | 31,310 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Cash interest expense
|
$ | 1,083 | $ | 1,346 | $ | 2,153 | $ | 2,424 | ||||||||
Non-cash amortization of debt discount
|
1,755 | 1,640 | 3,480 | 3,253 | ||||||||||||
Amortization of debt costs
|
161 | 156 | 318 | 309 | ||||||||||||
Total interest expense
|
$ | 2,999 | $ | 3,142 | $ | 5,951 | $ | 5,986 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Market value gains/(losses) on assets held in
|
||||||||||||||||
deferred compensation trust
|
$ | (83 | ) | $ | 3,199 | $ | 105 | $ | 1,585 | |||||||
Gain on settlement of company-owned life insurance
|
- | - | - | 1,211 | ||||||||||||
Loss on disposal of property and equipment
|
(58 | ) | (78 | ) | (152 | ) | (54 | ) | ||||||||
Interest income
|
150 | 207 | 225 | 289 | ||||||||||||
Other - net
|
1 | 30 | 18 | 51 | ||||||||||||
Total other income
|
$ | 10 | $ | 3,358 | $ | 196 | $ | 3,082 |
Fair Value Measure
|
||||||||||||||||
Carrying Value
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
|
Significant
Other
Observable
Inputs (Level 2)
|
Significant
Unobservable
Inputs (Level 3)
|
|||||||||||||
Mutual fund investments of deferred
compensation plans held in trust
|
$ | 26,282 | $ | 26,282 | $ | - | $ | - | ||||||||
Long-term debt
|
155,608 | 172,701 | - | - |
16. Guarantor Subsidiaries
|
||||||||||||||||||||
Our 1.875% Notes are fully and unconditionally guaranteed on an unsecured, jointly and severally liable basis by certain of our 100% owned subsidiaries. The following unaudited, condensed, consolidating financial data presents the composition of the parent company (Chemed), the guarantor subsidiaries and the non-guarantor subsidiaries as of June 30, 2010 and December 31, 2009 for the balance sheet, the three and six months ended June 30, 2010 and June 30, 2009 for the income statement and the six months ended June 30, 2010 and June 30, 2009 for the statement of cash flows (dollars in thousands):
|
||||||||||||||||||||
June 30, 2010
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
|||||||||||||||||
|
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||||||
ASSETS
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 105,276 | $ | (1,238 | ) | $ | 5,042 | $ | - | $ | 109,080 | |||||||||
Accounts receivable, less allowances
|
560 | 100,754 | 422 | - | 101,736 | |||||||||||||||
Intercompany receivables
|
- | 149,823 | - | (149,823 | ) | - | ||||||||||||||
Inventories
|
- | 7,272 | 706 | - | 7,978 | |||||||||||||||
Current deferred income taxes
|
(962 | ) | 15,312 | 103 | - | 14,453 | ||||||||||||||
Prepaid income taxes
|
3,424 | (2,939 | ) | (134 | ) | - | 351 | |||||||||||||
Prepaid expenses
|
1,047 | 9,326 | 50 | - | 10,423 | |||||||||||||||
Total current assets
|
109,345 | 278,310 | 6,189 | (149,823 | ) | 244,021 | ||||||||||||||
Investments of deferred compensation plans
|
- | - | 26,282 | - | 26,282 | |||||||||||||||
Properties and equipment, at cost, less accumulated depreciation
|
12,987 | 63,209 | 2,241 | - | 78,437 | |||||||||||||||
Identifiable intangible assets less accumulated amortization
|
- | 56,620 | - | - | 56,620 | |||||||||||||||
Goodwill
|
- | 445,644 | 4,461 | - | 450,105 | |||||||||||||||
Other assets
|
6,373 | 2,384 | 1,741 | - | 10,498 | |||||||||||||||
Investments in subsidiaries
|
677,384 | 17,356 | - | (694,740 | ) | - | ||||||||||||||
Total assets
|
$ | 806,089 | $ | 863,523 | $ | 40,914 | $ | (844,563 | ) | $ | 865,963 | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||||||||||||||
Accounts payable
|
$ | (970 | ) | $ | 49,646 | $ | 455 | $ | - | $ | 49,131 | |||||||||
Intercompany payables
|
143,947 | - | 5,876 | (149,823 | ) | - | ||||||||||||||
Income taxes
|
(969 | ) | 6,199 | (447 | ) | - | 4,783 | |||||||||||||
Accrued insurance
|
677 | 34,052 | - | - | 34,729 | |||||||||||||||
Accrued compensation
|
2,063 | 39,026 | 524 | - | 41,613 | |||||||||||||||
Other current liabilities
|
1,215 | 10,346 | 108 | - | 11,669 | |||||||||||||||
Total current liabilities
|
145,963 | 139,269 | 6,516 | (149,823 | ) | 141,925 | ||||||||||||||
Deferred income taxes
|
(11,417 | ) | 43,452 | (7,682 | ) | - | 24,353 | |||||||||||||
Long-term debt
|
155,608 | - | - | - | 155,608 | |||||||||||||||
Deferred compensation liabilities
|
- | - | 25,374 | - | 25,374 | |||||||||||||||
Other liabilities
|
2,968 | 2,327 | 441 | - | 5,736 | |||||||||||||||
Stockholders' equity
|
512,967 | 678,475 | 16,265 | (694,740 | ) | 512,967 | ||||||||||||||
Total liabilities and stockholders' equity
|
$ | 806,089 | $ | 863,523 | $ | 40,914 | $ | (844,563 | ) | $ | 865,963 | |||||||||
December 31, 2009
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
|||||||||||||||||
|
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||||||
ASSETS
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 109,331 | $ | (1,221 | ) | $ | 4,306 | $ | - | $ | 112,416 | |||||||||
Accounts receivable, less allowances
|
618 | 52,303 | 540 | - | 53,461 | |||||||||||||||
Intercompany receivables
|
- | 149,888 | - | (149,888 | ) | - | ||||||||||||||
Inventories
|
- | 7,009 | 534 | - | 7,543 | |||||||||||||||
Current deferred income taxes
|
(378 | ) | 14,048 | 31 | - | 13,701 | ||||||||||||||
Prepaid expenses
|
(2,457 | ) | 13,706 | (112 | ) | - | 11,137 | |||||||||||||
Total current assets
|
107,114 | 235,733 | 5,299 | (149,888 | ) | 198,258 | ||||||||||||||
Investments of deferred compensation plans
|
- | - | 24,158 | - | 24,158 | |||||||||||||||
Properties and equipment, at cost, less accumulated depreciation
|
10,309 | 62,912 | 2,137 | - | 75,358 | |||||||||||||||
Identifiable intangible assets less accumulated amortization
|
- | 57,920 | - | - | 57,920 | |||||||||||||||
Goodwill
|
- | 445,662 | 4,380 | - | 450,042 | |||||||||||||||
Other assets
|
11,190 | 2,232 | 312 | - | 13,734 | |||||||||||||||
Investments in subsidiaries
|
643,572 | 15,523 | - | (659,095 | ) | - | ||||||||||||||
Total assets
|
$ | 772,185 | $ | 819,982 | $ | 36,286 | $ | (808,983 | ) | $ | 819,470 | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||||||||||||||
Accounts payable
|
$ | (2,411 | ) | $ | 54,084 | $ | 398 | $ | - | $ | 52,071 | |||||||||
Intercompany payables
|
147,744 | - | 2,144 | (149,888 | ) | - | ||||||||||||||
Income taxes
|
(2,145 | ) | 2,159 | 49 | - | 63 | ||||||||||||||
Accrued insurance
|
1,231 | 33,930 | - | - | 35,161 | |||||||||||||||
Accrued compensation
|
4,235 | 30,020 | 407 | - | 34,662 | |||||||||||||||
Other current liabilities
|
1,643 | 11,367 | 1,117 | - | 14,127 | |||||||||||||||
Total current liabilities
|
150,297 | 131,560 | 4,115 | (149,888 | ) | 136,084 | ||||||||||||||
Deferred income taxes
|
(10,549 | ) | 43,183 | (6,710 | ) | - | 25,924 | |||||||||||||
Long-term debt
|
152,127 | - | - | - | 152,127 | |||||||||||||||
Deferred compensation liabilities
|
- | - | 23,637 | - | 23,637 | |||||||||||||||
Other liabilities
|
3,148 | 1,388 | - | - | 4,536 | |||||||||||||||
Stockholders' equity
|
477,162 | 643,851 | 15,244 | (659,095 | ) | 477,162 | ||||||||||||||
Total liabilities and stockholders' equity
|
$ | 772,185 | $ | 819,982 | $ | 36,286 | $ | (808,983 | ) | $ | 819,470 |
For the three months ended June 30, 2010
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
|||||||||||||||||
|
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||||||
Continuing Operations
|
||||||||||||||||||||
Service revenues and sales
|
$ | - | $ | 308,825 | $ | 6,170 | $ | - | $ | 314,995 | ||||||||||
Cost of services provided and goods sold
|
- | 220,455 | 3,247 | - | 223,702 | |||||||||||||||
Selling, general and administrative expenses
|
6,508 | 42,302 | 1,146 | - | 49,956 | |||||||||||||||
Depreciation
|
244 | 5,749 | 201 | - | 6,194 | |||||||||||||||
Amortization
|
366 | 921 | - | - | 1,287 | |||||||||||||||
Total costs and expenses
|
7,118 | 269,427 | 4,594 | - | 281,139 | |||||||||||||||
Income/ (loss) from operations
|
(7,118 | ) | 39,398 | 1,576 | - | 33,856 | ||||||||||||||
Interest expense
|
(2,888 | ) | (111 | ) | - | - | (2,999 | ) | ||||||||||||
Other (expense)/income - net
|
3,670 | (3,562 | ) | (98 | ) | - | 10 | |||||||||||||
Income/ (loss) before income taxes
|
(6,336 | ) | 35,725 | 1,478 | - | 30,867 | ||||||||||||||
Income tax (provision)/ benefit
|
2,150 | (13,567 | ) | (595 | ) | - | (12,012 | ) | ||||||||||||
Equity in net income of subsidiaries
|
23,041 | 994 | - | (24,035 | ) | - | ||||||||||||||
Net income
|
$ | 18,855 | $ | 23,152 | $ | 883 | $ | (24,035 | ) | $ | 18,855 | |||||||||
For the three months ended June 30, 2009
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
|||||||||||||||||
|
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||||||
Continuing Operations
|
||||||||||||||||||||
Service revenues and sales
|
$ | - | $ | 289,382 | $ | 5,873 | $ | - | $ | 295,255 | ||||||||||
Cost of services provided and goods sold
|
- | 204,416 | 2,921 | - | 207,337 | |||||||||||||||
Selling, general and administrative expenses
|
5,783 | 39,586 | 4,211 | - | 49,580 | |||||||||||||||
Depreciation
|
148 | 5,016 | 174 | - | 5,338 | |||||||||||||||
Amortization
|
315 | 1,303 | - | - | 1,618 | |||||||||||||||
Other operating expenses
|
3,444 | - | - | - | 3,444 | |||||||||||||||
Total costs and expenses
|
9,690 | 250,321 | 7,306 | - | 267,317 | |||||||||||||||
Income/ (loss) from operations
|
(9,690 | ) | 39,061 | (1,433 | ) | - | 27,938 | |||||||||||||
Interest expense
|
(2,757 | ) | (385 | ) | - | - | (3,142 | ) | ||||||||||||
Other income - net
|
106 | 38 | 3,214 | - | 3,358 | |||||||||||||||
Income/ (loss) before income taxes
|
(12,341 | ) | 38,714 | 1,781 | - | 28,154 | ||||||||||||||
Income tax (provision)/ benefit
|
4,148 | (14,766 | ) | (286 | ) | - | (10,904 | ) | ||||||||||||
Equity in net income of subsidiaries
|
25,443 | 1,295 | - | (26,738 | ) | - | ||||||||||||||
Net income
|
$ | 17,250 | $ | 25,243 | $ | 1,495 | $ | (26,738 | ) | $ | 17,250 | |||||||||
For the six months ended June 30, 2010
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
|||||||||||||||||
|
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||||||
Continuing Operations
|
||||||||||||||||||||
Service revenues and sales
|
$ | - | $ | 611,827 | $ | 11,981 | $ | - | $ | 623,808 | ||||||||||
Cost of services provided and goods sold
|
- | 436,655 | 6,184 | - | 442,839 | |||||||||||||||
Selling, general and administrative expenses
|
12,206 | 83,619 | 2,669 | - | 98,494 | |||||||||||||||
Depreciation
|
380 | 10,882 | 401 | - | 11,663 | |||||||||||||||
Amortization
|
696 | 1,815 | - | - | 2,511 | |||||||||||||||
Total costs and expenses
|
13,282 | 532,971 | 9,254 | - | 555,507 | |||||||||||||||
Income/ (loss) from operations
|
(13,282 | ) | 78,856 | 2,727 | - | 68,301 | ||||||||||||||
Interest expense
|
(5,739 | ) | (212 | ) | - | - | (5,951 | ) | ||||||||||||
Other (expense)/income - net
|
7,291 | (7,199 | ) | 104 | - | 196 | ||||||||||||||
Income/ (loss) before income taxes
|
(11,730 | ) | 71,445 | 2,831 | - | 62,546 | ||||||||||||||
Income tax (provision)/ benefit
|
3,894 | (27,106 | ) | (1,121 | ) | - | (24,333 | ) | ||||||||||||
Equity in net income of subsidiaries
|
46,049 | 1,820 | - | (47,869 | ) | - | ||||||||||||||
Net income
|
$ | 38,213 | $ | 46,159 | $ | 1,710 | $ | (47,869 | ) | $ | 38,213 | |||||||||
For the six months ended June 30, 2009
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
|||||||||||||||||
|
Parent
|
Subsidiaries
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||||||
Continuing Operations
|
||||||||||||||||||||
Service revenues and sales
|
$ | - | $ | 578,521 | $ | 11,672 | $ | - | $ | 590,193 | ||||||||||
Cost of services provided and goods sold
|
- | 408,445 | 5,905 | - | 414,350 | |||||||||||||||
Selling, general and administrative expenses
|
11,268 | 79,978 | 4,127 | - | 95,373 | |||||||||||||||
Depreciation
|
299 | 10,023 | 341 | - | 10,663 | |||||||||||||||
Amortization
|
590 | 2,564 | - | - | 3,154 | |||||||||||||||
Other operating expenses
|
3,989 | - | - | - | 3,989 | |||||||||||||||
Total costs and expenses
|
16,146 | 501,010 | 10,373 | - | 527,529 | |||||||||||||||
Income/ (loss) from operations
|
(16,146 | ) | 77,511 | 1,299 | - | 62,664 | ||||||||||||||
Interest (expense)/income
|
(5,527 | ) | (465 | ) | 6 | - | (5,986 | ) | ||||||||||||
Other (expense)/income - net
|
490 | (239 | ) | 2,831 | - | 3,082 | ||||||||||||||
Income/ (loss) before income taxes
|
(21,183 | ) | 76,807 | 4,136 | - | 59,760 | ||||||||||||||
Income tax (provision)/ benefit
|
7,418 | (29,216 | ) | (1,373 | ) | - | (23,171 | ) | ||||||||||||
Equity in net income of subsidiaries
|
50,354 | 2,900 | - | (53,254 | ) | - | ||||||||||||||
Net income
|
$ | 36,589 | $ | 50,491 | $ | 2,763 | $ | (53,254 | ) | $ | 36,589 | |||||||||
For the six months ended June 30, 2010
|
Guarantor
|
Non-Guarantor
|
||||||||||||||
Parent
|
Subsidiaries
|
Subsidiaries
|
Consolidated
|
|||||||||||||
Cash Flow from Operating Activities:
|
||||||||||||||||
Net cash provided/(used) by operating activities
|
$ | (3,737 | ) | $ | 24,585 | $ | (571 | ) | $ | 20,277 | ||||||
Cash Flow from Investing Activities:
|
||||||||||||||||
Capital expenditures
|
(10 | ) | (11,454 | ) | (478 | ) | (11,942 | ) | ||||||||
Business combinations, net of cash acquired
|
- | 83 | 6 | 89 | ||||||||||||
Proceeds from sale of property and equipment
|
- | (30 | ) | - | (30 | ) | ||||||||||
Other uses - net
|
(89 | ) | (171 | ) | (26 | ) | (286 | ) | ||||||||
Net cash used by investing activities
|
(99 | ) | (11,572 | ) | (498 | ) | (12,169 | ) | ||||||||
Cash Flow from Financing Activities:
|
||||||||||||||||
Change in cash overdrafts payable
|
1,338 | (2,652 | ) | - | (1,314 | ) | ||||||||||
Change in intercompany accounts
|
9,830 | (11,478 | ) | 1,648 | - | |||||||||||
Dividends paid to shareholders
|
(5,481 | ) | - | - | (5,481 | ) | ||||||||||
Purchases of treasury stock
|
(10,083 | ) | - | (42 | ) | (10,125 | ) | |||||||||
Proceeds from exercise of stock options
|
3,475 | - | - | 3,475 | ||||||||||||
Realized excess tax benefit on share based compensation
|
702 | 1,100 | - | 1,802 | ||||||||||||
Other sources - net
|
- | - | 199 | 199 | ||||||||||||
Net cash provided/ (used) by financing activities
|
(219 | ) | (13,030 | ) | 1,805 | (11,444 | ) | |||||||||
Net increase/(decrease) in cash and cash equivalents
|
(4,055 | ) | (17 | ) | 736 | (3,336 | ) | |||||||||
Cash and cash equivalents at beginning of year
|
109,331 | (1,221 | ) | 4,306 | 112,416 | |||||||||||
Cash and cash equivalents at end of period
|
$ | 105,276 | $ | (1,238 | ) | $ | 5,042 | $ | 109,080 | |||||||
For the six months ended June 30, 2009
|
Guarantor
|
Non-Guarantor
|
||||||||||||||
Parent
|
Subsidiaries
|
Subsidiaries
|
Consolidated
|
|||||||||||||
Cash Flow from Operating Activities:
|
||||||||||||||||
Net cash provided/(used) by operating activities
|
$ | (7,802 | ) | $ | 49,192 | $ | 1,730 | $ | 43,120 | |||||||
Cash Flow from Investing Activities:
|
||||||||||||||||
Capital expenditures
|
(13 | ) | (7,912 | ) | (211 | ) | (8,136 | ) | ||||||||
Business combinations, net of cash acquired
|
- | (1,859 | ) | - | (1,859 | ) | ||||||||||
Proceeds from sale of property and equipment
|
1,280 | 216 | - | 1,496 | ||||||||||||
Other uses - net
|
(365 | ) | (110 | ) | - | (475 | ) | |||||||||
Net cash provided/(used) by investing activities
|
902 | (9,665 | ) | (211 | ) | (8,974 | ) | |||||||||
Cash Flow from Financing Activities:
|
||||||||||||||||
Change in cash overdrafts payable
|
1,242 | (2,023 | ) | - | (781 | ) | ||||||||||
Change in intercompany accounts
|
39,429 | (37,625 | ) | (1,804 | ) | - | ||||||||||
Dividends paid to shareholders
|
(2,711 | ) | - | - | (2,711 | ) | ||||||||||
Purchases of treasury stock
|
(526 | ) | - | - | (526 | ) | ||||||||||
Proceeds from exercise of stock options
|
68 | - | - | 68 | ||||||||||||
Realized excess tax benefit on share based compensation
|
313 | - | - | 313 | ||||||||||||
Repayment of long-term debt
|
(17,700 | ) | (99 | ) | - | (17,799 | ) | |||||||||
Other sources/(uses) - net
|
(93 | ) | 148 | 239 | 294 | |||||||||||
Net cash provided/ (used) by financing activities
|
20,022 | (39,599 | ) | (1,565 | ) | (21,142 | ) | |||||||||
Net increase/(decrease) in cash and cash equivalents
|
13,122 | (72 | ) | (46 | ) | 13,004 | ||||||||||
Cash and cash equivalents at beginning of year
|
65 | 202 | 3,361 | 3,628 | ||||||||||||
Cash and cash equivalents at end of period
|
$ | 13,187 | $ | 130 | $ | 3,315 | $ | 16,632 | ||||||||
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Service revenues and sales
|
$ | 314,995 | $ | 295,255 | $ | 623,808 | $ | 590,193 | ||||||||
Net income
|
$ | 18,855 | $ | 17,250 | $ | 38,213 | $ | 36,589 | ||||||||
Diluted EPS
|
$ | 0.82 | $ | 0.76 | $ | 1.66 | $ | 1.61 | ||||||||
Adjusted EBITDA*
|
$ | 44,887 | $ | 43,650 | $ | 87,957 | $ | 85,874 | ||||||||
Adjusted EBITDA as a % of revenue
|
14.3 | % | 14.8 | % | 14.1 | % | 14.6 | % |
•
|
A $48.3 million increase in accounts receivable primarily at VITAS, related to timing of Medicare payments and refund of overpayments from prior years.
|
•
|
A $4.7 million increase in income taxes payable, related to timing of payments.
|
Increase/(Decrease)
|
||||||||||
Amount
|
Percent
|
|||||||||
VITAS
|
||||||||||
Routine homecare
|
11,506 | 7.6 | % | |||||||
Continuous care
|
1,977 | 5.6 | % | |||||||
General inpatient
|
2,322 | 9.8 | % | |||||||
Medicare cap
|
(470 | ) | -93.1 | % | ||||||
Roto-Rooter
|
||||||||||
Plumbing
|
4,039 | 10.6 | % | |||||||
Drain cleaning
|
(245 | ) | -0.7 | % | ||||||
Other
|
611 | 5.1 | % | |||||||
Total
|
$ | 19,740 | 6.7 | % |
2010
|
2009
|
|||||||
SG&A expenses before long-term incentive
|
||||||||
compensation and the impact of market gains and
|
||||||||
losses of deferred compensation plans
|
48,240 | 46,381 | ||||||
Long-term incentive compensation
|
1,799 | - | ||||||
Impact of market value gains/(losses) on liabilities
|
||||||||
held in deferred compensation trusts
|
(83 | ) | 3,199 | |||||
Total SG&A expenses
|
$ | 49,956 | $ | 49,580 |
2010
|
2009
|
|||||||
Interest income
|
150 | 207 | ||||||
Market value gains/(losses) on assets held in deferred
|
||||||||
compensation trusts
|
(83 | ) | 3,199 | |||||
Loss on disposal of property and equipment
|
(58 | ) | (78 | ) | ||||
Other
|
1 | 30 | ||||||
Total other income
|
$ | 10 | $ | 3,358 |
2010
|
2009
|
|||||||
VITAS
|
||||||||
Costs associated with the OIG investigation
|
$ | (74 | ) | $ | (53 | ) | ||
Roto-Rooter
|
||||||||
Costs of class action lawsuit
|
(63 | ) | - | |||||
Corporate
|
||||||||
Stock option expense
|
(1,484 | ) | (1,544 | ) | ||||
Long-term incentive compensation
|
(1,124 | ) | - | |||||
Noncash interest expense related to accounting for
|
||||||||
conversion feature of the convertible notes
|
(1,068 | ) | (987 | ) | ||||
Expenses of contested proxy solicitation
|
- | (2,180 | ) | |||||
Impact of non-deductible losses and non-taxable gains on
|
||||||||
investments held in deferred compensation trusts
|
- | 20 | ||||||
Total
|
$ | (3,813 | ) | $ | (4,744 | ) |
Increase/(Decrease)
|
||||||||
Amount
|
Percent
|
|||||||
VITAS
|
$ | 1,159 | 6.8 | % | ||||
Roto-Rooter
|
62 | 0.7 | % | |||||
Corporate
|
384 | 4.4 | % | |||||
$ | 1,605 | 9.3 | % |
Increase/(Decrease)
|
||||||||||
Amount
|
Percent
|
|||||||||
VITAS
|
||||||||||
Routine homecare
|
$ | 21,678 | 7.2 | % | ||||||
Continuous care
|
5,060 | 7.3 | % | |||||||
General inpatient
|
3,522 | 7.2 | % | |||||||
Medicare cap
|
1,548 | 658.7 | % | |||||||
BNAF
|
(1,950 | ) | -100.0 | % | ||||||
Roto-Rooter
|
||||||||||
Plumbing
|
5,167 | 6.8 | % | |||||||
Drain cleaning
|
(2,188 | ) | -3.1 | % | ||||||
Other
|
778 | 3.2 | % | |||||||
Total
|
$ | 33,615 | 5.7 | % |
2010
|
2009
|
|||||||
SG&A expenses before long-term incentive
|
||||||||
compensation and the impact of market gains and
|
||||||||
losses of deferred compensation plans
|
$ | 96,590 | $ | 93,788 | ||||
Long-term incentive compensation
|
1,799 | - | ||||||
Impact of market value gains/(losses) on liabilities
|
||||||||
held in deferred compensation trusts
|
105 | 1,585 | ||||||
Total SG&A expenses
|
$ | 98,494 | $ | 95,373 |
2010
|
2009
|
|||||||
Interest income
|
225 | 289 | ||||||
Market value gains/(losses) on assets held in deferred
|
||||||||
compensation trusts
|
105 | 1,585 | ||||||
Loss on disposal of property and equipment
|
(152 | ) | (54 | ) | ||||
Non-taxable income from certain investments held
|
||||||||
deferred compensation trusts
|
- | 1,211 | ||||||
Other
|
18 | 51 | ||||||
Total other income
|
$ | 196 | $ | 3,082 |
2010
|
2009
|
|||||||
VITAS
|
||||||||
Costs associated with the OIG investigation
|
$ | (173 | ) | $ | (61 | ) | ||
Roto-Rooter
|
||||||||
Costs of class action lawsuit
|
(63 | ) | - | |||||
Corporate
|
||||||||
Stock option expense
|
(2,782 | ) | (2,836 | ) | ||||
Long-term incentive compensation
|
(1,124 | ) | - | |||||
Noncash interest expense related to accounting for
|
||||||||
conversion feature of the convertible notes
|
(2,115 | ) | (1,955 | ) | ||||
Expenses of contested proxy solicitation
|
- | (2,525 | ) | |||||
Impact of non-deductible losses and non-taxable gains on
|
||||||||
investments held in deferred compensation trusts
|
- | 756 | ||||||
Total
|
$ | (6,257 | ) | $ | (6,621 | ) |
Increase/(Decrease)
|
||||||||
Amount
|
Percent
|
|||||||
VITAS
|
$ | 2,427 | 7.1 | % | ||||
Roto-Rooter
|
(354 | ) | -2.1 | % | ||||
Corporate
|
(449 | ) | -3.0 | % | ||||
$ | 1,624 | 4.4 | % |
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
||||||||||||||||
CONSOLIDATING STATEMENT OF INCOME
|
||||||||||||||||
FOR THE THREE MONTHS ENDED JUNE 30, 2010
|
||||||||||||||||
(in thousands)(unaudited)
|
||||||||||||||||
2010 (a)
|
VITAS
|
Roto-Rooter
|
Corporate
|
Chemed
Consolidated |
||||||||||||
Service revenues and sales
|
$ | 226,638 | $ | 88,357 | $ | - | $ | 314,995 | ||||||||
Cost of services provided and goods sold
|
175,257 | 48,445 | - | 223,702 | ||||||||||||
Selling, general and administrative expenses
|
18,404 | 24,192 | 7,360 | 49,956 | ||||||||||||
Depreciation
|
4,103 | 1,950 | 141 | 6,194 | ||||||||||||
Amortization
|
788 | 132 | 367 | 1,287 | ||||||||||||
Total costs and expenses
|
198,552 | 74,719 | 7,868 | 281,139 | ||||||||||||
Income/(loss) from operations
|
28,086 | 13,638 | (7,868 | ) | 33,856 | |||||||||||
Interest expense
|
(48 | ) | (64 | ) | (2,887 | ) | (2,999 | ) | ||||||||
Intercompany interest income/(expense)
|
1,350 | 773 | (2,123 | ) | - | |||||||||||
Other income/(expense)—net
|
45 | 14 | (49 | ) | 10 | |||||||||||
Income/(loss) before income taxes
|
29,433 | 14,361 | (12,927 | ) | 30,867 | |||||||||||
Income taxes
|
(11,152 | ) | (5,501 | ) | 4,641 | (12,012 | ) | |||||||||
Net income/(loss)
|
$ | 18,281 | $ | 8,860 | $ | (8,286 | ) | $ | 18,855 | |||||||
(a) The following amounts are included in net income (in thousands):
|
||||||||||||||||
|
VITAS
|
Roto-Rooter
|
Corporate
|
Chemed
Consolidated |
|||||||||||||
Pretax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$ | - | $ | - | $ | (2,346 | ) | $ | (2,346 | ) | ||||||
Long-term incentive compensation
|
- | - | (1,799 | ) | (1,799 | ) | ||||||||||
Noncash impact of accounting for convertible debt
|
- | - | (1,688 | ) | (1,688 | ) | ||||||||||
Expenses of class action lawsuit
|
- | (105 | ) | - | (105 | ) | ||||||||||
Expenses incurred in connection with the Office of Inspector
|
||||||||||||||||
General investigation
|
(118 | ) | - | - | (118 | ) | ||||||||||
Total
|
$ | (118 | ) | $ | (105 | ) | $ | (5,833 | ) | $ | (6,056 | ) | ||||
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
After-tax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$ | - | $ | - | $ | (1,484 | ) | $ | (1,484 | ) | ||||||
Long-term incentive compensation
|
- | - | (1,124 | ) | (1,124 | ) | ||||||||||
Noncash impact of accounting for convertible debt
|
- | - | (1,068 | ) | (1,068 | ) | ||||||||||
Expenses of class action lawsuit
|
- | (63 | ) | - | (63 | ) | ||||||||||
Expenses incurred in connection with the Office of Inspector
|
||||||||||||||||
General investigation
|
(74 | ) | - | - | (74 | ) | ||||||||||
Total
|
$ | (74 | ) | $ | (63 | ) | $ | (3,676 | ) | $ | (3,813 | ) | ||||
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
CONSOLIDATING STATEMENT OF INCOME
|
FOR THE THREE MONTHS ENDED JUNE 30, 2009
|
(in thousands)(unaudited)
|
Chemed
|
||||||||||||||||
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
2009 (a)
|
||||||||||||||||
Service revenues and sales
|
$ | 211,303 | $ | 83,952 | $ | - | $ | 295,255 | ||||||||
Cost of services provided and goods sold
|
162,175 | 45,162 | - | 207,337 | ||||||||||||
Selling, general and administrative expenses
|
17,877 | 22,844 | 8,859 | 49,580 | ||||||||||||
Depreciation
|
3,256 | 2,035 | 47 | 5,338 | ||||||||||||
Amortization
|
1,187 | 117 | 314 | 1,618 | ||||||||||||
Other operating expenses
|
- | - | 3,444 | 3,444 | ||||||||||||
Total costs and expenses
|
184,495 | 70,158 | 12,664 | 267,317 | ||||||||||||
Income/(loss) from operations
|
26,808 | 13,794 | (12,664 | ) | 27,938 | |||||||||||
Interest expense
|
(326 | ) | (59 | ) | (2,757 | ) | (3,142 | ) | ||||||||
Intercompany interest income/(expense)
|
1,023 | 581 | (1,604 | ) | - | |||||||||||
Other income-net
|
123 | 6 | 3,229 | 3,358 | ||||||||||||
Income/(loss) before income taxes
|
27,628 | 14,322 | (13,796 | ) | 28,154 | |||||||||||
Income taxes
|
(10,506 | ) | (5,524 | ) | 5,126 | (10,904 | ) | |||||||||
Net income/(loss)
|
$ | 17,122 | $ | 8,798 | $ | (8,670 | ) | $ | 17,250 |
(a) The following amounts are included in net income (in thousands):
|
VITAS
|
Roto-Rooter | Corporate |
Chemed
Consolidated
|
|||||||||||||
Pretax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$ | - | $ | - | $ | (2,443 | ) | $ | (2,443 | ) | ||||||
Noncash impact of accounting for convertible debt
|
- | - | (1,561 | ) | (1,561 | ) | ||||||||||
Expenses associated with contested proxy solicitation
|
- | - | (3,444 | ) | (3,444 | ) | ||||||||||
Expenses incurred in connection with the Office of Inspector
|
||||||||||||||||
General investigation
|
(86 | ) | - | - | (86 | ) | ||||||||||
Total
|
$ | (86 | ) | $ | - | $ | (7,448 | ) | $ | (7,534 | ) |
VITAS
|
Roto-Rooter | Corporate | Consolidated | |||||||||||||
After-tax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$ | - | $ | - | $ | (1,544 | ) | $ | (1,544 | ) | ||||||
Noncash impact of accounting for convertible debt
|
- | - | (987 | ) | (987 | ) | ||||||||||
Income tax impact of nondeductible losses on investments
|
||||||||||||||||
held in deferred compensation trusts
|
- | - | 20 | 20 | ||||||||||||
Expenses associated with contested proxy solicitation
|
- | - | (2,180 | ) | (2,180 | ) | ||||||||||
Expenses incurred in connection with the Office of Inspector
|
||||||||||||||||
General investigation
|
(53 | ) | - | - | (53 | ) | ||||||||||
Total
|
$ | (53 | ) | $ | - | $ | (4,691 | ) | $ | (4,744 | ) | |||||
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
CONSOLIDATING STATEMENT OF INCOME
|
FOR THE SIX MONTHS ENDED JUNE 30, 2010
|
(in thousands)(unaudited)
|
Chemed
|
||||||||||||||||
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
2010 (a)
|
||||||||||||||||
Service revenues and sales
|
$ | 449,578 | $ | 174,230 | $ | - | $ | 623,808 | ||||||||
Cost of services provided and goods sold
|
347,350 | 95,489 | - | 442,839 | ||||||||||||
Selling, general and administrative expenses
|
36,550 | 48,950 | 12,994 | 98,494 | ||||||||||||
Depreciation
|
7,587 | 3,901 | 175 | 11,663 | ||||||||||||
Amortization
|
1,559 | 255 | 697 | 2,511 | ||||||||||||
Total costs and expenses
|
393,046 | 148,595 | 13,866 | 555,507 | ||||||||||||
Income/(loss) from operations
|
56,532 | 25,635 | (13,866 | ) | 68,301 | |||||||||||
Interest expense
|
(80 | ) | (132 | ) | (5,739 | ) | (5,951 | ) | ||||||||
Intercompany interest income/(expense)
|
2,639 | 1,475 | (4,114 | ) | - | |||||||||||
Other income/(expense)—net
|
6 | 24 | 166 | 196 | ||||||||||||
Income/(loss) before income taxes
|
59,097 | 27,002 | (23,553 | ) | 62,546 | |||||||||||
Income taxes
|
(22,378 | ) | (10,329 | ) | 8,374 | (24,333 | ) | |||||||||
Net income/(loss)
|
$ | 36,719 | $ | 16,673 | $ | (15,179 | ) | $ | 38,213 |
(a) The following amounts are included in net income (in thousands):
|
VITAS
|
Roto-Rooter | Corporate |
Chemed
Consolidated
|
|||||||||||||
Pretax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$ | - | $ | - | $ | (4,397 | ) | $ | (4,397 | ) | ||||||
Long-term incentive compensation
|
- | - | (1,799 | ) | (1,799 | ) | ||||||||||
Noncash impact of accounting for convertible debt
|
- | - | (3,343 | ) | (3,343 | ) | ||||||||||
Expenses of class action lawsuit
|
- | (105 | ) | - | (105 | ) | ||||||||||
Expenses incurred in connection with the Office of Inspector
|
||||||||||||||||
General investigation
|
(278 | ) | - | - | (278 | ) | ||||||||||
Total
|
$ | (278 | ) | $ | (105 | ) | $ | (9,539 | ) | $ | (9,922 | ) |
VITAS
|
Roto-Rooter | Corporate | Consolidated | |||||||||||||
After-tax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$ | - | $ | - | $ | (2,782 | ) | $ | (2,782 | ) | ||||||
Long-term incentive compensation
|
- | - | (1,124 | ) | (1,124 | ) | ||||||||||
Noncash impact of accounting for convertible debt
|
- | - | (2,115 | ) | (2,115 | ) | ||||||||||
Expenses of class action lawsuit
|
- | (63 | ) | - | (63 | ) | ||||||||||
Expenses incurred in connection with the Office of Inspector
|
||||||||||||||||
General investigation
|
(173 | ) | - | - | (173 | ) | ||||||||||
Total
|
$ | (173 | ) | $ | (63 | ) | $ | (6,021 | ) | $ | (6,257 | ) | ||||
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
CONSOLIDATING STATEMENT OF INCOME
|
FOR THE SIX MONTHS ENDED JUNE 30, 2009
|
(in thousands)(unaudited)
|
VITAS
|
Roto-Rooter
|
Corporate |
Chemed
Consolidated
|
|||||||||||||
2009 (a)
|
||||||||||||||||
Service revenues and sales
|
$ | 419,720 | $ | 170,473 | $ | - | $ | 590,193 | ||||||||
Cost of services provided and goods sold
|
321,807 | 92,543 | - | 414,350 | ||||||||||||
Selling, general and administrative expenses
|
35,423 | 47,219 | 12,731 | 95,373 | ||||||||||||
Depreciation
|
6,475 | 4,089 | 99 | 10,663 | ||||||||||||
Amortization
|
2,358 | 206 | 590 | 3,154 | ||||||||||||
Other operating expenses
|
- | - | 3,989 | 3,989 | ||||||||||||
Total costs and expenses
|
366,063 | 144,057 | 17,409 | 527,529 | ||||||||||||
Income/(loss) from operations
|
53,657 | 26,416 | (17,409 | ) | 62,664 | |||||||||||
Interest expense
|
(365 | ) | (94 | ) | (5,527 | ) | (5,986 | ) | ||||||||
Intercompany interest income/(expense)
|
1,913 | 1,117 | (3,030 | ) | - | |||||||||||
Other income-net
|
120 | 122 | 2,840 | 3,082 | ||||||||||||
Income/(loss) before income taxes
|
55,325 | 27,561 | (23,126 | ) | 59,760 | |||||||||||
Income taxes
|
(21,033 | ) | (10,534 | ) | 8,396 | (23,171 | ) | |||||||||
Net income/(loss)
|
$ | 34,292 | $ | 17,027 | $ | (14,730 | ) | $ | 36,589 | |||||||
(a) The following amounts are included in net income (in thousands):
|
VITAS
|
Roto-Rooter | Corporate |
Chemed
Consolidated
|
|||||||||||||
Pretax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$ | - | $ | - | $ | (4,485 | ) | $ | (4,485 | ) | ||||||
Noncash impact of accounting for convertible debt
|
- | - | (3,091 | ) | (3,091 | ) | ||||||||||
Non-taxable income on certain investments held in deferred
|
||||||||||||||||
compensation trusts
|
- | - | 1,211 | 1,211 | ||||||||||||
Expenses associated with contested proxy solicitation
|
- | - | (3,989 | ) | (3,989 | ) | ||||||||||
Expenses incurred in connection with the Office of Inspector
|
||||||||||||||||
General investigation
|
(99 | ) | - | - | (99 | ) | ||||||||||
Total
|
$ | (99 | ) | $ | - | $ | (10,354 | ) | $ | (10,453 | ) | |||||
VITAS
|
Roto-Rooter
|
Corporate | Consolidated | |||||||||||||
After-tax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$ | - | $ | - | $ | (2,836 | ) | $ | (2,836 | ) | ||||||
Noncash impact of accounting for convertible debt
|
- | - | (1,955 | ) | (1,955 | ) | ||||||||||
Non-taxable income on certain investments held in deferred
|
||||||||||||||||
compensation trusts
|
- | - | 1,211 | 1,211 | ||||||||||||
Income tax impact of nondeductible losses on investments
|
||||||||||||||||
held in deferred compensation trusts
|
- | - | (455 | ) | (455 | ) | ||||||||||
Expenses associated with contested proxy solicitation
|
- | - | (2,525 | ) | (2,525 | ) | ||||||||||
Expenses incurred in connection with the Office of Inspector
|
||||||||||||||||
General investigation
|
(61 | ) | - | - | (61 | ) | ||||||||||
Total
|
$ | (61 | ) | $ | - | $ | (6,560 | ) | $ | (6,621 | ) |
Consolidating Summary and Reconciliation of Adjusted EBITDA
|
Chemed Corporation and Subsidiary Companies
|
||||||||||||||||
(in thousands)
|
Chemed
|
|||||||||||||||
For the three months ended June 30, 2010
|
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
||||||||||||
Net income/(loss)
|
$ | 18,281 | $ | 8,860 | $ | (8,286 | ) | $ | 18,855 | |||||||
Add/(deduct):
|
||||||||||||||||
Interest expense
|
48 | 64 | 2,887 | 2,999 | ||||||||||||
Income taxes
|
11,152 | 5,501 | (4,641 | ) | 12,012 | |||||||||||
Depreciation
|
4,103 | 1,950 | 141 | 6,194 | ||||||||||||
Amortization
|
788 | 132 | 367 | 1,287 | ||||||||||||
EBITDA
|
34,372 | 16,507 | (9,532 | ) | 41,347 | |||||||||||
Add/(deduct):
|
||||||||||||||||
Legal expenses of OIG investigation
|
118 | - | - | 118 | ||||||||||||
Stock option expense
|
- | - | 2,346 | 2,346 | ||||||||||||
Advertising cost adjustment
|
- | (678 | ) | - | (678 | ) | ||||||||||
Expenses of class action litigation
|
- | 105 | - | 105 | ||||||||||||
Long-term incentive compensation
|
- | - | 1,799 | 1,799 | ||||||||||||
Interest income
|
(90 | ) | (25 | ) | (35 | ) | (150 | ) | ||||||||
Intercompany interest income/(expense)
|
(1,350 | ) | (773 | ) | 2,123 | - | ||||||||||
Adjusted EBITDA
|
$ | 33,050 | $ | 15,136 | $ | (3,299 | ) | $ | 44,887 |
Chemed
|
||||||||||||||||
For the three months ended June 30, 2009
|
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
||||||||||||
Net income/(loss)
|
$ | 17,122 | $ | 8,798 | $ | (8,670 | ) | $ | 17,250 | |||||||
Add/(deduct):
|
||||||||||||||||
Interest expense
|
326 | 59 | 2,757 | 3,142 | ||||||||||||
Income taxes
|
10,506 | 5,524 | (5,126 | ) | 10,904 | |||||||||||
Depreciation
|
3,256 | 2,035 | 47 | 5,338 | ||||||||||||
Amortization
|
1,187 | 117 | 314 | 1,618 | ||||||||||||
EBITDA
|
32,397 | 16,533 | (10,678 | ) | 38,252 | |||||||||||
Add/(deduct):
|
||||||||||||||||
Expenses associated with contested proxy solicitation
|
- | - | 3,444 | 3,444 | ||||||||||||
Legal expenses of OIG investigation
|
86 | - | - | 86 | ||||||||||||
Stock option expense
|
- | - | 2,443 | 2,443 | ||||||||||||
Advertising cost adjustment
|
- | (368 | ) | - | (368 | ) | ||||||||||
Interest income
|
(149 | ) | (18 | ) | (40 | ) | (207 | ) | ||||||||
Intercompany interest income/(expense)
|
(1,023 | ) | (581 | ) | 1,604 | - | ||||||||||
Adjusted EBITDA
|
$ | 31,311 | $ | 15,566 | $ | (3,227 | ) | $ | 43,650 | |||||||
Consolidating Summary and Reconciliation of Adjusted EBITDA
|
Chemed Corporation and Subsidiary Companies
|
||||||||||||||||
(in thousands)
|
Chemed
|
|||||||||||||||
For the six months ended June 30, 2010
|
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
||||||||||||
Net income/(loss)
|
$ | 36,719 | $ | 16,673 | $ | (15,179 | ) | $ | 38,213 | |||||||
Add/(deduct):
|
||||||||||||||||
Interest expense
|
80 | 132 | 5,739 | 5,951 | ||||||||||||
Income taxes
|
22,378 | 10,329 | (8,374 | ) | 24,333 | |||||||||||
Depreciation
|
7,587 | 3,901 | 175 | 11,663 | ||||||||||||
Amortization
|
1,559 | 255 | 697 | 2,511 | ||||||||||||
EBITDA
|
68,323 | 31,290 | (16,942 | ) | 82,671 | |||||||||||
Add/(deduct):
|
||||||||||||||||
Legal expenses of OIG investigation
|
278 | - | - | 278 | ||||||||||||
Stock option expense
|
- | - | 4,397 | 4,397 | ||||||||||||
Advertising cost adjustment
|
- | (1,068 | ) | - | (1,068 | ) | ||||||||||
Expenses of class action litigation
|
- | 105 | - | 105 | ||||||||||||
Long-term incentive compensation
|
- | - | 1,799 | 1,799 | ||||||||||||
Interest income
|
(135 | ) | (27 | ) | (63 | ) | (225 | ) | ||||||||
Intercompany interest income/(expense)
|
(2,639 | ) | (1,475 | ) | 4,114 | - | ||||||||||
Adjusted EBITDA
|
$ | 65,827 | $ | 28,825 | $ | (6,695 | ) | $ | 87,957 | |||||||
Chemed
|
||||||||||||||||
For the six months ended June 30, 2009
|
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
||||||||||||
Net income/(loss)
|
$ | 34,292 | $ | 17,027 | $ | (14,730 | ) | $ | 36,589 | |||||||
Add/(deduct):
|
||||||||||||||||
Interest expense
|
365 | 94 | 5,527 | 5,986 | ||||||||||||
Income taxes
|
21,033 | 10,534 | (8,396 | ) | 23,171 | |||||||||||
Depreciation
|
6,475 | 4,089 | 99 | 10,663 | ||||||||||||
Amortization
|
2,358 | 206 | 590 | 3,154 | ||||||||||||
EBITDA
|
64,523 | 31,950 | (16,910 | ) | 79,563 | |||||||||||
Add/(deduct):
|
||||||||||||||||
Non-taxable income from certain investments held in
|
||||||||||||||||
deferred compensation trusts
|
- | - | (1,211 | ) | (1,211 | ) | ||||||||||
Expenses associated with contested proxy solicitation
|
- | - | 3,989 | 3,989 | ||||||||||||
Legal expenses of OIG investigation
|
99 | - | - | 99 | ||||||||||||
Stock option expense
|
- | - | 4,485 | 4,485 | ||||||||||||
Advertising cost adjustment
|
- | (762 | ) | - | (762 | ) | ||||||||||
Interest income
|
(197 | ) | (36 | ) | (56 | ) | (289 | ) | ||||||||
Intercompany interest income/(expense)
|
(1,913 | ) | (1,117 | ) | 3,030 | - | ||||||||||
Adjusted EBITDA
|
$ | 62,512 | $ | 30,035 | $ | (6,673 | ) | $ | 85,874 | |||||||
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
OPERATING STATISTICS FOR VITAS SEGMENT
|
(unaudited)
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
OPERATING STATISTICS
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Net revenue ($000)
|
||||||||||||||||
Homecare
|
$ | 163,512 | $ | 152,006 | $ | 320,738 | $ | 299,060 | ||||||||
Inpatient
|
25,989 | 23,667 | 52,281 | 48,759 | ||||||||||||
Continuous care
|
37,102 | 35,125 | 74,776 | 69,716 | ||||||||||||
Total before Medicare cap allowance and 2008 BNAF
|
$ | 226,603 | $ | 210,798 | $ | 447,795 | $ | 417,535 | ||||||||
Estimated BNAF
|
- | - | - | 1,950 | ||||||||||||
Medicare cap allowance
|
35 | 505 | 1,783 | 235 | ||||||||||||
Total
|
$ | 226,638 | $ | 211,303 | $ | 449,578 | $ | 419,720 | ||||||||
Net revenue as a percent of total
|
||||||||||||||||
before Medicare cap allowance
|
||||||||||||||||
Homecare
|
72.1 |
%
|
72.1 | % | 71.6 |
%
|
71.6 | % | ||||||||
Inpatient
|
11.5 | 11.2 | 11.7 | 11.7 | ||||||||||||
Continuous care
|
16.4 | 16.7 | 16.7 | 16.7 | ||||||||||||
Total before Medicare cap allowance and 2008 BNAF
|
100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||
Estimated BNAF
|
- | - | - | 0.5 | ||||||||||||
Medicare cap allowance
|
- | 0.2 | 0.4 | - | ||||||||||||
Total
|
100.0 |
%
|
100.2 | % | 100.4 |
%
|
100.5 | % | ||||||||
Average daily census (days)
|
||||||||||||||||
Homecare
|
8,345 | 7,668 | 8,229 | 7,573 | ||||||||||||
Nursing home
|
3,223 | 3,292 | 3,193 | 3,277 | ||||||||||||
Routine homecare
|
11,568 | 10,960 | 11,422 | 10,850 | ||||||||||||
Inpatient
|
433 | 394 | 438 | 407 | ||||||||||||
Continuous care
|
583 | 566 | 594 | 567 | ||||||||||||
Total
|
12,584 | 11,920 | 12,454 | 11,824 | ||||||||||||
Total Admissions
|
14,423 | 13,840 | 29,267 | 28,008 | ||||||||||||
Total Discharges
|
14,132 | 13,740 | 28,685 | 27,605 | ||||||||||||
Average length of stay (days)
|
77.4 | 73.4 | 76.6 | 75.0 | ||||||||||||
Median length of stay (days)
|
14.0 | 14.0 | 14.0 | 14.0 | ||||||||||||
ADC by major diagnosis
|
||||||||||||||||
Neurological
|
32.8 |
%
|
32.8 | % | 32.8 |
%
|
32.7 | % | ||||||||
Cancer
|
18.1 | 19.2 | 18.5 | 19.3 | ||||||||||||
Cardio
|
12.0 | 12.1 | 11.9 | 12.2 | ||||||||||||
Respiratory
|
6.5 | 6.6 | 6.6 | 6.6 | ||||||||||||
Other
|
30.6 | 29.3 | 30.2 | 29.2 | ||||||||||||
Total
|
100.0 |
%
|
100.0 | % | 100.0 |
%
|
100.0 | % | ||||||||
Admissions by major diagnosis
|
||||||||||||||||
Neurological
|
18.5 |
%
|
17.3 | % | 18.6 | % | 17.9 | % | ||||||||
Cancer
|
33.8 | 35.4 | 33.8 | 34.9 | ||||||||||||
Cardio
|
11.2 | 11.9 | 11.4 | 12.1 | ||||||||||||
Respiratory
|
8.5 | 7.7 | 8.5 | 7.8 | ||||||||||||
Other
|
28.0 | 27.7 | 27.7 | 27.3 | ||||||||||||
Total
|
100.0 |
%
|
100.0 | % | 100.0 |
%
|
100.0 | % | ||||||||
Direct patient care margins
|
||||||||||||||||
Routine homecare
|
52.5 |
%
|
52.1 | % | 51.9 |
%
|
51.9 | % | ||||||||
Inpatient
|
12.3 | 16.6 | 13.7 | 17.1 | ||||||||||||
Continuous care
|
21.2 | 20.2 | 21.0 | 20.2 | ||||||||||||
Homecare margin drivers (dollars per patient day)
|
||||||||||||||||
Labor costs
|
$ | 52.52 | $ | 51.83 | $ | 53.21 | $ | 52.32 | ||||||||
Drug costs
|
7.67 | 7.71 | 7.72 | 7.68 | ||||||||||||
Home medical equipment
|
6.66 | 6.82 | 6.80 | 6.75 | ||||||||||||
Medical supplies
|
2.46 | 2.36 | 2.45 | 2.32 | ||||||||||||
Inpatient margin drivers (dollars per patient day)
|
||||||||||||||||
Labor costs
|
$ | 301.81 | $ | 282.46 | $ | 294.27 | $ | 276.96 | ||||||||
Continuous care margin drivers (dollars per patient day)
|
||||||||||||||||
Labor costs
|
$ | 530.05 | $ | 522.27 | $ | 528.23 | $ | 521.79 | ||||||||
Bad debt expense as a percent of revenues
|
0.9 |
%
|
1.1 | % | 0.9 |
%
|
1.1 | % | ||||||||
Accounts receivable --
|
||||||||||||||||
Days of revenue outstanding- excluding unapplied Medicare payments
|
42.3 | 55.9 |
n.a.
|
n.a.
|
||||||||||||
Days of revenue outstanding- including unapplied Medicare payments
|
34.1 | 36.7 |
n.a.
|
n.a.
|
||||||||||||
Weighted
|
Cumulative Shares |
Dollar Amount
|
||||||||||||||
Total Number
|
Average
|
Repurchased
|
Remaining
|
|||||||||||||
of Shares
|
Price Paid Per
|
Under
|
Under
|
|||||||||||||
Repurchased
|
Share
|
the Program
|
The Program
|
|||||||||||||
April 2007 Program
|
||||||||||||||||
January 1 through January 31, 2010
|
31,375 | $ | 47.17 | 1,736,972 | $ | 51,718,696 | ||||||||||
February 1 through February 29, 2010
|
- | $ | - | 1,736,972 | $ | 51,718,696 | ||||||||||
March 1 through March 31, 2010
|
- | $ | - | 1,736,972 | $ | 51,718,696 | ||||||||||
First Quarter Total - April 2007 Program
|
31,375 | $ | 47.17 | |||||||||||||
April 1 through April 30, 2010
|
- | $ | - | 1,736,972 | $ | 51,718,696 | ||||||||||
May 1 through May 31, 2010
|
38,492 | $ | 53.70 | 1,775,464 | $ | 49,651,677 | ||||||||||
June 1 through June 30, 2010
|
76,408 | $ | 55.65 | 1,851,872 | $ | 45,399,865 | ||||||||||
Second Quarter Total - April 2007 Program
|
114,900 | $ | 54.99 |
On April 26, 2007, our Board of Directors authorized a $150 million share repurchase plan with no expiration date.
|
On May 20, 2008 our Board of Directors authorized an additional $56 million under the April 2007 Program.
|
Exhibit No.
|
Description
|
|
31.1
|
Certification by Kevin J. McNamara pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act of 1934.
|
|
31.2
|
Certification by David P. Williams pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act of 1934.
|
|
31.3
|
Certification by Arthur V. Tucker, Jr. pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act of 1934.
|
|
32.1
|
Certification by Kevin J. McNamara pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification by David P. Williams pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.3
|
Certification by Arthur V. Tucker, Jr. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Document |
Chemed Corporation
|
||||||
(Registrant)
|
||||||
Dated:
|
July 30, 2010
|
By:
|
Kevin J. McNamara
|
|||
Kevin J. McNamara
|
||||||
(President and Chief Executive Officer)
|
||||||
Dated:
|
July 30, 2010
|
By:
|
David P. Williams
|
|||
David P. Williams
|
||||||
(Executive Vice President and Chief Financial Officer)
|
||||||
Dated:
|
July 30, 2010
|
By:
|
Arthur V. Tucker, Jr.
|
|||
Arthur V. Tucker, Jr.
|
||||||
(Vice President and Controller)
|