Delaware
(State or other jurisdiction of
incorporation or organization)
|
31-0791746
(I.R.S. Employer
Identification Number)
|
Suite 2600, 255 East Fifth Street, Cincinnati, Ohio
(Address of principal executive offices)
|
45202-4726
(Zip Code)
|
Title of Each Class | Name of each exchange on which registered |
Capital Stock – Par Value $1 Per Share
|
New York Stock Exchange
|
Document
|
Where Incorporated
|
2015 Annual Report to Stockholders (specified portions) | Parts I, II, and IV |
Proxy Statement for Annual Meeting to be held May 16, 2016
|
Part III
|
PART I
|
|
Item 1.
|
Business
|
Item 1A.
|
Risk Factors
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
|
PART II
|
|
Item 5.
|
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
Item 6.
|
Selected Financial Data
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
PART III
|
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions and Director Independence
|
Item 14.
|
Principal Accountant Fees and Services
|
PART IV
|
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
|
Routine Home Care. The routine home care rate is paid for each day that a patient is in a hospice program and is not receiving one of the other categories of hospice care. In 2015 the routine home care rate does not vary based upon the volume or intensity of services provided by the hospice program. Effective January 1, 2016 the routine home care rate changed to reflect a two-tiered rate, with a higher rate for the first 60 days of a hospice patient’s care and a lower rate for days 61 and after. In addition there is a Service Intensity Add-on payment which covers direct home care visits conducted by a registered nurse or social worker in the last seven days of a hospice patient’s life, reimbursed up to four hours per day in fifteen minute increments at the continuous care rate.
|
|
General Inpatient Care. The general inpatient care rate is paid when a patient requires inpatient services for a short period for pain control or symptom management which cannot be managed in other settings. General inpatient care services must be provided in a Medicare or Medicaid certified hospital or long-term care facility or at a freestanding inpatient hospice facility with the required registered nurse staffing.
|
|
Continuous Home Care. Continuous home care, which VITAS refers to as “Intensive Comfort Care,” is provided to patients while at home, during periods of crisis when intensive monitoring and care, primarily nursing care, is required in order to achieve palliation or management of acute medical symptoms. Continuous home care requires a minimum of 8 hours of care within a 24-hour day, which begins and ends at midnight. The care must be predominantly nursing care provided by either a registered nurse or licensed practical nurse. While the published Medicare continuous home care rates are daily rates, Medicare actually pays for continuous home care in fifteen minute increments. This fifteen minute rate is calculated by dividing the daily rate by 96.
|
|
Respite Care. Respite care permits a hospice patient to receive services on an inpatient basis for a short period of time in order to provide relief for the patient’s family or other caregivers from the demands of caring for the patient. A hospice can receive payment for respite care for a given patient for up to five consecutive days at a time, after which respite care is reimbursed at the routine home care rate.
|
●
|
Ensuring that Medicare hospice eligibility determinations are made in accordance with the Medicare regulations; and
|
●
|
Revising the annual cap on hospice benefits to better reflect the cost of care provided.
|
●
|
Denial of payment;
|
●
|
Civil monetary penalties of $15,000 per referral or $1,000,000 for “circumvention schemes;”
|
●
|
Assessments equal to 200% of the dollar value of each such service provided; and
|
●
|
Exclusion from the Medicare and Medicaid programs.
|
●
|
Payment for services;
|
●
|
Conduct of operations, including fraud and abuse, anti-kickback prohibitions, self-referral prohibitions and false claims;
|
●
|
Privacy and security of medical records;
|
●
|
Employment practices; and
|
●
|
Various state approval requirements, such as facility and professional licensure, certificate of need, compliance surveys and other certification or recertification requirements.
|
●
|
Identify markets that meet its selection criteria for new hospice locations;
|
●
|
Hire and retain qualified management teams to operate each of its new hospice locations;
|
●
|
Manage a large and geographically diverse group of hospice locations;
|
●
|
Become Medicare and Medicaid certified in new markets;
|
●
|
Generate sufficient hospice admissions to operate profitably in these new markets;
|
●
|
Compete effectively with existing hospices in new markets; or
|
●
|
Obtain state licensure and/or a certificate of need from appropriate state agencies in new markets.
|
●
|
Community-based hospice providers;
|
●
|
National and regional companies;
|
●
|
Hospital-based hospice and palliative care programs;
|
●
|
Physician groups;
|
●
|
Nursing homes;
|
●
|
Home health agencies;
|
●
|
Infusion therapy companies; and
|
●
|
Nursing agencies.
|
9
|
||||||
Name
|
Age
|
Office
|
First Elected
|
|||
Kevin J. McNamara | 62 | President and Chief Executive Officer | August 2, 1994 (1) | |||
Timothy S. O’Toole | 60 | Executive Vice President | May 18, 1992 (2) | |||
Spencer S. Lee | 60 | Executive Vice President | May 15, 2000 (3) | |||
David P. Williams | 55 | Executive Vice President and Chief Financial Officer | March 5, 2004 (4) | |||
Arthur V. Tucker, Jr.
|
66
|
Vice President and Controller
|
February 1, 1989 (5)
|
(1)
|
Mr. K. J. McNamara is President and Chief Executive Officer of the Company and has held these positions since August 1994 and May 2001, respectively. 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.
|
(2)
|
Mr. T.S. O’Toole is an Executive Vice President of the Company and has held this position since May 1992. He is also Chief Executive Officer of VITAS, a wholly owned subsidiary of the Company, and has held this position since February 24, 2004. Previously, from May 1992 to February 24, 2004, he also served the Company as Treasurer.
|
(3)
|
Mr. S. S. 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 Services Company, a wholly owned subsidiary of the Company, 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.
|
(4)
|
Mr. D. P. Williams is an Executive Vice President and the Chief Financial Officer of the company and has held these positions since August 10, 2007 and March 5, 2004, respectively. Mr. Williams is also Senior Vice President and Chief Financial Officer of Roto-Rooter Group, Inc., and has held these positions since January 1999.
|
(5)
|
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.
|
Closing
|
Dividends Paid
|
|||||||||||
High
|
Low
|
Per Share
|
||||||||||
2014
|
||||||||||||
First Quarter
|
$ | 89.45 | 73.31 | $ | 0.20 | |||||||
Second Quarter
|
93.72 | 83.27 | 0.20 | |||||||||
Third Quarter
|
107.31 | 93.64 | 0.22 | |||||||||
Fourth Quarter
|
110.83 | 98.25 | 0.22 | |||||||||
2015
|
||||||||||||
First Quarter
|
$ | 123.42 | 101.14 | $ | 0.22 | |||||||
Second Quarter
|
132.80 | 115.25 | 0.22 | |||||||||
Third Quarter
|
152.23 | 129.21 | 0.24 | |||||||||
Fourth Quarter
|
158.74 | 128.41 | 0.24 |
Total Number
|
Weighted Average
|
Cumulative Shares
|
Dollar Amount
|
|||||||||||||
of Shares
|
Price Paid Per
|
Repurchased Under
|
Remaining Under
|
|||||||||||||
Repurchased
|
Share
|
the Program
|
The Program
|
|||||||||||||
February 2011 Program
|
||||||||||||||||
January 1 through January 31, 2015
|
- | $ | - | 6,074,819 | $ | 11,808,785 | ||||||||||
February 1 through February 28, 2015
|
- | - | 6,074,819 | 11,808,785 | ||||||||||||
March 1 through March 31, 2015
|
- | - | 6,074,819 | $ | 111,808,785 | |||||||||||
First Quarter Total
|
- | $ | - | |||||||||||||
April 1 through April 30, 2015
|
31,239 | $ | 116.66 | 6,106,058 | $ | 108,163,534 | ||||||||||
May 31 through May 31, 2015
|
218,761 | 119.38 | 6,324,819 | 82,047,193 | ||||||||||||
June 1 through June 30, 2015
|
- | - | 6,324,819 | $ | 82,047,193 | |||||||||||
Second Quarter Total
|
250,000 | $ | 119.05 | |||||||||||||
July 1 through July 31, 2015
|
- | $ | - | 6,324,819 | $ | 82,047,193 | ||||||||||
August 1 through August 31, 2015
|
50,000 | 138.40 | 6,374,819 | 75,127,293 | ||||||||||||
September 1 through September 30, 2015
|
85,765 | 131.87 | 6,460,584 | $ | 63,817,207 | |||||||||||
Third Quarter Total
|
135,765 | $ | 134.28 | |||||||||||||
October 1 October 31, 2015
|
- | $ | - | 6,460,584 | $ | 63,817,207 | ||||||||||
November 1 through November 30, 2015
|
- | - | 6,460,584 | 63,817,207 | ||||||||||||
December 1 through December 31, 2015
|
75,000 | 151.09 | 6,535,584 | $ | 52,485,644 | |||||||||||
Fourth Quarter Total
|
75,000 | $ | 151.09 |
Number of
securities to be
issued upon
exercise of
outstanding
warrants
and rights
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column)
|
||||||||||
Plan Category
|
||||||||||||
Equity compensation plans approved by stockholders (1)
|
1,640,251 | $ | 95.43 | 1,527,806 |
(1)
|
Amount includes 76,376 shares allocated to certain employees which vest upon attainment of specified earnings per share targets and specified total shareholder return targets.
|
December 31,
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
Chemed Corporation
|
100.00
|
81.44
|
110.30
|
124.50
|
173.21
|
247.25
|
S&P 500
|
100.00
|
102.11
|
118.45
|
156.82
|
178.28
|
180.75
|
Dow Jones Diversified Industrials
|
100.00
|
100.80
|
121.77
|
173.08
|
174.90
|
197.36
|
Item 15
|
Exhibits and Financial Statement Schedule
|
|
Exhibits
|
||
3.1
|
Certificate of Incorporation of Chemed Corporation.*
|
|
3.2
|
Certificate of Amendment to Certificate of Incorporation.*
|
|
3.3
|
By-Laws of Chemed Corporation, as amended February 19, 2016
|
|
10.1
|
1999 Long-Term Employee Incentive Plan as amended through May 20, 2002.*,**
|
|
10.2
|
2002 Executive Long-Term Incentive Plan, as amended May 18, 2004.*,**
|
|
10.3
|
2004 Stock Incentive Plan.*,**
|
|
10.4
|
2006 Stock Incentive Plan, as amended August 11, 2006.*,**
|
|
10.5
|
2010 Stock Incentive Plan.*,**
|
|
10.6
|
2015 Stock Incentive Plan**
|
|
10.7
|
Employment Agreement with David P. Williams dated December 1, 2006.*,**
|
|
10.8
|
First Amendment to Employment Agreement with David P. Williams dated July 9, 2009.*,**
|
|
10.9
|
Employment Agreement with Timothy S. O’Toole dated May 6, 2007.*,**
|
|
10.10
|
First Amendment to Employment Agreement with Timothy S. O’Toole dated July 9, 2009.*,**
|
|
10.10
|
Employment Agreement with Kevin J. McNamara dated May 3, 2008.*,**
|
|
10.12
|
First Amendment to Employment Agreement with Kevin J. McNamara dated July 9, 2009.*,**
|
|
10.13
|
Excess Benefits Plan, as restated and amended, effective June 1, 2001.*,**
|
|
10.14
|
Amendment No. 1 to Excess Benefits Plan, effective July 1, 2001.*,**
|
|
10.15
|
Amendment No. 2 to Excess Benefits Plan, effective November 7, 2003.*,**
|
|
10.16
|
Non-Employee Directors’ Deferred Compensation Plan.*,**
|
|
10.17
|
Chemed/Roto-Rooter Savings & Retirement Plan, effective January 1, 1999.*,**
|
|
10.18
|
First Amendment to Chemed/Roto-Rooter Savings & Retirement Plan, effective September 6, 2000.*,**
|
|
10.19
|
Second Amendment to Chemed/Roto-Rooter Savings & Retirement Plan, effective January 1, 2001.*,**
|
|
10.20
|
Third Amendment to Chemed/Roto-Rooter Savings & Retirement Plan, effective December 12, 2001.*,**
|
|
10.21
|
Directors Emeriti Plan.*,**
|
|
10.22
|
Chemed Corporation Change in Control Severance Plan, as amended July 9, 2009.*,**
|
10.23
|
Chemed Corporation Senior Executive Severance Policy, as amended July 9, 2009.*,**
|
|
10.24
|
Roto-Rooter Deferred Compensation Plan No. 1, as amended January 1, 1998.*,**
|
|
10.25
|
Roto-Rooter Deferred Compensation Plan No. 2.*,**
|
|
10.26
|
Form of Performance-Based Restricted Stock Units Award*,**
|
|
10.27
|
Form of Restricted Stock Award.*,**
|
|
10.28
|
Form of Stock Option Grant, pre-2013.*,**
|
|
10.29
|
Form of Stock Option Grant, 2013.*,**
|
|
10.30
|
Form of Stock Option Grant, 2013.*,**
|
|
10.31
|
Form of Stock Option Grant, 2015
|
|
10.32
|
Third Amended and Restated Credit Agreement by and among Chemed Corporation, JP Morgan Chase Bank NA, and other lenders as of June 30, 2014, exhibits and schedules thereto.*
|
|
|
||
12
|
Computation of Ratio of Earnings to Fixed Charges.
|
|
13
|
2015 Annual Report to Stockholders.
|
|
14
|
Policies on Business Ethics of Chemed Corporation
|
|
21
|
Subsidiaries of Chemed Corporation.
|
|
23
|
Consent of Independent Registered Public Accounting Firm.
|
|
24
|
Powers of Attorney.
|
|
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 Extension Schema*
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase*
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase*
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase*
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase*
|
*
|
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.
|
February 26, 2016 | CHEMED CORPORATION | ||
By | /s/ Kevin J. McNamara | ||
Kevin J. McNamara | |||
President and Chief Executive Officer |
Signature
|
Title
|
Date
|
/s/ Kevin J. McNamara
Kevin J. McNamara
|
President and Chief
Executive Officer and
a Director (Principal
Executive Officer)
|
|
/s/ David P. Williams
David P. Williams
|
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
|
|
/s/ Arthur V. Tucker, Jr.
Arthur V. Tucker, Jr.
|
Vice President and
Controller
(Principal Accounting
Officer)
|
February 26, 2016
|
Joel F. Gemunder*
Patrick P. Grace*
Thomas C. Hutton*
Walter L. Krebs*
Andrea R. Lindell*
|
Thomas P. Rice*
Donald E. Saunders*
George J Walsh III* - -Directors
Frank E. Wood*
|
* | 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 |
February 26, 2016
|
/s/ Naomi C. Dallob
|
|
Date
|
Naomi C. Dallob
(Attorney-in-Fact)
|
Page(s)
|
|
Chemed Corporation Consolidated Financial
|
|
Statements and Financial Statement Schedule | |
Report of Independent Registered Public Accounting Firm | 75* |
Consolidated Statement of Income | 76* |
Consolidated Balance Sheet | 77* |
Consolidated Statement of Cash Flows | 78* |
Consolidated Statement of Changes in Stockholders’ Equity | 79* |
Notes to Consolidated Financial Statements | 80-100* |
Report of Independent Registered Public Accounting Firm on | |
Financial Statement Schedule | S-2 |
Schedule II – Valuation and Qualifying Accounts
|
S-3 |
SCHEDULE II
|
||||||||||||||||||||
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
||||||||||||||||||||
VALUATION AND QUALIFYING ACCOUNTS
|
||||||||||||||||||||
(IN THOUSANDS)
|
||||||||||||||||||||
DR/(CR)
|
||||||||||||||||||||
|
|
ADDITIONS
|
|
|
||||||||||||||||
(CHARGED)
|
||||||||||||||||||||
CREDITED
|
(CHARGED)
|
|||||||||||||||||||
BALANCE AT
|
TO COSTS
|
CREDITED
|
BALANCE
|
|||||||||||||||||
BEGINNING
|
AND
|
TO OTHER
|
DEDUCTIONS
|
AT END
|
||||||||||||||||
DESCRIPTION
|
OF PERIOD
|
EXPENSES
|
ACCOUNTS
|
(a)
|
OF PERIOD
|
|||||||||||||||
Allowances for doubtful
|
||||||||||||||||||||
accounts (b)
|
||||||||||||||||||||
For the year 2015
|
$ | (14,728 | ) | $ | (14,435 | ) | $ | (1,169 | ) | $ | 17,088 | $ | (13,244 | ) | ||||||
For the year 2014
|
$ | (12,590 | ) | $ | (13,079 | ) | $ | (840 | ) | $ | 11,781 | $ | (14,728 | ) | ||||||
For the year 2013
|
$ | (10,892 | ) | $ | (10,690 | ) | $ | (1,318 | ) | $ | 10,310 | $ | (12,590 | ) | ||||||
(a) With respect to allowances for doubtful accounts, deductions include accounts considered uncollectible or
|
||||||||||||||||||||
written off, payments, companies divested, etc.
|
||||||||||||||||||||
(b) Classified in consolidated balance sheet as a reduction of accounts receivable.
|
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
|
Certificate of Amendment to
|
Form 8-K
|
3.1
|
Certificate of Incorporation
|
5/16/06
|
||
3.3
|
By-Laws of Chemed Corporation
|
Form 8-K
|
|
as amended February 19, 2016
|
2/19/16
|
||
10.1
|
1999 Long Term Employee
|
Form 10-K
|
10.16
|
Incentive Plan as amended
|
3/28/03, **
|
||
through May 20, 2002
|
|||
10.2
|
2002 Executive Long-Term
|
Form 10-Q
|
10.16
|
Incentive Plan, as amended
|
8/19/04, **
|
||
May 18, 2004
|
|||
10.3
|
2004 Stock Incentive Plan
|
Proxy Statement
|
A
|
3/25/04, **
|
|||
10.4
|
2006 Stock Incentive Plan,
|
Form 10-Q
|
10.1
|
as amended August 11, 2006
|
8/14/06, **
|
||
10.5
|
2010 Stock Incentive Plan
|
Form 8-K
|
99.1 |
|
5/18/10, **
|
||
10.6
|
2015 Stock Incentive Plan
|
Form S-8
|
4.5
|
|
7/15/15, **
|
||
10.7
|
Employment Agreement with David
|
Form 8-K
|
10.01
|
|
P. Williams dated December 1,
|
12/1/06, **
|
|
2006.
|
|||
|
|||
10.8
|
First Amendment to Employment
|
Form 10-Q
|
10.2
|
Agreement with David P. Williams
|
10/30/09, **
|
||
dated July 9, 2009.
|
|||
10.9
|
Employment Agreement with
|
Form 8-K
|
10.02
|
Timothy S. O’Toole dated
|
5/7/07, **
|
||
May 6, 2007.
|
|||
10.10
|
First Amendment to Employment
|
Form 10-Q
|
10.3
|
Agreement with Timothy S.
|
10/30/09, **
|
||
O’Toole dated July 9, 2009.
|
|||
10.11
|
Employment Agreement with
|
Form 8-K
|
10.01
|
Kevin J. McNamara dated
|
5/6/08, **
|
||
May 3, 2008.
|
|||
10.12
|
First Amendment to Employment
|
Form 10-Q
|
10.1
|
Agreement with Kevin J.
|
10/30/09, **
|
||
McNamara dated July 9, 2009.
|
10.13
|
Excess Benefits Plan, as restated
|
Form 10-K
|
10.24
|
and amended, effective June 1,
|
3/12/04, **
|
||
2001
|
|||
10.14
|
Amendment No. 1 to Excess Benefits
|
Form 10-K
|
10.25
|
Plan, effective July 1, 2002
|
3/12/04, **
|
||
10.15
|
Amendment No. 2 to Excess Benefits
|
Form 10-K
|
10.26
|
Plan, effective November 7, 2003
|
3/12/04, **
|
||
|
|
||
10.16
|
Non-Employee Directors' Deferred
|
Form 10-K
|
10.10
|
Compensation Plan
|
3/24/88, **
|
||
10.17
|
Chemed/Roto-Rooter Savings &
|
Form 10-K
|
10.25
|
Retirement Plan, effective
|
3/25/99, **
|
||
January 1, 1999
|
|||
10.18
|
First Amendment to Chemed/
|
Form 10-K
|
10.22
|
Roto-Rooter Savings & Retirement
|
3/28/02, **
|
||
Plan effective September 6, 2000
|
|||
10.19
|
Second Amendment to Chemed/
|
Form 10-K
|
10.23
|
Roto-Rooter Savings & Retirement
|
3/28/02, **
|
||
Plan effective January 1, 2001
|
|||
10.20
|
Third Amendment to Chemed/
|
Form 10-K
|
10.24
|
Roto-Rooter Savings & Retirement
|
3/28/02, **
|
||
Plan effective December 12, 2001
|
|||
10.21
|
Directors Emeriti Plan
|
Form 10-Q
|
10.11
|
|
5/12/88, **
|
||
10.22
|
Change in Control Severance
|
Form 10-Q
|
10.5 |
Plan as amended July 9, 2009.
|
10/30/09, **
|
||
10.23
|
Senior Executive Severance
|
Form 10-Q
|
10.4
|
Policy as amended July 9, 2009.
|
10/30/09, **
|
||
10.24
|
Roto-Rooter Deferred Compensation
|
Form 10-K
|
10.37
|
Plan No. 1, as amended January 1,
|
3/28/01, **
|
||
1998
|
|||
10.25
|
Roto-Rooter Deferred Compensation
|
Form 10-K
|
10.38
|
Plan No. 2
|
3/28/01, **
|
||
10.26
|
Form of Performance Based Restricted
|
Form 10-K
|
10.32
|
Stock Unit Award
|
2/27/14, **
|
||
10.27
|
Form of Restricted Stock Award
|
Form 10-K
|
10.50
|
3/28/05, **
|
|
||
10.28
|
Form of Stock Option Grant Pre-2013
|
Form 10-K
|
10.51
|
10.29
|
Form of Stock Option Grant – 2013
|
Form 10-K
|
10.35
|
2/27/14, **
|
|
||
10.30
|
Form of Stock Option Grant – 2015
|
*
|
|
10.31
|
Third Amended and Restated Credit
|
Form 8-K
|
10.1
|
Agreement by and among Chemed Corporation,
|
7/2/14
|
||
JP Morgan Chase Bank NA, and other lenders
|
|||
As of June 30, 2014 exhibits and schedules thereto.
|
12
|
Computation of Ratio of Earnings
|
*
|
to Fixed Charges
|
||
13
|
2015 Annual Report to Stockholders |
*
|
|
||
14
|
Policies on Business Ethics of Chemed
|
Form 10-K
|
Corporation
|
2/27/14
|
|
21
|
Subsidiaries of Chemed Corporation
|
*
|
23
|
Consent of Independent Registered
|
*
|
Public Accounting Firm
|
|
|
24
|
Powers of Attorney
|
*
|
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 Extension Schema
|
*
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
*
|
|
||
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
*
|
|
||
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
*
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
*
|
Section 1.01.
|
Place. Meetings of stockholders shall be held at such places, within or without the State of Delaware, as shall be specified in the respective notices or waivers of notice thereof.
|
Section 1.02.
|
Annual Meetings. An annual meeting of stockholders for the election of directors and the transaction of such other business as may come before it shall be held at 11:00 o’ clock in the forenoon, or at such other hour as may be stated in the notice thereof, on (i) the third Monday of May in each year unless such day is a holiday, in which case it shall be held on the next day following that is not a holiday or (ii) on such other date in such year as the Board of Directors shall determine.
|
Section 1.03.
|
Special Meetings. (a) Special meetings of stockholders, for any purpose or purposes, may be called at any time by the Chairman of the Board, the Chief Executive Officer, the President or the Secretary, and shall be called by the Chairman of the Board, the Chief Executive Officer, the President or the Secretary upon the written request of a majority of the Board of Directors or of the holders of record of shares having a majority of the voting power of the stock of the corporation then entitled to vote for the election of directors; provided that any such written stockholder request shall be made in accordance with the procedures set forth in Section 1.03(b).
|
(b)
|
Any stockholder or stockholders seeking to have the Chairman of the Board, the Chief Executive Officer, the President or the Secretary call a special meeting of the stockholders pursuant to Section 1.03(a) shall deliver a written request (the “Meeting Request”) in proper form to the Chairman of the Board, the Chief Executive Officer, the President or the Secretary at the corporation’s principal executive offices. Such Meeting Request shall (i) be signed by stockholders holding not less than a majority of the voting power of the stock of the corporation then entitled to vote for the election of directors as of the date such request is received by the corporation, (ii) specify whether the purpose of the special meeting is the election of directors and/or the conduct of other business and (iii) if the stockholder or stockholders are proposing that business other than, or in addition to, the election of directors be so conducted, include a description of the nature of the proposed business and the exact text of any such proposal or business (including the text of any proposed resolutions).
|
Section 1.04.
|
Notice and Waiver of Notice. Unless otherwise provided by law, notice of each annual meeting or special meeting of stockholders, stating the time, place and purpose or purposes thereof, shall be given to each stockholder entitled to vote at such meeting, not less than ten nor more than sixty days before the day on which the meeting is to be held, by any manner permitted by applicable law. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the corporation. Notice of any meeting of stockholders need not be given to any person who may become a stockholder of record after the record date for such meeting fixed pursuant to Section 7.03, nor to any person who shall attend the meeting in person or by proxy nor to any stockholder who shall sign a waiver of such notice in writing either before, after or at the time of such meeting. Except as otherwise provided by law, notice of any adjourned meeting of stockholders need not be given.
|
Section 1.05.
|
List of Stockholders. The Secretary, or other officer of the corporation who has charge of the stock ledger of the corporation, shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to such meeting, (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the corporation, and such list shall be produced and kept at the time and place of such meeting during the whole time thereof, and may be inspected by any stockholder who is present. Except as required by law the stock ledger shall be the only evidence of permitted examiners of such list.
|
Section 1.06.
|
Quorum Adjournment and Postponement. (a) At all meetings of stockholders, the holders of record, present in person or by proxy, of shares having a majority of the voting power of the stock of the corporation entitled to vote thereat, shall be necessary and sufficient to constitute a quorum for the transaction of business. A stockholder shall be treated as being present at a meeting if (i) present in person at the meeting or (ii) represented at the meeting by a valid proxy, whether such proxy card is marked as casting a vote or abstaining or is left blank.
|
(b)
|
In the absence of a quorum, the Chairman of the Board or the holders of record of shares having a majority of the voting power of the stock of the corporation present in person or by proxy at the time and place of the meeting, or of any adjournment thereof, may adjourn the meeting from time to time, without notice other than announcement at the time and place of such meeting or adjournment, until a quorum shall be present. At any adjourned session of any such meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally noticed. The stockholders present at a duly organized meeting may continue to transact any business for which a quorum existed at the commencement of such meeting until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
|
(c)
|
Any previously-scheduled meeting of stockholders may be postponed by the Board of Directors upon public notice given prior to the time previously scheduled for such meeting.
|
Section 1.07.
|
Voting. (a) When a quorum is present at any meeting of stockholders, the vote of the holders of shares having a majority of the voting power of the stock of the corporation present and entitled to vote at such meeting shall decide any question brought before such meeting, unless the question is one upon which, by express provision of law or of the Certificate of Incorporation or these By-Laws, a different vote is required, in which case such express provision shall govern and control the decision of such question.
|
(b)
|
Each stockholder shall at every meeting of stockholders be entitled to one vote for each share of the capital stock of the corporation registered in such stockholder’s name on the books of the corporation at the record date fixed as provided in Section 7.03.
|
(c)
|
At all meetings of stockholders, a stockholder may vote either in person or by proxy as may be permitted by applicable law; provided, however, that no proxy shall be voted after one year from its date unless the proxy provides for a longer period. Any proxy to be used at a meeting of stockholders must be delivered to the Secretary or his representative at the principal executive offices of the corporation at or before the time of the meeting.
|
(d)
|
The vote on any matter, including the election of directors, need not be by written ballot. Any written ballot shall be signed by the stockholder voting, or by such stockholder’s proxy, and shall state the number of shares voted.
|
Section 1.08.
|
Consent in Lieu of Meeting. (a) Any action required or permitted to be taken at a meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if consents in writing, setting forth the action so taken, shall be signed by the holders of record of shares having not less than the minimum voting power that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and delivered to the corporation by delivery to its registered office in the state of Delaware, its principal place of business or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.
|
(b)
|
For the corporation to determine the stockholders entitled to take corporate action by written consent without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date for such purpose. The Board of Directors shall promptly, but in all events within ten days after the date on which such request is received by the Secretary, adopt a resolution fixing such record date. If no record date has been fixed by the Board of Directors within ten days of the date on which such a request is received, the record date for determining stockholders entitled to take corporate action by written consent without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery in the manner set forth in Section 1.08(a). If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to take corporate action by written consent without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.
|
(c)
|
Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the earliest dated consent delivered in the manner required hereby to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the corporation as set forth in Section 1.08(a).
|
(d)
|
A facsimile, electronic mail message, telegram, cablegram or other electronic transmission (each an “electronic transmission”) consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes hereof if such electronic transmission sets forth or is delivered with information from which the corporation can determine: (i) that the electronic transmission was transmitted by the stockholder or proxyholder or by a person or persons authorized to act for the stockholder or proxyholder and (ii) the date on which such stockholder or proxyholder or authorized person or persons transmitted such electronic transmission. The date on which such electronic transmission is transmitted shall be deemed to be the date on which such consent was signed. No consent given by electronic transmission shall be deemed to have been delivered until such consent is reproduced in paper form and until such paper form shall be delivered to the Corporation by delivery as set forth in Section 1.08(a). Notwithstanding the foregoing limitations on delivery, consents given by electronic transmission may be otherwise delivered to the principal place of business of the corporation or to the Secretary as provided by resolution of the Board of Directors.
|
(e)
|
Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing and all purposes for which the original writing could be used; provided that such is a complete reproduction of the entire original writing.
|
(f)
|
In the event of the delivery to the corporation of a written consent or consents purporting to represent the requisite voting power to authorize or take corporate action and/or any related revocations, the Secretary shall provide for their safekeeping. The Secretary, or such other officer of the corporation as the Board of Directors may designate, shall, as promptly as practicable, conduct a ministerial review of the validity of the consents and/or any related revocations deemed necessary and appropriate; provided, however, that if the corporate action to which the written consent relates is the removal or replacement of one or more members of the Board of Directors, the Secretary, or such other officer of the corporation as the Board of Directors may designate, shall promptly designate two persons, who may be employees of the corporation, but who shall not be members of the Board of Directors or officers of the corporation, to serve as inspectors with respect to such written consent and such inspectors shall discharge the functions of the Secretary, or such other officer of the corporation as the Board of Directors may designate, under this Section 1.08.
|
(g)
|
No action by written consent without a meeting shall be effective until such date as the Secretary, such other officer of the corporation as designated by the Board of Directors or the inspectors as appointed in accordance with Section 1.08(f), as applicable, completes its review, determines that such consents represent not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and so certifies to the Board of Directors for entry in the records of the corporation.
|
(h)
|
Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the corporation as provided herein.
|
(i)
|
Any stockholder giving a written consent, or the stockholder’s proxyholder, may revoke the consent in any manner permitted by applicable law.
|
Section 1.09.
|
Notice of Stockholder Business and Nominations.
|
(a)
|
Annual Meeting of Stockholders. (i) Nominations of persons for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders only (A) pursuant to the corporation’s notice of meeting (or any supplement thereto) delivered pursuant to Section 1.04, (B) by or at the direction of the Board of Directors (or any duly authorized committee thereof), (C) by any stockholder who is entitled to vote at the meeting on the election of directors or such business (as applicable), who complies with the notice procedures set forth in this Section 1.09 and who is a stockholder of record at the time such notice is delivered to the Secretary, or (D) in the case of certain nominations of persons for election to the Board of Directors, pursuant to Section 1.11 of this Article 1.
|
|
(A)
|
“Director Questionnaire” as defined in Section 2.02(b).
|
|
(B)
|
“Director Representation and Agreement” as defined in Section 2.02(b).
|
|
(C)
|
“public announcement” means disclosure in a press release reported by the Dow Jones News Service, Associated Press or other national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act (or any successor provisions thereto).
|
|
(D)
|
“Stockholder Associated Person” of any stockholder means (1) any beneficial owner of shares of stock of the corporation on whose behalf any proposal or nomination is made by such stockholder; (2) any affiliates or associates of such stockholder or any beneficial owner described in clause (1); and (3) each other person with whom any of the persons described in the clauses (1) and (2) either is acting in concert with respect to the corporation or has any agreement, arrangement or understanding (whether written or oral) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy given to such person in response to a public proxy solicitation made generally by such person to all stockholders entitled to vote at any meeting) or disposing of any capital stock of the corporation or to cooperate in obtaining, changing or influencing the control of the corporation (except independent financial, legal and other advisors acting in the ordinary course of their respective businesses).
|
(b)
|
Special Meetings of Stockholders. Business transacted at any special meeting of stockholders shall be limited to the purpose or purposes stated in the corporation’s notice of meeting delivered pursuant to Section 1.04. At a special meeting of stockholders at which directors are to be elected pursuant to the corporation’s notice of meeting, nominations of persons for election to the Board of Directors may be made (A) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (B) by any stockholder of the corporation who is a stockholder of record at the time the notice provided for in this Section 1.09(b) is delivered to the Secretary, who is entitled to vote for the election of directors at such meeting and who complies with the notice procedures set forth in this Section 1.09(b). Any stockholder entitled to vote in an election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the corporation’s notice of meeting for a special meeting of stockholders, if (i) the stockholder’s notice required by this Section 1.09(b) shall be delivered to the Secretary at the principal executive offices of the corporation not earlier than the close of business on the 120th day prior to such special meeting and not later than the close of business on the 90th day prior to such special meeting or, if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the 10th day following the day on which public announcement of the date of the meeting and of the nominees proposed by the Board of Directors to be elected at such meeting is first made by the corporation, and (ii) such stockholder’s notice contains the information that would have been required by Section 1.09(a)(iv) if Section 1.09(a)(iv) were applicable to nominations of persons for election to the Board of Directors made in connection with a special meeting of the stockholders. No public announcement of an adjournment or postponement of a special meeting shall commence a new time period (or extend any time period) for the giving of such a stockholder’s notice.
|
(c)
|
General. (ii) Only such persons nominated in accordance with this Section 1.09 or Section 1.11, where applicable, shall be eligible to be elected at an annual or special meeting of stockholders to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance this Section 1.09. Except as otherwise provided by the Certificate of Incorporation, these By-Laws or applicable law, and in furtherance of Section 1.10, the person presiding over the meeting shall have the power and duty (A) to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed in accordance with this Section 1.09 (including whether any stockholder or beneficial owner on whose behalf the nomination or proposal is made solicited (or is part of a group which solicited) or did not so solicit, proxies or votes in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by Section 1.09(a)(iii)(B)(9) and Section 1.09(a)(iv)(B)(4) or Section 1.11, where applicable, and (B) if any proposed nomination or business was not so made or proposed in compliance with this Section 1.09 or Section 1.11, where applicable, to declare that such nomination shall be disregarded or that such proposed business shall not be transacted. Notwithstanding the foregoing provisions of this Section 1.09, unless otherwise required by applicable law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders to present a nomination or, in the case of an annual meeting, proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the corporation. For purposes of these By-Laws, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders (“Qualified Representative”).
|
Section 1.10.
|
Inspectors of Elections; Opening and Closing the Polls. (a) To the extent required by applicable law, the Board of Directors by resolution or the Chairman of the Board shall appoint one or more inspectors, who may be employees of the corporation, to act at the meeting and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. Each inspector, before discharging his duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his ability. The inspectors shall have the duties prescribed by the General Corporation Law of the State of Delaware.
|
(b)
|
Meetings of the stockholders shall be presided over by the Chairman of the Board, or if he is not present, by the Chief Executive Officer, or if he is not present, by the President, the Chief Operating Officer (if one has been elected) or a Vice President, as designated by the Board of Directors, or if none of such officers is present, by another person designated by the Board of Directors to preside over the meeting. The Secretary, if present, shall act as secretary of such meetings, or if he is not present, an Assistant Secretary shall so act; if neither the Secretary nor an Assistant Secretary is present, then a secretary shall be appointed by the person presiding over the meeting. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the person presiding over any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to adjourn the meeting and to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the person presiding over the meeting, may include the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as such presiding person shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The person presiding over any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered.
|
Section 1.11.
|
Proxy Access.
|
a)
|
The corporation shall include in its proxy statement for an annual meeting of the stockholders the name, together with the required information specified below, of any person nominated for election to the Board by a stockholder that satisfies, or by a group of no more than 20 stockholders that together satisfy, the requirements of this Section 1.11, and who expressly elect at the time of providing the notice required by this Section 1.11 to have its nominee included in the corporation’s proxy statement pursuant to this Section 1.11. For purposes of this Section 1.11, the information that the corporation will be required to include in its proxy statement is: (i) the information concerning the nominee and the stockholder or group of stockholders who nominated such nominee that is required to be disclosed in the corporation’s proxy statement by the regulations promulgated under the Exchange Act and (ii) if such stockholder or group of stockholders so elects, a statement pursuant to paragraph (j) of this Section 1.11. No person may be a member of more than one group of persons constituting a group that satisfies the requirements of this Section 1.11.
|
b)
|
For nominations pursuant to this Section 1.11 to be properly submitted by a stockholder or group of stockholders, such stockholder or group of stockholders must give timely written notice of such nominations to the Secretary. To be considered timely, a stockholder’s notice, together with the other information required by this Section 1.11, must be received by the Secretary at the principal executive offices of the corporation not less than 120 calendar days nor more than 150 calendar days before the anniversary date of the corporation’s proxy statement released to stockholders in connection with the prior year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days earlier or more than 60 days later than such anniversary date, notice by the stockholder to be timely must be so delivered or received not earlier than the 150th day prior to such annual meeting and not later than the close of business on the later of the 120th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made.
|
c)
|
The number of stockholder nominees nominated pursuant to this Section 1.11 (including any nominees that were submitted by a stockholder or group of stockholders for inclusion in the corporation’s proxy statement pursuant to this Section 1.11, but either are subsequently withdrawn or that the Board decides to nominate as Board nominees) appearing in the corporation’s proxy statement with respect to an annual meeting of stockholders, shall not exceed the greater of (i) two or (ii) 20% of the number of directors in office as of the last day on which notice of a nomination in accordance with the procedures set forth in this Section 1.11 may be received by the Secretary pursuant to this Section 1.11, or if such amount is not a whole number, the closest whole number below 20%. In the event that one or more vacancies for any reason occur on the Board after the last day on which notice of a nomination in accordance with the procedures set forth in this Section 1.11 may be received by the Secretary pursuant to this Section 1.11, but before the date of the annual meeting of stockholders, and the Board resolves to reduce the size of the Board in connection therewith, the maximum number of stockholder nominees nominated pursuant to this Section 1.11 included in the corporation’s proxy statement shall be calculated based on the number of directors in office as so reduced. Any stockholder or group of stockholders submitting more than one nominee for inclusion in the corporation’s proxy statement pursuant to this Section 1.11 shall rank its nominees based on the order that such stockholder or group of stockholders desires such nominees to be selected for inclusion in the corporation’s proxy statement in the event that the total number of stockholder nominees submitted by stockholders or groups of stockholders pursuant to this Section 1.11 exceeds the maximum number of stockholder nominees provided for in this Section 1.11. In the event that the number of stockholder nominees submitted by stockholders or groups of stockholders pursuant to this Section 1.11 exceeds the maximum number of stockholder nominees provided for in this Section 1.11, the highest ranking stockholder nominee who meets the requirements of this Section 1.11 from each stockholder or group of stockholders will be selected for inclusion in the corporation’s proxy statement until the maximum number is reached, going in order of the amount (largest to smallest) of shares of capital stock of the corporation each stockholder or group of stockholders disclosed as owned in its respective notice of a nomination submitted to the corporation in accordance with the procedures set forth in this Section 1.11. If the maximum number is not reached after the highest ranking stockholder nominee who meets the requirements of this Section 1.11 from each stockholder or group of stockholders has been selected, this process will continue as many times as necessary, following the same order each time, until the maximum number is reached.
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d)
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For purposes of this Section 1.11, a stockholder or group of stockholders shall be deemed to “own” only those outstanding shares of capital stock of the corporation as to which the stockholder or any member of a group of stockholders possesses both (i) the full voting and investment rights pertaining to the shares and (ii) the full economic interest in (including the opportunity for profit and risk of loss on) such shares; provided that the number of shares calculated in accordance with clauses (i) and (ii) shall not include any shares (x) sold by such stockholder or any of its affiliates in any transaction that has not been settled or closed, (y) borrowed by such stockholder or any of its affiliates for any purposes or purchased by such stockholder or any of its affiliates pursuant to an agreement to resell or (z) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such stockholder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of shares of outstanding capital stock of the corporation, in any such case which instrument or agreement has, or is intended to have, the purpose or effect of (1) reducing in any manner, to any extent or at any time in the future, such stockholder’s or affiliates’ full right to vote or direct the voting of any such shares, and/or (2) hedging, offsetting or altering to any degree gain or loss arising from the full economic ownership of such shares by such stockholder or affiliate. A person’s ownership of shares shall continue notwithstanding (i) the loaning of such shares if, during the period such shares are loaned, the person has the power to recall such loaned shares on three business days’ notice; or (ii) such person having delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement if, during the period such arrangement exists, the proxy, power of attorney or other instrument or arrangement is revocable at any time by such person. The terms “owned,” “owning” and other variations of the word “own” shall have correlative meanings. Whether outstanding shares of the capital stock of the corporation are “owned” for these purposes shall be determined by the Board. For purposes of this Section 1.11, the term “affiliate” or “affiliates” shall have the meaning ascribed thereto under the General Rules and Regulations under the Exchange Act.
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e)
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In order to make a nomination pursuant to this Section 1.11, a stockholder or group of stockholders must have owned 3% or more of the corporation’s outstanding capital stock continuously for at least three years as of both the date the written notice of the nomination is delivered to or mailed and received by the corporation in accordance with this Section 1.11 and the record date for determining stockholders entitled to vote at the annual meeting of stockholders, and must continue to own at least 3% of the corporation’s outstanding capital stock through the meeting date. Together with any notice of a nomination in accordance with the procedures set forth in this Section 1.11, a stockholder or group of stockholders must also provide the following information in writing to the Secretary: (i) any and all information required by Section 1.09(a)(iv) of this Article I, (ii) one or more written statements from the record holder of the shares (and from each intermediary through which the shares are or have been held during the requisite three-year holding period) verifying that, as of a date within 7 calendar days prior to the date the written notice of the nomination is delivered to or mailed and received by the Secretary, the stockholder or group of stockholders owns, and has owned continuously for the preceding three years, at least 3% of the corporation’s outstanding common stock, and the stockholder or group of stockholders’ agreement to provide, within 5 business days after the record date for the annual meeting of stockholders, written statements from the record holder and intermediaries verifying such stockholder or group of stockholders’ continuous ownership of at least 3% of the corporation’s outstanding capital stock through the record date; (iii) the written consent of each stockholder nominee to being named in the proxy statement as a nominee and to serve as a director if elected; (iv) a copy of the Schedule 14N that has been filed with the Securities and Exchange Commission as required by Rule 14a-18 under the Exchange Act; and (v) in the case of a nomination by a group of shareholders, the written designation by all group members of one group member that is authorized to act on behalf of all such members with respect to the nomination and matters related thereto, including any withdrawal of the nomination.
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f)
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Together with any notice of a nomination in accordance with the procedures set forth in this Section 1.11, a stockholder or group of stockholders must also provide a written representation and agreement that such stockholder or group of stockholders (including each member thereof): (i) acquired at least 3% of the corporation’s outstanding capital stock in the ordinary course of business and not with the intent to change or influence control of the corporation, and does not presently have such intent, (ii) presently intends to maintain qualifying ownership of at least 3% of the corporation’s outstanding capital stock through the date of the annual meeting, (iii) has not nominated and will not nominate for election to the Board at the annual meeting of stockholders any person other than the nominee or nominees being nominated pursuant to this Section 1.11, (iv) has not engaged and will not engage in, and has not and will not be a “participant” in another person’s, “solicitation” within the meaning of Rule 14a-1(l) under the Exchange Act, in support of the election of any individual as a director at the annual meeting of stockholders other than its nominee or a nominee of the Board, (v) will not distribute to any stockholder any form of proxy for the annual meeting of stockholders other than the form distributed by the corporation and (vi) will provide facts, statements and other information in all communications with the corporation and stockholders of the corporation that are or will be true and correct in all material respects and do not and will not omit a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
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g)
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Together with any notice of a nomination in accordance with the procedures set forth in this Section 1.11, a stockholder or group of stockholders must provide a written undertaking that the stockholder or group of stockholders (including each member thereof) agrees to: (i) assume all liability stemming from any legal or regulatory violation arising out of the stockholder or group of stockholders’ communications with the stockholders of the corporation or out of the information that the such stockholder or group of stockholders provided to the corporation, (ii) comply with all other laws and regulations applicable to any solicitation in connection with the annual meeting of stockholders, and (iii) indemnify and hold harmless the corporation and each of its directors, officers and employees individually against any liability, loss or damages in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the corporation or any of its directors, officers or employees arising out of any nomination submitted by the stockholder or group of stockholders pursuant to this Section 1.11. The inspector of elections shall not give effect to the stockholder or group of stockholders’ votes with respect to the election of directors if such stockholder or group of stockholders does not comply with the undertakings in paragraph (f) above or this paragraph (g).
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h)
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Together with any notice of a nomination in accordance with the procedures set forth in this Section 1.11, a stockholder nominee must deliver to the Secretary a Director Representation and Agreement as set forth in Section 2.02(b)(ii). At the request of the corporation, the stockholder nominee must submit all completed and signed questionnaires required of directors of the corporation, including a Director Questionnaire as required by Section 2.02(b)(i).
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i)
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In the event that any information or communications provided by the stockholder or group of stockholders or any stockholder nominee to the corporation or its stockholders ceases to be true and correct in all material respects or omits a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading, each stockholder or group of stockholders or stockholder nominee, as the case may be, shall promptly notify the Secretary of any defect in such previously provided information and of the information that is required to correct any such defect.
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j)
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The stockholder or group of stockholders may provide to the Secretary, at the time the information required by this Section 1.11 is provided, a written statement for inclusion in the corporation’s proxy statement for the annual meeting of stockholders, not to exceed 500 words, in support of each stockholder nominee’s candidacy. Notwithstanding anything to the contrary contained in this Section 1.11, the corporation may omit from its proxy statement any information or statement that it, in good faith, believes would violate any applicable law or regulation.
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k)
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The corporation shall not be required to include, pursuant to this Section 1.11, any stockholder nominee in its proxy statement for any meeting of stockholders: (i) for which the Secretary receives a notice that a stockholder or group of stockholders has nominated a person for election to the Board pursuant to Section 1.09(a)(i)(C) of this Article I, (ii) if the stockholder nominee is, or has been within the three years preceding the date the corporation first mails to the stockholders its notice of meeting that includes the name of the stockholder nominee, an officer or director of a company that is a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914, of the corporation, as determined by the Board, (iii) who is not independent under the listing standards of the principal U.S. securities exchange upon which the capital stock of the corporation is listed, any applicable rules of the Securities and Exchange Commission or any publicly disclosed standards used by the Board in determining and disclosing the independence of the corporation’s directors, including those set forth in Section 2.02 of Article II, (iv) if the stockholder nominee or the stockholder or group of stockholders (including any member thereof) who has nominated such stockholder nominee has engaged in or is currently engaged in, or has been or is a “participant” in another person’s, “solicitation” within the meaning of Rule 14a-1(l) under the Securities Exchange Act of 1934, as amended, in support of the election of any individual as a director at the meeting other than such stockholder nominee or a nominee of the Board, (v) who is or becomes a party to any compensatory, payment or other financial agreement, arrangement or understanding with any person other than the corporation that has not been disclosed to the corporation, (vi) who is named subject of a criminal proceeding (excluding traffic violations and other minor offenses) pending as of the date the corporation first mails to the stockholders its notice of meeting that includes the name of the stockholder nominee and, within the 10 years preceding such date, must not have been convicted in such a criminal proceeding, (vii) who upon becoming a member of the Board would cause the corporation to be in violation of these By-Laws, the Certificate of Incorporation, the rules and listing standards of the principal U.S. exchange upon which the capital stock of the corporation is listed or any applicable state or federal law, rule or regulation, (viii) if such stockholder nominee or the applicable stockholder or group of stockholders (including any member thereof) shall have provided information to the corporation in respect of such nomination that was untrue in any material respect or omitted to state a material fact necessary in order to make the statement made, in light of the circumstances under which it was made, not misleading, as determined by the Board, or (ix) if the stockholder or group of stockholders (including any member thereof) or applicable stockholder nominee otherwise shall have breached or contravened any of its or their agreements, representations or undertakings or failed to comply with this Section 1.11, as determined by the Board or the chairman of the annual meeting of stockholders.
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l)
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Notwithstanding anything to the contrary set forth in this Section 1.11, the Board or the presiding director or officer of the annual meeting of stockholders shall declare a nomination by a stockholder or group of stockholders to be invalid, and such nomination shall be disregarded notwithstanding that proxies in respect of such vote may have been received by the corporation, if: (i) the stockholder or group of stockholders (including any member thereof) or applicable stockholder nominee otherwise shall have breached or contravened any of its or their agreements, representations or undertakings or failed to comply with this Section 1.11, as determined by the Board or the presiding director or officer of the annual meeting of stockholders, (ii) such stockholder nominee or the applicable stockholder or group of stockholders (including any member thereof) shall have provided information to the corporation in respect of such nomination that was untrue in any material respect or omitted a material fact necessary in order to make the statement made, in light of the circumstances under which it was made, not misleading, as determined by the Board or (iii) the stockholder or group of stockholders (or a qualified representative thereof) does not appear at the annual meeting of stockholders to present any nomination pursuant to this Section 1.11.
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m)
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Any stockholder nominee who is included in the corporation’s proxy statement for a particular annual meeting of stockholders but either: (i) withdraws from or becomes ineligible or unavailable for election at the annual meeting of stockholders, or (ii) does not receive at least 25% of the votes cast in favor of the stockholder nominee’s election, will be ineligible to be a stockholder nominee pursuant to this Section 1.11 for the next two annual meetings of stockholders.
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n)
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The stockholder or group of stockholders shall file with the Securities and Exchange Commission any solicitation or other communication with the corporation’s stockholders relating to the meeting at which such stockholder’s or such group’s nominee will be nominated, regardless of whether any such filing is required under Regulation 14A of the Exchange Act, or whether any exemption from filing is available for such solicitation or other communication under Regulation 14A of the Exchange Act.
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Section 2.01.
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Number. The number of directors which shall constitute the Whole Board of Directors shall be no fewer than three nor more than forty. The first Board of Directors as of the date of these By-Laws shall consist of eleven directors. Thereafter, within the minimum and maximum above specified, the number of directors which shall constitute the Whole Board of Directors shall be determined by resolution of the Board of Directors or, in the absence thereof, shall be the number of directors elected at the preceding annual meeting of stockholders. The term “Whole Board of Directors” shall mean the total number of directors most recently determined pursuant to this Section 2.01, whether or not there exist any vacancies or unfilled previously authorized directorships.
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Section 2.02.
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Election; Qualification. (a) Directors shall be elected at each annual meeting of stockholders, and may also be elected as provided in Section 2.04 of this Article. Except as otherwise provided by the Certificate of Incorporation, these By-laws, the rules and regulations of any stock exchange applicable to the corporation, or applicable law or pursuant to any regulation applicable to the corporation or its securities, at all meetings of stockholders for the election of directors at which a quorum is present, each director nominee shall be elected by the affirmative vote of the majority of the votes cast by the holders of record, present in person or by proxy, of shares entitled to vote for the election of directors; provided, however, that in a contested election (as defined herein), directors shall be elected by a plurality of the votes cast. For the purposes of this Section 2.02, the “affirmative vote of the majority of the votes cast” shall mean that the number of votes cast “for” a nominee’s election exceeds the number of votes cast “against” that nominee’s election. Abstentions and broker non-votes shall not be counted as votes cast. A direction to “withhold authority” with respect to a nominee shall be treated as a vote cast against the election of such nominee. An election shall be contested if, as determined by the Board of Directors, (i) a stockholder has nominated any person(s) for election to the Board of Directors in compliance with the requirements for stockholder nominees for director set forth in Section 1.09 or otherwise in accordance with applicable law and (ii) such nomination has not been withdrawn by such stockholder on or prior to the fourteenth day prior to the date the corporation first mails its notice of meeting. Directors need not be stockholders of the corporation.
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(b)
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Each director of the corporation and nominee for election as a director of the corporation must, as a qualification to serve as a director, deliver to the Secretary at the principal executive offices of the corporation: (i) a written questionnaire with respect to the background and qualifications of such person and of any other person or entity on whose behalf the nomination is made (which questionnaire shall be provided by the Secretary upon written request) (a “Director Questionnaire”) and (ii) a written representation and agreement (in the form provided by the Secretary upon written request) (the “Director Representation and Agreement”) that such person: (A) is not, if serving as a director of the corporation, and will not become, while serving as a director of the corporation, a party to any agreement, arrangement or understanding (whether written or oral) with, and has not given any commitment or assurance to, any person or entity (1) as to how such person will act or vote on any issue or question to be considered by the Board of Directors (or any committee thereof) or (2) that could limit or interfere with such person’s ability to comply with such person’s duties as a director of the corporation under applicable law while serving as such that, in the case of this clause (2), has not been disclosed therein, (B) is not and will not become a party to any agreement, arrangement or understanding (whether written or oral) with any person or entity other than the corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director of the corporation that has not been disclosed in writing to the corporation, (C) is, if serving as a director of the corporation, or would be if elected as a director of the corporation, and will be, while serving as such, in compliance with all applicable corporate governance, conflict of interest, confidentiality and securities ownership and trading policies and guidelines of the corporation (copies of which shall be provided by the Secretary upon written request) (subject to any waivers or exemptions granted pursuant to a resolution of the majority of the disinterested members of the Board of Directors) and any other policies applicable to directors of the corporation, (D) irrevocably submits such person’s resignation as a director, if serving, or if elected as a director of the corporation, effective upon a finding by a court of competent jurisdiction that such person has breached the Director Representation and Agreement in any material respect and (E) irrevocably submits such person’s resignation as a director, if serving, effective upon (1) such person’s failure to receive the affirmative vote of a majority of the votes cast at the next stockholder meeting at which he or she faces reelection and (2) the Board of Directors’ acceptance of such resignation.
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(c)
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If any nominee for director in a non-contested election does not receive the affirmative vote of a majority of the votes cast at a stockholder meeting, and such nominee is an incumbent director, the Nominating Committee shall assess the appropriateness of such nominee continuing to serve as director and shall recommend to the Board of Directors the action to be taken with respect to the resignation such nominee submitted in accordance with Section 2.02(b)(ii)(E). In reaching its recommendation, the Nominating Committee may consider factors it deems relevant, including, but not limited to, the director’s qualifications, the director’s past and expected future contributions to the corporation, the stated reason or reasons why stockholders voted against such director’s reelection, the overall composition of the Board of Directors, the availability of other qualified candidates for director and whether accepting the tendered resignation would cause the corporation to fail to meet any applicable rule or regulation (including New York Stock Exchange listing requirements and federal securities laws). The Nominating Committee’s evaluation shall begin promptly following the certification of the voting results and shall be forwarded to the Board of Directors to permit the Board of Directors to act on it no later than 90 days following the certification of the stockholder vote. In reviewing the Nominating Committee’s recommendation, the Board of Directors shall consider the factors evaluated by the Nominating Committee and such additional information and factors as the Board of Directors believes to be relevant. The corporation shall publicly disclose the Board of Directors’ decision within four business days in a Form 8-K, providing an explanation of the process by which the decision was reached and, if applicable, the reasons for not accepting the director’s resignation. Any director whose resignation is evaluated and decided upon pursuant to this provision shall not participate in the Nominating Committee’s recommendation or Board of Directors’ action regarding whether to accept the resignation offer. If a majority of the members of the Nominating Committee fail to receive the required vote in favor of their elections in the same election, then those independent directors on the Board of Directors (as most recently determined by the Board of Directors pursuant to applicable listing guidelines) who did receive the required vote shall consider the resignation offers and recommend to the Board of Directors whether to accept them.
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(d)
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If the Board of Directors accepts a director’s resignation pursuant to Section 2.02(c), or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board of Directors may fill the resulting vacancy pursuant to Section 2.04 or may decrease the size of the Board of Directors pursuant to Section 2.01.
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Section 2.03.
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Term of Office. Each director shall serve until his successor is elected and qualified in accordance with Section 2.02, or until his death, resignation, disqualification or removal.
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Section 2.04.
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Resignations; Removals; Filling of Vacancies. Any director may resign at any time by giving notice of such resignation to the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President or the Secretary. Unless otherwise specified in such notice, such resignation shall be effective upon receipt of such notice by the Board of Directors or such officer. Any director may be removed at any time, either for or without cause, by vote of the holders of shares having a majority of the voting power of the stock of the corporation entitled to vote for the election of directors.
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Section 2.05.
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Powers. The business and affairs of the corporation shall be managed by the Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by law or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the stockholders.
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Section 2.06.
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Chairman of the Board. The Board of Directors may elect from its members a Chairman of the Board who shall serve until the next annual election of directors, or until his death, resignation, disqualification or removal. The Chairman of the Board shall preside at all stockholder and Board meetings and perform such duties and have such powers as from time to time may be assigned to him by the Board of Directors. The Chairman may resign at any time by giving notice of such resignation to the Board of Directors. Unless otherwise specified in such notice, such resignation shall be effective upon receipt of such notice by the Board of Directors. The Chairman of the Board may be removed from such position at any time, either for or without cause, by the affirmative vote of a majority of the Whole Board of Directors. In the event that the position of Chairman of the Board becomes vacant for any reason, the Chief Executive Officer shall assume the position of Chairman of the Board until such time as a new Chairman of the Board is elected by a majority of the Whole Board of Directors.
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Section 3.01.
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Place. Meetings of directors, both regular and special, may be held either within or without the State of Delaware.
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Section 3.02.
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Annual and Regular Meetings. The annual meeting of the Board of Directors for the election of officers, and for the transaction of such business as may be deemed desirable by the directors present, shall be held in each year immediately following the annual meeting of stockholders, at the place of such meeting, or at such time and place as the retiring Board of Directors may have designated. If the annual meeting of the Board of Directors is so held, no notice thereof need be given. If the annual meeting of the Board of Directors shall not be so held in any year, such meeting shall be held as soon after the annual meeting of stockholders as practicable, upon notice as required for special meetings of the Board of Directors under Section 3.03. The Board of Directors from time to time may provide for the holding of regular meetings and fix the times and places of such meetings, and no notice need be given of regular meetings held at the times and places so fixed.
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Section 3.03.
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Special Meetings and Notice Thereof; Waiver of Notice. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board, the Chief Executive Officer, the President or the Secretary, and shall be called by the Chairman of the Board, the Chief Executive Officer, the President or the Secretary upon the written request of any two directors, such written request to state the purpose or purposes of the meeting and to be delivered to the Chairman of the Board, the Chief Executive Officer, the President or the Secretary. Each such special meeting shall be held at such place, date and time as shall be designated by the officer or directors calling such meeting. Notice of each special meeting of the Board of Directors shall be mailed to each director, postage prepaid, addressed to him at his residence or his usual place of business, at least two days before the day on which the meeting is to be held, or shall be sent to him at such place by telegram, radio or cable or shall be telephoned or delivered to him personally not later than the day before the meeting is to be held. Notice of any special meeting need not be given to any director who shall attend such meeting in person or who shall waive notice thereof in writing or by telegram, radio or cable, either before, after or at the time of such meeting. Except as otherwise provided by law, notice of any adjourned meeting of the Board of Directors need not be given.
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Section 3.04.
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Quorum. At each meeting of the Board of Directors (subject to the provision of Section 2.04 regarding the filling of vacancies), the presence of a majority of the total number of directors constituting the Whole Board of Directors shall constitute a quorum for the transaction of business. Except as otherwise provided in these By-Laws, the vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum, a majority of the directors present at the time and place of any meeting or of any adjournment thereof (or if only one director be present, then that one) may adjourn the meeting from time to time, without notice other than announcement at the time and place of such meeting or adjournment, until a quorum shall be present. At any adjourned session of any such meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally noticed.
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Section 3.05.
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Consent in lieu of Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board of Directors.
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Section 3.06.
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Participation by Telephone. Directors may participate in any meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in such meeting can hear each other, and such participation shall constitute such directors’ presence at such meeting.
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Section 4.01.
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Creation of Committee. The Board of Directors may, by action of a majority of the whole Board of Directors, designate an Executive Committee and/or one or more other committees, each consisting of one or more directors.
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Section 4.02.
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Powers of Committee. Subject to any limitations imposed by law or by resolution adopted by a majority of the Whole Board of Directors, the Executive Committee shall have and may exercise, when the Board of Directors is not in session, all power and authority of the Board of Directors in the management of the business and affairs of the corporation, except any power or authority in reference to (a) approving or adopting, or recommending to the stockholders any action or matter, other than the election or removal of directors, expressly required by the General Corporation Law of Delaware to be submitted to stockholders for approval, or (b) adopting, amending or repealing any By-Law of the corporation. Each other committee shall have and may exercise, when the Board of Directors is not in session, such powers, not exceeding those which may be granted to the Executive Committee, as the Board of Directors shall confer.
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Section 4.03.
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Meeting and Proceedings. Except as otherwise provided in these By-Laws or by resolutions of the Board of Directors, each committee shall adopt its own rules governing the conduct of its proceedings. All action by any committee shall be reported to the Board of Directors at the next meeting thereof and shall be subject to revision and alteration by the Board of Directors, provided that no such revision or alteration shall affect the rights of third parties. At each meeting of any committee, the presence of a majority of the total number of members constituting the committee shall constitute a quorum for the transaction of business. The vote of a majority of the members of the committee present at any meeting at which a quorum is present shall be the action of the committee.
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Section 4.04.
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Term of Office; Resignations; Removals; Filling of Vacancies. The term of office of a member of a committee shall be as provided in the resolution of the Board of Directors designating the committee or designating him as a member but shall not exceed his term of office as a director. If prior to the end of his term of office as a member of a committee a member should cease to be a director, he shall cease to be a member of the committee. Any member of any committee may resign at any time by giving notice of such resignation to the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President or the Secretary. Unless otherwise specified in such notice, such resignation shall be effective upon receipt of such notice by the Board of Directors or such officer. Any member of any committee may be removed at any time from such committee, either for or without cause by action of a majority of the Whole Board of Directors. Vacancies in any committee may be filled by the Board of Directors by action of a majority of the Whole Board of Directors.
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Section 5.01.
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Election; Number; Qualifications; Term. The officers of the corporation shall be elected by a majority of the Whole Board of Directors, and shall include a Chief Executive Officer, a President, one or more Executive Vice Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer, one or more Assistant Treasurers and such other officers as may be elected in the discretion of the Board of Directors. Any two or more offices may be held by the same person. Officers need not be directors or stockholders of the corporation. Each officer shall hold office until his successor is elected and qualified, or until his death, resignation, disqualification or removal.
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Section 5.02.
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Power and Duties in General. In addition to the powers and duties prescribed by these By-Laws, the officers and assistant officers shall have such powers and duties as are usually incident to their respective offices, subject to the control of the Board of Directors.
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Section 5.03.
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The Chief Executive Officer. The Chief Executive Officer of the corporation shall, subject to the control of the Board of Directors, have general charge of the business and affairs of the corporation and general supervision of its officers and agents and shall, in the absence of the Chairman of the Board, preside at all meetings of stockholders and of the Board of Directors at which he shall be present. He shall prepare and present reports to the Board concerning the state of the corporation’s business and affairs. The Board may designate one of the other officers of the corporation to perform the duties of the Chief Executive Officer in his absence.
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Section 5.04.
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The President. The President shall, during any absence of the Chief Executive Officer, carry out all of the duties of the Chief Executive Officer. He shall also perform such other duties as may be assigned to him by the Chief Executive Officer.
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Section 5.05.
|
The Vice Presidents. An Executive Vice President, a Senior Vice President or Vice President shall perform such duties as from time to time may be assigned to him by the Chief Executive Officer, the President or by the Board of Directors or by any committee thereunto authorized.
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Section 5.06.
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The Secretary. The Secretary shall cause the minutes of all proceedings of the stockholders and the Board of Directors to be recorded in the minute book of the corporation, shall cause all notices to be duly given in accordance with the provisions of these By-Laws and as required by law, and shall have charge and custody of the records and the seal of the corporation.
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Section 5.07.
|
The Treasurer. The Treasurer shall have charge and custody of the corporate funds and securities, shall keep full and accurate accounts of receipts and disbursements, shall deposit all monies and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated in accordance with these By-Laws, and shall render a report and account of the transactions of the corporation and of the financial condition of the corporation whenever so required by the Board of Directors or the Chief Executive Officer.
|
Section 5.08.
|
Resignations; Removals; Filling of Vacancies. Any officer may resign at any time by giving notice of such resignation to the Board of Directors, the Chief Executive Officer, the President or the Secretary. Unless otherwise specified in such notice, such resignation shall be effective upon receipt of such notice by the Board of Directors or such officer. Any officer may be removed at any time, either for or without cause, by action of a majority of the Whole Board of Directors.
|
Section 5.09.
|
Bonding. None of the officers, assistant officers and other employees, agents or representatives of the corporation shall be required to give bond unless the Board of Directors shall in its discretion require any such bond or bonds. Any bond so required shall be payable to the corporation in such amount and with such conditions and security as the Board of Directors may require.
|
Section 6.01.
|
Execution of Instruments. The Chief Executive Officer, the President or any Vice President may enter into any contract or execute and deliver any instrument (including, but not limited to, any check, bill of exchange, order for the payment of money, promissory note, acceptance, evidence of indebtedness or proxy to vote with respect to shares of stock of another corporation owned by or standing in the name of the corporation) in the name and on behalf of the corporation, subject to the control of the Board of Directors. The Board of Directors may authorize any officer, employee or agent to enter into any contract or execute and deliver any such instrument in the name and on behalf of the corporation, and such authorization may be general or confined to specific instances. To the extent authorized by the Board of Directors, the signature of any such person may be a facsimile.
|
Section 6.02.
|
Deposits. Monies and other valuable effects of the corporation may be deposited from time to time to the credit of the corporation with such depositories as may be selected by the Board of Directors or by any committee, officer or agent of the corporation to whom power of selection may be delegated from time to time by the Board of Directors.
|
Section 7.01.
|
Issuance; Signatures. Every holder of stock of the corporation shall be entitled to have a certificate signed by, or in the name of the corporation by the Chief Executive Officer, the President or a Vice President, and by either the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, of the corporation certifying the number of shares owned by him in the corporation. If such certificate is countersigned by a transfer agent other than the corporation or one of its employees, or a registrar other than the corporation or its employees, any other signature on the certificate may be a facsimile. Stock certificates shall be in such form as shall be approved by the Board of Directors.
|
Section 7.02.
|
Continuing Validity of Signatures. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon any such certificate shall cease to be such officer, transfer agent or registrar, whether because of death, resignation or otherwise, before such certificate is issued, such certificate may nevertheless be issued by the corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.
|
Section 7.03.
|
Record Date. (a) In order that the corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, such meeting or any adjournment thereof, , notwithstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid. Any record date set to determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and shall, unless otherwise required by applicable law, not be more than 60 nor less than ten days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting and, in such case, shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.
|
(b)
|
In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which shall not be more than sixty days prior to such action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
|
Section 7.04.
|
Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to have the rights of a stockholder with respect thereto, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.
|
Section 7.05.
|
Lost Certificates. When any certificate of stock is alleged to have been lost, destroyed or wrongfully taken, the corporation shall issue a new certificate if the owner so requests before the corporation has notice that the certificate has been acquired by a bona fide purchaser, (b) files with the corporation a sufficient indemnity bond and (c) satisfies any other reasonable requirements imposed by the corporation. The Board of Directors may waive the requirement of any such indemnity bond.
|
Section 8.01.
|
Offices. The principal office of the corporation in the State of Delaware shall be at No. 100 West Tenth Street, Wilmington, Delaware. The corporation may also have offices at other places within or without the State of Delaware.
|
Section 8.02.
|
Fiscal Year. The fiscal year of the corporation shall begin on the 1st day of January in each year, and shall end on the 31st day of December in such year.
|
Section 8.03.
|
Seal. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words “Corporate Seal, Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced.
|
Section 8.04.
|
Compensation of Directors. The Board of Directors shall have authority to fix the compensation of directors (including the Chairman of the Board). The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and/or a stated salary as director. No such payment shall preclude any director or committee member from serving the corporation in any other capacity and receiving compensation therefore. Members of committees may be allowed like compensation for attending committee meetings.
|
Section 8.05.
|
Compensation of Officers and Employees. The compensation of officers and, to the extent the Board of Directors shall deem advisable, the compensation of all other employees, agents and representatives of the corporation shall be fixed by the Board of Directors of in accordance with procedures adopted by it. Compensation may be contingent and/or measured in whole or in part by the profits of the corporation and its subsidiaries or a segment thereof. Bonuses, other extra or incentive compensation, deferred compensation and retirement benefits may be paid. Such amounts may be payable in cash, stock of the corporation or other property. The Board of Directors may delegate the authority contained in this section to such directors, officers, employees or agents of the corporation as the Board of Directors deems advisable.
|
Section 8.06.
|
Amendment of By-Laws. The By-Laws may be altered, amended or repealed from time to time, and new By-Laws may be made and adopted, by action of a majority of the Whole Board of Directors or by the stockholders.
|
Section 8.07.
|
Forum Selection. Unless the corporation consents in writing to the selection of an alternative forum, a state or federal court located within the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the corporation, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer or other employee of the corporation to the corporation or the corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, the certificate of incorporation or the by-laws of the corporation or (iv) any action asserting a claim governed by the internal affairs doctrine, in each such case subject to such court having personal jurisdiction over the indispensable parties named as defendants therein.
|
Section 9.01.
|
Right to Indemnification. The corporation shall to the fullest extent permitted by applicable law as then in effect indemnify each person (the “Indemnitee”) who was or is involved in any manner (including, without limitation, as a party or a witness) or is threatened to be made so involved in any threatened, pending or completed investigation, claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (including, without limitation, any action, suit or proceeding by, or in the right of, the corporation to procure a judgment in its favor) (a “Proceeding”) by reason of the fact that he is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise (including, without limitation, any employee benefit plan) against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such Proceeding. Such indemnification shall be a contract right and shall include the right to receive payment in advance of any expenses incurred by the Indemnitee in connection with such Proceeding, consistent with the provisions of applicable law as then in effect.
|
Section 9.02.
|
Insurance, Contracts and Funding. The corporation may purchase and maintain insurance to protect itself and any Indemnitee against any expenses, judgments, fines and amounts paid in settlement as specified in Section 9.01 of this Article or incurred by any Indemnitee in connection with any Proceeding referred to in Section 9.01 of this Article, to the fullest extent permitted by applicable law as then in effect. The corporation may enter into contracts with any director or officer of the corporation in furtherance of the provisions of this Article and may create a trust fund, grant a security interest or use other means (including, without limitation, a letter of credit) to ensure the payment of such amounts as may be necessary to effect indemnification as provided in this Article.
|
Section 9.03.
|
Indemnification; Not Exclusive Right. The right of indemnification provided in this Article shall not be exclusive of any other rights to which those seeking indemnification may otherwise be entitled, and the provisions of this Article shall inure to the benefit of the heirs and legal representatives of any person entitled to indemnification under this Article and shall be applicable to Proceedings commenced or continuing after the adoption of this Article, whether arising from acts or omissions occurring before or after such adoption.
|
Section 9.04.
|
Advancement of Expenses; Procedures; Presumptions and Effect of Certain Proceedings; Remedies. In furtherance, but not in limitation of the foregoing provisions, the following procedures, presumptions and remedies shall apply with respect to advancement of expenses and the right to indemnification under this Article:
|
(a)
|
Advancement of Expenses. All reasonable expenses incurred by or on behalf of the Indemnitee in connection with any Proceeding shall be advanced to the Indemnitee by the corporation within 20 days after the receipt by the corporation of a statement or statements from the Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the expenses incurred by the Indemnitee and, if required by law at the time of such advance, shall include or be accompanied by an undertaking by or on behalf of the Indemnitee to repay the amounts advanced if it should ultimately be determined that the Indemnitee is not entitled to be indemnified against such expenses pursuant to this Article.
|
(b)
|
Procedure for Determination of Entitlement to Indemnification. (i) To obtain indemnification under this Article, an Indemnitee shall submit to the Secretary of the corporation a written request, including such documentation and information as is reasonably available to the Indemnitee and reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification (the “Supporting Documentation”). The determination of the Indemnitee’s entitlement to indemnification shall be made not later than 60 days after receipt by the corporation of the written request for indemnification together with the Supporting Documentation. The Secretary of the corporation shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that the Indemnitee has requested indemnification.
|
(ii)
|
The Indemnitee’s entitlement to indemnification under this Article shall be determined in one of the following ways: (a) by a majority vote of the Disinterested Directors (as hereinafter defined), if they constitute a quorum of the Board of Directors; (b) by a written opinion on Independent Counsel (as hereinafter defined) if (x) a Change of Control (as hereinafter defined) shall have occurred and the Indemnitee so requests or (y) a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, a majority of such Disinterested Directors so directs; (c) by the stockholders of the corporation (but only if a majority of the Disinterested Directors, if they constitute a quorum of the Board of Directors, presents the issue of entitlement to indemnification to the stockholders for their determination); or (d) as provided in Section 9.04(c).
|
(iii)
|
In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 9.04(b)(ii), a majority of the Disinterested Directors shall select the Independent Counsel, but only an Independent Counsel to which the Indemnitee does not reasonably object; provided, however, that if a Change of Control shall have occurred, the Indemnitee shall select such Independent Counsel, but only an Independent Counsel to which the Board of Directors does not reasonably object.
|
(c)
|
Presumptions and Effect of Certain Proceedings. Except as otherwise expressly provided in this Article, the Indemnitee shall be presumed to be entitled to indemnification under this Article upon submission of a request for indemnification together with the Supporting Documentation in accordance with Section 9.04(b)(i), and thereafter the corporation shall have the burden of proof to overcome that presumption in reaching a contrary determination. In any event, if the person or persons empowered under Section 9.04(b) to determine entitlement to indemnification shall not have been appointed or shall not have made a determination within 60 days after receipt by the corporation of the request therefore together with the Supporting Documentation, the Indemnitee shall be deemed to be entitled to indemnification and the Indemnitee shall be entitled to such indemnification unless (a) the Indemnitee misrepresented or failed to disclose a material fact in making the request for indemnification or in the Supporting Documentation or (b) such indemnification is prohibited by law. The termination of any Proceeding described in Section 9.01, or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, adversely affect the right of the Indemnitee to indemnification or create a presumption that the Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not apposed to the best interests of the corporation or, with respect to any criminal Proceeding, that the Indemnitee had reasonable cause to believe that his conduct was unlawful.
|
(d)
|
Remedies of Indemnitee. (i) In the event that a determination is made pursuant to Section 9.04(b) that the Indemnitee is not entitled to indemnification under this Article, (a) the Indemnitee shall be entitled to seek an adjudication of his entitlement to such indemnification either, at the Indemnitee’s sole option, in (x) an appropriate court of the State of Delaware or any other court of competent jurisdiction or (y) an arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association; (b) any such judicial proceeding or arbitration shall be de novo and the Indemnitee shall not be prejudiced by reason of such adverse determination; and (c) in any such judicial proceeding or arbitration the corporation shall have the burden of proving that the Indemnitee is not entitled to indemnification under this Article.
|
(ii)
|
If a determination shall have been made or deemed to have been made, pursuant to Section 9.04(b) or (c), that the Indemnitee is entitled to indemnification, the corporation shall be obligated to pay the amounts constituting such indemnification within five days after such determination has been made or deemed to have been made and shall be conclusively bound by such determination unless (a) the Indemnitee misrepresented or failed to disclose a material fact in making the request for indemnification or in the Supporting Documentation or (b) such indemnification is prohibited by law. In the event that (c) advancement of expenses is not timely made pursuant to Section 9.04(a) or (d) payment of indemnification is not made within five days after a determination of entitlement to indemnification has been made or deemed to have been made pursuant to Section 9.04(b) or (c), the Indemnitee shall be entitled to seek judicial enforcement of the corporation’s obligation to pay to the Indemnitee such advancement of expenses or indemnification. Notwithstanding the foregoing, the corporation may bring an action, in an appropriate court in the State of Delaware or any other court of competent jurisdiction, contesting the right of the Indemnitee to receive indemnification hereunder due to the occurrence of an event described in subclause (a) or (b) of this clause (ii)(a “disqualifying Event”); provided, however, that in any such action the corporation shall have the burden of proving the occurrence of such Disqualifying Event.
|
(iii)
|
The corporation shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 9.04(d) that the procedures and presumptions of this Article are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the corporation is bound by all the provisions of this Article.
|
(iv)
|
In the event that the Indemnitee, pursuant to this Section 9.04(d), seeks a judicial adjudication of or an award in arbitration to enforce his rights under, or to recover damages for breach of, this Article, the Indemnitee shall be entitled to recover from the corporation, and shall be indemnified by the corporation against, any expenses actually and reasonably incurred by him if the Indemnitee prevails in such judicial adjudication or arbitration. If it shall be determined in such judicial adjudication or arbitration that the Indemnitee is entitled to receive part but not all of the indemnification or advancement of expenses sought, the expenses incurred by the Indemnitee in connection with such judicial adjudication or arbitration shall be prorated accordingly.
|
(e)
|
Definitions. For the purposes of this Section 9.04: (i) “Change in Control” means a change in control of the corporation of a nature that would be required to be reported in response to Item 6(e) of Section 14A of Regulation 14A promulgated under the Securities Exchange Act (or any successor provision thereto), whether or not the corporation is then subject to such reporting requirement; provided that, without limitation, such a change in control shall be deemed to have occurred if (a) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act (or any successor provision thereto)) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act (or any successor provision thereto)), directly or indirectly, of securities of the corporation representing 5 percent or more of the combined voting power of the corporation’s then outstanding securities without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such acquisition; (b) the corporation is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (c) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (including for this purpose any new director whose election or nomination for election by the corporation’s stockholders was approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors.
|
(ii)
|
“Disinterested Director” means a director of the corporation who is not or was not a party to the Proceeding in respect of which indemnification is sought by the Indemnitee.
|
(iii)
|
“Independent Counsel” means a law firm or a member of a law firm that neither presently is, nor in the past five years has been, retained to represent: (i) the corporation or the Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification under this Article. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing under the law of the State of Delaware, would have a conflict of interest in representing either the corporation or the Indemnitee in an action to determine the Indemnitee’s rights under this Article.
|
Section 9.05.
|
Severability. If any provision or provisions of this Article shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Article (including, without limitation, all portions of any paragraph of this Article containing any such provisions held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Article (including, without limitation, all portions of any paragraph of this Article containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.
|
Section 9.06.
|
Amendment. No provision of this Article shall be amended retroactively. In no case shall any amendment of this Article occur without thirty days’ advance written notice to all Indemnitees.
|
(2)
|
This option, to the extent that it shall not have been exercised, shall terminate when you cease to be an employee of the Corporation or a Subsidiary, unless you cease to be an employee because of your resignation with the consent of the Incentive Committee or because of your death, incapacity or retirement under a retirement plan of the Corporation or a Subsidiary. If you cease to be an employee because of such resignation, this option shall terminate upon the expiration of three months after you cease to be an employee, except as provided in the next sentence. If you cease to be an employee because of your death, incapacity or retirement under a retirement plan of the Corporation or a Subsidiary, or if you cease to be an employee because of your resignation with the consent of the Incentive Committee and die during the three-month period referred to in the preceding sentence, this option shall terminate fifteen (15) months after you ceased to be an employee. Where this option is exercised more than three months after termination of employment, as aforesaid, only those installments which shall have become exercisable prior to the expiration of three months after you ceased to be an employee, whether by death or otherwise, may be exercised. A leave of absence for military or governmental service or for other purposes shall not, if approved by the Incentive Committee be deemed a termination of employment within the meaning of this paragraph (3), provided, however, that this option may not be exercised during any such leave of absence. Notwithstanding the foregoing provisions of this paragraph (3) or any provision of the Plan, this option shall not be exercisable after the expiration of five years from the date this option is granted.
|
Very truly yours, | ||||
CHEMED CORPORATION | ||||
By: | ||||
Naomi C. Dallob | ||||
Receipt Acknowledged: | Chief Legal Officer | |||
Employee |
CHEMED CORPORATION
|
|||||||||||||||||||||||||
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
|
|||||||||||||||||||||||||
(in thousands, except ratios)
|
|||||||||||||||||||||||||
2011
|
2012
|
2013
|
2014
|
2015
|
|||||||||||||||||||||
Pretax income from continuing operations
|
$ | 140,556 | $ | 145,819 | $ | 123,829 | $ | 162,754 | $ | 180,126 | |||||||||||||||
Additions:
|
|||||||||||||||||||||||||
Fixed charges
|
26,656 | 28,021 | 28,032 | 21,388 | 16,985 | ||||||||||||||||||||
Amortization of capitalized interest
|
438 | 435 | 435 | 435 | 435 | ||||||||||||||||||||
|
|||||||||||||||||||||||||
Adjusted income
|
$ | 167,650 | $ | 174,275 | $ | 152,296 | $ | 184,577 | $ | 197,546 | |||||||||||||||
Fixed Charges:
|
|||||||||||||||||||||||||
Interest expense
|
$ | 13,888 | $ | 14,723 | $ | 15,035 | $ | 8,186 | $ | 3,645 | |||||||||||||||
Interest component of rental expense
|
12,768 | 13,298 | 12,997 | 13,202 | 13,340 | ||||||||||||||||||||
|
|||||||||||||||||||||||||
Fixed charges
|
$ | 26,656 | $ | 28,021 | $ | 28,032 | $ | 21,388 | $ | 16,985 | |||||||||||||||
Ratio of earnings to fixed charges (a)
|
6.3 |
x
|
6.2 |
x
|
5.4 |
x
|
8.6 |
x
|
11.6 |
x
|
|||||||||||||||
Report of Independent Registered Public Accounting Firm
|
75
|
Consolidated Statement of Income
|
76
|
Consolidated Balance Sheet
|
77
|
Consolidated Statement of Cash Flows
|
78
|
Consolidated Statement of Changes in Stockholders’ Equity
|
79
|
Notes to Consolidated Financial Statements
|
80
|
Unaudited Summary of Quarterly Results
|
101
|
Selected Financial Data
|
103
|
Unaudited Consolidating Statements of Income
|
104
|
Management’s Discussion and Analysis of Financial Conditions and Results of Operations
|
107
|
CONSOLIDATED STATEMENT OF INCOME
|
||||||||||||
Chemed Corporation and Subsidiary Companies
|
||||||||||||
(in thousands, except per share data)
|
||||||||||||
For the Years Ended December 31,
|
2015
|
2014
|
2013
|
|||||||||
Service revenues and sales
|
$ | 1,543,388 | $ | 1,456,282 | $ | 1,413,329 | ||||||
Cost of services provided and goods sold (excluding depreciation)
|
1,087,610 | 1,034,673 | 1,008,808 | |||||||||
Selling, general and administrative expenses
|
237,821 | 222,589 | 215,564 | |||||||||
Depreciation
|
32,369 | 29,881 | 27,698 | |||||||||
Amortization
|
1,130 | 720 | 1,644 | |||||||||
Other operating expenses (Note 21)
|
- | - | 26,221 | |||||||||
Total costs and expenses
|
1,358,930 | 1,287,863 | 1,279,935 | |||||||||
Income from operations
|
184,458 | 168,419 | 133,394 | |||||||||
Interest expense
|
(3,645 | ) | (8,186 | ) | (15,035 | ) | ||||||
Other income/(expenses)--net (Note 10)
|
(687 | ) | 2,521 | 5,470 | ||||||||
Income before income taxes
|
180,126 | 162,754 | 123,829 | |||||||||
Income taxes (Note 11)
|
(69,852 | ) | (63,437 | ) | (46,602 | ) | ||||||
Net Income
|
$ | 110,274 | $ | 99,317 | $ | 77,227 | ||||||
Earnings Per Share (Note 15)
|
||||||||||||
Net Income
|
$ | 6.54 | $ | 5.79 | $ | 4.24 | ||||||
Average number of shares outstanding
|
16,870 | 17,165 | 18,199 | |||||||||
Diluted Earnings Per Share (Note 15)
|
||||||||||||
Net Income
|
$ | 6.33 | $ | 5.57 | $ | 4.16 | ||||||
Average number of shares outstanding
|
17,422 | 17,840 | 18,585 |
CONSOLIDATED BALANCE SHEET
|
||||||||
Chemed Corporation and Subsidiary Companies
|
||||||||
(in thousands, except shares and per share data)
|
||||||||
December 31,
|
2015
|
2014
|
||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents (Note 9)
|
$ | 14,727 | $ | 14,132 | ||||
Accounts receivable less allowances of $13,244 (2014 - $14,728)
|
106,262 | 124,607 | ||||||
Inventories
|
6,314 | 6,168 | ||||||
Current deferred income taxes (Note 11)
|
- | 15,414 | ||||||
Prepaid income taxes
|
10,653 | 2,787 | ||||||
Prepaid expenses
|
12,852 | 11,456 | ||||||
Total current assets
|
150,808 | 174,564 | ||||||
Investments of deferred compensation plans held in trust (Notes 14 and 16)
|
49,481 | 49,147 | ||||||
Properties and equipment, at cost, less accumulated depreciation (Note 12)
|
117,370 | 105,336 | ||||||
Identifiable intangible assets less accumulated amortization of $32,866 (2014 - $32,772) (Note 6)
|
55,111 | 56,027 | ||||||
Goodwill
|
472,322 | 466,722 | ||||||
Other assets
|
7,233 | 8,136 | ||||||
Total Assets
|
$ | 852,325 | $ | 859,932 | ||||
Liabilities
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$ | 43,695 | $ | 46,849 | ||||
Current portion of long-term debt (Note 3)
|
7,500 | 6,250 | ||||||
Income taxes (Note 11)
|
- | 5,818 | ||||||
Accrued insurance
|
43,972 | 40,814 | ||||||
Accrued compensation
|
52,817 | 50,718 | ||||||
Accrued legal
|
1,233 | 753 | ||||||
Other current liabilities
|
22,119 | 24,352 | ||||||
Total current liabilities
|
171,336 | 175,554 | ||||||
Deferred income taxes (Note 11)
|
21,041 | 29,945 | ||||||
Long-term debt (Note 3)
|
83,750 | 141,250 | ||||||
Deferred compensation liabilities (Note 14)
|
49,467 | 48,684 | ||||||
Other liabilities
|
13,478 | 13,143 | ||||||
Total Liabilities
|
339,072 | 408,576 | ||||||
Commitments and contingencies (Notes 13 and 18)
|
||||||||
Stockholders' Equity
|
||||||||
Capital stock - authorized 80,000,000 shares $1 par; issued 33,985,316 shares
|
||||||||
(2014 - 33,337,297 shares)
|
33,985 | 33,337 | ||||||
Paid-in capital
|
603,006 | 538,845 | ||||||
Retained earnings
|
865,845 | 771,176 | ||||||
Treasury stock - 17,187,540 shares (2014 - 16,446,572 shares), at cost
|
(991,978 | ) | (894,285 | ) | ||||
Deferred compensation payable in Company stock (Note 14)
|
2,395 | 2,283 | ||||||
Total Stockholders' Equity
|
513,253 | 451,356 | ||||||
Total Liabilities and Stockholders' Equity
|
$ | 852,325 | $ | 859,932 |
CONSOLIDATED STATEMENT OF CASH FLOWS
|
||||||||||||
Chemed Corporation and Subsidiary Companies
|
||||||||||||
(in thousands)
|
||||||||||||
For the Years Ended December 31,
|
2015
|
2014
|
2013
|
|||||||||
Cash Flows from Operating Activities
|
||||||||||||
Net income
|
$ | 110,274 | $ | 99,317 | $ | 77,227 | ||||||
Adjustments to reconcile net income to net cash provided by operations:
|
||||||||||||
Depreciation and amortization
|
33,499 | 30,601 | 29,342 | |||||||||
Provision for uncollectible accounts receivable
|
14,247 | 13,173 | 10,907 | |||||||||
Noncash portion of long-term incentive compensation
|
6,644 | 2,569 | 1,301 | |||||||||
Provision/(benefit) for deferred income taxes (Note 11)
|
6,325 | 6,978 | (6,988 | ) | ||||||||
Stock option expense
|
5,445 | 4,802 | 6,042 | |||||||||
Amortization of restricted stock awards
|
2,107 | 2,471 | 3,046 | |||||||||
Directors' stock awards
|
540 | 480 | 480 | |||||||||
Amortization of debt issuance costs
|
523 | 826 | 1,751 | |||||||||
Amortization of discount on convertible notes
|
- | 3,392 | 8,674 | |||||||||
Changes in operating assets and liabilities, excluding amounts acquired in business combinations:
|
||||||||||||
Decrease/(increase) in accounts receivable
|
4,132 | (45,785 | ) | (9,009 | ) | |||||||
Decrease/(increase) in inventories
|
(142 | ) | 535 | 355 | ||||||||
Decrease/(increase) in prepaid expenses
|
(1,290 | ) | 6,362 | (6,317 | ) | |||||||
Increase/(decrease) in accounts payable and other current liabilities
|
476 | (26,304 | ) | 39,860 | ||||||||
Increase/(decrease) in income taxes
|
344 | 11,279 | (2,461 | ) | ||||||||
Increase in other assets
|
(47 | ) | (4,769 | ) | (6,507 | ) | ||||||
Increase in other liabilities
|
1,320 | 8,484 | 6,713 | |||||||||
Excess tax benefit on stock-based compensation
|
(14,042 | ) | (5,172 | ) | (3,982 | ) | ||||||
Other sources
|
1,145 | 1,040 | 413 | |||||||||
Net cash provided by operating activities
|
171,500 | 110,279 | 150,847 | |||||||||
Cash Flows from Investing Activities
|
||||||||||||
Capital expenditures
|
(44,135 | ) | (43,571 | ) | (29,324 | ) | ||||||
Business combinations, net of cash acquired (Note 7)
|
(6,614 | ) | (250 | ) | (2,257 | ) | ||||||
Other sources
|
432 | 294 | 235 | |||||||||
Net cash used by investing activities
|
(50,317 | ) | (43,527 | ) | (31,346 | ) | ||||||
Cash Flows from Financing Activities
|
||||||||||||
Payments on revolving line of credit
|
(153,200 | ) | (336,350 | ) | - | |||||||
Proceeds from revolving line of credit
|
103,200 | 386,350 | - | |||||||||
Purchases of treasury stock
|
(59,323 | ) | (110,019 | ) | (92,911 | ) | ||||||
Capital stock surrendered to pay taxes on stock-based compensation
|
(15,734 | ) | (7,524 | ) | (5,348 | ) | ||||||
Dividends paid
|
(15,605 | ) | (14,255 | ) | (14,148 | ) | ||||||
Proceeds from exercise of stock options (Note 4)
|
15,424 | 23,910 | 17,122 | |||||||||
Excess tax benefit on stock-based compensation
|
14,042 | 5,172 | 3,982 | |||||||||
Payments on other long-term debt
|
(6,250 | ) | (189,456 | ) | - | |||||||
Increase/(decrease) in cash overdraft payable
|
(1,177 | ) | 9,714 | (11,415 | ) | |||||||
Proceeds from other long-term debt
|
- | 100,000 | - | |||||||||
Retirement of warrants
|
- | (2,648 | ) | - | ||||||||
Debt issuance costs
|
- | (914 | ) | (1,108 | ) | |||||||
Other uses
|
(1,965 | ) | (1,018 | ) | (788 | ) | ||||||
Net cash used by financing activities
|
(120,588 | ) | (137,038 | ) | (104,614 | ) | ||||||
Increase/(decrease) in cash and cash equivalents
|
595 | (70,286 | ) | 14,887 | ||||||||
Cash and cash equivalents at beginning of year
|
14,132 | 84,418 | 69,531 | |||||||||
Cash and cash equivalents at end of year
|
$ | 14,727 | $ | 14,132 | $ | 84,418 |
CONSOLIDATED STATEMENT OF CHANGES
|
||||||||||||||||||||||||
IN STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||
Chemed Corporation and Subsidiary Companies
|
||||||||||||||||||||||||
(in thousands, except per share data)
|
Deferred
|
|||||||||||||||||||||||
Compensation
|
||||||||||||||||||||||||
Treasury
|
Payable in
|
|||||||||||||||||||||||
Capital
|
Paid-in
|
Retained
|
Stock-
|
Company
|
||||||||||||||||||||
Stock
|
Capital
|
Earnings
|
at Cost
|
Stock
|
Total
|
|||||||||||||||||||
Balance at December 31, 2012
|
$ | 31,589 | $ | 437,364 | $ | 623,035 | $ | (640,732 | ) | $ | 2,035 | $ | 453,291 | |||||||||||
Net income
|
- | - | 77,227 | - | - | 77,227 | ||||||||||||||||||
Dividends paid ($.76 per share)
|
- | - | (14,148 | ) | - | - | (14,148 | ) | ||||||||||||||||
Stock awards and exercise of stock options (Note 4)
|
656 | 44,366 | - | (18,851 | ) | - | 26,171 | |||||||||||||||||
Purchases of treasury stock (Note 20)
|
- | - | - | (92,911 | ) | - | (92,911 | ) | ||||||||||||||||
Other
|
- | (719 | ) | - | (140 | ) | 119 | (740 | ) | |||||||||||||||
Balance at December 31, 2013
|
32,245 | 481,011 | 686,114 | (752,634 | ) | 2,154 | 448,890 | |||||||||||||||||
Net income
|
- | - | 99,317 | - | - | 99,317 | ||||||||||||||||||
Dividends paid ($.84 per share)
|
- | - | (14,255 | ) | - | - | (14,255 | ) | ||||||||||||||||
Stock awards and exercise of stock options (Note 4)
|
809 | 61,469 | - | (31,237 | ) | - | 31,041 | |||||||||||||||||
Purchases of treasury stock (Note 20)
|
- | - | - | (110,019 | ) | - | (110,019 | ) | ||||||||||||||||
Retirement of warrants
|
- | (2,645 | ) | - | - | - | (2,645 | ) | ||||||||||||||||
Other
|
283 | (990 | ) | - | (395 | ) | 129 | (973 | ) | |||||||||||||||
Balance at December 31, 2014
|
33,337 | 538,845 | 771,176 | (894,285 | ) | 2,283 | 451,356 | |||||||||||||||||
Net income
|
- | - | 110,274 | - | - | 110,274 | ||||||||||||||||||
Dividends paid ($.92 per share)
|
- | - | (15,605 | ) | - | - | (15,605 | ) | ||||||||||||||||
Stock awards and exercise of stock options (Note 4)
|
648 | 66,077 | - | (38,257 | ) | - | 28,468 | |||||||||||||||||
Purchases of treasury stock (Note 20)
|
- | - | - | (59,323 | ) | - | (59,323 | ) | ||||||||||||||||
Other
|
- | (1,916 | ) | - | (113 | ) | 112 | (1,917 | ) | |||||||||||||||
Balance at December 31, 2015
|
$ | 33,985 | $ | 603,006 | $ | 865,845 | $ | (991,978 | ) | $ | 2,395 | $ | 513,253 |
1.
|
Summary of Significant Accounting Policies
|
Buildings and building improvements
|
10.9
|
yrs.
|
|
Transportation equipment
|
10.8
|
||
Machinery and equipment
|
5.4
|
||
Computer software
|
4.6
|
||
Furniture and fixtures
|
4.8
|
Vitas
|
Roto-
Rooter
|
Total
|
||||||||||
Balance at December 31, 2013
|
$ | 328,450 | $ | 138,421 | $ | 466,871 | ||||||
Business combinations
|
- | 198 | 198 | |||||||||
Foreign currency adjustments
|
- | (198 | ) | (198 | ) | |||||||
Program closing
|
(149 | ) | - | (149 | ) | |||||||
Balance at December 31, 2014
|
$ | 328,301 | $ | 138,421 | $ | 466,722 | ||||||
Business combinations
|
- | 5,944 | 5,944 | |||||||||
Foreign currency adjustments
|
- | (344 | ) | (344 | ) | |||||||
Balance at December 31, 2015
|
$ | 328,301 | $ | 144,021 | $ | 472,322 |
Covenants not to compete
|
6.5
|
yrs.
|
|
Reaquired franchise rights
|
6.1
|
||
Referral networks
|
10.0
|
||
Customer lists
|
13.3
|
2.
|
Hospice Revenue Recognition
|
Medicare
|
Medicaid
|
Commercial
|
Other
|
Total
|
||||||||||||||||
Beginning Balance January 1, 2013
|
$ | 3,875 | $ | 5,194 | $ | 2,204 | $ | 22 | $ | 11,295 | ||||||||||
Bad debt provision
|
1,901 | 4,902 | 2,026 | 1,992 | 10,821 | |||||||||||||||
Write-offs
|
(1,452 | ) | (4,342 | ) | (2,877 | ) | (1,269 | ) | (9,940 | ) | ||||||||||
Other/Contractual adjustments
|
490 | 145 | 684 | (445 | ) | 874 | ||||||||||||||
Ending Balance December 31, 2014
|
4,814 | 5,899 | 2,037 | 300 | 13,050 | |||||||||||||||
Bad debt provision
|
286 | 8,096 | 2,969 | 2 | 11,353 | |||||||||||||||
Write-offs
|
(1,863 | ) | (8,089 | ) | (2,819 | ) | (642 | ) | (13,413 | ) | ||||||||||
Other/Contractual adjustments
|
562 | 93 | 687 | (174 | ) | 1,168 | ||||||||||||||
Ending Balance December 31, 2015
|
$ | 3,799 | $ | 5,999 | $ | 2,874 | $ | (514 | ) | $ | 12,158 |
2015
|
2014
|
|||||||
Beginning Balance January 1,
|
$ | 6,112 | $ | 8,260 | ||||
2015 measurement period
|
(165 | ) | 165 | |||||
2014 measurement period
|
- | 1,451 | ||||||
2011 measurement period
|
- | (325 | ) | |||||
Payments
|
(4,782 | ) | (3,439 | ) | ||||
Ending Balance December 31,
|
$ | 1,165 | $ | 6,112 |
3.
|
Long-Term Debt and Lines of Credit
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
Revolver
|
$ | - | $ | 50,000 | ||||
Term loan
|
91,250 | 97,500 | ||||||
Total
|
91,250 | 147,500 | ||||||
Current portion of term loan
|
(7,500 | ) | (6,250 | ) | ||||
Long-term debt
|
$ | 83,750 | $ | 141,250 |
2016
|
$ | 7,500 | ||
2017
|
8,750 | |||
2018
|
10,000 | |||
2019
|
65,000 | |||
$ | 91,250 |
2015
|
$ | 2,988 | |||
2014
|
4,322 | ||||
2013
|
4,744 |
Description
|
Requirement
|
Chemed
|
||
Leverage Ratio (Consolidated Indebtedness/Consolidated Adj. EBITDA)
|
< 3.50 to 1.00
|
0.54 to 1.00
|
||
Fixed Charge Coverage Ratio (Consolidated Free Cash Flow/Consolidated
|
||||
Fixed Charges)
|
> 1.50 to 1.00
|
2.18 to 1.00
|
||
Annual Operating Lease Commitment
|
< $50.0 million
|
$25.5 million
|
4.
|
Stock-Based Compensation Plans
|
2015 Awards
|
2014 Awards
|
2013 Awards
|
||||||||||
TSR Awards
|
||||||||||||
Shares granted
|
10,761 | 10,340 | 16,149 | |||||||||
Per-share fair value
|
$ | 142.55 | $ | 112.60 | $ | 139.51 | ||||||
Volatility
|
25.2 | % | 30.8 | % | 21.2 | % | ||||||
Risk-free interest rate
|
0.93 | % | 0.33 | % | 0.25 | % | ||||||
EPS Awards
|
||||||||||||
Shares granted
|
10,761 | 14,061 | 16,149 | |||||||||
Per-share fair value
|
$ | 113.14 | $ | 82.80 | $ | 139.51 | ||||||
Common Assumptions
|
||||||||||||
Service period (years)
|
2.9 | 2.9 | 2.2 | |||||||||
Three-year measurement period ends December 31,
|
2017 | 2016 | 2015 |
Stock Options
|
Stock Awards
|
Performance Units (PSUs)
|
||||||||||||||||||||||||||||||
Weighted Average
|
Aggregate
|
Weighted
|
Number of
|
Weighted
|
||||||||||||||||||||||||||||
Remaining
|
Intrinsic
|
Average
|
Nonvested
|
Average
|
||||||||||||||||||||||||||||
Number of
|
Exercise
|
Contractual
|
Value
|
Number of
|
Grant-Date
|
Target
|
Grant-Date
|
|||||||||||||||||||||||||
Options
|
Price
|
Life (Years)
|
(thousands)
|
Awards
|
Price
|
Units
|
Price
|
|||||||||||||||||||||||||
Outstanding at January 1, 2014
|
1,768,174 | $ | 73.14 | 140,510 | $ | 67.71 | 56,699 | $ | 81.91 | |||||||||||||||||||||||
Granted
|
422,750 | 157.36 | 36,987 | 121.75 | 21,522 | 127.85 | ||||||||||||||||||||||||||
Exercised/Vested
|
(611,786 | ) | 62.03 | (80,011 | ) | 68.36 | - | - | ||||||||||||||||||||||||
Canceled/ Forfeited
|
(15,263 | ) | 89.64 | (754 | ) | 79.50 | (1,845 | ) | 98.56 | |||||||||||||||||||||||
Outstanding at December 31, 2015
|
1,563,875 | 100.09 | 6.3 | $ | 82,056 | 96,732 | 87.75 | 44,692 | 110.58 | |||||||||||||||||||||||
Vested and expected to vest
|
||||||||||||||||||||||||||||||||
at December 31, 2015
|
1,563,875 | 100.09 | 6.3 | 82,056 | 96,732 | 87.75 | 127,061 | * | 97.68 | |||||||||||||||||||||||
Exercisable at December 31, 2015
|
768,261 | 70.41 | 6.1 | 61,756 |
n.a.
|
n.a.
|
n.a.
|
n.a.
|
||||||||||||||||||||||||
* Amount includes 46,610 share units which vested and were converted to Capital Stock and distributed in the first quarter of 2016. The shares that vested in 2016 had a weighted average grant-date fair value of $71.69 per share and an estimated fair value of $139.51.
|
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Total compensation cost of stock-based compensation
|
||||||||||||
plans charged against income
|
$ | 14,737 | $ | 10,323 | $ | 10,868 | ||||||
Total income tax benefit recognized in income for stock
|
||||||||||||
based compensation plans
|
5,416 | 3,794 | 3,994 | |||||||||
Total intrinsic value of stock options exercised
|
45,600 | 26,344 | 16,922 | |||||||||
Total intrinsic value of stock awards vested during the period
|
12,065 | 4,564 | 4,298 | |||||||||
Per-share weighted averaged grant-date fair value of
|
||||||||||||
stock awards granted
|
121.75 | 88.48 | 77.13 |
2015
|
2014
|
2013
|
||||||||||
Stock price on date of issuance
|
$ | 157.36 | $ | 106.59 | $ | 70.30 | ||||||
Grant date fair value per share
|
$ | 29.46 | $ | 21.58 | $ | 14.79 | ||||||
Number of options granted
|
422,750 | 410,800 | 392,274 | |||||||||
Expected term (years)
|
4.0 | 4.8 | 4.9 | |||||||||
Risk free rate of return
|
1.57 | % | 1.59 | % | 1.39 | % | ||||||
Volatility
|
22.20 | % | 22.60 | % | 24.90 | % | ||||||
Dividend yield
|
0.6 | % | 0.8 | % | 1.1 | % | ||||||
Forfeiture rate
|
- | - | - |
Stock
|
Stock
|
|||||||||||
Options
|
Awards
|
PSUs
|
||||||||||
Total unrecognized compensation related to nonvested options, stock awards
|
||||||||||||
and PSUs at the end of year
|
$ | 18,421 | $ | 3,849 | $ | 3,515 | ||||||
Weighted average period over which unrecognized compensation cost of
|
||||||||||||
nonvested options, stock awards and PSUs to be recognized (years)
|
2.4 | 2.1 | 1.7 | |||||||||
Actual income tax benefit realized from options exercised or stock awards
|
||||||||||||
and PSUs vested
|
$ | 16,786 | $ | 3,667 | $ | 2,397 | ||||||
Aggregate intrinsic value of stock options, stock awards and PSUs vested
|
||||||||||||
and expected to vest
|
$ | 82,056 | $ | 14,586 | $ | 19,160 |
5.
|
Segments and Nature of the Business
|
●
|
The VITAS segment provides hospice services for patients with terminal illnesses. This type of care is aimed at making the terminally ill patient’s end of life as comfortable and pain-free as possible. Hospice care is available to patients who have been initially certified or re-certified as terminally ill (i.e., a prognosis of six months or less) by their attending physician, if any, and the hospice physician. VITAS offers all levels of hospice care in a given market, including routine home care, inpatient care and continuous care. Over 90% of VITAS’ revenues are derived through the Medicare and Medicaid reimbursement programs.
|
●
|
The Roto-Rooter segment provides repair and maintenance services to residential and commercial accounts using the Roto-Rooter registered service marks. Such services include plumbing, drain cleaning and water restoration. They are delivered through company-owned and operated territories, independent contractor-operated territories and franchised locations. This segment also manufactures and sells products and equipment used to provide such services.
|
●
|
We report corporate administrative expenses and unallocated investing and financing income and expense not directly related to either segment as “Corporate”. Corporate administrative expense includes the stewardship, accounting and reporting, legal, tax and other costs of operating a publicly held corporation. Corporate investing and financing income and expenses include the costs and income associated with corporate debt and investment arrangements.
|
For the Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Revenues by Type of Service
|
|
|||||||||||
VITAS
|
||||||||||||
Routine homecare
|
$ | 865,145 | $ | 810,413 | $ | 791,735 | ||||||
Continuous care
|
150,802 | 152,206 | 155,409 | |||||||||
General inpatient
|
99,439 | 102,876 | 104,968 | |||||||||
Medicare cap
|
165 | (1,290 | ) | (6,999 | ) | |||||||
Total segment
|
1,115,551 | 1,064,205 | 1,045,113 | |||||||||
Roto-Rooter
|
||||||||||||
Sewer and drain cleaning
|
142,562 | 141,078 | 141,283 | |||||||||
Plumbing repair and maintenance
|
188,065 | 174,993 | 168,942 | |||||||||
Independent contractors
|
37,966 | 36,496 | 33,030 | |||||||||
Water restoration
|
38,163 | 18,480 | 3,042 | |||||||||
Other products and services
|
21,081 | 21,030 | 21,919 | |||||||||
Total segment
|
427,837 | 392,077 | 368,216 | |||||||||
Total service revenues and sales
|
$ | 1,543,388 | $ | 1,456,282 | $ | 1,413,329 | ||||||
Aftertax Segment Earnings/(Loss)
|
||||||||||||
VITAS
|
$ | 93,346 | $ | 86,185 | $ | 76,144 | ||||||
Roto-Rooter
|
48,573 | 42,075 | 29,243 | |||||||||
Total
|
141,919 | 128,260 | 105,387 | |||||||||
Corporate
|
(31,645 | ) | (28,943 | ) | (28,160 | ) | ||||||
Net income
|
$ | 110,274 | $ | 99,317 | $ | 77,227 | ||||||
Interest Income
|
||||||||||||
VITAS
|
$ | 7,740 | $ | 6,111 | $ | 5,038 | ||||||
Roto-Rooter
|
3,425 | 2,931 | 2,096 | |||||||||
Total
|
11,165 | 9,042 | 7,134 | |||||||||
Corporate
|
- | 10 | 56 | |||||||||
Intercompany eliminations
|
(10,884 | ) | (9,081 | ) | (6,343 | ) | ||||||
Total interest income
|
$ | 281 | $ | (29 | ) | $ | 847 | |||||
Interest Expense
|
||||||||||||
VITAS
|
$ | 200 | $ | 207 | $ | 182 | ||||||
Roto-Rooter
|
348 | 363 | 322 | |||||||||
Total
|
548 | 570 | 504 | |||||||||
Corporate
|
3,097 | 7,616 | 14,531 | |||||||||
Total interest expense
|
$ | 3,645 | $ | 8,186 | $ | 15,035 | ||||||
Income Tax Provision
|
||||||||||||
VITAS
|
$ | 56,675 | $ | 53,278 | $ | 46,910 | ||||||
Roto-Rooter
|
29,630 | 25,808 | 17,560 | |||||||||
Total
|
86,305 | 79,086 | 64,470 | |||||||||
Corporate
|
(16,453 | ) | (15,649 | ) | (17,868 | ) | ||||||
Total income tax provision
|
$ | 69,852 | $ | 63,437 | $ | 46,602 | ||||||
Identifiable Assets
|
||||||||||||
VITAS
|
$ | 523,717 | $ | 546,031 | $ | 518,316 | ||||||
Roto-Rooter
|
255,192 | 251,407 | 241,679 | |||||||||
Total
|
778,909 | 797,438 | 759,995 | |||||||||
Corporate
|
73,416 | 62,494 | 133,706 | |||||||||
Total identifiable assets
|
$ | 852,325 | $ | 859,932 | $ | 893,701 |
For the Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Additions to Long-Lived Assets
|
||||||||||||
VITAS
|
$ | 23,278 | $ | 21,880 | $ | 16,219 | ||||||
Roto-Rooter
|
26,476 | 21,595 | 15,202 | |||||||||
Total
|
49,754 | 43,475 | 31,421 | |||||||||
Corporate
|
995 | 346 | 160 | |||||||||
Total additions to long-lived assets
|
$ | 50,749 | $ | 43,821 | $ | 31,581 | ||||||
Depreciation and Amortization
|
||||||||||||
VITAS
|
$ | 19,547 | $ | 19,048 | $ | 19,534 | ||||||
Roto-Rooter
|
13,360 | 10,975 | 9,273 | |||||||||
Total
|
32,907 | 30,023 | 28,807 | |||||||||
Corporate
|
592 | 578 | 535 | |||||||||
Total depreciation and amortization
|
$ | 33,499 | $ | 30,601 | $ | 29,342 |
6.
|
Intangible Assets
|
2016
|
$ | 359 | ||
2017
|
169 | |||
2018
|
122 | |||
2019
|
96 | |||
2020
|
66 | |||
Thereafter
|
59 |
Gross
|
Accumulated
|
Net Book
|
||||||||||
Asset
|
Amortization
|
Value
|
||||||||||
December 31, 2015
|
||||||||||||
Referral networks
|
$ | 21,729 | $ | (21,473 | ) | $ | 256 | |||||
Covenants not to compete
|
9,533 | (9,220 | ) | 313 | ||||||||
Customer lists
|
1,215 | (1,215 | ) | - | ||||||||
Reaquired franchise rights
|
1,260 | (958 | ) | 302 | ||||||||
Subtotal - definite-lived intangibles
|
33,737 | (32,866 | ) | 871 | ||||||||
VITAS trade name
|
51,300 | - | 51,300 | |||||||||
Rapid Rooter trade name
|
150 | - | 150 | |||||||||
Operating licenses
|
2,790 | - | 2,790 | |||||||||
Total
|
$ | 87,977 | $ | (32,866 | ) | $ | 55,111 | |||||
December 31, 2014
|
||||||||||||
Referral networks
|
$ | 22,599 | $ | (21,626 | ) | $ | 973 | |||||
Covenants not to compete
|
9,575 | (9,209 | ) | 366 | ||||||||
Customer lists
|
1,219 | (1,194 | ) | 25 | ||||||||
Reaquired franchise rights
|
1,106 | (743 | ) | 363 | ||||||||
Subtotal - definite-lived intangibles
|
34,499 | (32,772 | ) | 1,727 | ||||||||
VITAS trade name
|
51,300 | - | 51,300 | |||||||||
Rapid Rooter trade name
|
150 | - | 150 | |||||||||
Operating licenses
|
2,850 | - | 2,850 | |||||||||
Total
|
$ | 88,799 | $ | (32,772 | ) | $ | 56,027 |
7.
|
Business Combinations
|
Identifiable intangible assets
|
$ | 213 | ||
Goodwill
|
5,944 | |||
Other assets and liabilities - net
|
457 | |||
$ | 6,614 |
Identifiable intangible assets
|
$ | 47 | ||
Goodwill
|
198 | |||
Other assets and liabilities - net
|
5 | |||
$ | 250 |
Identifiable intangible assets
|
$ | 1,023 | ||
Goodwill
|
1,212 | |||
Other assets and liabilities - net
|
22 | |||
$ | 2,257 |
8.
|
Discontinued Operations
|
2016
|
$ | 826 | ||
2017
|
300 | |||
Thereafter
|
601 | |||
$ | 1,727 |
9.
|
Cash Overdrafts and Cash Equivalents
|
10.
|
Other Income/(expense)—Net
|
For the Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Market value gains related to deferred
|
||||||||||||
compensation trusts
|
$ | 148 | $ | 3,118 | $ | 4,982 | ||||||
Loss on disposal of property and equipment
|
(698 | ) | (640 | ) | (320 | ) | ||||||
Interest income/ (expense)
|
281 | (29 | ) | 847 | ||||||||
Other - net
|
(418 | ) | 72 | (39 | ) | |||||||
Total other income/(expense)
|
$ | (687 | ) | $ | 2,521 | $ | 5,470 |
11.
|
Income Taxes
|
For the Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Current
|
||||||||||||
U.S. federal
|
$ | 55,026 | $ | 48,577 | $ | 45,348 | ||||||
U.S. state and local
|
8,104 | 7,285 | 7,731 | |||||||||
Foreign
|
397 | 597 | 511 | |||||||||
Deferred
|
||||||||||||
U.S. federal, state and local
|
6,323 | 6,970 | (6,995 | ) | ||||||||
Foreign
|
2 | 8 | 7 | |||||||||
Total
|
$ | 69,852 | $ | 63,437 | $ | 46,602 |
December 31,
|
||||||||
2015
|
2014
|
|||||||
Accrued liabilities
|
$ | 39,529 | $ | 37,879 | ||||
Stock compensation expense
|
8,555 | 11,591 | ||||||
Allowance for uncollectible accounts receivable
|
1,729 | 2,779 | ||||||
State net operating loss carryforwards
|
1,701 | 1,603 | ||||||
Other
|
896 | 807 | ||||||
Deferred income tax assets
|
52,410 | 54,659 | ||||||
Amortization of intangible assets
|
(50,136 | ) | (47,946 | ) | ||||
Accelerated tax depreciation
|
(18,030 | ) | (15,641 | ) | ||||
Currents assets
|
(1,576 | ) | (1,519 | ) | ||||
State income taxes
|
(1,465 | ) | (698 | ) | ||||
Market valuation of investments
|
(1,375 | ) | (2,346 | ) | ||||
Other
|
(857 | ) | (1,023 | ) | ||||
Deferred income tax liabilities
|
(73,439 | ) | (69,173 | ) | ||||
Net deferred income tax liabilities
|
$ | (21,029 | ) | $ | (14,514 | ) |
2015
|
2014
|
2013
|
||||||||||
Balance at January 1,
|
$ | 980 | $ | 892 | $ | 2,646 | ||||||
Unrecognized tax benefits due to positions taken in current year
|
260 | 247 | 219 | |||||||||
Decrease due to expiration of statute of limitations
|
(188 | ) | (159 | ) | (1,973 | ) | ||||||
Balance at December 31,
|
$ | 1,052 | $ | 980 | $ | 892 |
For the Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Income tax provision calculated using the statutory rate of 35%
|
$ | 63,044 | $ | 56,964 | $ | 43,340 | ||||||
State and local income taxes, less federal income tax effect
|
5,787 | 5,536 | 4,323 | |||||||||
Uncertain tax position adjustments
|
- | - | (1,782 | ) | ||||||||
Nondeductible expenses
|
1,438 | 1,290 | 1,250 | |||||||||
Other --net
|
(417 | ) | (353 | ) | (529 | ) | ||||||
Income tax provision
|
$ | 69,852 | $ | 63,437 | $ | 46,602 | ||||||
Effective tax rate
|
38.8 | % | 39.0 | % | 37.6 | % |
2015
|
$ | 62,928 | |||
2014
|
44,921 | ||||
2013
|
55,827 |
12.
|
Properties and Equipment
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
Land
|
$ | 5,365 | $ | 4,261 | ||||
Buildings and building improvements
|
64,440 | 61,401 | ||||||
Transportation equipment
|
31,077 | 26,904 | ||||||
Machinery and equipment
|
83,293 | 77,273 | ||||||
Computer software
|
45,414 | 51,564 | ||||||
Furniture and fixtures
|
71,894 | 66,248 | ||||||
Projects under development
|
16,981 | 3,420 | ||||||
Total properties and equipment
|
318,464 | 291,071 | ||||||
Less accumulated depreciation
|
(201,094 | ) | (185,735 | ) | ||||
Net properties and equipment
|
$ | 117,370 | $ | 105,336 |
13.
|
Lease Arrangements
|
2016
|
$ | 21,679 | ||
2017
|
15,815 | |||
2018
|
12,420 | |||
2019
|
8,697 | |||
2020
|
6,189 | |||
Thereafter
|
14,294 | |||
Total minimum rental payments
|
$ | 79,094 |
For the Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Total rental expense
|
$ | 40,021 | $ | 39,606 | $ | 38,992 |
14.
|
Retirement Plans
|
For the Years Ended December 31,
|
||||||||||
2015
|
2014
|
2013
|
||||||||
$ | 11,970 | $ | 13,838 | $ | 14,511 |
15.
|
Earnings Per Share
|
Net Income
|
|||||||||||
For the Years Ended December 31,
|
Net Income
|
Shares
|
Earnings per
Share
|
||||||||
2015
|
|||||||||||
Earnings
|
$
|
110,274
|
16,870
|
$ |
6.54
|
||||||
Dilutive stock options
|
-
|
394
|
|||||||||
Nonvested stock awards
|
-
|
158
|
|||||||||
Diluted earnings
|
$
|
110,274
|
17,422
|
$ |
6.33
|
||||||
2014
|
|||||||||||
Earnings
|
$
|
99,317
|
17,165
|
$ |
5.79
|
||||||
Dilutive stock options
|
-
|
412
|
|||||||||
Nonvested stock awards
|
-
|
149
|
|||||||||
Conversion of Notes and impact of warrants outstanding
|
-
|
114
|
|||||||||
Diluted earnings
|
$
|
99,317
|
17,840
|
$ |
5.57
|
||||||
2013 | |||||||||||
Earnings
|
$
|
77,227
|
18,199
|
$ |
4.24
|
||||||
Dilutive stock options
|
-
|
278
|
|||||||||
Nonvested stock awards
|
-
|
108
|
|||||||||
Diluted earnings
|
$
|
77,227
|
18,585
|
$ |
4.16
|
16.
|
Financial Instruments
|
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)
|
|||||||||||||
Investments of deferred compensation plans held in trust
|
$ | 49,481 | $ | 49,481 | $ | - | $ | - | ||||||||
Long-term debt and current portion of long-term debt
|
91,250 | - | 91,250 | - |
Fair Value Measure
|
||||||||||||||||
Carrying Value
|
Quoted Prices in Active Markets
for Identical
Assets (Level 1)
|
Significant
Other
Observable
Inputs (Level 2)
|
Significant Unobservabl
Inputs (Level 3)
|
|||||||||||||
Investments of deferred compensation plans held in trust
|
$ | 49,147 | $ | 49,147 | $ | - | $ | - | ||||||||
Long-term debt
|
147,500 | - | 147,500 | - |
17.
|
Loans Receivable from Independent Contractors
|
For the Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Revenues
|
$ | 37,966 | $ | 36,496 | $ | 33,030 | ||||||
Pretax profits
|
22,176 | 21,238 | 17,726 |
18.
|
Legal and Regulatory Matters
|
19.
|
Concentration of Risk
|
20.
|
Capital Stock Transactions
|
For the Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Total cost of repurchased shares (in thousands):
|
$ | 59,323 | $ | 110,019 | $ | 92,911 | ||||||
Shares repurchased
|
460,765 | 1,182,934 | 1,356,344 | |||||||||
Weighted average price per share
|
$ | 128.75 | $ | 93.01 | $ | 68.50 |
21.
|
Other Operating Expenses (in thousands):
|
December 31,
|
||||
2013
|
||||
Litigation settlement of VITAS segment
|
$ | 10,500 | ||
Settlements of Roto-Rooter segment
|
15,721 | |||
Total other operating expenses
|
$ | 26,221 |
22.
|
Recent Accounting Statements
|
UNAUDITED SUMMARY OF QUARTERLY RESULTS
|
||||||||||||||||||||
Chemed Corporation and Subsidiary Companies
|
||||||||||||||||||||
(in thousands, except per share and footnote data)
|
||||||||||||||||||||
First
|
Second
|
Third
|
Fourth
|
Total
|
||||||||||||||||
For the Year Ended December 31, 2015
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
Year
|
|||||||||||||||
Total service revenues and sales
|
$ | 376,652 | $ | 381,921 | $ | 386,226 | $ | 398,589 | $ | 1,543,388 | ||||||||||
Gross profit (excluding depreciation)
|
$ | 107,767 | $ | 111,258 | $ | 114,137 | $ | 122,616 | $ | 455,778 | ||||||||||
Income from operations
|
$ | 40,571 | $ | 44,600 | $ | 50,128 | $ | 49,159 | $ | 184,458 | ||||||||||
Interest expense
|
(969 | ) | (969 | ) | (908 | ) | (799 | ) | (3,645 | ) | ||||||||||
Other income/(expense)--net
|
563 | 536 | (2,355 | ) | 569 | (687 | ) | |||||||||||||
Income before income taxes
|
40,165 | 44,167 | 46,865 | 48,929 | 180,126 | |||||||||||||||
Income taxes
|
(15,628 | ) | (17,192 | ) | (18,032 | ) | (19,000 | ) | (69,852 | ) | ||||||||||
Net income (a)
|
$ | 24,537 | $ | 26,975 | $ | 28,833 | $ | 29,929 | $ | 110,274 | ||||||||||
Earnings Per Share (a)
|
||||||||||||||||||||
Net income
|
$ | 1.45 | $ | 1.60 | $ | 1.71 | $ | 1.78 | $ | 6.54 | ||||||||||
Average number of shares outstanding
|
16,914 | 16,880 | 16,865 | 16,819 | 16,870 | |||||||||||||||
Diluted Earnings Per Share (a)
|
||||||||||||||||||||
Net income
|
$ | 1.40 | $ | 1.55 | $ | 1.65 | $ | 1.72 | $ | 6.33 | ||||||||||
Average number of shares outstanding
|
17,466 | 17,419 | 17,422 | 17,365 | 17,422 | |||||||||||||||
(a) The following amounts are included in income during the respective quarter (in thousands):
|
||||||||||||||||||||
First
|
Second
|
Third
|
Fourth
|
Total
|
||||||||||||||||
Quarter
|
Quarter
|
Quarter
|
Quarter
|
Year
|
||||||||||||||||
Pretax (cost)/benefit:
|
||||||||||||||||||||
Stock option expense
|
$ | (1,444 | ) | $ | (1,343 | ) | $ | (813 | ) | $ | (1,845 | ) | $ | (5,445 | ) | |||||
Long-term incentive compensation
|
(934 | ) | (1,457 | ) | (1,364 | ) | (3,764 | ) | (7,519 | ) | ||||||||||
Acquisition expenses
|
- | (131 | ) | (30 | ) | (11 | ) | (172 | ) | |||||||||||
Expenses related to litigation settlements
|
(5 | ) | - | - | - | (5 | ) | |||||||||||||
Expenses related to securities litigation
|
- | (37 | ) | - | - | (37 | ) | |||||||||||||
Expenses related to the Office
|
||||||||||||||||||||
of Inspector General investigation
|
(1,274 | ) | (1,412 | ) | (1,151 | ) | (1,137 | ) | (4,974 | ) | ||||||||||
Total
|
$ | (3,657 | ) | $ | (4,380 | ) | $ | (3,358 | ) | $ | (6,757 | ) | $ | (18,152 | ) | |||||
After-tax (cost)/benefit:
|
||||||||||||||||||||
Stock option expense
|
$ | (910 | ) | $ | (849 | ) | $ | (509 | ) | $ | (1,171 | ) | $ | (3,439 | ) | |||||
Long-term incentive compensation
|
(591 | ) | (921 | ) | (863 | ) | (2,377 | ) | (4,752 | ) | ||||||||||
Acquisition expenses
|
- | (80 | ) | (18 | ) | (6 | ) | (104 | ) | |||||||||||
Expenses related to litigation settlements
|
(3 | ) | - | - | - | (3 | ) | |||||||||||||
Expenses related to securities litigation
|
- | (23 | ) | - | - | (23 | ) | |||||||||||||
Expenses related to the Office
|
||||||||||||||||||||
of Inspector General investigation
|
(790 | ) | (868 | ) | (711 | ) | (703 | ) | (3,072 | ) | ||||||||||
Total
|
$ | (2,294 | ) | $ | (2,741 | ) | $ | (2,101 | ) | $ | (4,257 | ) | $ | (11,393 | ) |
UNAUDITED SUMMARY OF QUARTERLY RESULTS
|
||||||||||||||||||||
Chemed Corporation and Subsidiary Companies
|
||||||||||||||||||||
(in thousands, except per share and footnote data)
|
||||||||||||||||||||
First
|
Second
|
Third
|
Fourth
|
Total
|
||||||||||||||||
For the Year Ended December 31, 2014
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
Year
|
|||||||||||||||
Total service revenues and sales
|
$ | 358,300 | $ | 360,182 | $ | 358,389 | $ | 379,411 | $ | 1,456,282 | ||||||||||
Gross profit (excluding depreciation)
|
$ | 100,481 | $ | 103,175 | $ | 101,944 | $ | 116,009 | $ | 421,609 | ||||||||||
Income from operations
|
$ | 36,652 | $ | 41,519 | $ | 40,211 | $ | 50,037 | $ | 168,419 | ||||||||||
Interest expense
|
(3,815 | ) | (2,429 | ) | (980 | ) | (962 | ) | (8,186 | ) | ||||||||||
Other income/(expense)--net
|
816 | 756 | 705 | 244 | 2,521 | |||||||||||||||
Income before income taxes
|
33,653 | 39,846 | 39,936 | 49,319 | 162,754 | |||||||||||||||
Income taxes
|
(13,079 | ) | (15,483 | ) | (15,351 | ) | (19,524 | ) | (63,437 | ) | ||||||||||
Net income (a)
|
$ | 20,574 | $ | 24,363 | $ | 24,585 | $ | 29,795 | $ | 99,317 | ||||||||||
Earnings Per Share (a)
|
||||||||||||||||||||
Net income
|
$ | 1.17 | $ | 1.41 | $ | 1.44 | $ | 1.77 | $ | 5.79 | ||||||||||
Average number of shares outstanding
|
17,510 | 17,236 | 17,039 | 16,878 | 17,165 | |||||||||||||||
Diluted Earnings Per Share (a)
|
||||||||||||||||||||
Net income
|
$ | 1.12 | $ | 1.36 | $ | 1.39 | $ | 1.71 | $ | 5.57 | ||||||||||
Average number of shares outstanding
|
18,305 | 17,880 | 17,627 | 17,469 | 17,840 | |||||||||||||||
(a) The following amounts are included in income during the respective quarter (in thousands):
|
||||||||||||||||||||
First
|
Second
|
Third
|
Fourth
|
Total
|
||||||||||||||||
Quarter
|
Quarter
|
Quarter
|
Quarter
|
Year
|
||||||||||||||||
Pretax (cost)/benefit:
|
||||||||||||||||||||
Stock option expense
|
$ | (1,309 | ) | $ | (1,144 | ) | $ | (977 | ) | $ | (1,372 | ) | $ | (4,802 | ) | |||||
Noncash impact of change in accounting for convertible debt
|
(2,259 | ) | (1,130 | ) | - | - | (3,389 | ) | ||||||||||||
Long-term incentive compensation
|
(373 | ) | (613 | ) | (1,002 | ) | (581 | ) | (2,569 | ) | ||||||||||
Acquisition expenses
|
(1 | ) | - | - | (23 | ) | (24 | ) | ||||||||||||
Recoveries/(expenses) related to litigation settlements
|
(306 | ) | (32 | ) | 234 | (16 | ) | (120 | ) | |||||||||||
Expenses related to securities litigation
|
- | (189 | ) | (138 | ) | - | (327 | ) | ||||||||||||
Expenses incurred in connection with the Office
|
||||||||||||||||||||
of Inspector General investigation
|
(748 | ) | (410 | ) | (450 | ) | (533 | ) | (2,141 | ) | ||||||||||
Total
|
$ | (4,996 | ) | $ | (3,518 | ) | $ | (2,333 | ) | $ | (2,525 | ) | $ | (13,372 | ) | |||||
After-tax (cost)/benefit:
|
||||||||||||||||||||
Stock option expense
|
$ | (822 | ) | $ | (722 | ) | $ | (615 | ) | $ | (863 | ) | $ | (3,022 | ) | |||||
Noncash impact of change in accounting for convertible debt
|
(1,429 | ) | (714 | ) | - | - | (2,143 | ) | ||||||||||||
Long-term incentive compensation
|
(236 | ) | (388 | ) | (634 | ) | (367 | ) | (1,625 | ) | ||||||||||
Acquisition expenses
|
(1 | ) | - | - | (14 | ) | (15 | ) | ||||||||||||
Recoveries/(expenses) related to litigation settlements
|
(187 | ) | (20 | ) | 143 | (10 | ) | (74 | ) | |||||||||||
Expenses related to securities litigation
|
- | (119 | ) | (88 | ) | - | (207 | ) | ||||||||||||
Expenses incurred in connection with the Office
|
||||||||||||||||||||
of Inspector General investigation
|
(464 | ) | (254 | ) | (279 | ) | (331 | ) | (1,328 | ) | ||||||||||
Total
|
$ | (3,139 | ) | $ | (2,217 | ) | $ | (1,473 | ) | $ | (1,585 | ) | $ | (8,414 | ) |
SELECTED FINANCIAL DATA
|
||||||||||||||||||||
Chemed Corporation and Subsidiary Companies
|
||||||||||||||||||||
(in thousands, except per share and footnote data, ratios, percentages and personnel)
|
||||||||||||||||||||
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||
Summary of Operations
|
||||||||||||||||||||
Continuing operations (a)
|
||||||||||||||||||||
Service revenues and sales
|
$ | 1,543,388 | $ | 1,456,282 | $ | 1,413,329 | $ | 1,430,043 | $ | 1,355,970 | ||||||||||
Gross profit (excluding depreciation)
|
455,778 | 421,609 | 404,521 | 396,722 | 385,486 | |||||||||||||||
Depreciation
|
32,369 | 29,881 | 27,698 | 26,009 | 25,247 | |||||||||||||||
Amortization
|
1,130 | 720 | 1,644 | 1,508 | 1,467 | |||||||||||||||
Income from operations
|
184,458 | 168,419 | 133,394 | 156,419 | 153,727 | |||||||||||||||
Net income (b)
|
110,274 | 99,317 | 77,227 | 89,304 | 85,979 | |||||||||||||||
Earnings per share
|
||||||||||||||||||||
Net income
|
$ | 6.54 | $ | 5.79 | $ | 4.24 | $ | 4.72 | $ | 4.19 | ||||||||||
Average number of shares outstanding
|
16,870 | 17,165 | 18,199 | 18,924 | 20,523 | |||||||||||||||
Diluted earnings per share
|
||||||||||||||||||||
Net income
|
$ | 6.33 | $ | 5.57 | $ | 4.16 | $ | 4.62 | $ | 4.10 | ||||||||||
Average number of shares outstanding
|
17,422 | 17,840 | 18,585 | 19,339 | 20,945 | |||||||||||||||
Cash dividends per share
|
$ | 0.92 | $ | 0.84 | $ | 0.76 | $ | 0.68 | $ | 0.60 | ||||||||||
Financial Position--Year-End
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 14,727 | $ | 14,132 | $ | 84,418 | $ | 69,531 | $ | 38,081 | ||||||||||
Working capital/(deficit)
|
(20,528 | ) | (990 | ) | (139,330 | ) | 40,849 | 5,353 | ||||||||||||
Current ratio
|
0.88 | 0.99 | 0.62 | 1.26 | 1.04 | |||||||||||||||
Properties and equipment, at cost less
|
||||||||||||||||||||
accumulated depreciation
|
$ | 117,370 | $ | 105,336 | $ | 92,955 | $ | 91,934 | $ | 82,951 | ||||||||||
Total assets
|
852,325 | 859,932 | 893,701 | 859,626 | 795,905 | |||||||||||||||
Long-term debt
|
83,750 | 141,250 | - | 174,890 | 166,784 | |||||||||||||||
Stockholders' equity
|
513,253 | 451,356 | 448,890 | 453,291 | 413,684 | |||||||||||||||
Other Statistics
|
||||||||||||||||||||
Capital expenditures
|
$ | 44,135 | $ | 43,571 | $ | 29,324 | $ | 35,252 | $ | 29,592 | ||||||||||
Number of employees
|
14,406 | 14,190 | 13,952 | 14,096 | 13,733 | |||||||||||||||
(a) The following amounts are included in income from continuing operations during the respective year (in thousands):
|
||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
After-tax benefit/(cost):
|
||||||||||||||||||||
Stock option expense
|
$ | (3,439 | ) | $ | (3,022 | ) | $ | (3,813 | ) | $ | (5,143 | ) | $ | (5,298 | ) | |||||
Noncash impact of change in accounting for convertible debt
|
- | (2,143 | ) | (5,448 | ) | (5,041 | ) | (4,664 | ) | |||||||||||
Long-term incentive compensation
|
(4,752 | ) | (1,625 | ) | (822 | ) | (228 | ) | (1,880 | ) | ||||||||||
Litigation settlements
|
(3 | ) | (74 | ) | (16,061 | ) | - | - | ||||||||||||
Expenses related to litigation settlements
|
- | - | (865 | ) | (617 | ) | (1,397 | ) | ||||||||||||
Expenses incurred in connection with the Office of Inspector
|
||||||||||||||||||||
General investigation
|
(3,072 | ) | (1,328 | ) | (1,333 | ) | (752 | ) | (737 | ) | ||||||||||
Acquisition expense
|
(104 | ) | (15 | ) | (38 | ) | (114 | ) | (75 | ) | ||||||||||
Cost to shut down HVAC operations
|
- | - | - | (649 | ) | - | ||||||||||||||
Expenses of securities litigation
|
(23 | ) | (207 | ) | (69 | ) | (469 | ) | - | |||||||||||
Loss on extinguishment of debt
|
- | - | (294 | ) | - | - | ||||||||||||||
Severance arrangements
|
- | - | (184 | ) | - | - | ||||||||||||||
Uncertain tax position adjustments
|
- | - | 1,782 | - | - | |||||||||||||||
Total
|
$ | (11,393 | ) | $ | (8,414 | ) | $ | (27,145 | ) | $ | (13,013 | ) | $ | (14,051 | ) |
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
||||||||||||||||
UNAUDITED CONSOLIDATING STATEMENT OF INCOME
|
||||||||||||||||
FOR THE YEAR ENDED DECEMBER 31, 2015
|
||||||||||||||||
(in thousands)(unaudited)
|
||||||||||||||||
Roto-
|
Chemed
|
|||||||||||||||
VITAS
|
Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
2015
|
||||||||||||||||
Service revenues and sales
|
$ | 1,115,551 | $ | 427,837 | $ | - | $ | 1,543,388 | ||||||||
Cost of services provided and goods sold
|
862,587 | 225,023 | - | 1,087,610 | ||||||||||||
Selling, general and administrative expenses
|
89,879 | 114,269 | 33,673 | 237,821 | ||||||||||||
Depreciation
|
18,789 | 12,988 | 592 | 32,369 | ||||||||||||
Amortization
|
758 | 372 | - | 1,130 | ||||||||||||
Total costs and expenses
|
972,013 | 352,652 | 34,265 | 1,358,930 | ||||||||||||
Income/(loss) from operations
|
143,538 | 75,185 | (34,265 | ) | 184,458 | |||||||||||
Interest expense
|
(200 | ) | (348 | ) | (3,097 | ) | (3,645 | ) | ||||||||
Intercompany interest income/(expense)
|
7,499 | 3,385 | (10,884 | ) | - | |||||||||||
Other income/(expense)—net
|
(816 | ) | (19 | ) | 148 | (687 | ) | |||||||||
Income/(loss) before income taxes
|
150,021 | 78,203 | (48,098 | ) | 180,126 | |||||||||||
Income taxes
|
(56,675 | ) | (29,630 | ) | 16,453 | (69,852 | ) | |||||||||
Net income/(loss)
|
$ | 93,346 | $ | 48,573 | $ | (31,645 | ) | $ | 110,274 | |||||||
(a) The following amounts are included in income from continuing operations (in thousands):
|
||||||||||||||||
Roto-
|
Chemed
|
|||||||||||||||
VITAS |
Rooter
|
Corporate |
Consolidated
|
|||||||||||||
Pretax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$ | - | $ | - | $ | (5,445 | ) | $ | (5,445 | ) | ||||||
Long-term incentive compensation
|
- | - | (7,519 | ) | (7,519 | ) | ||||||||||
Securities litigation
|
- | - | (37 | ) | (37 | ) | ||||||||||
Expenses related to litigation settlements
|
- | (5 | ) | - | (5 | ) | ||||||||||
Acquisition expense
|
- | (172 | ) | - | (172 | ) | ||||||||||
Expenses incurred in connection with the Office of Inspector
|
||||||||||||||||
General investigation
|
(4,974 | ) | - | - | (4,974 | ) | ||||||||||
Total
|
$ | (4,974 | ) | $ | (177 | ) | $ | (13,001 | ) | $ | (18,152 | ) | ||||
Roto-
|
Chemed
|
|||||||||||||||
VITAS
|
Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
After-tax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$ | - | $ | - | $ | (3,439 | ) | $ | (3,439 | ) | ||||||
Long-term incentive compensation
|
- | - | (4,752 | ) | (4,752 | ) | ||||||||||
Securities litigation
|
- | - | (23 | ) | (23 | ) | ||||||||||
Expenses related to litigation settlements
|
- | (3 | ) | - | (3 | ) | ||||||||||
Acquisition expense
|
- | (104 | ) | - | (104 | ) | ||||||||||
Expenses incurred in connection with the Office of Inspector
|
||||||||||||||||
General investigation
|
(3,072 | ) | - | - | (3,072 | ) | ||||||||||
Total
|
$ | (3,072 | ) | $ | (107 | ) | $ | (8,214 | ) | $ | (11,393 | ) |
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
||||||||||||||||
UNAUDITED CONSOLIDATING STATEMENT OF INCOME
|
||||||||||||||||
FOR THE YEAR ENDED DECEMBER 31, 2014
|
||||||||||||||||
(in thousands)(unaudited)
|
||||||||||||||||
Roto-
|
Chemed
|
|||||||||||||||
VITAS
|
Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
2014
|
||||||||||||||||
Service revenues and sales
|
$ | 1,064,205 | $ | 392,077 | $ | - | $ | 1,456,282 | ||||||||
Cost of services provided and goods sold
|
825,739 | 208,934 | - | 1,034,673 | ||||||||||||
Selling, general and administrative expenses
|
85,184 | 106,960 | 30,445 | 222,589 | ||||||||||||
Depreciation
|
18,601 | 10,702 | 578 | 29,881 | ||||||||||||
Amortization
|
447 | 273 | - | 720 | ||||||||||||
Total costs and expenses
|
929,971 | 326,869 | 31,023 | 1,287,863 | ||||||||||||
Income/(loss) from operations
|
134,234 | 65,208 | (31,023 | ) | 168,419 | |||||||||||
Interest expense
|
(207 | ) | (363 | ) | (7,616 | ) | (8,186 | ) | ||||||||
Intercompany interest income/(expense)
|
6,189 | 2,892 | (9,081 | ) | - | |||||||||||
Other income/(expense)—net
|
(753 | ) | 146 | 3,128 | 2,521 | |||||||||||
Income/(loss) before income taxes
|
139,463 | 67,883 | (44,592 | ) | 162,754 | |||||||||||
Income taxes
|
(53,278 | ) | (25,808 | ) | 15,649 | (63,437 | ) | |||||||||
Net income/(loss)
|
$ | 86,185 | $ | 42,075 | $ | (28,943 | ) | $ | 99,317 | |||||||
(a) The following amounts are included in income from continuing operations (in thousands):
|
||||||||||||||||
Roto-
|
Chemed
|
|||||||||||||||
VITAS |
Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
Pretax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$ | - | $ | - | $ | (4,802 | ) | $ | (4,802 | ) | ||||||
Noncash impact of change in accounting for convertible debt
|
- | - | (3,389 | ) | (3,389 | ) | ||||||||||
Long-term incentive compensation
|
- | - | (2,569 | ) | (2,569 | ) | ||||||||||
Securities litigation
|
- | - | (327 | ) | (327 | ) | ||||||||||
Expenses related to litigation settlements
|
(113 | ) | (7 | ) | - | (120 | ) | |||||||||
Acquisition expense
|
(1 | ) | (23 | ) | - | (24 | ) | |||||||||
Expenses incurred in connection with the Office of Inspector
|
||||||||||||||||
General investigation
|
(2,141 | ) | - | - | (2,141 | ) | ||||||||||
Total
|
$ | (2,255 | ) | $ | (30 | ) | $ | (11,087 | ) | $ | (13,372 | ) | ||||
Roto-
|
Chemed
|
|||||||||||||||
VITAS
|
Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
After-tax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$ | - | $ | - | $ | (3,022 | ) | $ | (3,022 | ) | ||||||
Noncash impact of change in accounting for convertible debt
|
- | - | (2,143 | ) | (2,143 | ) | ||||||||||
Long-term incentive compensation
|
- | - | (1,625 | ) | (1,625 | ) | ||||||||||
Securities litigation
|
- | - | (207 | ) | (207 | ) | ||||||||||
Expenses related to litigation settlements
|
(70 | ) | (4 | ) | - | (74 | ) | |||||||||
Acquisition expense
|
(1 | ) | (14 | ) | - | (15 | ) | |||||||||
Expenses incurred in connection with the Office of Inspector
|
||||||||||||||||
General investigation
|
(1,328 | ) | - | - | (1,328 | ) | ||||||||||
Total
|
$ | (1,399 | ) | $ | (18 | ) | $ | (6,997 | ) | $ | (8,414 | ) |
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
||||||||||||||||
UNAUDITED CONSOLIDATING STATEMENT OF INCOME
|
||||||||||||||||
FOR THE YEAR ENDED DECEMBER 31, 2013
|
||||||||||||||||
(in thousands)(unaudited)
|
||||||||||||||||
Roto-
|
Chemed
|
|||||||||||||||
VITAS
|
Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
2013
|
||||||||||||||||
Service revenues and sales
|
$ | 1,045,113 | $ | 368,216 | $ | - | $ | 1,413,329 | ||||||||
Cost of services provided and goods sold
|
813,600 | 195,208 | - | 1,008,808 | ||||||||||||
Selling, general and administrative expenses
|
82,969 | 102,940 | 29,655 | 215,564 | ||||||||||||
Depreciation
|
18,149 | 9,014 | 535 | 27,698 | ||||||||||||
Amortization
|
1,385 | 259 | - | 1,644 | ||||||||||||
Other operating expenses
|
10,500 | 15,721 | - | 26,221 | ||||||||||||
Total costs and expenses
|
926,603 | 323,142 | 30,190 | 1,279,935 | ||||||||||||
Income/(loss) from operations
|
118,510 | 45,074 | (30,190 | ) | 133,394 | |||||||||||
Interest expense
|
(182 | ) | (322 | ) | (14,531 | ) | (15,035 | ) | ||||||||
Intercompany interest income/(expense)
|
4,288 | 2,055 | (6,343 | ) | - | |||||||||||
Other income/(expense)—net
|
438 | (4 | ) | 5,036 | 5,470 | |||||||||||
Income/(loss) before income taxes
|
123,054 | 46,803 | (46,028 | ) | 123,829 | |||||||||||
Income taxes
|
(46,910 | ) | (17,560 | ) | 17,868 | (46,602 | ) | |||||||||
Net income/(loss)
|
$ | 76,144 | $ | 29,243 | $ | (28,160 | ) | $ | 77,227 | |||||||
(a) The following amounts are included in income from continuing operations (in thousands):
|
||||||||||||||||
Roto-
|
Chemed
|
|||||||||||||||
VITAS
|
Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
Pretax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$ | - | $ | - | $ | (6,042 | ) | $ | (6,042 | ) | ||||||
Noncash impact of change in accounting for convertible debt
|
- | - | (8,613 | ) | (8,613 | ) | ||||||||||
Long-term incentive compensation
|
- | - | (1,301 | ) | (1,301 | ) | ||||||||||
Loss on extinguishment of debt
|
- | - | (465 | ) | (465 | ) | ||||||||||
Securities litigation
|
- | - | (109 | ) | (109 | ) | ||||||||||
Litigation settlement costs
|
(10,500 | ) | (15,721 | ) | - | (26,221 | ) | |||||||||
Expenses related to litigation settlements
|
- | (1,425 | ) | - | (1,425 | ) | ||||||||||
Severance arrangements
|
- | (302 | ) | - | (302 | ) | ||||||||||
Acquisition expense
|
(58 | ) | (4 | ) | - | (62 | ) | |||||||||
Expenses incurred in connection with the Office of Inspector
|
||||||||||||||||
General investigation
|
(2,149 | ) | - | - | (2,149 | ) | ||||||||||
Total
|
$ | (12,707 | ) | $ | (17,452 | ) | $ | (16,530 | ) | $ | (46,689 | ) | ||||
Roto-
|
Chemed | |||||||||||||||
VITAS |
Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
After-tax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$ | - | $ | - | $ | (3,813 | ) | $ | (3,813 | ) | ||||||
Noncash impact of change in accounting for convertible debt
|
- | - | (5,448 | ) | (5,448 | ) | ||||||||||
Long-term incentive compensation
|
- | - | (822 | ) | (822 | ) | ||||||||||
Loss on extinguishment of debt
|
- | - | (294 | ) | (294 | ) | ||||||||||
Securities litigation
|
- | - | (69 | ) | (69 | ) | ||||||||||
Litigation settlement costs
|
(6,510 | ) | (9,551 | ) | - | (16,061 | ) | |||||||||
Expenses related to litigation settlements
|
- | (865 | ) | - | (865 | ) | ||||||||||
Severance arrangements
|
- | (184 | ) | - | (184 | ) | ||||||||||
Acquisition expense
|
(36 | ) | (2 | ) | - | (38 | ) | |||||||||
Expenses incurred in connection with the Office of Inspector
|
||||||||||||||||
General investigation
|
(1,333 | ) | - | - | (1,333 | ) | ||||||||||
Uncertain tax position adjustments
|
- | - | 1,782 | 1,782 | ||||||||||||
Total
|
$ | (7,879 | ) | $ | (10,602 | ) | $ | (8,664 | ) | $ | (27,145 | ) |
2015
|
2014
|
2013
|
||||||||||
Consolidated service revenues and sales
|
$ | 1,543,388 | $ | 1,456,282 | $ | 1,413,329 | ||||||
Consolidated net income
|
$ | 110,274 | $ | 99,317 | $ | 77,227 | ||||||
Diluted EPS
|
$ | 6.33 | $ | 5.57 | $ | 4.16 | ||||||
Adjusted net income
|
$ | 121,667 | $ | 107,731 | $ | 104,372 | ||||||
Adjusted diluted EPS
|
$ | 6.98 | $ | 6.07 | $ | 5.62 | ||||||
Adjusted EBITDA
|
$ | 235,931 | $ | 212,562 | $ | 206,850 | ||||||
Adjusted EBITDA as a % of revenue
|
15.3 | % | 14.6 | % | 14.6 | % |
●
|
Our operations generated cash of $171.5 million.
|
●
|
We repurchased $59.3 million of our stock in the open market using cash on hand.
|
●
|
We spent $44.1 million on capital expenditures.
|
●
|
A $56.3 million decrease in cash as a result of a net payment of long-term debt.
|
●
|
An $18.3 million decrease in accounts receivable due to the timing of payments.
|
●
|
A $12.0 million increase in properties and equipment due mainly to the purchase of water restoration equipment and the construction of a stand-alone building for a Roto-Rooter branch location.
|
●
|
A $5.6 million increase in goodwill related to the purchase of the Omaha and Scranton locations at Roto-Rooter.
|
Description
|
Requirement
|
Chemed
|
||
Leverage Ratio (Consolidated Indebtedness/Consolidated Adj. EBITDA)
|
< 3.50 to 1.00
|
0.54 to 1.00
|
||
Fixed Charge Coverage Ratio (Consolidated Free Cash Flow/Consolidated
|
||||
Fixed Charges
|
> 1.50 to 1.00
|
2.18 to 1.00
|
||
Annual Operating Lease Commitment
|
< $50.0 million
|
$25.5 million
|
For the Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Net cash provided by operating activities
|
$ | 171.5 | $ | 110.3 | $ | 150.8 | ||||||
Capital expenditures
|
(44.1 | ) | (43.6 | ) | (29.3 | ) | ||||||
Operating cash after capital expenditures
|
127.4 | 66.7 | 121.5 | |||||||||
Purchase of treasury stock in the open market
|
(59.3 | ) | (110.0 | ) | (92.9 | ) | ||||||
Net change in long-term debt
|
(56.3 | ) | (39.5 | ) | - | |||||||
Business combinations
|
(6.6 | ) | (0.3 | ) | (2.3 | ) | ||||||
Dividends paid
|
(15.6 | ) | (14.3 | ) | (14.1 | ) | ||||||
Proceeds from exercise of stock options
|
15.4 | 23.9 | 17.1 | |||||||||
Increase/(decrease) in cash overdraft payable
|
(1.2 | ) | 9.7 | (11.4 | ) | |||||||
Other--net
|
(3.2 | ) | (6.5 | ) | (3.0 | ) | ||||||
Increase/(decrease) in cash and cash equivalents
|
$ | 0.6 | $ | (70.3 | ) | $ | 14.9 |
Less than
|
After
|
|||||||||||||||||||
Total
|
1 year
|
1-3 Years
|
4 -5 Years
|
5 Years
|
||||||||||||||||
Long-term debt obligations (a)
|
$ | 91,250 | $ | 7,500 | $ | 18,750 | $ | 65,000 | $ | - | ||||||||||
Interest on long-term debt
|
3,509 | 1,140 | 1,946 | 423 | - | |||||||||||||||
Operating lease obligations
|
79,094 | 21,679 | 28,235 | 14,886 | 14,294 | |||||||||||||||
Purchase obligations (b)
|
43,695 | 43,695 | - | - | - | |||||||||||||||
Other long-term obligations (c)
|
60,873 | 2,851 | 5,704 | 2,851 | 49,467 | |||||||||||||||
Total contractual cash obligations
|
$ | 278,421 | $ | 76,865 | $ | 54,635 | $ | 83,160 | $ | 63,761 | ||||||||||
(a) Represents the face value of the obligation.
|
||||||||||||||||||||
(b) Purchase obligations primarily consist of accounts payable at December 31, 2015.
|
||||||||||||||||||||
(c) Other long-term obligations comprise largely excess benefit obligations.
|
Favorable/(Unfavorable)
|
||||||||
Amount
|
Percent
|
|||||||
Service revenues and sales
|
||||||||
VITAS
|
$ | 51,346 | 5 | % | ||||
Roto-Rooter
|
35,760 | 9 | ||||||
Total
|
87,106 | 6 | ||||||
Cost of services provided and goods sold
|
(52,937 | ) | (5 | ) | ||||
Selling, general and administrative expenses
|
(15,232 | ) | (7 | ) | ||||
Depreciation
|
(2,488 | ) | (8 | ) | ||||
Amortization
|
(410 | ) | (57 | ) | ||||
Income from operations
|
16,039 | 10 | ||||||
Interest expense
|
4,541 | 55 | ||||||
Other income - net
|
(3,208 | ) | 127 | |||||
Income before income taxes
|
17,372 | 11 | ||||||
Income taxes
|
(6,415 | ) | (10 | ) | ||||
Net income
|
$ | 10,957 | 11 |
Amount
|
Percent
|
|||||||
Routine homecare
|
$ | 54,732 | 7 | % | ||||
Continuous care
|
(1,404 | ) | (1 | ) | ||||
General inpatient
|
(3,437 | ) | (3 | ) | ||||
Medicare cap
|
1,455 | 113 | ||||||
$ | 51,346 | 5 |
Days of Care
|
Increase/(Decrease)
|
|||||||||||
2015
|
2014
|
Percent
|
||||||||||
Routine homecare
|
5,258,660 | 4,959,658 | 6 | |||||||||
Continuous Care
|
206,405 | 207,207 | - | |||||||||
General inpatient
|
150,424 | 156,421 | (4 | ) | ||||||||
Total days of care
|
5,615,489 | 5,323,286 | 6 |
Amount
|
Percent
|
|||||||
Plumbing
|
$ | 13,072 | 8 | % | ||||
Sewer and drain cleaning
|
1,484 | 1 | ||||||
Contractor operations
|
1,470 | 4 | ||||||
Water restoration
|
19,683 | 107 | ||||||
Other
|
51 | - | ||||||
$ | 35,760 | 9 |
2015
|
2014
|
|||||||
SG&A expenses before long-term incentive
|
||||||||
compensation, OIG expenses and the impact
|
||||||||
of market gains of deferred compensation plans
|
$ | 225,180 | $ | 214,761 | ||||
Long-term incentive compensation
|
7,519 | 2,569 | ||||||
Expenses related to OIG investigation
|
4,974 | 2,141 | ||||||
Impact of market value gains on liabilities
|
||||||||
held in deferred compensation trusts
|
148 | 3,118 | ||||||
Total SG&A expenses
|
$ | 237,821 | $ | 222,589 |
2015
|
2014
|
|||||||
Market value gains on assets held in deferred
|
||||||||
compensation trusts
|
$ | 148 | $ | 3,118 | ||||
Loss on disposal of property and equipment
|
(698 | ) | (640 | ) | ||||
Interest income/ (expense)
|
281 | (29 | ) | |||||
Other
|
(418 | ) | 72 | |||||
Total other income/(expense)
|
$ | (687 | ) | $ | 2,521 |
2015
|
2014
|
|||||||
VITAS
|
||||||||
Costs associated with the OIG investigation
|
$ | (3,072 | ) | $ | (1,328 | ) | ||
Litigation settlement costs
|
- | (70 | ) | |||||
Acquisition expense
|
- | (1 | ) | |||||
Roto-Rooter
|
||||||||
Expenses related to litigation settlements
|
(3 | ) | (4 | ) | ||||
Acquisition expense
|
(104 | ) | (14 | ) | ||||
Corporate
|
||||||||
Long-term incentive compensation
|
(4,752 | ) | (1,625 | ) | ||||
Noncash impact of change in accounting of convertible debt
|
- | (2,143 | ) | |||||
Costs related to securities litigation
|
(23 | ) | (207 | ) | ||||
Stock option expense
|
(3,439 | ) | (3,022 | ) | ||||
Total
|
$ | (11,393 | ) | $ | (8,414 | ) |
Increase/(Decrease)
|
||||||||
Amount
|
Percent
|
|||||||
VITAS
|
$ | 7,160 | 8 | % | ||||
Roto-Rooter
|
6,498 | 15 | ||||||
Corporate
|
(2,701 | ) | (9 | ) | ||||
$ | 10,957 | 11 |
Favorable/(Unfavorable)
|
||||||||
Amount
|
Percent
|
|||||||
Service revenues and sales
|
||||||||
VITAS
|
$ | 19,092 | 2 | % | ||||
Roto-Rooter
|
23,861 | 6 | ||||||
Total
|
42,953 | 3 | ||||||
Cost of services provided and goods sold
|
(25,865 | ) | (3 | ) | ||||
Selling, general and administrative expenses
|
(7,025 | ) | (3 | ) | ||||
Depreciation
|
(2,183 | ) | (8 | ) | ||||
Amortization
|
924 | 56 | ||||||
Other operating expenses
|
26,221 | 100 | ||||||
Income from operations
|
35,025 | 26 | ||||||
Interest expense
|
6,849 | 46 | ||||||
Other income - net
|
(2,949 | ) | (54 | ) | ||||
Income before income taxes
|
38,925 | 31 | ||||||
Income taxes
|
(16,835 | ) | (36 | ) | ||||
Net income
|
$ | 22,090 | 29 |
Amount
|
Percent
|
|||||||
Routine homecare
|
$ | 18,678 | 2 | % | ||||
Continuous care
|
(3,203 | ) | (2 | ) | ||||
General inpatient
|
(2,092 | ) | (2 | ) | ||||
Medicare cap
|
5,709 | 82 | ||||||
$ | 19,092 | 2 |
Amount
|
Percent
|
|||||||
Plumbing
|
$ | 6,051 | 4 | % | ||||
Sewer and drain cleaning
|
(205 | ) | - | |||||
Contractor operations
|
3,466 | 10 | ||||||
Water restoration
|
15,438 | 507 | ||||||
Other
|
(889 | ) | 4 | |||||
$ | 23,861 | 6 |
2014
|
2013
|
|||||||
SG&A expenses before long-term incentive
|
||||||||
compensation, OIG expenses and the impact
|
||||||||
of market gains of deferred compensation plans
|
$ | 214,761 | $ | 207,131 | ||||
Long-term incentive compensation
|
2,569 | 1,301 | ||||||
Expenses related to OIG investigation
|
2,141 | 2,149 | ||||||
Impact of market value gains on liabilities
|
||||||||
held in deferred compensation trusts
|
3,118 | 4,982 | ||||||
Total SG&A expenses
|
$ | 222,589 | $ | 215,563 |
2014
|
2013
|
|||||||
Litigation settlement of VITAS segment
|
$ | - | $ | 10,500 | ||||
Settlements of Roto-Rooter segment
|
- | 15,721 | ||||||
Total other operating expenses
|
$ | - | $ | 26,221 |
2014
|
2013
|
|||||||
Market value gains on assets held in deferred
|
||||||||
compensation trusts
|
$ | 3,118 | $ | 4,982 | ||||
Loss on disposal of property and equipment
|
(640 | ) | (320 | ) | ||||
Interest income/ (expense)
|
(29 | ) | 847 | |||||
Other
|
72 | (39 | ) | |||||
Total other income
|
$ | 2,521 | $ | 5,470 |
2014
|
2013
|
|||||||
VITAS
|
||||||||
Costs associated with the OIG investigation
|
$ | (1,328 | ) | $ | (1,333 | ) | ||
Litigation settlement
|
- | (6,510 | ) | |||||
Litigation settlement costs
|
(70 | ) | - | |||||
Acquisition expense
|
(1 | ) | (36 | ) | ||||
Roto-Rooter
|
||||||||
Expenses related to litigation settlements
|
(4 | ) | (865 | ) | ||||
Litigation settlements
|
- | (9,551 | ) | |||||
Acquisition expense
|
(14 | ) | (2 | ) | ||||
Expenses of severance arrangements
|
- | (184 | ) | |||||
Corporate
|
||||||||
Long-term incentive compensation
|
(1,625 | ) | (822 | ) | ||||
Noncash impact of change in accounting of convertible debt
|
(2,143 | ) | (5,448 | ) | ||||
Costs related to securities litigation
|
(207 | ) | (69 | ) | ||||
Stock option expense
|
(3,022 | ) | (3,813 | ) | ||||
Uncertain tax position adjustments
|
- | 1,782 | ||||||
Loss on extinguishment of debt
|
- | (294 | ) | |||||
Total
|
$ | (8,414 | ) | $ | (27,145 | ) |
Increase/(Decrease)
|
||||||||
Amount
|
Percent
|
|||||||
VITAS
|
$ | 10,041 | 13 | % | ||||
Roto-Rooter
|
12,832 | 44 | ||||||
Corporate
|
(783 | ) | (3 | ) | ||||
$ | 22,090 | 29 |
2015
|
2014
|
|||||||
Beginning Balance January 1,
|
$ | 6,112 | $ | 8,260 | ||||
2015 measurement period
|
(165 | ) | 165 | |||||
2014 measurement period
|
- | 1,451 | ||||||
2011 measurement period
|
- | (325 | ) | |||||
Payments
|
(4,782 | ) | (3,439 | ) | ||||
Ending Balance December 31,
|
$ | 1,165 | $ | 6,112 |
Consolidating Summary of Adjusted EBITDA
|
||||||||||||||||
Chemed Corporation and Subsidiary Companies
|
||||||||||||||||
(in thousands)
|
Chemed | |||||||||||||||
2015 |
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
||||||||||||
Net income/(loss)
|
$ | 93,346 | $ | 48,573 | $ | (31,645 | ) | $ | 110,274 | |||||||
Add/(deduct):
|
||||||||||||||||
Interest expense
|
200 | 348 | 3,097 | 3,645 | ||||||||||||
Income taxes
|
56,675 | 29,630 | (16,453 | ) | 69,852 | |||||||||||
Depreciation
|
18,789 | 12,988 | 592 | 32,369 | ||||||||||||
Amortization
|
758 | 372 | - | 1,130 | ||||||||||||
EBITDA
|
169,768 | 91,911 | (44,409 | ) | 217,270 | |||||||||||
Add/(deduct):
|
||||||||||||||||
Intercompany interest/(expense)
|
(7,499 | ) | (3,385 | ) | 10,884 | - | ||||||||||
Interest income
|
(241 | ) | (40 | ) | - | (281 | ) | |||||||||
Expenses related to OIG investigation
|
4,974 | - | - | 4,974 | ||||||||||||
Acquisition expenses
|
- | 172 | - | 172 | ||||||||||||
Expenses related to litigation settlements
|
- | 5 | - | 5 | ||||||||||||
Advertising cost adjustment
|
- | (1,317 | ) | - | (1,317 | ) | ||||||||||
Stock option expense
|
- | - | 5,445 | 5,445 | ||||||||||||
Stock award expense
|
496 | 268 | 1,343 | 2,107 | ||||||||||||
Long-term incentive compensation
|
- | - | 7,519 | 7,519 | ||||||||||||
Expenses related to securities litigation
|
- | - | 37 | 37 | ||||||||||||
Adjusted EBITDA
|
$ | 167,498 | $ | 87,614 | $ | (19,181 | ) | $ | 235,931 | |||||||
Chemed
|
||||||||||||||||
2014 |
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
||||||||||||
Net income/(loss)
|
$ | 86,186 | $ | 42,075 | $ | (28,944 | ) | $ | 99,317 | |||||||
Add/(deduct):
|
||||||||||||||||
Interest expense
|
207 | 363 | 7,616 | 8,186 | ||||||||||||
Income taxes
|
53,278 | 25,808 | (15,649 | ) | 63,437 | |||||||||||
Depreciation
|
18,601 | 10,702 | 578 | 29,881 | ||||||||||||
Amortization
|
447 | 273 | - | 720 | ||||||||||||
EBITDA
|
158,719 | 79,221 | (36,399 | ) | 201,541 | |||||||||||
Add/(deduct):
|
||||||||||||||||
Intercompany interest/(expense)
|
(6,189 | ) | (2,892 | ) | 9,081 | - | ||||||||||
Interest income
|
78 | (39 | ) | (10 | ) | 29 | ||||||||||
Expenses related to OIG investigation
|
2,141 | - | - | 2,141 | ||||||||||||
Acquisition expenses
|
1 | 23 | - | 24 | ||||||||||||
Expenses related to litigation settlements
|
113 | 7 | - | 120 | ||||||||||||
Advertising cost adjustment
|
- | (1,462 | ) | - | (1,462 | ) | ||||||||||
Stock option expense
|
- | - | 4,802 | 4,802 | ||||||||||||
Stock award expense
|
586 | 252 | 1,633 | 2,471 | ||||||||||||
Long-term incentive compensation
|
- | - | 2,569 | 2,569 | ||||||||||||
Expenses related to securities litigation
|
- | - | 327 | 327 | ||||||||||||
Adjusted EBITDA
|
$ | 155,449 | $ | 75,110 | $ | (17,997 | ) | $ | 212,562 | |||||||
Chemed | ||||||||||||||||
2013 | VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||||
Net income/(loss)
|
$ | 76,144 | $ | 29,243 | $ | (28,160 | ) | $ | 77,227 | |||||||
Add/(deduct):
|
||||||||||||||||
Interest expense
|
182 | 322 | 14,531 | 15,035 | ||||||||||||
Income taxes
|
46,910 | 17,560 | (17,868 | ) | 46,602 | |||||||||||
Depreciation
|
18,149 | 9,014 | 535 | 27,698 | ||||||||||||
Amortization
|
1,386 | 259 | - | 1,645 | ||||||||||||
EBITDA
|
142,771 | 56,398 | (30,962 | ) | 168,207 | |||||||||||
Add/(deduct):
|
||||||||||||||||
Intercompany interest/(expense)
|
(4,288 | ) | (2,055 | ) | 6,343 | - | ||||||||||
Interest income
|
(750 | ) | (41 | ) | (56 | ) | (847 | ) | ||||||||
Expenses related to OIG investigation
|
2,149 | - | - | 2,149 | ||||||||||||
Acquisition expenses
|
58 | 4 | - | 62 | ||||||||||||
Litigation settlement
|
10,500 | 15,721 | - | 26,221 | ||||||||||||
Expenses of litigation settlements
|
- | 1,425 | - | 1,425 | ||||||||||||
Advertising cost adjustment
|
- | (1,166 | ) | - | (1,166 | ) | ||||||||||
Expenses of severance arrangements
|
- | 302 | - | 302 | ||||||||||||
Stock option expense
|
- | - | 6,042 | 6,042 | ||||||||||||
Stock award expense
|
716 | 348 | 1,981 | 3,045 | ||||||||||||
Long-term incentive compensation
|
- | - | 1,301 | 1,301 | ||||||||||||
Expenses related to securities litigation
|
- | - | 109 | 109 | ||||||||||||
Adjusted EBITDA
|
$ | 151,156 | $ | 70,936 | $ | (15,242 | ) | $ | 206,850 |
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
||||||||||||
RECONCILIATION OF ADJUSTED NET INCOME
|
||||||||||||
(in thousands, except per share data)(unaudited)
|
||||||||||||
For the Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Net income as reported
|
$ | 110,274 | $ | 99,317 | $ | 77,227 | ||||||
Add/(deduct) after-tax cost of:
|
||||||||||||
Non-cash expense of change in accounting for convertible
|
- | 2,143 | 5,448 | |||||||||
Stock option expense
|
3,439 | 3,022 | 3,813 | |||||||||
Expenses related to OIG investigation
|
3,072 | 1,328 | 1,333 | |||||||||
Net expenses related to litigation settlements
|
3 | 74 | 865 | |||||||||
Long-term incentive compensation
|
4,752 | 1,625 | 822 | |||||||||
Expenses related to securities litigation
|
23 | 207 | 69 | |||||||||
Acquisition expenses
|
104 | 15 | 38 | |||||||||
Litigation settlements
|
- | - | 16,061 | |||||||||
Uncertain tax position adjustments
|
- | - | (1,782 | ) | ||||||||
Loss on extinguishment of debt
|
- | - | 294 | |||||||||
Expenses of severance arrangements
|
- | - | 184 | |||||||||
Adjusted net income
|
$ | 121,667 | $ | 107,731 | $ | 104,372 | ||||||
Diluted Earnings Per Share As Reported
|
||||||||||||
Net income
|
$ | 6.33 | $ | 5.57 | $ | 4.16 | ||||||
Average number of shares outstanding
|
17,422 | 17,840 | 18,585 | |||||||||
Adjusted Diluted Earnings Per Share
|
||||||||||||
Net income
|
$ | 6.98 | $ | 6.07 | $ | 5.62 | ||||||
Average number of shares outstanding
|
17,422 | 17,738 | * | 18,585 | ||||||||
*For the purpose of computing adjusted diluted earnings per share for 2014, the estimated dilutive impact of the convertible notes prior to the conversion of these notes on May 15, 2014 (impact of 102,000) has been excluded from the computation of diluted average shares outstanding as this impact was entirely offset by the exercise of the note hedges on May 15, 2014.
|
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
||||||||||||||||
OPERATING STATISTICS FOR VITAS SEGMENT
|
||||||||||||||||
(unaudited)
|
||||||||||||||||
Three Months Ended December 31,
|
Year Ended December 31,
|
|||||||||||||||
OPERATING STATISTICS
|
2015
|
2014
|
2015
|
2014
|
||||||||||||
Net revenue ($000)
|
||||||||||||||||
Homecare
|
$ | 224,278 | $ | 209,633 | $ | 865,145 | $ | 810,413 | ||||||||
Inpatient
|
22,954 | 25,839 | 99,439 | 102,876 | ||||||||||||
Continuous care
|
37,238 | 38,405 | 150,802 | 152,206 | ||||||||||||
Total before Medicare cap allowance
|
$ | 284,470 | $ | 273,877 | $ | 1,115,386 | $ | 1,065,495 | ||||||||
Medicare cap allowance
|
- | 506 | 165 | (1,290 | ) | |||||||||||
Total
|
$ | 284,470 | $ | 274,383 | $ | 1,115,551 | $ | 1,064,205 | ||||||||
Net revenue as a percent of total before Medicare cap allowance
|
||||||||||||||||
Homecare
|
78.8 | % | 76.6 | % | 77.6 | % | 76.0 | % | ||||||||
Inpatient
|
8.1 | 9.4 | 8.9 | 9.7 | ||||||||||||
Continuous care
|
13.1 | 14.0 | 13.5 | 14.3 | ||||||||||||
Total before Medicare cap allowance
|
100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||
Medicare cap allowance
|
- | 0.2 | - | (0.1 | ) | |||||||||||
Total
|
100.0 | % | 100.2 | % | 100.0 | % | 99.9 | % | ||||||||
Average daily census (days)
|
||||||||||||||||
Homecare
|
11,707 | 10,850 | 11,372 | 10,634 | ||||||||||||
Nursing home
|
3,062 | 2,995 | 3,035 | 2,954 | ||||||||||||
Routine homecare
|
14,769 | 13,845 | 14,407 | 13,588 | ||||||||||||
Inpatient
|
377 | 427 | 412 | 428 | ||||||||||||
Continuous care
|
551 | 566 | 566 | 568 | ||||||||||||
Total
|
15,697 | 14,838 | 15,385 | 14,584 | ||||||||||||
Total Admissions
|
15,790 | 16,313 | 65,872 | 64,090 | ||||||||||||
Total Discharges
|
15,915 | 16,333 | 64,900 | 63,478 | ||||||||||||
Average length of stay (days)
|
89.8 | 82.7 | 81.6 | 82.4 | ||||||||||||
Median length of stay (days)
|
17.0 | 15.0 | 15.0 | 15.0 | ||||||||||||
ADC by major diagnosis
|
||||||||||||||||
Neurological
|
22.8 | % | 25.4 | % | 23.2 | % | 30.1 | % | ||||||||
Cancer
|
15.6 | 17.2 | 16.4 | 17.3 | ||||||||||||
Cardio
|
17.4 | 17.8 | 17.4 | 17.0 | ||||||||||||
Cerebro
|
29.9 | 26.4 | 29.1 | 20.6 | ||||||||||||
Respiratory
|
7.7 | 7.8 | 7.8 | 7.9 | ||||||||||||
Other
|
6.6 | 5.4 | 6.1 | 7.1 | ||||||||||||
Total
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Admissions by major diagnosis
|
||||||||||||||||
Neurological
|
12.1 | % | 13.2 | % | 12.3 | % | 18.6 | % | ||||||||
Cancer
|
31.5 | 33.1 | 32.0 | 33.3 | ||||||||||||
Cardio
|
15.2 | 15.2 | 15.3 | 14.9 | ||||||||||||
Cerebro
|
19.7 | 17.7 | 19.0 | 11.5 | ||||||||||||
Respiratory
|
9.5 | 9.3 | 9.9 | 9.4 | ||||||||||||
Other
|
12.0 | 11.5 | 11.5 | 12.3 | ||||||||||||
Total
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Direct patient care margins
|
||||||||||||||||
Routine homecare
|
54.7 | % | 54.9 | % | 53.4 | % | 53.8 | % | ||||||||
Inpatient
|
1.3 | 7.2 | 5.0 | 5.8 | ||||||||||||
Continuous care
|
16.1 | 18.2 | 16.1 | 17.4 | ||||||||||||
Homecare margin drivers (dollars per patient day)
|
||||||||||||||||
Labor costs
|
$ | 53.96 | $ | 53.06 | $ | 55.58 | $ | 53.99 | ||||||||
Drug costs
|
6.63 | 6.90 | 6.68 | 7.01 | ||||||||||||
Home medical equipment
|
6.61 | 6.41 | 6.57 | 6.61 | ||||||||||||
Medical supplies
|
2.84 | 3.10 | 2.90 | 3.18 | ||||||||||||
Inpatient margin drivers (dollars per patient day)
|
||||||||||||||||
Labor costs
|
$ | 358.21 | $ | 327.53 | $ | 350.06 | $ | 339.90 | ||||||||
Continuous care margin drivers (dollars per patient day)
|
||||||||||||||||
Labor costs
|
$ | 596.21 | $ | 582.69 | $ | 592.48 | $ | 585.61 | ||||||||
Bad debt expense as a percent of revenues
|
1.0 | % | 1.0 | % | 1.0 | % | 1.0 | % | ||||||||
Accounts receivable --
|
||||||||||||||||
Days of revenue outstanding- excluding unapplied Medicare payments
|
37.5 | 38.9 |
N.A.
|
N.A.
|
||||||||||||
Days of revenue outstanding- including unapplied Medicare payments
|
26.7 | 33.6 |
N.A.
|
N.A.
|
/s/ Joel F. Gemunder | ||
Joel F. Gemunder |
/s/ Patrick P. Grace | ||
Patrick P. Grace
|
/s/ Thomas C. Hutton | ||
Thomas C. Hutton
|
/s/ Thomas P. Rice | ||
Thomas P. Rice
|
/s/ Donald E. Saunders | ||
Donald E. Saunders
|
/s/ George J. Walsh III | ||
George J. Walsh III
|
/s/ Frank E. Wood | ||
Frank E. Wood
|
/s/ Walter L. Krebs | ||
Walter L. Krebs
|
/s/ Andrea R. Lindell | ||
Andrea R. Lindell
|
1.
|
I have reviewed this annual report on Form 10-K of Chemed Corporation (“registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations, and cash flow of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls or procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by other within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors or persons performing the equivalent function:
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Kevin J. McNamara | ||
Kevin J. McNamara | ||
(President and Chief Executive Officer) |
1.
|
I have reviewed this annual report on Form 10-K of Chemed Corporation (“registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations, and cash flow of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls or procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by other within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors or persons performing the equivalent function:
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ David P. Williams | ||
David P. Williams | ||
(Executive Vice President and Chief Financial Officer) |
1.
|
I have reviewed this annual report on Form 10-K of Chemed Corporation (“registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations, and cash flow of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls or procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by other within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors or persons performing the equivalent function:
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Arthur V. Tucker, Jr. | ||
Arthur V. Tucker, Jr. | ||
(Vice President and Controller) |
1)
|
The Company’s Annual Report on Form 10-K for the year ending December 31, 2015 (“Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Kevin J. McNamara | ||
Kevin J. McNamara | ||
(President and Chief Executive Officer) |
1)
|
The Company’s Annual Report on Form 10-K for the year ending December 31, 2015 (“Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ David P. Williams | ||
David P. Williams | ||
(Executive Vice President and Chief Financial Officer) |
1)
|
The Company’s Annual Report on Form 10-K for the year ending December 31, 2015 (“Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Arthur V. Tucker, Jr. | ||
Arthur V. Tucker, Jr. | ||
(Vice President and Controller)
|
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MW ATS3]EPVD10V
Document And Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Feb. 16, 2016 |
Jun. 30, 2015 |
|
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2015 | ||
Entity Registrant Name | CHEMED CORP | ||
Trading Symbol | CHE | ||
Entity Central Index Key | 0000019584 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 16,985,970 | ||
Entity Public Float | $ 2,162,114,441 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | Yes |
Consolidated Statement Of Income - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Consolidated Statement Of Income [Abstract] | |||
Service revenues and sales | $ 1,543,388 | $ 1,456,282 | $ 1,413,329 |
Cost of services provided and goods sold (excluding depreciation) | 1,087,610 | 1,034,673 | 1,008,808 |
Selling, general and administrative expenses | 237,821 | 222,589 | 215,564 |
Depreciation | 32,369 | 29,881 | 27,698 |
Amortization | 1,130 | 720 | 1,644 |
Other operating expenses (Note 21) | 26,221 | ||
Total costs and expenses | 1,358,930 | 1,287,863 | 1,279,935 |
Income from operations | 184,458 | 168,419 | 133,394 |
Interest expense | (3,645) | (8,186) | (15,035) |
Other income/(expense) - net (Note 10) | (687) | 2,521 | 5,470 |
Income before income taxes | 180,126 | 162,754 | 123,829 |
Income taxes (Note 11) | (69,852) | (63,437) | (46,602) |
Net income | $ 110,274 | $ 99,317 | $ 77,227 |
Earnings Per Share (Note 15) | |||
Net income | $ 6.54 | $ 5.79 | $ 4.24 |
Average number of shares outstanding | 16,870 | 17,165 | 18,199 |
Diluted Earnings Per Share (Note 15) | |||
Net income | $ 6.33 | $ 5.57 | $ 4.16 |
Average number of shares outstanding | 17,422 | 17,840 | 18,585 |
Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Consolidated Balance Sheet [Abstract] | ||
Accounts receivable, allowances | $ 13,244 | $ 14,728 |
Identifiable intangible assets, accumulated amortization | $ 32,866 | $ 32,772 |
Capital stock - authorized | 80,000,000 | 80,000,000 |
Capital stock - par value | $ 1 | $ 1 |
Capital stock - issued | 33,985,316 | 33,337,297 |
Treasury stock | 17,187,540 | 16,446,572 |
Consolidated Statement Of Changes In Stockholders' Equity - USD ($) $ in Thousands |
Capital Stock [Member] |
Paid-In Capital [Member] |
Retained Earnings [Member] |
Treasury Stock-At Cost [Member] |
Deferred Compensation Payable In Company Stock [Member] |
Total |
---|---|---|---|---|---|---|
Balance at Dec. 31, 2012 | $ 31,589 | $ 437,364 | $ 623,035 | $ (640,732) | $ 2,035 | $ 453,291 |
Net income | 77,227 | 77,227 | ||||
Dividends paid | (14,148) | (14,148) | ||||
Stock awards and exercise of stock options (Note 4) | 656 | 44,366 | (18,851) | 26,171 | ||
Purchases of treasury stock (Note 20) | (92,911) | (92,911) | ||||
Other | (719) | (140) | 119 | (740) | ||
Balance at Dec. 31, 2013 | 32,245 | 481,011 | 686,114 | (752,634) | 2,154 | 448,890 |
Net income | 99,317 | 99,317 | ||||
Dividends paid | (14,255) | (14,255) | ||||
Stock awards and exercise of stock options (Note 4) | 809 | 61,469 | (31,237) | 31,041 | ||
Purchases of treasury stock (Note 20) | (110,019) | (110,019) | ||||
Retirement of warrants | (2,645) | (2,645) | ||||
Other | 283 | (990) | (395) | 129 | (973) | |
Balance at Dec. 31, 2014 | 33,337 | 538,845 | 771,176 | (894,285) | 2,283 | 451,356 |
Net income | 110,274 | 110,274 | ||||
Dividends paid | (15,605) | (15,605) | ||||
Stock awards and exercise of stock options (Note 4) | 648 | 66,077 | (38,257) | 28,468 | ||
Purchases of treasury stock (Note 20) | (59,323) | (59,323) | ||||
Other | (1,916) | (113) | 112 | (1,917) | ||
Balance at Dec. 31, 2015 | $ 33,985 | $ 603,006 | $ 865,845 | $ (991,978) | $ 2,395 | $ 513,253 |
Consolidated Statement Of Changes In Stockholders' Equity (Parenthetical) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Consolidated Statement Of Changes In Stockholders' Equity [Abstract] | |||
Dividends paid per share | $ 0.92 | $ 0.84 | $ 0.76 |
Summary Of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Significant Accounting Policies | 1.Summary of Significant Accounting Policies NATURE OF OPERATIONS We operate through our two wholly-owned subsidiaries: VITAS Healthcare Corporation (“VITAS”) and Roto-Rooter Group, Inc. (“Roto-Rooter”). VITAS focuses on hospice care that helps make terminally ill patients' final days as comfortable as possible. Through its team of doctors, nurses, home health aides, social workers, clergy and volunteers, VITAS provides direct medical services to patients, as well as spiritual and emotional counseling to both patients and their families. Roto-Rooter provides plumbing, drain cleaning and water restoration services to both residential and commercial customers. Through its network of company-owned branches, independent contractors and franchisees, Roto-Rooter offers plumbing, drain cleaning service and water restoration to approximately 90% of the U.S. population.
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Chemed Corporation and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated.
We have analyzed the provisions of the Financial Accounting Standards Board (“FASB”) authoritative guidance on the consolidation of variable interest entities relative to our contractual relationships with Roto-Rooter’s independent contractors and franchisees. The guidance requires the primary beneficiary of a Variable Interest Entity (“VIE”) to consolidate the accounts of the VIE. Based upon the guidance provided by the FASB, we have concluded that neither the independent contractors nor the franchisees are VIEs.
CASH EQUIVALENTS Cash equivalents comprise short-term, highly liquid investments, including money market funds that have original maturities of three months or less.
ACCOUNTS AND LOANS RECEIVABLE Accounts and loans receivable are recorded at the principal balance outstanding less estimated allowances for uncollectible accounts. For the Roto-Rooter segment, allowances for trade accounts receivable are generally provided for accounts more than 90 days past due, although collection efforts continue beyond that time. Due to the small number of loans receivable outstanding, allowances for loan losses are determined on a case-by-case basis. For the VITAS segment, allowances for accounts receivable are provided on accounts based on expected collection rates by payer types. The expected collection rate is based on both historical averages and known current trends. Final write-off of overdue accounts or loans receivable is made when all reasonable collection efforts have been made and payment is not forthcoming. We closely monitor our receivables and periodically review procedures for granting credit to attempt to hold losses to a minimum.
We make appropriate provisions to reduce our accounts receivable balance for any governmental or other payer reviews resulting in denials of patient service revenue. We believe our hospice programs comply with all payer requirements at the time of billing. However, we cannot predict whether future billing reviews or similar audits by payers will result in material denials or reductions in revenue.
CONCENTRATION OF RISK As of December 31, 2015 and 2014, approximately 49% and 61%, respectively, of VITAS’ total accounts receivable balance were due from Medicare and 41% and 31%, respectively, of VITAS’ total accounts receivable balance were due from various state Medicaid programs. Combined accounts receivable from Medicare and Medicaid represent approximately 80% of the consolidated net accounts receivable in the accompanying consolidated balance sheet as of December 31, 2015.
As further described in Note 19, we have agreements with one vendor to provide specified pharmacy services for VITAS and its hospice patients. In 2015 and 2014, respectively, purchases made from this vendor represent in excess of 90% of all pharmacy services used by VITAS.
INVENTORIES Substantially all of the inventories are either general merchandise or finished goods. Inventories are stated at the lower of cost or market. For determining the value of inventories, cost methods that reasonably approximate the first-in, first-out (“FIFO”) method are used.
DEPRECIATION AND PROPERTIES AND EQUIPMENT Depreciation of properties and equipment is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the remaining lease terms (excluding option terms) or their useful lives. Expenditures for maintenance, repairs, renewals and betterments that do not materially prolong the useful lives of the assets are expensed as incurred. The cost of property retired or sold and the related accumulated depreciation are removed from the accounts, and the resulting gain or loss is reflected currently in other income, net.
Expenditures for major software purchases and software developed for internal use are capitalized and depreciated using the straight-line method over the estimated useful lives of the assets. For software developed for internal use, external direct costs for materials and services and certain internal payroll and related fringe benefit costs are capitalized in accordance with the FASB’s authoritative guidance on accounting for the costs of computer software developed or obtained for internal use.
The weighted average lives of our property and equipment at December 31, 2015, were:
GOODWILL AND INTANGIBLE ASSETS
The table below shows a rollforward of Goodwill (in thousands):
Identifiable, definite-lived intangible assets arise from purchase business combinations and are amortized using either an accelerated method or the straight-line method over the estimated useful lives of the assets. The selection of an amortization method is based on which method best reflects the economic pattern of usage of the asset. The weighted average lives of our identifiable, definite-lived intangible assets at December 31, 2015, were:
The date of our annual goodwill and indefinite-lived intangible asset impairment analysis is October 1. The VITAS trade name is considered to have an indefinite life. We also capitalize the direct costs of obtaining licenses to operate either hospice programs or plumbing operations subject to a minimum capitalization threshold. These costs are amortized over the life of the license using the straight line method. Certificates of Need (“CON”), which are required in certain states for hospice operations, are generally granted without expiration and thus, we believe them to be indefinite-lived assets subject to impairment testing.
We consider that Roto-Rooter Corp. (“RRC”), Roto-Rooter Services Co. (“RRSC”) and VITAS are appropriate reporting units for testing goodwill impairment. We consider RRC and RRSC separate reporting units but one operating segment. This is appropriate as they each have their own set of general ledger accounts that can be analyzed at “one level below an operating segment” per the definition of a reporting unit in FASB guidance.
We completed our qualitative analysis for impairment of goodwill and our indefinite-lived intangible assets as of October 1, 2015. Based on our assessment, we do not believe that it is more likely than not that our reporting units or indefinite-lived assets fair values are less than their carrying values.
LONG-LIVED ASSETS If we believe a triggering event may have occurred that indicates a possible impairment of our long-lived assets, we perform an estimate and valuation of the future benefits of our long-lived assets (other than goodwill, the VITAS trade name and capitalized CON costs) based on key financial indicators. If the projected undiscounted cash flows of a major business unit indicate that properties and equipment or identifiable, definite-lived intangible assets have been impaired, a write-down to fair value is made.
OTHER ASSETS Debt issuance costs are included in other assets. Issuance costs related to revolving credit agreements are amortized using the straight line method, over the life of the agreement. All other issuance costs are amortized using the effective interest method over the life of the debt.
REVENUE RECOGNITION Both the VITAS segment and Roto-Rooter segment recognize service revenues and sales when the earnings process has been completed. Generally, this occurs when services are provided or products are delivered. Sales of Roto-Rooter products, including drain cleaning machines and drain cleaning solution, comprise less than 3% of our total service revenues and sales for each of the three years in the period ended December 31, 2015.
CHARITY CARE VITAS provides charity care, in certain circumstances, to patients without charge when management of the hospice program determines that the patient does not have the financial wherewithal to make payment. There is no revenue or associated accounts receivable in the accompanying consolidated financial statements related to charity care.
The cost of providing charity care during the years ended December 31, 2015, 2014 and 2013, was $7.6 million, $7.3 million and $7.5 million, respectively and is included in cost of services provided and goods sold. The cost of charity care is calculated by taking the ratio of charity care days to total days of care and multiplying by total cost of care.
SALES TAX The Roto-Rooter segment collects sales tax from customers when required by state and federal laws. We record the amount of sales tax collected net in the accompanying consolidated statement of income.
GUARANTEES In the normal course of business, Roto-Rooter enters into various guarantees and indemnifications in our relationships with customers and others. These arrangements include guarantees of services for periods ranging from one day to one year and product satisfaction guarantees. At December 31, 2015 and 2014, our accrual for service guarantees and warranty claims was $340,000 and $350,000 respectively.
OPERATING EXPENSES Cost of services provided and goods sold (excluding depreciation) includes salaries, wages and benefits of service providers and field personnel, material costs, medical supplies and equipment, pharmaceuticals, insurance costs, service vehicle costs and other expenses directly related to providing service revenues or generating sales. Selling, general and administrative expenses include salaries, wages, stock-based compensation expense and benefits of selling, marketing and administrative employees, advertising expenses, communications and branch telephone expenses, office rent and operating costs, legal, banking and professional fees and other administrative costs. The cost associated with VITAS sales personnel is included in cost of services provided and goods sold (excluding depreciation).
ADVERTISING We expense the production costs of advertising the first time the advertising takes place. The costs of telephone directory listings are expensed when the directories are placed in circulation. These directories are generally in circulation for approximately one year, at which point they are typically replaced by the publisher with a new directory. We generally pay for directory placement assuming it is in circulation for one year. If the directory is in circulation for less than or greater than one year, we receive a credit or additional billing, as necessary. We do not control the timing of when a new directory is placed in circulation. We pay for and expense the cost of internet advertising and placement on a “per click” basis. Advertising expense for the year ended December 31, 2015, was $36.4 million (2014 – $32.8 million; 2013 - $31.0 million).
COMPUTATION OF EARNINGS PER SHARE Earnings per share are computed using the weighted average number of shares of capital stock outstanding. Diluted earnings per share reflect the dilutive impact of our outstanding stock options and nonvested stock awards. Stock options whose exercise price is greater than the average market price of our stock are excluded from the computation of diluted earnings per share.
STOCK-BASED COMPENSATION PLANS Stock-based compensation cost is measured at the grant date, based on the fair value of the award and recognized as expense over the employee’s requisite service period on a straight-line basis.
INSURANCE ACCRUALS For our Roto-Rooter segment and Corporate Office, we initially self-insure for all casualty insurance claims (workers’ compensation, auto liability and general liability). As a result, we closely monitor and frequently evaluate our historical claims experience to estimate the appropriate level of accrual for self-insured claims. Our third-party administrator (“TPA”) processes and reviews claims on a monthly basis. Currently, our exposure on any single claim is capped at $750,000. In developing our estimates, we accumulate historical claims data for the previous 10 years to calculate loss development factors (“LDF”) by insurance coverage type. LDFs are applied to known claims to estimate the ultimate potential liability for known and unknown claims for each open policy year. LDFs are updated annually. Because this methodology relies heavily on historical claims data, the key risk is whether the historical claims are an accurate predictor of future claims exposure. The risk also exists that certain claims have been incurred and not reported on a timely basis. To mitigate these risks, in conjunction with our TPA, we closely monitor claims to ensure timely accumulation of data and compare claims trends with the industry experience of our TPA.
For the VITAS segment, we initially self-insure for workers’ compensation claims. Currently, VITAS’ exposure on any single claim is capped at $1,000,000. For VITAS’ self-insurance accruals for workers’ compensation, the valuation methods used are similar to those used internally for our other business units. We are also insured for other risks with respect to professional liability with a deductible of $750,000.
Our casualty insurance liabilities are recorded gross before any estimated recovery for amounts exceeding our stop loss limits. Estimated recoveries from insurance carriers are recorded as accounts receivable.
TAXES ON INCOME Deferred taxes are provided on an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amount of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in our opinion, it is more likely than not that some portion or all of the deferred tax assets will not be realized due to insufficient taxable income within the carryback or carryforward period available under the tax laws. Deferred tax assets and liabilities are adjusted for the effects of changes in laws and rates on the date of enactment.
In November 2015, the FASB issued ASU No. 2015-17 which simplifies the balance sheet classification required for deferred tax balances. It allows for a company’s deferred tax assets and liabilities to be netted into a noncurrent account, either asset or liability, by jurisdiction. The ASU is required to be adopted for annual periods beginning after December 15, 2016 and the interim periods within that annual period. Early adoption is permitted. Companies have the choice to adopt prospectively or retrospectively. In order to simplify our balance sheet classification required for deferred tax balances, we adopted the ASU for our annual balance sheet as of December 31, 2015 on a prospective basis. Prior periods have not been retrospectively adjusted. We do not believe that this change results in a material comparability issue between years on our balance sheet
We are subject to income taxes in Canada, U.S. federal and most state jurisdictions. Significant judgment is required to determine our provision for income taxes. Our financial statements reflect expected future tax consequences of such uncertain positions assuming the taxing authorities’ full knowledge of the position and all relevant facts.
CONTINGENCIES As discussed in Note 18, we are subject to various lawsuits and claims in the normal course of our business. In addition, we periodically receive communications from governmental and regulatory agencies concerning compliance with Medicare and Medicaid billing requirements at our VITAS subsidiary. We establish reserves for specific, uninsured liabilities in connection with regulatory and legal action that we deem to be probable and estimable. We record legal fees associated with legal and regulatory actions as the costs are incurred. We disclose material loss contingencies that are probable but not reasonably estimable and those that are at least reasonably possible.
ESTIMATES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Disclosures of aftertax expenses and adjustments are based on estimates of the effective income tax rates for the applicable segments.
CLASSIFICATION ADJUSTMENTS In 2015, we classified $2.1 million of non-cash restricted stock award amortization in selling, general and administrative expenses. We also recorded classifications adjustments of $2.5 million and $3.0 million to decrease amortization and increase selling, general and administrative expenses in our Consolidated Statement of Income for 2014 and 2013, respectively, related to non-cash restricted stock award amortization. This classification adjustment does not impact income from operations, income before income taxes, net income, earnings per share, net cash provided by operating activities or our Consolidated Balance Sheet. We believe the impact of the classification adjustments are immaterial to our consolidated financial statements for the current and prior periods.
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Hospice Revenue Recognition |
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Hospice Revenue Recognition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hospice Revenue Recognition | 2.Hospice Revenue Recognition VITAS recognizes revenue at the estimated realizable amount due from third-party payers, which are primarily Medicare and Medicaid. Payers may deny payment for services in whole or in part on the basis that such services are not eligible for coverage and do not qualify for reimbursement. We estimate denials each period and make adequate provision in the financial statements. The estimate of denials is based on historical trends and known circumstances and does not vary materially from period to period on an aggregate basis. Medicare billings are subject to certain limitations, as described below.
The allowance for doubtful accounts for VITAS comprises the following (in thousands):
VITAS is subject to certain limitations on Medicare payments for services. Specifically, if the number of inpatient care days any hospice program provides to Medicare beneficiaries exceeds 20% of the total days of hospice care such program provided to all Medicare patients for an annual period beginning September 28, the days in excess of the 20% figure may be reimbursed only at the routine homecare rate. None of VITAS’ hospice programs exceeded the payment limits on inpatient services in 2015, 2014 or 2013.
VITAS is also subject to a Medicare annual per-beneficiary cap (“Medicare cap”). Compliance with the Medicare cap is measured in one of two ways based on a provider election. The “streamlined” method compares total Medicare payments received under a Medicare provider number with respect to services provided to all Medicare hospice care beneficiaries in the program or programs covered by that Medicare provider number between November 1 of each year and October 31 of the following year with the product of the per-beneficiary cap amount and the number of Medicare beneficiaries electing hospice care for the first time from that hospice program or programs from September 28 through September 27 of the following year.
The “proportional” method compares the total Medicare payments received under a Medicare provider number with respect to services provided to all Medicare hospice care beneficiaries in the program or programs covered by the Medicare provider number between September 28 and September 27 of the following year with the product of the per beneficiary cap amount and a pro-rated number of Medicare beneficiaries receiving hospice services from that program during the same period. The pro-rated number of Medicare beneficiaries is calculated based on the ratio of days the beneficiary received hospice services during the measurement period to the total number of days the beneficiary received hospice services.
We actively monitor each of our hospice programs, by provider number, as to their specific admission, discharge rate and median length of stay data in an attempt to determine whether revenues are likely to exceed the annual per-beneficiary Medicare cap. Should we determine that revenues for a program are likely to exceed the Medicare cap based on projected trends, we attempt to institute corrective actions, which include changes to the patient mix and increased patient admissions. However, should we project our corrective action will not prevent that program from exceeding its Medicare cap, we estimate the amount of revenue recognized during the period that will require repayment to the Federal government under the Medicare cap and record the amount as a reduction to service revenue.
During the year ended December 31, 2015 we recorded a $165,000 Medicare cap reversal of amounts recorded in the fourth quarter of 2014 for one program’s projected 2015 measurement period liability. During the year ended December 31, 2014, we recorded a net Medicare cap liability of $1.3 million for two programs’ projected 2014 and 2015 measurement period liability offset by the reversal of one program’s 2011 measurement period projected Medicare cap liability. During the year ended December 31, 2013, we reversed the Medicare cap liability for amounts recorded in the fourth quarter of 2012 for three programs’ projected 2013 measurement period liability. During 2013 this reversal was offset by the Medicare cap liability for two programs’ projected 2014 measurement period liability. The net pretax expense/(income) was ($165,000), $1.3 million, and $7.0 million for fiscal years 2015, 2014 and 2013, respectively.
In 2013, the U.S. government implemented automatic budget reductions of 2.0% for all government payees, including hospice benefits paid under the Medicare program. In 2015, CMS determined that the Medicare cap should be calculated “as if” sequestration did not occur. As a result of this decision, VITAS has received notification from our third party intermediary that an additional $1.9 million is owed for Medicare cap in two programs arising during the 2013 and 2014 measurement periods. The amounts are automatically deducted from our semi-monthly PIP payments. We do not believe that CMS is authorized under the sequestration authority or the statutory methodology for establishing the Medicare cap to the amounts they have withheld and intend to withhold under their current “as if” methodology. We have not recorded a reserve as of December 31, 2015 for the $1.9 million potential exposure. We have appealed CMS’s methodology change with the appropriate regulatory appeal board.
Shown below is the Medicare cap liability activity for the years ended December 31, 2015 and 2014, (in thousands):
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Long-Term Debt and Lines of Credit |
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Long-Term Debt and Lines of Credit [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt and Lines Of Credit |
3. Long-Term Debt and Lines of Credit On May 15, 2014, we retired our Senior Convertible Notes (the “Notes”) outstanding. We paid the $187.0 million of principal outstanding using a combination of cash on hand and our existing revolving credit facility. In addition, we issued 249,000 Chemed shares in conjunction with the conversion feature of the Notes. At the time we issued the Notes, we had entered into a purchased call transaction to offset any potential economic dilution resulting from the conversion feature in the Notes. As a result, we received 266,000 Chemed shares from the exercise of the purchased call transaction. The issuance of shares under the conversion feature of the Notes, as well as the receipt of shares from the purchased call transaction were recorded as adjustments to paid-in capital during 2014.
At the time we issued the Notes we also sold warrants for the right to purchase approximately 2,477,000 Chemed shares in the future. During 2014, we settled these warrants with one counterparty representing half of the total warrants issued for $2.6 million in cash. The amount paid was recorded as an adjustment to paid-in capital. During 2014, Chemed’s stock price exceeded the exercise price of the remaining outstanding sold warrants resulting in the Company, on December 8, 2014, issuing 35,166 of common shares to the other counterparty in full settlement of the warrants. Pursuant to authoritative guidance, the settlement of the sold warrants was accounted for as an equity transaction.
On June 30, 2014, we replaced our existing credit agreement with the Third Amended and Restated Credit Agreement (“2014 Credit Agreement”). Terms of the 2014 Credit Agreement consist of a five-year, $350 million revolving credit facility and a $100 million term loan. The 2014 Credit Agreement has a floating interest rate that is currently LIBOR plus 113 basis points.
The debt outstanding at December 31, 2015 and 2014 consists of the following (in thousands):
Scheduled principal payments of the term loan are as follows:
Capitalized interest was not material for any of the periods shown. Summarized below are the total amounts of interest paid during the years ended December 31 (in thousands):
Debt issuance costs associated with the existing credit agreement were not written off as the lenders and their relative percentage participation in the facility did not change. With respect to the 2014 Credit Agreement, deferred financing costs were $0.9 million. The 2014 Credit Agreement contains the following quarterly financial covenants:
We are in compliance with all debt covenants as of December 31, 2015. We have issued $37.8 million in standby letters of credit as of December 31, 2015 for insurance purposes. Issued letters of credit reduce our available credit under the 2014 Credit Agreement. As of December 31, 2015, we have approximately $312.2 million of unused lines of credit available and eligible to be drawn down under our revolving credit facility.
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Stock-Based Compensation Plans |
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Stock-Based Compensation Plans |
4. Stock-Based Compensation Plans We have three stock incentive plans under which 6.8 million shares can be issued to key employees and directors through a grant of stock options, stock awards and/or performance stock units (“PSUs”). The Compensation/Incentive Committee (“CIC”) of the Board of Directors administers these plans.
We grant stock options, stock awards and PSUs to our officers, other key employees and directors to better align their long-term interests with those of our shareholders. We grant stock options at an exercise price equal to the market price of our stock on the date of grant. Options vest evenly annually over a three-year period. Those granted in 2015 have a contractual life of 5 years; those granted prior to 2015 have a contractual life of 10 years. Restricted stock awards granted in 2015 vest ratably annually over a three year period; previous restricted stock awards generally cliff vest over a three- or four-year period. Unrestricted stock awards generally are granted to our non-employee directors annually at the time of our annual meeting. PSUs are contingent upon achievement of multi-year earnings targets or market targets. Upon achievement of targets, PSUs are converted to unrestricted shares of Capital stock.
We recognize the cost of stock options, stock awards and PSUs on a straight-line basis over the service life of the award, generally the vesting period. We include the cost of all stock-based compensation in selling, general and administrative expense.
In May 2015, the CIC granted 4,437 unrestricted shares of Capital stock to the Company’s outside directors.
PERFORMANCE AWARDS
In November 2013, February 2014 and February 2015, the CIC granted PSUs contingent upon the achievement of certain total stockholder return (“TSR”) targets as compared to the TSR of a group of peer companies for the three-year measurement period, at which date the awards may vest. We utilize a Monte Carlo simulation approach in a risk-neutral framework with inputs including historical volatility and the risk-free rate of interest to value these TSR awards. We amortize the total estimated cost over the service period of the award.
In November 2013, February 2014, and February 2015, the CIC granted PSUs contingent on the achievement of certain earnings per share (“EPS”) targets over the three-year measurement period. At the end of each reporting period, we estimate the number of shares we believe will ultimately vest and record that expense over the service period of the award.
Comparative data for the PSUs include:
The following table summarizes total stock option, stock award and PSU activity during 2015:
We estimate the fair value of stock options using the Black-Scholes valuation model. We determine expected term, volatility, dividend yield and forfeiture rate based on our historical experience. We believe that historical experience is the best indicator of these factors.
Comparative data for stock options, stock awards and PSUs include (in thousands, except per-share amounts):
The assumptions we used to value stock option grants are as follows:
Other data for stock options, stock awards and PSUs for 2015 include (dollar amounts in thousands):
EMPLOYEE STOCK PURCHASE PLAN (“ESPP”) The ESPP allows eligible participants to purchase our shares through payroll deductions at current market value. We pay administrative and broker fees associated with the ESPP. Shares purchased for the ESPP are purchased on the open market and credited directly to participants’ accounts. In accordance with the FASB’s guidance, the ESPP is non-compensatory.
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Segments and Nature of the Business |
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Segments and Nature of the Business [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments and Nature Of The Business | 5.Segments and Nature of the Business Our segments include the VITAS segment and the Roto-Rooter segment. Relative contributions of each segment to service revenues and sales were 72% and 28%, respectively, in 2015 and 73% and 27%, respectively, in 2014. The vast majority of our service revenues and sales from continuing operations are generated from business within the United States.
The reportable segments have been defined along service lines, which is consistent with the way the businesses are managed. In determining reportable segments, the RRSC and RRC operating units of the Roto-Rooter segment have been aggregated on the basis of possessing similar operating and economic characteristics. The characteristics of these operating segments and the basis for aggregation are reviewed annually. Accordingly, the reportable segments are defined as follows:
Segment data are set forth below (in thousands):
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Intangible Assets |
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Intangible Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | 6.Intangible Assets Amortization of definite-lived intangible assets for the years ended December 31, 2015, 2014, 2013, was $1.1 million, $720,000 and $1.6 million, respectively. The following is a schedule by year of projected amortization expense for definite-lived intangible assets (in thousands):
The balance in identifiable intangible assets comprises the following (in thousands):
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Business Combinations |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | 7.Business Combinations During 2015, we completed two business combinations of former franchisees within the Roto-Rooter segment for $6.6 million in cash to increase our market penetration in Pennsylvania and Nebraska. The purchase price of these acquisitions was allocated as follows (in thousands):
During 2014, we completed one business combination of a former franchisee within the Roto-Rooter segment for $250,000 in cash to increase our market penetration in Idaho. The purchase price of this acquisition was allocated as follows (in thousands):
During 2013, we completed one business combination of a former franchisee within the Roto-Rooter segment for $756,000 in cash to increase our market penetration in Colorado. We made one acquisition within the VITAS segment for $1.5 million in cash to increase our market penetration in Houston, Texas during 2013. The purchase price of these acquisitions was allocated as follows (in thousands):
The unaudited pro forma results of operations, assuming purchase business combinations completed in 2015 and 2014 were completed on January 1, 2014, do not materially impact the accompanying consolidated financial statements. The results of operations of each of the above business combinations are included in our results of operations from the date of the respective acquisition.
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Discontinued Operations |
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Discontinued Operations [Abstract] | |||||||||||||||||||||
Discontinued Operations | 8.Discontinued Operations At December 31, 2015 and 2014, the accrual for our estimated liability for potential environmental cleanup and related costs arising from the 1991 sale of DuBois amounted to $1.7 million. Of the 2015 balance, $826,000 is included in other current liabilities and $901,000 is included in other liabilities (long-term). The estimated amounts and timing of payments of these liabilities follows (in thousands):
We are contingently liable for additional DuBois-related environmental cleanup and related costs up to a maximum of $14.9 million. On the basis of a continuing evaluation of the potential liability, we believe it is not probable this additional liability will be paid. Accordingly, no provision for this contingent liability has been recorded. The potential liability is not insured, and the recorded liability does not assume the recovery of insurance proceeds. Also, the environmental liability has not been discounted because it is not possible to reliably project the timing of payments. We believe that any adjustments to our recorded liability will not materially adversely affect our financial position, results of operations or cash flows.
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Cash Overdrafts And Cash Equivalents |
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Cash Overdrafts And Cash Equivalents [Abstract] | |
Cash Overdrafts And Cash Equivalents |
9. Cash Overdrafts and Cash Equivalents Included in accounts payable are cash overdrafts of $9.3 million and $10.5 million as of December 31, 2015 and 2014, respectively.
From time to time throughout the year, we invest excess cash in money market funds directly with major commercial banks. We closely monitor the creditworthiness of the institutions with which we invest our overnight funds. We had $76,000 in cash equivalents as of December 31, 2015. There was $80,000 in cash equivalents as of December 31, 2014. The weighted average rate of return for our cash equivalents was 0.20% in 2015 and 0.06% in 2014.
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Other Income/(Expense)-Net |
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Other Income/(Expense)-Net | 10.Other Income/(expense)—Net Other income/(expense)—net from continuing operations comprises the following (in thousands):
The offset for market value gains or losses of the deferred compensation trust are recorded in selling, general and administrative expenses.
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Income Taxes |
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Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | 11.Income Taxes The provision for income taxes comprises the following (in thousands):
A summary of the temporary differences that give rise to deferred tax assets/ (liabilities) follows (in thousands):
At December 31, 2015 and 2014, state net operating loss carryforwards were $34.0 million and $31.8 million, respectively. These net operating losses will expire, in varying amounts, between 2022 and 2035. Based on our history of operating earnings, we have determined that our operating income will, more likely than not, be sufficient to ensure realization of our deferred income tax assets.
A reconciliation of the beginning and ending of year amount of our unrecognized tax benefit is as follows (in thousands):
We file tax returns in the U.S. federal jurisdiction and various states. The years ended December 31, 2012 and forward remain open for review for federal income tax purposes. The earliest open year relating to any of our major state jurisdictions is the fiscal year ended December 31, 2010. During the next twelve months, we do not anticipate a material net change in unrecognized tax benefits.
We classify interest related to our accrual for uncertain tax positions in separate interest accounts. As of December 31, 2015 and 2014, we have approximately $125,000 and $123,000, respectively, accrued in interest payable related to uncertain tax positions. These accruals are included in other current liabilities in the accompanying consolidated balance sheet. Net interest expense related to uncertain tax positions included in interest expense in the accompanying consolidated statement of income is not material.
The difference between the actual income tax provision for continuing operations and the income tax provision calculated at the statutory U.S. federal tax rate is explained as follows (in thousands):
Summarized below are the total amounts of income taxes paid during the years ended December 31 (in thousands):
Provision has not been made for additional taxes on $35.1 million of undistributed earnings of our domestic subsidiaries. Should we elect to sell our interest in all of these businesses rather than to effect a tax-free liquidation, additional taxes amounting to approximately $12.9 million would be incurred based on current income tax rates.
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Properties And Equipment |
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Properties And Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Properties And Equipment |
12.Properties and Equipment A summary of properties and equipment follows (in thousands):
The net book value of computer software at December 31, 2015 and 2014, was $8.3 million and $10.5 million, respectively. Depreciation expense for computer software was $3.9 million, $ 4.4 million and $3.9 million for the years ended December 31, 2015, 2014 and 2013, respectively.
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Lease Arrangements |
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Lease Arrangements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Arrangements | 13.Lease Arrangements We have operating leases that cover our corporate office headquarters, various warehouse and office facilities, office equipment and transportation equipment. The remaining terms of these leases range from monthly to eleven years, and in most cases we expect that these leases will be renewed or replaced by other leases in the normal course of business. We have no significant capital leases as of December 31, 2015 or 2014.
The following is a summary of future minimum rental payments and sublease rentals to be received under operating leases that have initial or remaining noncancelable terms in excess of one year at December 31, 2015 (in thousands):
Total rental expense incurred under operating leases for continuing operations follows (in thousands):
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Retirement Plans |
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Retirement Plans [Abstract] | |||||||||||||||||||||||||||||||
Retirement Plans | 14. Retirement Plans Retirement obligations under various plans cover substantially all full-time employees who meet age and/or service eligibility requirements. All plans providing retirement benefits to our employees are defined contribution plans. Expenses for our retirement and profit-sharing plans, excess benefit plans and other similar plans are as follows (in thousands):
These expenses include the impact of market gains and losses on assets held in deferred compensation plans.
We have excess benefit plans for key employees whose participation in the qualified plans is limited by U.S. Employee Retirement Income Security Act requirements. Benefits are determined based on theoretical participation in the qualified plans. Benefits are only invested in mutual funds, and participants are not permitted to diversify accumulated benefits in shares of our capital stock. Trust assets invested in shares of our stock are included in treasury stock, and the corresponding liability is included in a separate component of stockholders’ equity. At December 31, 2015, these trusts held 99,309 shares at historical average cost or $2.4 million of our stock (2014 – 99,231 shares or $2.3 million).
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Earnings Per Share |
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Earnings Per Share |
15.Earnings Per Share The computation of earnings per share follows (in thousands, except per share data):
During 2015, 422,000 stock options were excluded from the computation of diluted earnings per share as their exercise prices were greater than the average market price during most of the year. During 2014, 411,000 stock options were also excluded. During 2013, 358,000 stock options were also excluded.
In 2014, diluted earnings per share was impacted by the issuance of 249,000 shares of capital stock under the conversion feature of our 1.875% Senior Convertible Notes (the “Notes”) on May 15, 2014. The dilutive impact of this conversion feature for 2014 was 102,000 shares.
At the time we issued the Notes, as discussed in Note 3, we also sold warrants for the right to purchase approximately 2,477,000 Chemed shares in the future. During the quarter ended June 30, 2014, we settled these warrants with one counterparty representing half of the total warrants issued for $2.6 million. The amount paid was recorded as an adjustment to paid-in capital. During the third quarter of 2014, Chemed’s stock price exceeded the exercise price of the remaining outstanding sold warrants resulting in the Company, on December 8, 2014, issuing 35,166 of Capital shares to the other counterparty in full settlement of the warrants. Pursuant to authoritative guidance, the settlement of the sold warrants were accounted for as an equity transactions. The dilutive impact of the warrants was 12,000 shares for the year ended December 31, 2014.
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Financial Instruments |
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Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments |
16.Financial Instruments FASB’s authoritative guidance on fair value measurements defines a hierarchy which prioritizes the inputs in fair value measurements. Level 1 measurements are measurements using quoted prices in active markets for identical assets or liabilities. Level 2 measurements use significant other observable inputs. Level 3 measurements are measurements using significant unobservable inputs which require a company to develop its own assumptions. In recording the fair value of assets and liabilities, companies must use the most reliable measurement available. The following shows the carrying value, fair value and the hierarchy for our financial instruments as of December 31, 2015 (in thousands):
The following shows the carrying value, fair value and the hierarchy for our financial instruments as of December 31, 2014 (in thousands):
For cash and cash equivalents, accounts receivable and accounts payable, the carrying amount is a reasonable estimate of fair value because of the liquidity and short-term nature of these instruments.
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Loans Receivable from Independent Contractors |
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Loans Receivable from Independent Contractors [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Loans Receivable from Independent Contractors | 17.Loans Receivable from Independent Contractors At December 31, 2015, we had contractual arrangements with 69 independent contractors to provide plumbing repair, drain cleaning and water restoration services under sublicensing agreements using the Roto-Rooter name in lesser-populated areas of the United States and Canada. The arrangements give the independent contractors the right to conduct a plumbing, drain cleaning and water restoration business using the Roto-Rooter name in a specified territory in exchange for a royalty based on a percentage of labor sales, depending upon type of service this percentage ranges between 27%–32%. We also pay for certain telephone directory advertising and internet marketing in these areas, lease certain capital equipment and provide operating manuals to serve as resources for operating a plumbing, drain cleaning and water restoration business. The contracts are generally cancelable upon 90 days’ written notice (without cause) or upon a few days notice (with cause). The independent contractors are responsible for running the businesses as they believe best.
Our maximum exposure to loss from arrangements with our independent contractors at December 31, 2015, is approximately $1.8 million (2014 - $1.6 million). The exposure to loss is mainly the result of loans provided to the independent contractors. In most cases, these loans are partially secured by receivables and equipment owned by the independent contractor. The interest rates on the loans range from zero to 7% per annum, and the remaining terms of the loans range from 2.5 months to 5.4 years at December 31, 2015. We recorded the following from our independent contractors (in thousands):
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Legal And Regulatory Matters |
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Dec. 31, 2015 | |
Legal And Regulatory Matters [Abstract] | |
Legal And Regulatory Matters |
18.Legal and Regulatory Matters The VITAS segment of the Company’s business operates in a heavily-regulated industry. As a result, the Company is subjected to inquiries and investigations by various government agencies, as well as to lawsuits, including qui tam actions. The following sections describe the various ongoing material lawsuits and investigations of which the Company is currently aware. It is not possible at this time for us to estimate either the timing or outcome of any of those matters, or whether any potential loss, or range of potential losses, is probable or estimable.
Regulatory Matters and Litigation
On May 2, 2013, the government filed a False Claims Act complaint against the Company and certain of its hospice-related subsidiaries in the U.S. District Court for the Western District of Missouri, United States v. VITAS Hospice Services, LLC, et al., No. 4:13-cv-00449-BCW (the “2013 Action”). Prior to that date, the Company received various qui tam lawsuits and subpoenas from the U.S. Department of Justice and OIG that have been previously disclosed. The 2013 Action alleges that, since at least 2002, VITAS, and since 2004, the Company, submitted or caused the submission of false claims to the Medicare program by (a) billing Medicare for continuous home care services when the patients were not eligible, the services were not provided, or the medical care was inappropriate, and (b) billing Medicare for patients who were not eligible for the Medicare hospice benefit because they did not have a life expectancy of six months or less if their illnesses ran their normal course. This complaint seeks treble damages, statutory penalties, and the costs of the action, plus interest. The defendants filed a motion to dismiss on September 24, 2013. On September 30, 2014, the Court denied the motion, except to the extent that claims were filed before July 24, 2002. On November 13, 2014, the government filed a Second Amended Complaint. The Second Amended Complaint changed and supplemented some of the allegations, but did not otherwise expand the causes of action or the nature of the relief sought against VITAS. VITAS filed its Answer to the Second Amended Complaint on August 11, 2015. The Company is not able to reasonably estimate the probability of loss or range of loss at this time.
For additional procedural history of this litigation, please refer to our prior quarterly and annual filings. The net costs incurred related to U.S. v. Vitas and related regulatory matters were $5.0 million, $2.1 million and $2.1 million for 2015, 2014 and 2013 respectively.
In November 2013, two shareholder derivative lawsuits were filed against the Company’s current and former directors, as well as certain of its officers, both of which are covered by the Company’s commercial insurance. On November 6, 2013, KBC Asset Management NV filed suit in the United States District Court for the District of Delaware, KBC Asset Management NV, derivatively on behalf of Chemed Corp. v. McNamara, et al., No. 13 Civ. 1854 (LPS) (D. Del.). It sued Kevin McNamara, Joel Gemunder, Patrick Grace, Thomas Hutton, Walter Krebs, Andrea Lindell, Thomas Rice, Donald Saunders, Arthur Tucker, Jr., George Walsh III, Frank Wood, Timothy O’Toole, David Williams and Ernest Mrozek, together with the Company as nominal defendant. Plaintiff alleges that since at least 2004, Chemed, through VITAS, has submitted or caused the submission of false claims to Medicare. The suit alleges a claim for breach of fiduciary duty against the individual defendants, and seeks (a) a declaration that the individual defendants breached their fiduciary duties to the Company; (b) an order requiring those defendants to pay compensatory damages, restitution and exemplary damages, in unspecified amounts, to the Company; (c) an order directing the Company to implement new policies and procedures; and (d) costs and disbursements incurred in bringing the action, including attorneys’ fees.
On November 14, 2013, Mildred A. North filed suit in the United States District Court for the Southern District of Ohio, North, derivatively on behalf of Chemed Corp. v. Kevin McNamara, et al., No. 13 Civ. 833 (MDB) (S.D. Ohio). She sued Kevin McNamara, David Williams, Timothy O’Toole, Joel Gemunder, Patrick Grace, Walter Krebs, Andrea Lindell, Thomas Rice, Donald Saunders, George Walsh III, Frank Wood and Thomas Hutton, together with the Company as nominal defendant. Plaintiff alleges that, between February 2010 and the present, the individual defendants breached their fiduciary duties as officers and directors of Chemed by, among other things, (a) allegedly causing VITAS to submit improper and ineligible claims to Medicare and Medicaid; and (b) allegedly misrepresenting the state of Chemed’s internal controls. The suit alleges claims for breach of fiduciary duty, abuse of control and gross mismanagement against the individual defendants. The complaint also alleges unjust enrichment and insider trading against Messrs. McNamara, Williams and O’Toole. Plaintiff seeks (a) a declaration that the individual defendants breached their fiduciary duties to the Company; (b) an order requiring those defendants to pay compensatory damages, restitution and exemplary damages, in unspecified amounts, to the Company; (c) an order directing the Company to implement new policies and procedures; and (d) costs and disbursements incurred in bringing the action, including attorneys’ fees.
On January 29, 2014 defendants in North filed a motion to transfer that case to Delaware under 28 U.S.C § 1404(a). On February 12, 2014, defendants in KBC filed a motion to dismiss that case pursuant to Federal Rules of Civil Procedure 23.1 and 12(b)(6). On September 19, 2014, the Ohio court granted defendants’ motion to transfer North to Delaware. Following that decision and in light of that transfer, on September 29, 2014, the Delaware court denied without prejudice defendants’ motion to dismiss KBC, and referred both cases to Magistrate Judge Burke.
On October 15, 2014, Plaintiff KBC filed a motion to consolidate KBC with North. On February 2, 2015 the court granted the motion for consolidation in full, appointing Plaintiff KBC the sole lead plaintiff and its counsel, the sole lead and liaison counsel. The court ordered that both cases will proceed under the caption In re Chemed Corp. Shareholder and Derivative Litigation, No. 13 Civ. 1854 (LPS) (CJB) (D. Del.). Plaintiff KBC has designated its pending complaint as the operative complaint in the consolidated proceedings. Defendants subsequently renewed their motion to dismiss those claims and allegations. On December 23, 2015, Magistrate Judge Burke issued a Report & Recommendation recommending that (1) defendants’ motion to dismiss be granted; (2) plaintiff be given 14 days from the date of affirmance by the district court to file an amended complaint addressing deficiencies with regard to their duty of loyalty claim; and (3) failure to do so should give rise to dismissal with prejudice. The Report and Recommendation remains subject to review and affirmance by the district court judge overseeing the matter. On January 11, 2016, Lead Plaintiff KBC filed Objections to the Report and Recommendations. Defendants responses to those Objections were filed on January 28, 2016.
The Company intends to defend vigorously against the allegations in each of the above lawsuits. Regardless of the outcome of any of the preceding matters, responding to the subpoenas and dealing with the various regulatory agencies and opposing parties can adversely affect us through defense costs, potential payments, diversion of management time, and related publicity. Although the Company intends to defend them vigorously, there can be no assurance that those suits will not have a material adverse effect on the Company.
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Concentration Of Risk |
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Concentration Of Risk [Abstract] | |
Concentration Of Risk |
19. Concentration of Risk VITAS has pharmacy services agreements (“Agreements”) with Enclara Pharmacia (previously Hospice Pharmacia) whereby Enclara provides specified pharmacy services for VITAS and its hospice patients in geographical areas served by both VITAS and Enclara. VITAS made purchases from Enclara of $37.7 million, $35.6 million and $39.0 million for the years ended December 31, 2015, 2014 and 2013, respectively. For the years ended December 31, 2015, 2014 and 2013, respectively, purchases from this vendor represent approximately 90% of all pharmacy services used by VITAS. VITAS’ accounts payable to Enclara was $3.0 million at December 31, 2015. At December 31, 2014, VITAS’ accounts payable to Enclara was $3.6 million.
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Capital Stock Transactions |
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Capital Stock Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Capital Stock Transactions | 20. Capital Stock Transactions In March 2015, our Board of Directors authorized an additional $100 million for stock repurchase under the February 2011 repurchase program. We repurchased the following capital stock:
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Other Operating Expenses |
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Other Operating Expenses [Abstract] | |||||||||||||||||||
Other Operating Expenses |
21. Other Operating Expenses (in thousands):
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Recent Accounting Statements |
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Dec. 31, 2015 | |
Recent Accounting Statements [Abstract] | |
Recent Accounting Statements | 22. Recent Accounting Statements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update “ASU No. 2014-09 – Revenue from Contracts with Customers” which provides additional guidance to clarify the principles for recognizing revenue. The standard will also be used to develop a common revenue standard for removing inconsistencies and weaknesses, improve comparability, provide more useful information to users through improved disclosure requirements, and simplify the preparation of financial statements. The guidance is effective for fiscal years beginning after December 15, 2017. We are currently evaluating the impact of this ASU on our existing revenue recognition policies and disclosures.
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, “ASU No. 2014-15 - Presentation of Financial Statements-Going Concern”. ASU 2014-15 is intended to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnote disclosures. This guidance is effective for us for the annual period ending December 31, 2016 and interim periods thereafter. We do not expect the adoption of this standard to have a material impact on our consolidated financial position, results of operations or cash flows.
In April 2015, the FASB issued Accounting Standards Update No. 2015-03, “ASU No. 2015-03 – Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. ASU 2015-03 is intended to simplify the presentation of debt issuance costs. Under the new guidance, debt issuance costs will be presented as a direct deduction from the carrying value of the associated debt, consistent with the existing presentation of a debt discount. This guidance is effective for us for the annual period beginning after December 15, 2015. We do not expect the adoption of this standard to have a material impact on our consolidated financial position, results of operations or cash flows.
In August 2015, the FASB issued Accounting Standards Update No. 2015-15, “ASU No. 2015-15- Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line of Credit Arrangements”. This Accounting Standards Update adds SEC paragraphs pursuant to the SEC Staff Accouncement at the June 18, 2015 Emerging Issues Task Force (EITF) meeting. Given the absence of authoritative guidance within Update 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. We do not expect this interpretation to have a material impact on our consolidated financial position, results of operations or cash flows.
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Schedule II - Valuation And Qualifying Accounts |
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Schedule II - Valuation and Qualifying Accounts [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule II - Valuation And Qualifying Accounts |
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Summary Of Significant Accounting Policies (Policy) |
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Summary Of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature Of Operations | NATURE OF OPERATIONS We operate through our two wholly-owned subsidiaries: VITAS Healthcare Corporation (“VITAS”) and Roto-Rooter Group, Inc. (“Roto-Rooter”). VITAS focuses on hospice care that helps make terminally ill patients' final days as comfortable as possible. Through its team of doctors, nurses, home health aides, social workers, clergy and volunteers, VITAS provides direct medical services to patients, as well as spiritual and emotional counseling to both patients and their families. Roto-Rooter provides plumbing, drain cleaning and water restoration services to both residential and commercial customers. Through its network of company-owned branches, independent contractors and franchisees, Roto-Rooter offers plumbing, drain cleaning service and water restoration to approximately 90% of the U.S. population.
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Principles Of Consolidation | PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Chemed Corporation and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated.
We have analyzed the provisions of the Financial Accounting Standards Board (“FASB”) authoritative guidance on the consolidation of variable interest entities relative to our contractual relationships with Roto-Rooter’s independent contractors and franchisees. The guidance requires the primary beneficiary of a Variable Interest Entity (“VIE”) to consolidate the accounts of the VIE. Based upon the guidance provided by the FASB, we have concluded that neither the independent contractors nor the franchisees are VIEs.
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Cash Equivalents | CASH EQUIVALENTS Cash equivalents comprise short-term, highly liquid investments, including money market funds that have original maturities of three months or less.
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Accounts And Loans Receivable | ACCOUNTS AND LOANS RECEIVABLE Accounts and loans receivable are recorded at the principal balance outstanding less estimated allowances for uncollectible accounts. For the Roto-Rooter segment, allowances for trade accounts receivable are generally provided for accounts more than 90 days past due, although collection efforts continue beyond that time. Due to the small number of loans receivable outstanding, allowances for loan losses are determined on a case-by-case basis. For the VITAS segment, allowances for accounts receivable are provided on accounts based on expected collection rates by payer types. The expected collection rate is based on both historical averages and known current trends. Final write-off of overdue accounts or loans receivable is made when all reasonable collection efforts have been made and payment is not forthcoming. We closely monitor our receivables and periodically review procedures for granting credit to attempt to hold losses to a minimum.
We make appropriate provisions to reduce our accounts receivable balance for any governmental or other payer reviews resulting in denials of patient service revenue. We believe our hospice programs comply with all payer requirements at the time of billing. However, we cannot predict whether future billing reviews or similar audits by payers will result in material denials or reductions in revenue.
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Concentration Of Risk | CONCENTRATION OF RISK As of December 31, 2015 and 2014, approximately 49% and 61%, respectively, of VITAS’ total accounts receivable balance were due from Medicare and 41% and 31%, respectively, of VITAS’ total accounts receivable balance were due from various state Medicaid programs. Combined accounts receivable from Medicare and Medicaid represent approximately 80% of the consolidated net accounts receivable in the accompanying consolidated balance sheet as of December 31, 2015.
As further described in Note 19, we have agreements with one vendor to provide specified pharmacy services for VITAS and its hospice patients. In 2015 and 2014, respectively, purchases made from this vendor represent in excess of 90% of all pharmacy services used by VITAS.
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Inventories |
INVENTORIES Substantially all of the inventories are either general merchandise or finished goods. Inventories are stated at the lower of cost or market. For determining the value of inventories, cost methods that reasonably approximate the first-in, first-out (“FIFO”) method are used.
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Depreciation And Properties And Equipment | DEPRECIATION AND PROPERTIES AND EQUIPMENT Depreciation of properties and equipment is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the remaining lease terms (excluding option terms) or their useful lives. Expenditures for maintenance, repairs, renewals and betterments that do not materially prolong the useful lives of the assets are expensed as incurred. The cost of property retired or sold and the related accumulated depreciation are removed from the accounts, and the resulting gain or loss is reflected currently in other income, net.
Expenditures for major software purchases and software developed for internal use are capitalized and depreciated using the straight-line method over the estimated useful lives of the assets. For software developed for internal use, external direct costs for materials and services and certain internal payroll and related fringe benefit costs are capitalized in accordance with the FASB’s authoritative guidance on accounting for the costs of computer software developed or obtained for internal use.
The weighted average lives of our property and equipment at December 31, 2015, were:
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Goodwill And Intangible Assets | GOODWILL AND INTANGIBLE ASSETS
The table below shows a rollforward of Goodwill (in thousands):
Identifiable, definite-lived intangible assets arise from purchase business combinations and are amortized using either an accelerated method or the straight-line method over the estimated useful lives of the assets. The selection of an amortization method is based on which method best reflects the economic pattern of usage of the asset. The weighted average lives of our identifiable, definite-lived intangible assets at December 31, 2015, were:
The date of our annual goodwill and indefinite-lived intangible asset impairment analysis is October 1. The VITAS trade name is considered to have an indefinite life. We also capitalize the direct costs of obtaining licenses to operate either hospice programs or plumbing operations subject to a minimum capitalization threshold. These costs are amortized over the life of the license using the straight line method. Certificates of Need (“CON”), which are required in certain states for hospice operations, are generally granted without expiration and thus, we believe them to be indefinite-lived assets subject to impairment testing.
We consider that Roto-Rooter Corp. (“RRC”), Roto-Rooter Services Co. (“RRSC”) and VITAS are appropriate reporting units for testing goodwill impairment. We consider RRC and RRSC separate reporting units but one operating segment. This is appropriate as they each have their own set of general ledger accounts that can be analyzed at “one level below an operating segment” per the definition of a reporting unit in FASB guidance.
We completed our qualitative analysis for impairment of goodwill and our indefinite-lived intangible assets as of October 1, 2015. Based on our assessment, we do not believe that it is more likely than not that our reporting units or indefinite-lived assets fair values are less than their carrying values.
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Long-Lived Assets |
LONG-LIVED ASSETS If we believe a triggering event may have occurred that indicates a possible impairment of our long-lived assets, we perform an estimate and valuation of the future benefits of our long-lived assets (other than goodwill, the VITAS trade name and capitalized CON costs) based on key financial indicators. If the projected undiscounted cash flows of a major business unit indicate that properties and equipment or identifiable, definite-lived intangible assets have been impaired, a write-down to fair value is made.
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Other Assets | OTHER ASSETS Debt issuance costs are included in other assets. Issuance costs related to revolving credit agreements are amortized using the straight line method, over the life of the agreement. All other issuance costs are amortized using the effective interest method over the life of the debt.
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Revenue Recognition | REVENUE RECOGNITION Both the VITAS segment and Roto-Rooter segment recognize service revenues and sales when the earnings process has been completed. Generally, this occurs when services are provided or products are delivered. Sales of Roto-Rooter products, including drain cleaning machines and drain cleaning solution, comprise less than 3% of our total service revenues and sales for each of the three years in the period ended December 31, 2015.
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Charity Care | CHARITY CARE VITAS provides charity care, in certain circumstances, to patients without charge when management of the hospice program determines that the patient does not have the financial wherewithal to make payment. There is no revenue or associated accounts receivable in the accompanying consolidated financial statements related to charity care.
The cost of providing charity care during the years ended December 31, 2015, 2014 and 2013, was $7.6 million, $7.3 million and $7.5 million, respectively and is included in cost of services provided and goods sold. The cost of charity care is calculated by taking the ratio of charity care days to total days of care and multiplying by total cost of care.
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Sales Tax | SALES TAX The Roto-Rooter segment collects sales tax from customers when required by state and federal laws. We record the amount of sales tax collected net in the accompanying consolidated statement of income.
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Guarantees | GUARANTEES In the normal course of business, Roto-Rooter enters into various guarantees and indemnifications in our relationships with customers and others. These arrangements include guarantees of services for periods ranging from one day to one year and product satisfaction guarantees. At December 31, 2015 and 2014, our accrual for service guarantees and warranty claims was $340,000 and $350,000 respectively.
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Operating Expenses | OPERATING EXPENSES Cost of services provided and goods sold (excluding depreciation) includes salaries, wages and benefits of service providers and field personnel, material costs, medical supplies and equipment, pharmaceuticals, insurance costs, service vehicle costs and other expenses directly related to providing service revenues or generating sales. Selling, general and administrative expenses include salaries, wages, stock-based compensation expense and benefits of selling, marketing and administrative employees, advertising expenses, communications and branch telephone expenses, office rent and operating costs, legal, banking and professional fees and other administrative costs. The cost associated with VITAS sales personnel is included in cost of services provided and goods sold (excluding depreciation).
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Advertising | ADVERTISING We expense the production costs of advertising the first time the advertising takes place. The costs of telephone directory listings are expensed when the directories are placed in circulation. These directories are generally in circulation for approximately one year, at which point they are typically replaced by the publisher with a new directory. We generally pay for directory placement assuming it is in circulation for one year. If the directory is in circulation for less than or greater than one year, we receive a credit or additional billing, as necessary. We do not control the timing of when a new directory is placed in circulation. We pay for and expense the cost of internet advertising and placement on a “per click” basis. Advertising expense for the year ended December 31, 2015, was $36.4 million (2014 – $32.8 million; 2013 - $31.0 million).
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Computation Of Earnings Per Share | COMPUTATION OF EARNINGS PER SHARE Earnings per share are computed using the weighted average number of shares of capital stock outstanding. Diluted earnings per share reflect the dilutive impact of our outstanding stock options and nonvested stock awards. Stock options whose exercise price is greater than the average market price of our stock are excluded from the computation of diluted earnings per share.
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Stock-Based Compensation Plans | STOCK-BASED COMPENSATION PLANS Stock-based compensation cost is measured at the grant date, based on the fair value of the award and recognized as expense over the employee’s requisite service period on a straight-line basis.
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Insurance Accruals | INSURANCE ACCRUALS For our Roto-Rooter segment and Corporate Office, we initially self-insure for all casualty insurance claims (workers’ compensation, auto liability and general liability). As a result, we closely monitor and frequently evaluate our historical claims experience to estimate the appropriate level of accrual for self-insured claims. Our third-party administrator (“TPA”) processes and reviews claims on a monthly basis. Currently, our exposure on any single claim is capped at $750,000. In developing our estimates, we accumulate historical claims data for the previous 10 years to calculate loss development factors (“LDF”) by insurance coverage type. LDFs are applied to known claims to estimate the ultimate potential liability for known and unknown claims for each open policy year. LDFs are updated annually. Because this methodology relies heavily on historical claims data, the key risk is whether the historical claims are an accurate predictor of future claims exposure. The risk also exists that certain claims have been incurred and not reported on a timely basis. To mitigate these risks, in conjunction with our TPA, we closely monitor claims to ensure timely accumulation of data and compare claims trends with the industry experience of our TPA.
For the VITAS segment, we initially self-insure for workers’ compensation claims. Currently, VITAS’ exposure on any single claim is capped at $1,000,000. For VITAS’ self-insurance accruals for workers’ compensation, the valuation methods used are similar to those used internally for our other business units. We are also insured for other risks with respect to professional liability with a deductible of $750,000.
Our casualty insurance liabilities are recorded gross before any estimated recovery for amounts exceeding our stop loss limits. Estimated recoveries from insurance carriers are recorded as accounts receivable.
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Taxes On Income | TAXES ON INCOME Deferred taxes are provided on an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amount of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in our opinion, it is more likely than not that some portion or all of the deferred tax assets will not be realized due to insufficient taxable income within the carryback or carryforward period available under the tax laws. Deferred tax assets and liabilities are adjusted for the effects of changes in laws and rates on the date of enactment.
In November 2015, the FASB issued ASU No. 2015-17 which simplifies the balance sheet classification required for deferred tax balances. It allows for a company’s deferred tax assets and liabilities to be netted into a noncurrent account, either asset or liability, by jurisdiction. The ASU is required to be adopted for annual periods beginning after December 15, 2016 and the interim periods within that annual period. Early adoption is permitted. Companies have the choice to adopt prospectively or retrospectively. In order to simplify our balance sheet classification required for deferred tax balances, we adopted the ASU for our annual balance sheet as of December 31, 2015 on a prospective basis. Prior periods have not been retrospectively adjusted. We do not believe that this change results in a material comparability issue between years on our balance sheet
We are subject to income taxes in Canada, U.S. federal and most state jurisdictions. Significant judgment is required to determine our provision for income taxes. Our financial statements reflect expected future tax consequences of such uncertain positions assuming the taxing authorities’ full knowledge of the position and all relevant facts.
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Contingencies | CONTINGENCIES As discussed in Note 18, we are subject to various lawsuits and claims in the normal course of our business. In addition, we periodically receive communications from governmental and regulatory agencies concerning compliance with Medicare and Medicaid billing requirements at our VITAS subsidiary. We establish reserves for specific, uninsured liabilities in connection with regulatory and legal action that we deem to be probable and estimable. We record legal fees associated with legal and regulatory actions as the costs are incurred. We disclose material loss contingencies that are probable but not reasonably estimable and those that are at least reasonably possible.
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Estimates | ESTIMATES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Disclosures of aftertax expenses and adjustments are based on estimates of the effective income tax rates for the applicable segments.
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Classification Adjustments | CLASSIFICATION ADJUSTMENTS In 2015, we classified $2.1 million of non-cash restricted stock award amortization in selling, general and administrative expenses. We also recorded classifications adjustments of $2.5 million and $3.0 million to decrease amortization and increase selling, general and administrative expenses in our Consolidated Statement of Income for 2014 and 2013, respectively, related to non-cash restricted stock award amortization. This classification adjustment does not impact income from operations, income before income taxes, net income, earnings per share, net cash provided by operating activities or our Consolidated Balance Sheet. We believe the impact of the classification adjustments are immaterial to our consolidated financial statements for the current and prior periods.
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Summary Of Significant Accounting Policies (Tables) |
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Weighted Average Lives Of Property And Equipment |
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Schedule of movement in Goodwill |
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Weighted Average Lives Of Identifiable, Definite-Lived Intangible Assets |
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Hospice Revenue Recognitionn (Tables) |
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hospice Revenue Recognition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Allowance For Doubtful Accounts |
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Schedule Of Medicare Cap Liability Activity |
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Long-Term Debt and Lines of Credit (Tables) |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt and Lines of Credit [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Outstanding |
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Schedule of Principal Payments of the Term Loan |
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Interest Paid During Period |
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Financial Debt Covenants |
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Stock-Based Compensation Plans (Tables) |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Plans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Total Stock Option And Award Activity |
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Schedule Of Comparative Date For Performance Stock Units |
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Schedule Of Other Data For Stock Option And Stock Award Activity |
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Schedule Of Valuation Assumptions |
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Schedule Of Other Data For Stock Options, Stock Awards And PSUs |
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Segments and Nature of the Business (Tables) |
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Segments and Nature of the Business [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service Revenues And Sales And After-Tax Earnings By Business Segment |
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Intangible Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule By Year Of Projected Amortization Expense For Definite-Lived Intangible Assets |
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Schedule Of Intangible Assets |
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Business Combinations (Tables) |
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Dec. 31, 2015 | |||||||||||||||||||
PENNSYLVANIA and NEBRASKA [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Schedule Of Business Acquisitions |
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IDAHO | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Schedule Of Business Acquisitions |
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COLORADO and TEXAS [Member] | |||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||
Schedule Of Business Acquisitions |
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Discontinued Operations (Tables) |
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Dec. 31, 2015 | |||||||||||||||||||||
Discontinued Operations [Abstract] | |||||||||||||||||||||
Schedule Of Estimated Timing Of Payments Of Liabilities |
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Other Income/(Expense)-Net (Tables) |
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income/(Expense)-Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Other Income/(Expense)- Net |
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Income Taxes (Tables) |
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Provision For Income Taxes |
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Schedule Of Temporary Differences That Give Rise To Deferred Tax Assets (Liabilities) |
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Schedule Of Significant Changes To Unrecognized Tax Benefits |
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Schedule Of Difference Between Actual Income Tax Provision For Continuing Operations And Income Tax Provision Calculated At Statutory U.S. Federal Tax Rate |
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Schedule Of Income Taxes Paid |
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Properties And Equipment (Tables) |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Properties And Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Properties And Equipment |
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Lease Arrangements (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Arrangements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Future Minimum Rental Payments And Sublease Rentals To Be Received Under Operating Leases |
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Schedule Of Total Rental Expense Incurred Under Operating Leases For Continuing Operations |
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Retirement Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||
Retirement Plans [Abstract] | |||||||||||||||||||||||||||||||
Schedule Of Expenses For Retirement, Profit-Sharing Plans, Excess Benefit Plans And Other Similar Plans |
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Earnings Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Computation Of Earnings Per Share |
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Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Value, Fair Value And Hierarchy Of Financial Instruments | The following shows the carrying value, fair value and the hierarchy for our financial instruments as of December 31, 2015 (in thousands):
The following shows the carrying value, fair value and the hierarchy for our financial instruments as of December 31, 2014 (in thousands):
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Loans Receivable from Independent Contractors (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||
Loans Receivable from Independent Contractors [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Schedule Of Independent Contractors |
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Capital Stock Transactions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||
Capital Stock Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Schedule Of Capital Stock Repurchases |
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Other Operating Expenses (Tables) |
12 Months Ended | ||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||
Other Operating Expenses [Abstract] | |||||||||||||||||||
Schedule Of Other Operating Expenses | (in thousands):
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Summary Of Significant Accounting Policies (Schedule Of Weighted Average Lives Of Property And Equipment) (Details) |
12 Months Ended |
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Dec. 31, 2015 | |
Building And Building Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Weighted average lives of property and equipment | 10 years 10 months 24 days |
Transportation Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Weighted average lives of property and equipment | 10 years 9 months 18 days |
Machinery And Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Weighted average lives of property and equipment | 5 years 4 months 24 days |
Computer Software [Member] | |
Property, Plant and Equipment [Line Items] | |
Weighted average lives of property and equipment | 4 years 7 months 6 days |
Furniture And Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Weighted average lives of property and equipment | 4 years 9 months 18 days |
Summary Of Significant Accounting Policies (Schedule of movement in Goodwill) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Business Combination Segment Allocation [Line Items] | ||
Beginning Balance | $ 466,722 | $ 466,871 |
Business combinations | 5,944 | 198 |
Foreign currency adjustments | (344) | (198) |
Program closing | (149) | |
Ending Balance | 472,322 | 466,722 |
Segment VITAS [Member] | ||
Business Combination Segment Allocation [Line Items] | ||
Beginning Balance | $ 328,301 | $ 328,450 |
Business combinations | ||
Foreign currency adjustments | ||
Program closing | $ (149) | |
Ending Balance | $ 328,301 | 328,301 |
Roto-Rooter segment [Member] | ||
Business Combination Segment Allocation [Line Items] | ||
Beginning Balance | 138,421 | 138,421 |
Business combinations | 5,944 | 198 |
Foreign currency adjustments | (344) | $ (198) |
Program closing | ||
Ending Balance | $ 144,021 | $ 138,421 |
Summary Of Significant Accounting Policies (Weighted Average Lives Of Identifiable, Definite-Lived Intangible Assets) (Details) |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Covenants Not To Compete [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted average lives of identifiable, definite-lived intangible assets | 6 years 6 months |
Reacquired Franchise Rights [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted average lives of identifiable, definite-lived intangible assets | 6 years 1 month 6 days |
Referral Networks [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted average lives of identifiable, definite-lived intangible assets | 10 years |
Customer Lists [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted average lives of identifiable, definite-lived intangible assets | 13 years 3 months 18 days |
Hospice Revenue Recognition (Narrative) (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
Mar. 31, 2016 |
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Revenue Recognition [Line Items] | ||||
Medicare care costs reimbursement, benchmark percentage of the days in care | 20.00% | |||
Percentage of automatic budget reductions | 2.00% | |||
One Program Projected Measurement Period Liability [Member] | ||||
Revenue Recognition [Line Items] | ||||
Medicare cap reversal | $ 165,000 | |||
Two Program Projected Measurment Period Liability [Member] | ||||
Revenue Recognition [Line Items] | ||||
Net pretax expense/(income) from medicare cap liability | (165,000) | $ 1,300,000 | $ 7,000,000 | |
Additional amount owed for Medicar cap | $ 1,900,000 | |||
Scenario, Forecast [Member] | ||||
Revenue Recognition [Line Items] | ||||
Unbilled revenue | $ 1,900,000 |
Hospice Revenue Recognition (Schedule Of Medicare Cap Liability Activity) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Hospice Revenue Recognition [Abstract] | ||
Beginning Balance January 1, | $ 6,112 | $ 8,260 |
2015 measurement period | (165) | 165 |
2014 measurement period | 1,451 | |
2011 measurement period | (325) | |
Payments | (4,782) | (3,439) |
Ending Balance December 31, | $ 1,165 | $ 6,112 |
Long-Term Debt and Lines of Credit (Debt Outstanding) (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Debt Instrument [Line Items] | ||
Total | $ 91,250 | $ 147,500 |
Current portion of term loan | (7,500) | (6,250) |
Long-term debt | 83,750 | 141,250 |
Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Total | 50,000 | |
Medium-term Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total | $ 91,250 | $ 97,500 |
Long-Term Debt and Lines of Credit (Schedule of Principal Payments of the Term Loan) (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Debt Instrument [Line Items] | ||
Total | $ 91,250 | $ 147,500 |
Medium-term Notes [Member] | ||
Debt Instrument [Line Items] | ||
2016 | 7,500 | |
2017 | 8,750 | |
2018 | 10,000 | |
2019 | 65,000 | |
Total | $ 91,250 | $ 97,500 |
Long-Term Debt And Lines Of Credit (Interest Paid During Period) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Long-Term Debt and Lines of Credit [Abstract] | |||
Interest paid | $ 2,988 | $ 4,322 | $ 4,744 |
Long-Term Debt and Lines of Credit (Financial Debt Covenants) (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Long-Term Debt and Lines of Credit [Abstract] | |
Leverage Ratio (Consolidated Indebtedness/Consolidated Adj. EBITDA), Requirement | 3.50 |
Leverage Ratio (Consolidated Indebtedness Consolidated Adj. EBITDA) | 0.54 |
Fixed Charge Coverage Ratio (Consolidated Free Cash Flow/Consolidated Fixed Charges), Requirement | 1.50 |
Fixed Charge Coverage Ratio (Consolidated Free Cash Flow/Consolidated Fixed Charges), Chemed | 2.18 |
Annual Operating Lease Commitment, Requirement | $ 50.0 |
Annual Operating Lease Commitment, Chemed | $ 25.5 |
Stock-Based Compensation Plans (Schedule of Comparative Date for Performance Stock Units) (Details) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Per-share fair value | $ 121.75 | $ 88.48 | $ 77.13 |
Volatility | 22.20% | 22.60% | 24.90% |
Risk-free interest rate | 1.57% | 1.59% | 1.39% |
Service period (years) | 2 years 10 months 24 days | 2 years 10 months 24 days | 2 years 2 months 12 days |
Performance Based TSR [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted | 10,761 | 10,340 | 16,149 |
Per-share fair value | $ 142.55 | $ 112.60 | $ 139.51 |
Volatility | 25.20% | 30.80% | 21.20% |
Risk-free interest rate | 0.93% | 0.33% | 0.25% |
Performance Based EPS [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted | 10,761 | 14,061 | 16,149 |
Per-share fair value | $ 113.14 | $ 82.80 | $ 139.51 |
Stock-Based Compensation Plans (Schedule Of Other Data For Stock Option And Stock Award Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Stock-Based Compensation Plans [Abstract] | |||
Total compensation cost of stock-based compensation plans charged against income | $ 14,737 | $ 10,323 | $ 10,868 |
Total income tax benefit recognized in income for stock based compensation plans | 5,416 | 3,794 | 3,994 |
Total intrinsic value of stock options exercised | 45,600 | 26,344 | 16,922 |
Total intrinsic value of stock awards vested during the period | $ 12,065 | $ 4,564 | $ 4,298 |
Per-share weighted averaged grant-date fair value of stock awards granted | $ 121.75 | $ 88.48 | $ 77.13 |
Stock-Based Compensation Plans (Schedule Of Valuation Assumptions) (Details) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Stock-Based Compensation Plans [Abstract] | |||
Stock price on date of issuance | $ 157.36 | $ 106.59 | $ 70.30 |
Grant date fair value per share | $ 29.46 | $ 21.58 | $ 14.79 |
Number of options granted | 422,750 | 410,800 | 392,274 |
Expected term (years) | 4 years | 4 years 9 months 18 days | 4 years 10 months 24 days |
Risk free rate of return | 1.57% | 1.59% | 1.39% |
Volatility | 22.20% | 22.60% | 24.90% |
Dividend yield | 0.60% | 0.80% | 1.10% |
Forfeiture rate |
Intangible Assets (Schedule By Year Of Projected Amortization Expense For Definite-Lived Intangible Assets) (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Intangible Assets [Abstract] | |||
2016 | $ 359,000 | ||
2017 | 169,000 | ||
2018 | 122,000 | ||
2019 | 96,000 | ||
2020 | 66,000 | ||
Thereafter | 59,000 | ||
Amortization of definite-lived intangible assets | $ 1,100,000 | $ 720,000 | $ 1,600,000 |
Business Combinations (Narrative) (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015
USD ($)
entity
|
Dec. 31, 2014
USD ($)
entity
|
Dec. 31, 2013
USD ($)
entity
item
|
|
Business Acquisition [Line Items] | |||
Business combinations | $ 6,614,000 | $ 250,000 | $ 2,257,000 |
Segment Roto-Rooter [Member] | |||
Business Acquisition [Line Items] | |||
Number of businesses acquired | entity | 1 | ||
Segment Roto-Rooter [Member] | PENNSYLVANIA and NEBRASKA [Member] | |||
Business Acquisition [Line Items] | |||
Number of businesses acquired | entity | 2 | ||
Business combinations | $ 6,600,000 | ||
Segment Roto-Rooter [Member] | IDAHO | |||
Business Acquisition [Line Items] | |||
Number of businesses acquired | entity | 1 | ||
Business combinations | $ 250,000 | ||
Segment Roto-Rooter [Member] | COLORADO | |||
Business Acquisition [Line Items] | |||
Number of Business Combinations | item | 1 | ||
Business combinations | $ 756,000 | ||
Segment VITAS [Member] | TEXAS | |||
Business Acquisition [Line Items] | |||
Number of businesses acquired | entity | 1 | ||
Business combinations | $ 1,500,000 |
Business Combinations (Business Acquisition, Purchase Price Allocation) (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 472,322 | $ 466,722 | $ 466,871 |
PENNSYLVANIA and NEBRASKA [Member] | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets | 213 | ||
Goodwill | 5,944 | ||
Other assets and liabilities - net | 457 | ||
Assets total | $ 6,614 | ||
IDAHO | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets | 47 | ||
Goodwill | 198 | ||
Other assets and liabilities - net | 5 | ||
Assets total | $ 250 | ||
COLORADO and TEXAS [Member] | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets | 1,023 | ||
Goodwill | 1,212 | ||
Other assets and liabilities - net | 22 | ||
Assets total | $ 2,257 |
Discontinued Operations (Schedule Of Estimated Timing Of Payments Of Liabilities) (Details) $ in Thousands |
Dec. 31, 2015
USD ($)
|
---|---|
Discontinued Operations [Abstract] | |
2016 | $ 826 |
2017 | 300 |
Thereafter | 601 |
Total estimated timing of payments of liabilities related to discontinued operations | $ 1,727 |
Cash Overdrafts And Cash Equivalents (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Cash Overdrafts And Cash Equivalents [Abstract] | ||
Cash overdrafts included in accounts payable | $ 9,300,000 | $ 10,500,000 |
Cash equivalents | $ 76,000 | $ 80,000 |
Cash equivalents weighted average rate of return | 0.20% | 0.06% |
Other Income/(Expense)-Net (Schedule Of Other Income-Net From Continuing Operations) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Other Income/(Expense)-Net [Abstract] | |||
Market value gains related to deferred compensation trusts | $ 148 | $ 3,118 | $ 4,982 |
Loss on disposal of property and equipment | (698) | (640) | (320) |
Interest income/ (expense) | 281 | (29) | 847 |
Other - net | (418) | 72 | (39) |
Total other income/(expense) | $ (687) | $ 2,521 | $ 5,470 |
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Income Taxes [Abstract] | ||
Net operating loss carryforwards | $ 34,000 | $ 31,800 |
Accrued interest payable related to uncertain tax positions | 125 | $ 123 |
Undistributed earnings of domestic subsidiaries | 35,100 | |
Additional taxes if interest in all businesses is sold rather than to effect a tax-free liquidation | $ 12,900 |
Income Taxes (Schedule Of Provision For Income Taxes) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Taxes [Abstract] | |||
Current, U.S. federal | $ 55,026 | $ 48,577 | $ 45,348 |
Current, U.S. state and local | 8,104 | 7,285 | 7,731 |
Current, Foreign | 397 | 597 | 511 |
Deferred, U.S. federal, state and local | 6,323 | 6,970 | (6,995) |
Deferred, Foreign | 2 | 8 | 7 |
Total | $ 69,852 | $ 63,437 | $ 46,602 |
Income Taxes (Summary Of Temporary Differences That Give Rise To Deferred Tax Assets/ (Liabilities)) (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Income Taxes [Abstract] | ||
Accrued liabilities | $ 39,529 | $ 37,879 |
Stock compensation expense | 8,555 | 11,591 |
Allowance for uncollectible accounts receivable | 1,729 | 2,779 |
State net operating loss carryforwards | 1,701 | 1,603 |
Other | 896 | 807 |
Deferred income tax assets | 52,410 | 54,659 |
Amortization of intangible assets | (50,136) | (47,946) |
Accelerated tax depreciation | (18,030) | (15,641) |
Current assets | (1,576) | (1,519) |
State income taxes | (1,465) | (698) |
Market valuation of investments | (1,375) | (2,346) |
Other | (857) | (1,023) |
Deferred income tax liabilities | (73,439) | (69,173) |
Deferred income tax liabilities | $ (21,029) | $ (14,514) |
Income Taxes (Schedule Of Significant Changes To Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Taxes [Abstract] | |||
Balance at January 1, | $ 980 | $ 892 | $ 2,646 |
Unrecognized tax benefits due to positions taken in current year | 260 | 247 | 219 |
Decrease due to expiration of statute of limitations | (188) | (159) | (1,973) |
Balance at December 31, | $ 1,052 | $ 980 | $ 892 |
Income Taxes (Schedule Of Difference Between Actual Income Tax Provision For Continuing Operations And Income Tax Provision Calculated At Statutory U.S. Federal Tax Rate) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Taxes [Abstract] | |||
Income tax provision calculated using the statutory rate of 35% | $ 63,044 | $ 56,964 | $ 43,340 |
State and local income taxes, less federal income tax effect | 5,787 | 5,536 | 4,323 |
Uncertain tax position adjustments | (1,782) | ||
Nondeductible expenses | 1,438 | 1,290 | 1,250 |
Other --net | (417) | (353) | (529) |
Income tax provision | $ 69,852 | $ 63,437 | $ 46,602 |
Effective tax rate | 38.80% | 39.00% | 37.60% |
Statutory rate | 35.00% |
Income Taxes (Schedule Of Income Taxes Paid) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Taxes [Abstract] | |||
Income taxes paid | $ 62,928 | $ 44,921 | $ 55,827 |
Properties And Equipment (Narrative) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Properties And Equipment [Abstract] | |||
Net book value of computer software | $ 8.3 | $ 10.5 | |
Depreciation expense for computer software | $ 3.9 | $ 4.4 | $ 3.9 |
Lease Arrangements (Narrative) (Details) |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Maximum [Member] | |
Operating Leased Assets [Line Items] | |
Lease arrangements, remaining terms of leases under operating lease | 11 years |
Lease Arrangements (Summary Of Future Minimum Rental Payments And Sublease Rentals To Be Received Under Operating Leases) (Details) $ in Thousands |
Dec. 31, 2015
USD ($)
|
---|---|
Lease Arrangements [Abstract] | |
2016 | $ 21,679 |
2017 | 15,815 |
2018 | 12,420 |
2019 | 8,697 |
2020 | 6,189 |
Thereafter | 14,294 |
Total minimum rental payments | $ 79,094 |
Lease Arrangements (Schedule Of Total Rental Expense Incurred Under Operating Leases For Continuing Operations) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Lease Arrangements [Abstract] | |||
Total rental expense | $ 40,021 | $ 39,606 | $ 38,992 |
Retirement Plans (Narrative) (Details) - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Retirement Plans [Abstract] | ||
Number of treasury stock shares held | 99,309 | 99,231 |
Treasury stock held value | $ 2.4 | $ 2.3 |
Retirement Plans (Schedule Of Expenses For Retirement, Profit-Sharing Plans, Excess Benefit Plans And Other Similar Plans) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Retirement Plans [Abstract] | |||
Defined contribution plans expense | $ 11,970 | $ 13,838 | $ 14,511 |
Earnings Per Share (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Dec. 08, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Excluded stock options | 422,000 | 411,000 | 358,000 | |
Shares issued in conjunction with the conversion feature of the Notes | 35,166 | 249,000 | ||
Number of shares called by warrants | 2,477,000 | |||
Dilutive impact of the warrants | 12,000 | |||
Payments for Repurchase of Warrants | $ 2,648 | |||
Senior Convertible Notes [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Interest rate of senior convertible notes | 1.875% | |||
Dilutive impact of the warrants | 102,000 |
Earnings Per Share (Schedule Of Computation Of Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Earnings Per Share [Abstract] | |||
Earnings, Income | $ 110,274 | $ 99,317 | $ 77,227 |
Dilutive stock options, Income | |||
Nonvested stock awards, Income | |||
Conversion of Notes, Income | |||
Diluted earnings, Income | $ 110,274 | $ 99,317 | $ 77,227 |
Net Income, Earnings, Shares | 16,870 | 17,165 | 18,199 |
Dilutive stock options, Shares | 394 | 412 | 278 |
Nonvested stock awards, Shares | 158 | 149 | 108 |
Conversion of Notes and impact of warrants outstanding, Shares | 114 | ||
Net Income, Diluted Earnings, Shares | 17,422 | 17,840 | 18,585 |
Earnings per Share | $ 6.54 | $ 5.79 | $ 4.24 |
Earnings per Share, Diluted | $ 6.33 | $ 5.57 | $ 4.16 |
Financial Instruments (Carrying Value, Fair Value And Hierarchy Of Financial Instruments) (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Carrying Value [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments of deferred compensation plans held in trust | $ 49,481 | $ 49,147 |
Long-term debt | 91,250 | 147,500 |
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments of deferred compensation plans held in trust | 49,481 | 49,147 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | $ 91,250 | $ 147,500 |
Loans Receivable from Independent Contractors (Narrative) (Details) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2015
USD ($)
item
|
Dec. 31, 2014
USD ($)
|
|
Independent Contractor Operations [Line Items] | ||
Independent contractors with sublicenses | item | 69 | |
Maximum exposure to loss from arrangements with independent contractors | $ | $ 1.8 | $ 1.6 |
Days contracts may be cancelled with written notice | 90 days | |
Maximum [Member] | ||
Independent Contractor Operations [Line Items] | ||
Percentage of labor sales | 32.00% | |
Interest rates on loans | 7.00% | |
Terms of the loans to independent contractors, years | 5 years 4 months 24 days | |
Minimum [Member] | ||
Independent Contractor Operations [Line Items] | ||
Percentage of labor sales | 27.00% | |
Interest rates on loans | 0.00% | |
Terms of the loans to independent contractors, years | 2 months 15 days |
Loans Receivable from Independent Contractors (Schedule Of Independent Contractors) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Loans Receivable from Independent Contractors [Abstract] | |||
Revenues | $ 37,966 | $ 36,496 | $ 33,030 |
Pretax profits | $ 22,176 | $ 21,238 | $ 17,726 |
Legal And Regulatory Matters (Details) $ in Millions |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2013
item
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2013
USD ($)
|
|
Loss Contingencies [Line Items] | ||||
Number of shareholder derivative lawsuits filed | item | 2 | |||
U.S. v. VITAS [Member] | ||||
Loss Contingencies [Line Items] | ||||
Net costs incurred | $ | $ 5.0 | $ 2.1 | $ 2.1 |
Concentration Of Risk (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Concentration Risk [Line Items] | |||
VITAS made purchases from Enclara | $ 37,700 | $ 35,600 | $ 39,000 |
Accounts payable | 43,695 | 46,849 | |
Supplier Concentration Risk [Member] | |||
Concentration Risk [Line Items] | |||
Accounts payable | $ 3,000 | ||
Segment VITAS [Member] | |||
Concentration Risk [Line Items] | |||
Accounts payable | $ 3,600 | ||
Sales Revenue [Member] | |||
Concentration Risk [Line Items] | |||
Percentage of concentration risk services represent from vendor | 90.00% | 90.00% | 90.00% |
Sales Revenue [Member] | Segment VITAS [Member] | |||
Concentration Risk [Line Items] | |||
Percentage of concentration risk services represent from vendor | 72.00% | 73.00% |
Capital Stock Transactions (Narrative) (Details) $ in Millions |
Mar. 31, 2015
USD ($)
|
---|---|
Capital Stock Transactions [Abstract] | |
Stock repurchase program, amount authorized | $ 100 |
Capital Stock Transactions (Schedule Of Capital Stock Repurchases) (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Capital Stock Transactions [Abstract] | |||
Total cost of repurchased shares | $ 59,323 | $ 110,019 | $ 92,911 |
Shares repurchased | 460,765 | 1,182,934 | 1,356,344 |
Weighted average price per share | $ 128.75 | $ 93.01 | $ 68.50 |
Other Operating Expenses (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2013
USD ($)
| |
Other Operating Expenses [Line Items] | |
Other operating expenses | $ 26,221 |
Litigation settlement of VITAS segment [Member] | |
Other Operating Expenses [Line Items] | |
Litigation settlement | 10,500 |
Roto-Rooter segment [Member] | |
Other Operating Expenses [Line Items] | |
Litigation settlement | $ 15,721 |
Schedule II - Valuation And Qualifying Accounts (Details) - Allowance For Doubtful Accounts [Member] - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
BALANCE AT BEGINNING OF PERIOD | $ (14,728) | $ (12,590) | $ (10,892) |
(CHARGED) CREDITED TO COSTS AND EXPENSES | (14,435) | (13,079) | (10,690) |
(CHARGED) CREDITED TO OTHER ACCOUNTS | (1,169) | (840) | (1,318) |
DEDUCTIONS | 17,088 | 11,781 | 10,310 |
BALANCE AT END OF PERIOD | $ (13,244) | $ (14,728) | $ (12,590) |
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