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Roto-Rooter Inc. Reports Second-Quarter Earnings of $.28 per Share

CINCINNATI--(BUSINESS WIRE)--July 17, 2003--Roto-Rooter Inc. (NYSE:RRR) (OTCBB:CHEQP) today reported net income of $.28 per share for the second quarter, ended June 30, 2003, as compared with net income of $.46 per share in the 2002 second quarter. Net income in the year-ago second quarter included $.11 per share from discontinued operations.

Service revenues and sales from continuing operations for the 2003 second quarter were $77.3 million as compared with $79.1 million in the 2002 second quarter. For the second quarter, net cash provided by operating activities -- that is, cash provided by operations before capital expenditures and other investing and financing activities -- totaled $6.3 million in 2003 versus $11.9 million in 2002 which included $2.3 million from discontinued operations.

Year to date, for the six months ended June 30, 2003, Roto-Rooter's net income was $.54 per share as compared with $.94 per share in the same prior-year period. Net income for year-to-date 2003 included capital gains on the sales of investments of $.22 per share and severance charges of $.24 per share. Net income for the same 2002 period included income from discontinued operations of $.20 per share and capital gains on the sales of investments of $.08 per share.

Service revenues and sales from continuing operations for year-to-date 2003 totaled $154.9 million versus $160.0 million in 2002. Net cash provided by operating activities for the 2003 first half amounted to $11.5 million versus $18.5 million for the same 2002 period which included $2.2 million from discontinued operations.

Commenting on the company's future and its financial health, Roto-Rooter Inc. President and Chief Executive Officer Kevin J. McNamara said, "We're pleased to have taken the corporate name Roto-Rooter Inc., following shareholder approval at the annual meeting May 19. During the past several years, Roto-Rooter has emerged as our flagship subsidiary -- in terms of both revenues and profits -- and this change reflects that.

"Our balance sheet is solid, and cash balances exceed long-term debt. Cash flow, too, is excellent, with our operations generating $11.5 million year to date. Further, our $31.3 million investment in Vitas Healthcare Corporation yields 8% aftertax on our preferred dividend, while representing a potential future source of capital gains or equity earnings. Our financial health is excellent."

Discussing the company's operations, Mr. McNamara continued, "Consistent with the change to the Roto-Rooter name, the company redefined how it reports its business operations to reflect the structure of the company. Roto-Rooter Inc. now reports the Plumbing and Drain Service segment and the Service America segment. Additionally, the company will report Corporate Investing and Financing activities.

"Revenues at the Plumbing and Drain Service business grew 2% to $64.6 million in the 2003 second quarter as compared with the same prior-year quarter. Excluding revenues from the heating and cooling businesses and non-Roto-Rooter-branded operations which Roto-Rooter exited in 2002, revenues increased 5% to $59.6 million in company-owned branches and independent contractor operations. Further, revenues from Roto-Rooter's franchising activities and product and equipment sales increased by 11% to $2.1 million in the 2003 second quarter.

"Net income from the Plumbing and Drain Service business totaled $2.4 million in the 2003 second quarter, 24% below the year-ago second quarter's net income of $3.2 million, as a result of increased investments in marketing and higher general and administrative expenses."

Commenting on the Service America segment, Mr. McNamara said, "Service America, our appliance and heating/air-conditioning repair business, recorded net income of $35,000 in the 2003 second quarter compared with $59,000 in the 2002 second quarter. Revenues at Service America declined from $16.0 million to $12.7 million, as the company continues to reposition its service-agreement business. Through six months ended June 30, 2003, Service America has generated $2.7 million in net cash flow.

"Corporate Investing and Financing activities generated $311,000 of income in the 2003 second quarter, as compared with $179,000 in the prior-year second quarter. The increase is largely attributable to a $142,000 reduction in interest payments on corporate debt."

Concluding, Mr. McNamara said, "Our new name, Roto-Rooter Inc., reflects the company's future as a leader in the commercial and residential maintenance-and-repair-services industry and capitalizes on one of the best-known brands in America. We expect our Plumbing and Drain Service business will benefit from improved economic conditions, and we will increase revenues in this business over the long term."

Reflecting its confidence in Roto-Rooter's solid financial position and future earnings potential, in May, the Board of Directors declared a quarterly dividend of $.12 per share, which was paid in June. This represented Roto-Rooter's 128th consecutive quarterly dividend.

Roto-Rooter Inc. (www.RotoRooter.com), headquartered in Cincinnati, is a New York Stock Exchange-listed corporation operating in the residential and commercial repair-and-maintenance-service industry through two wholly owned subsidiaries. Roto-Rooter is North America's largest provider of plumbing and drain cleaning services. Service America Systems Inc. provides major-appliance and heating/air-conditioning repair, maintenance, and replacement services.

Statements in this press release or in other Roto-Rooter communications may relate to future events or Roto-Rooter's future performance. Such statements are forward-looking statements and are based on present information Roto-Rooter has related to its existing business circumstances. Investors are cautioned that such forward-looking statements are subject to inherent risk that actual results may differ materially from such forward-looking statements. Further, investors are cautioned that Roto-Rooter does not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations.

 ROTO-ROOTER, INC.
CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share data)(unaudited)


                        Three Months Ended      Six Months Ended
                             June 30,               June 30,
                         ----------------    ----------------------
                           2003     2002       2003          2002
                         -------  -------    --------      --------
Continuing Operations
  Service revenues and
   sales                 $77,271  $79,082    $154,916      $159,935
                         -------  -------    --------      --------
  Cost of services
   provided and goods
   sold                   45,611   46,624      91,763        95,132
  General and
   administrative
   expenses               14,532   12,508      31,056(a)     25,162
  Selling and marketing
   expenses               11,339   10,788      22,417        22,781
  Depreciation             2,990    3,486       6,042         6,978
                         -------  -------    --------      --------
    Total costs and
     expenses             74,472   73,406     151,278       150,053
                         -------  -------    --------      --------
    Income from
     operations            2,799    5,676       3,638         9,882
  Interest expense          (599)    (763)     (1,138)       (1,536)
  Distributions on
   preferred securities     (268)    (271)       (536)         (541)
  Other income--net        2,454      953       6,717(b)      3,542(b)
                         -------  -------    --------      --------
    Income before income
     taxes                 4,386    5,595       8,681(a,b)   11,347(b)
  Income taxes            (1,594)  (2,150)     (3,336)       (4,097)
                         -------  -------    --------      --------
    Income from
     continuing
     operations            2,792    3,445       5,345(a,b)    7,250(b)
 Discontinued Operations       -    1,124           -         1,991
                         -------  -------    --------      --------
 Net Income              $ 2,792  $ 4,569    $  5,345(a,b) $  9,241(b)
                         =======  =======    ========      ========

Earnings Per Share
  Income from continuing
   operations            $  0.28  $  0.35    $   0.54(a,b) $   0.74(b)
                         =======  =======    ========      ========
  Net income             $  0.28  $  0.46    $   0.54(a,b) $   0.94(b)
                         =======  =======    ========      ========
  Average number of
   shares outstanding      9,908    9,857       9,899         9,850
                         =======  =======    ========      ========

Diluted Earnings Per Share
  Income from continuing
   operations            $  0.28  $  0.35    $   0.54(a,b) $   0.73(b)
                         =======  =======    ========      ========
  Net income             $  0.28  $  0.46    $   0.54(a,b) $   0.93(b)
                         =======  =======    ========      ========
  Average number of
   shares outstanding      9,942    9,898       9,922         9,891
                         =======  =======    ========      ========

-------------------------
(a) Amounts include a pretax charge of $3,627,000 ($2,358,000 aftertax
    or $.24 per share) from severance charges in the first quarter of
    2003.

(b) Amounts for 2003 include a pretax gain of $3,544,000 ($2,151,000
    aftertax or $.22 per share) from the sales of investments in the
    first quarter. Amounts for 2002 include a pretax gain of
    $1,141,000 ($775,000 aftertax or $.08 per share) from the sales of
    investments in the first quarter.


ROTO-ROOTER, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)(unaudited)

                                                        June 30,
                                                 --------------------
                                                   2003       2002
                                                 ---------  ---------
Assets
  Current assets
    Cash and cash equivalents                    $  45,342  $  11,914
    Accounts receivable less allowances             15,188     14,794
    Inventories                                      8,699     10,070
    Statutory deposits                              10,095     12,282
    Current deferred income taxes                    7,424      7,934
    Current assets of discontinued operations            -     37,826
    Prepaid expenses and other current assets       13,682      9,220
                                                 ---------  ---------
        Total current assets                       100,430    104,040
  Investments of deferred compensation plans held
   in trust                                         16,411     15,833
  Other investments                                 32,789     37,692
  Note receivable                                   12,500          -
  Properties and equipment, at cost less
   accumulated depreciation                         46,906     49,989
  Identifiable intangible assets less accumulated
   amortization                                      2,599      3,197
  Goodwill less accumulated amortization           112,903    131,179
  Noncurrent assets of discontinued operations           -     44,158
  Other assets                                      17,196     12,835
                                                 ---------  ---------
             Total Assets                        $ 341,734  $ 398,923
                                                 =========  =========

Liabilities
  Current liabilities
    Accounts payable                             $   6,976  $   7,509
    Current portion of long-term debt                  473        366
    Income taxes                                     7,451      7,312
    Deferred contract revenue                       16,795     21,202
    Accrued insurance                               16,442     16,682
    Current liabilities of discontinued
     operations                                          -     11,325
    Other current liabilities                       19,631     20,235
                                                 ---------  ---------
        Total current liabilities                   67,768     84,631
  Long-term debt                                    25,715     55,810
  Mandatorily redeemable convertible preferred
   securities of the Chemed Capital Trust           14,186     14,186
  Deferred compensation liabilities                 16,395     15,833
  Noncurrent liabilities of discontinued
   operations                                            -      2,131
  Other liabilities                                 10,955     10,712
                                                 ---------  ---------
             Total Liabilities                     135,019    183,303
                                                 ---------  ---------

Stockholders' Equity
  Capital stock                                     13,451     13,461
  Paid-in capital                                  169,402    168,448
  Retained earnings                                135,766    146,240
  Treasury stock, at cost                         (110,681)  (112,568)
  Unearned compensation                             (3,824)    (5,480)
  Deferred compensation payable in Company stock     2,310      2,253
  Notes receivable for shares sold                    (926)      (939)
  Accumulated other comprehensive income             1,217      4,205
                                                 ---------  ---------
             Total Stockholders' Equity            206,715    215,620
                                                 ---------  ---------
             Total Liabilities and
              Stockholders' Equity               $ 341,734  $ 398,923
                                                 =========  =========

Book Value Per Share                             $   20.80  $   22.04
                                                 =========  =========

    CONTACT: Roto-Rooter Inc.
             Timothy S. O'Toole, 513/762-6702

    SOURCE: Roto-Rooter, Inc.