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Chemed > Investor Relations > News Releases > News Release
News Releases
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Chemed Authorizes Disposal of Service America Subsidiary

CINCINNATI--(BUSINESS WIRE)--Dec. 29, 2004--On December 22, 2004, the Board of Directors of Chemed Corporation ("Company") (NYSE:CHE) authorized the discontinuance of the operations of the Company's Service America segment through an asset sale to employees of Service America. The disposal is subject to certain regulatory and other approvals and is expected to be completed during the first half of 2005.

Our decision to dispose of Service America, which provides major-appliance and heating/air conditioning repair, maintenance and replacement services, is based on declining operating results and projected operating losses:

    --  Net service revenues declined from $74.2 million for the year
        ended December 31, 2000 to $48.1 million for the year ended
        December 31, 2003. Service revenues for the year ended
        December 31, 2004 are projected to decline to $38.8 million.

    --  Service America recorded net losses in each of the last three
        years and is projected to record net losses for 2004 and
        beyond.

The acquiring corporation will purchase a substantial majority of Service America's assets in exchange for assuming substantially all of Service America's liabilities. Included in the assets to be acquired is a receivable from the Company for approximately $4.9 million. The Company will pay $1 million of this receivable upon closing and the remainder over the following year in 11 equal monthly installments. The amount of this receivable is subject to adjustment for changes in Service America's balance sheet through the date of closing.

In connection with the disposal, we will record the following pretax costs and expenses during the fourth quarter of 2004 (in millions):

             Asset impairment charges                $ 3.4
             Employee termination costs                1.8
             Professional fees                         1.4
             Other                                      .5
                                                     -----
                       Total                         $ 7.1
                                                     =====

The timing of expected pretax cash outflows from the disposal of
Service America, is summarized as follows (in millions):

             2005                                    $ 5.7
             2006                                      1.5
             2007                                       .1
                                                     -----
                       Total                         $ 7.3
                                                     =====

The timing of expected cash inflows from income tax benefits related
to the disposal of Service America is summarized as follows (in
millions):

             2005                                   $ 14.4
             2006                                       .1
             2007                                       .1
                                                     -----
                       Total                        $ 14.6
                                                     =====


Listed on the New York Stock Exchange and headquartered in Cincinnati, Ohio, Chemed Corporation (www.chemed.com) is the nation's largest provider of end-of-life hospice care services through its VITAS Healthcare Corporation subsidiary. Chemed also maintains a presence in the residential and commercial repair-and-maintenance industry through two subsidiaries. Roto-Rooter is North America's largest provider of plumbing and drain cleaning services. Service America Network Inc. provides major-appliance and heating/air-conditioning repair, maintenance, and replacement services.

Certain statements contained in this press release and the accompanying tables are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "hope," "anticipate," "plan" and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Chemed does not undertake and specifically disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause Chemed's actual results to differ from those expressed in such forward-looking statements. These risks and uncertainties arise from, among other things, possible changes in regulations governing the hospice care, plumbing, drain cleaning and HVAC industries; periodic changes in reimbursement levels and procedures under Medicare and Medicaid programs; difficulties predicting patient length of stay and estimating potential Medicare reimbursement obligations; challenges inherent in Chemed's growth strategy; the current shortage of qualified nurses, other healthcare professionals and licensed plumbing and drain cleaning technicians; Chemed's dependence on patient referral sources; and other factors detailed under the caption "Description of Business by Segment" or "Risk Factors" in Chemed's most recent report on form 10-Q or 10-K and its other filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved.


    CONTACT: Chemed Corporation
             David P. Williams, 513-762-6901

    SOURCE: Chemed Corporation
All information current at time of original publication. Read complete disclaimer for details.
Copyright © 2005, Chemed Corporation. All rights reserved.
Page last modified: 04/18/05