0001157523-18-002533.txt : 20190212 0001157523-18-002533.hdr.sgml : 20190212 20181206083018 ACCESSION NUMBER: 0001157523-18-002533 CONFORMED SUBMISSION TYPE: CORRESP PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20181206 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHEMED CORP CENTRAL INDEX KEY: 0000019584 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOME HEALTH CARE SERVICES [8082] IRS NUMBER: 310791746 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: CORRESP BUSINESS ADDRESS: STREET 1: SUITE 2600 STREET 2: 255 E FIFTH ST CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: (513)762-6690 MAIL ADDRESS: STREET 1: SUITE 2600 STREET 2: 255 E FIFTH STREET CITY: CINCINNATI STATE: OH ZIP: 45202-4726 FORMER COMPANY: FORMER CONFORMED NAME: ROTO-ROOTER INC DATE OF NAME CHANGE: 20030613 FORMER COMPANY: FORMER CONFORMED NAME: CHEMED CORP DATE OF NAME CHANGE: 19920703 CORRESP 1 filename1.htm

December 6, 2018
 

 
Mr. Craig Arakawa, Accounting Branch Chief
United States Securities and Exchange Commission
Division of Corporation Finance
Office of Beverages, Apparel and Mining
100 F Street, N.E.
Washington, D.C. 20549

Re:        Chemed Corp.
Form 10-K for Fiscal Year Ended December 31, 2017
Filed February 26, 2018
File No. 001-08351

Dear Mr. Arakawa:

On behalf of Chemed Corporation (“Chemed” or the “Company”), this letter is sent in response to your office’s comment letter dated November 29, 2018.  For your convenience, each response is prefaced by the Staff’s corresponding comment in italicized text.

Form 10-K for the Fiscal Year Ended December 31, 2017
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations Reconciliation of Adjusted Net Income, page 101
 
1.
We note you present certain adjustments in your non-GAAP performance measures Adjusted Net Income and Adjusted Diluted Earnings Per Share net of income taxes both here and at page 36 of your Form 10-Q for the quarter ended September 30, 2018.  Please revise to present the effect of income taxes as a separate adjustment and expand your disclosure to clearly explain how the tax effect of non-GAAP adjustments are calculated.  Refer to Question 102.11 of the Non-GAAP Financial Measures Compliance and Disclosure Interpretations issued April 4, 2018.

 
We acknowledge the Staff’s comment and advise the Staff that in future reconciliations of GAAP net income to non-GAAP adjusted net income and adjusted diluted earnings per share, reconciling items will be presented before income taxes with a separate line attributable to total income taxes associated with those reconciling items.  We will begin to use the revised presentation beginning with our next financial report filing, Form 10-K for the fiscal year ended December 31, 2018.  The proposed revised presentation using amounts from Form 10-K for the fiscal year ended December 31, 2017 is shown below:

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
  
RECONCILIATION OF ADJUSTED NET INCOME
  
(in thousands, except per share data)(unaudited)
  
                   
 
For the Years Ended December 31,
 
   2017
   
2016
    
2015
  
Net income as reported  
$
98,177
    
$
108,743
    
$
110,274
  
                         
Add/(deduct) pre-tax cost of:                        
 Litigation settlements
    
84,476
      
-
      
-
  
 Stock option expense
    
10,485
      
8,330
      
5,445
  
 Loss on sale of transportation equipment
    
5,266
      
-
      
-
  
 Long-term incentive compensation
    
4,994
      
1,930
      
7,519
  
 Expenses related to OIG investigation
    
5,194
      
5,260
      
4,974
  
 Program closure expenses
    
1,138
      
-
      
-
  
 Medicare cap sequestration adjustment
    
447
      
228
      
-
  
 Early retirement expenses
    
-
      
4,491
      
-
  
 Net expenses related to litigation settlements
    
213
      
45
      
5
  
 Expenses related to securities litigation
    
-
      
-
      
37
  
 Acquisition expenses
    
-
      
-
      
172
  
Add(deduct) tax impacts:                        
 Tax impact of the above pre-tax adjustments (1)
    
(42,102
)
    
(7,540
)
    
(6,759
)
 Impact of tax reform
    
(8,302
)
    
-
      
-
  
 Excess tax benefits on stock compensation
    
(18,932
)
    
-
      
-
  
Adjusted net income  
$
141,054
    
$
121,487
    
$
121,667
  
                         
Diluted Earnings Per Share As Reported                        
 Net income
  
$
5.86
    
$
6.48
    
$
6.33
  
 Average number of shares outstanding
    
16,742
      
16,789
      
17,422
  
                         
Adjusted Diluted Earnings Per Share                        
 Net income
  
$
8.43
    
$
7.24
    
$
6.98
  
Average number of shares outstanding    
16,742
      
16,789
      
17,422
  
                         
(1) The tax impact of pre-tax adjustments was calculated using the applicable effective tax rate.
          
                         
The "Footnotes to Financial Statements" are integral parts of this financial information.




If a member of the Staff has any questions concerning this matter or needs additional information, he or she should contact David Williams, Executive Vice President and CFO, or the undersigned at (513) 762-6690.

 
  
Very truly yours,
 
  
 
 
  
 
 
  
CHEMED CORPORATION
 
  
 
 
  
 
 
 BY:
/s/ Michael D. Witzeman
 
  
 
 
  
Michael D. Witzeman
 
  
Vice President and Controller


cc:
Audit Committee of the Board of Directors
 
 
 
PricewaterhouseCoopers, LLP