Item 1: Business
GENERAL
Omega Financial Corporation ("Omega" or the "Company") is a Pennsylvania business corporation which is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended. Omega was formed, effective December 31, 1986, as a result of the merger of Heritage Financial Services Corporation ("Heritage") into Peoples National Bancorp, Inc. ("Peoples") and the change of Peoples' name to Omega.
Peoples was incorporated on June 24, 1982 and became an active bank holding company on December 7, 1982 through the acquisition of all of the outstanding shares of Peoples National Bank of Central Pennsylvania ("Peoples Bank"). Heritage was incorporated on June 21, 1982 and became an active bank holding company on December 31, 1982 through the acquisition of all of the outstanding shares of The Russell National Bank ("Russell Bank"). As a result of the merger of Heritage into Peoples, Omega became the holding company for both Peoples Bank and Russell Bank. On January 28, 1994, Penn Central Bancorp, Inc. ("Penn Central"), a bank holding company, merged into Omega. As a result of the merger of Penn Central into Omega, Omega became the holding company for Penn Central's five wholly-owned subsidiaries: Penn Central National Bank ("Penn Central Bank"), Hollidaysburg Trust Company ("Hollidaysburg"), the First National Bank of Saxton ("Saxton Bank"), Penn Central Bancorp Life Insurance Company and Penn Central Bancorp Investment Company. On February 18, 1995, Peoples Bank and Russell Bank merged to form Omega Bank N.A. ("Omega Bank") and on March 18, 1995, Saxton Bank merged into Penn Central Bank. On August 1, 1995, Omega acquired all of the outstanding shares of Montour Bank ("Montour"). On December 31, 1996, Montour was merged into Omega Bank. Unless the context otherwise requires, the "Company" refers to Omega Financial Corporation and its consolidated subsidiaries and the "Banks" refers to the Company's banking subsidiaries.
BANKING SERVICES
The Banks currently provide retail and commercial banking services through 41 offices in Central Pennsylvania. Omega Bank operates 25 full service banking offices in Centre, Clinton, Montour, Mifflin, and Juniata counties. Penn Central Bank operates six full service banking offices in Huntingdon and Bedford counties, and Hollidaysburg operates nine full service banking offices in Blair County.
The Banks provide a full range of banking services including an automatic teller machine network, checking accounts, NOW accounts, savings accounts, money market certificates, investment certificates, fixed rate certificates of deposit, club accounts, secured and unsecured commercial and consumer loans, construction and mortgage loans, safe deposit facilities, credit loans with overdraft checking protection and student loans. The Banks also provide a variety of trust services.
As of December 31, 1996, the Banks operated an aggregate of 37 automated teller machines (ATMs) at various locations. The Banks are members of the Money Access Center ("MAC") System and the "Plus System." The MAC System operates throughout Pennsylvania and the "Plus System" operates nationwide.
The Banks have a relatively stable deposit base with no major seasonal depositor or group of depositors. Most of their commercial customers are small and midsized businesses in Central Pennsylvania.
OTHER ACTIVITIES
On January 22, 1986, the Company formed Central Pennsylvania Life Insurance Co., an Arizona corporation, for the purpose of underwriting credit life insurance for the Company's bank subsidiaries.
On December 26, 1985, the Company formed Central Pennsylvania Investment Co., a Delaware corporation, for the purpose of holding and managing certain investments of the Company.
As a result of the merger of Penn Central into Omega on January 28, 1994, the Company also acquired Penn Central Bancorp Life Insurance Company and Penn Central Bancorp Investment Company.
Penn Central Bancorp Life Insurance Company was incorporated on December 13, 1985 under the laws of the State of Arizona and was authorized to underwrite credit life and disability insurance on credit obligations granted by the Banks. On December 31, 1994, Penn Central Bancorp Life Insurance Company was liquidated, with all existing business being transferred to Central Pennsylvania Life Insurance Company.
Penn Central Bancorp Investment Company was incorporated on July 24, 1986 under the laws of the State of Delaware for the purpose of acquiring high quality debt and equity investments. On August 4, 1994, Penn Central Bancorp Investment Company was merged into Central Pennsylvania Investment Company.
COMPETITION
The Banks service areas are characterized by intense competition for banking business among commercial banks, savings and loan associations, mutual savings banks and other financial institutions. The Banks actively compete with such banks and institutions for local retail and commercial accounts. The Banks also are subject to competition from other banks and financial institutions in Central Pennsylvania, as well as other financial institutions outside their service areas, for certain types of banking business. Many competitors have substantially greater financial resources and larger branch systems than those of the Banks.
In commercial transactions, the Banks' respective legal lending limits to a single borrower (approximately $8,918,000 for Omega Bank, $3,189,000 for Penn Central Bank, and $3,699,000 for Hollidaysburg Trust Company, as of December 31, 1996) enable them to compete effectively for the business of small and midsized businesses. However, this legal lending limit is considerably lower than that of various competing institutions and thus may act as a constraint on each Bank's effectiveness in competing for financings in excess of the limit.
In consumer transactions, the Banks believe that they are able to compete on a substantially equal basis with larger financial institutions because they offer competitive interest rates on savings and time accounts and loans.
In competing with other banks, savings and loan associations and other financial institutions, the Banks seek to provide personalized services through management's knowledge and awareness of their service areas, customers and borrowers. In management's opinion, larger institutions often do not provide sufficient attention to the retail depositors and the relatively small commercial borrowers that comprise the Banks' customer base.
Other competitors, including credit unions, consumer finance companies, insurance companies, and money market mutual funds, compete with certain lending and deposit gathering services offered by the Banks. The Banks also compete with insurance companies, investment counseling firms, mutual funds and other business firms and individuals in corporate and trust investment management services.
SUPERVISION AND REGULATION
The Company. The Company is registered as a "bank holding company" under the Bank Holding Company Act of 1956, as amended (the "BHC Act"), and is therefore subject to regulation by the Board of Governors of the Federal Reserve System (the "FRB").
Under the BHC Act, the Company is required to secure the prior approval of the FRB before it can merge or consolidate with any other bank holding company or acquire all or substantially all of the assets of any bank that is not already majority owned by it or acquire direct or indirect ownership, or control of, any voting shares of any bank that is not already majority owned by it, if after such acquisition it would directly or indirectly own or control more than 5% of the voting shares of such bank.
The Company is generally prohibited under the BHC Act from engaging in, or acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company engaged in nonbanking activities unless the FRB, by order or regulation, has found such activities to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. In making such determination, the FRB considers whether the performance of these activities by a bank holding company can reasonably be expected to produce benefits to the public which outweigh the possible adverse effects. The FRB has by regulation determined that certain activities are closely related to banking within the meaning of the BHC Act. These activities include, among others, operating a mortgage, finance, credit card or factoring company; performing certain data processing operations; providing investment and financial advice; acting as an insurance agent for certain types of credit-related insurance; leasing personal property on a full-payout, non-operating basis; and certain stock brokerage and investment advisory services.
Under the policy of the FRB with respect to bank holding company operations, a bank holding company is deemed to serve as a source of financial strength to its subsidiary depository institutions and to commit resources to support such institutions in circumstances where it might not do so absent such policy. Under the Federal Deposit Insurance Corporation Improvement Act of 1991 (the "1991 Act"), a bank holding company is required to guarantee that any "undercapitalized" (as such term is defined in the statute) insured depository institution subsidiary will comply with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal banking agency to the lesser of (I) an amount equal to 5% of the institution's total assets at the time the institution became undercapitalized, or (ii) the amount which is necessary (or would have been necessary) to bring the institution into compliance with all capital standards as of the time the institution failed to comply with such capital restoration plan.
Under the BHC Act, the Company is required to file periodic reports and other information of its operations with, and is subject to examination by, the FRB.
The Company is under the jurisdiction of the Securities and Exchange Commission and various state securities commissions for matters relating to the offer and sale of its securities and is subject to the Securities and Exchange Commission's rules and regulations relating to periodic reporting, reporting to shareholders, proxy solicitation and insider trading.
Omega Bank and Penn Central Bank. Omega Bank and Penn Central Bank, as national banks, are subject to the National Bank Act. Such banks are also subject to the supervision of, and are regularly examined by, the Office of the Comptroller of the Currency (the "OCC") and are required to furnish quarterly reports to the OCC. The approval of the OCC is required for the establishment of additional branch offices by any national bank, subject to applicable state law restrictions. Under current Pennsylvania law, banking institutions, such as these banking subsidiaries, may establish branches within any county in Pennsylvania, subject to the prior approval of the OCC.
Omega Bank and Penn Central Bank are members of the Federal Deposit Insurance Corporation (the "FDIC") and members of the Federal Reserve System and, therefore, are subject to additional regulation by these agencies. Some of the aspects of the lending and deposit business of these banks which are regulated by these agencies include personal lending, mortgage lending and reserve requirements.
Hollidaysburg Trust Company. Hollidaysburg Trust Company is a state chartered non-member banking institution subject to regulation by the Pennsylvania Department of Banking. As an insured bank under the Federal Deposit Insurance Act, Hollidaysburg is also regulated by the FDIC. Some of the aspects of the lending and deposit business of Hollidaysburg which are regulated include personal lending, mortgage lending, and reserve requirements. Representatives of the Pennsylvania Department of Banking and the FDIC regularly conduct examinations of Hollidaysburg, and Hollidaysburg must furnish quarterly reports to the Pennsylvania Department of Banking and the FDIC.
The operations of each of the Banks are also subject to numerous Federal, state and local laws and regulations which set forth specific restrictions and procedural requirements with respect to the extension of credit, credit practices, the disclosure of credit terms and discrimination in credit transactions. The deposits of the Banks are insured by the Bank Insurance Funds ("BIF") of the FDIC. The Banks also are subject to certain limitations on the amount of cash dividends that they can pay. See Note 18 of Notes to the Company's Consolidated Financial Statements, contained in Exhibit 13.1.
Capital Regulation. The Company and each of the Banks are subject to risk-based capital standards by which all bank holding companies and banks are evaluated in terms of capital adequacy. These standards relate a banking company's capital to the risk profile of its assets. The risk-based capital standards require that bank holding companies and banks must have Tier 1 capital of at least 4% and total capital, including Tier 1 capital, equal to at least 8% of its total risk-adjusted assets. Tier 1 capital includes common stockholders' equity and qualifying perpetual preferred stock together with related surpluses and retained earnings. The remaining portion of this capital standard, known as Tier 2 capital, may be comprised of limited life preferred stock, qualifying subordinated debt instruments, and the reserves for possible loan losses.
Additionally, banking organizations must maintain a minimum leverage ratio of 3% measured as the ratio of Tier 1 capital to adjusted average assets. This 3% leverage ratio is a minimum for the top-rated banking organizations without any supervisory, financial or operational weaknesses or deficiencies and other banking organizations are expected to maintain leverage capital ratios 100 to 200 basis points above the minimum depending on their financial condition.
See Note 21 of Notes to the Company's Consolidated Financial Statements, contained in the Company's Annual Report, for a table that provides a comparison of Omega's and each of the Bank's risk based capital ratios and the leverage ratio to minimum regulatory requirements.
Federal Banking Agencies have broad powers to take corrective action to resolve problems of insured depository institutions. The extent of these powers depends upon whether the institutions in question are "well capitalized," "adequately capitalized," "under capitalized", "significantly undercapitalized," or "critically undercapitalized."
The FDIC has issued a rule which sets the capital level for each of the five capital categories established in the 1991 Banking Law. Under the rule a bank is deemed to be "well capitalized" if the bank has a total risk-based capital ratio of 10% or greater, has a Tier 1 risk-based capital ratio of 6% or greater, has a leverage ratio of 5% or greater, and is not subject to any order of final capital directive by the FDIC to meet and maintain a specific capital level for any capital measure. A bank is deemed "adequately capitalized" if the bank has a total risk-based capital ratio of 8% or greater, a Tier-1 risk-based capital ratio of 4% or greater and a leverage capital ratio of 4% or greater (or 3% or greater for the most highly rated banks), and does not meet the definition of a "well capitalized" bank. A bank that has total risk-based capital, Tier-1 risk-based capital and leverage capital that is less than 8%, 4% and 4%, respectively, is deemed "undercapitalized." Under the regulation "significantly undercapitalized" banks are those with total risk-based capital, Tier-1 risk-based capital and leverage capital that is less than 5%, 3% and 3%, respectively. Finally, "critically undercapitalized" banks are defined as those banks which have a ratio of tangible equity to total assets that is equal to or less than 2%. A depository institution may be deemed to be in a capitalization category that is lower than is indicated by its actual capital position if it received an unsatisfactory examination rating.
All of the bank regulatory agencies have issued final rules that amend their capital guidelines for interest rate risk and requires such agencies to consider in their evaluation of a bank's capital adequacy the exposure of a bank's capital and economic value to changes in interest rates. These final rules do not establish an explicit supervisory threshold. The agencies intend, at a subsequent date, to incorporate explicit minimum requirements for interest rate risk into their risk based capital standards and have proposed a supervisory model to be used together with bank internal models to gather data and hopefully propose at a later date explicit minimum requirements.
RECENT LEGISLATION
On September 29, 1994, the President signed into law the "Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994" (the "Interstate Act"). Among other things, the Interstate Act permits bank holding companies to acquire banks in any state one year after enactment. Pennsylvania law was amended to authorize any out-of-state bank holding company to acquire control of any state or national bank located in Pennsylvania after it receives prior written approval from the Pennsylvania Department of Banking. Beginning June 1, 1997, a bank may merge with a bank in another state so long as both states have not opted out of interstate branching between the date of enactment of the Interstate Act and May 31, 1997. States may enact laws opting out of interstate branching before June 1, 1997, subject to certain conditions. States may also enact laws permitting interstate merger transactions before June 1, 1997 and host states may impose conditions on a branch resulting from an interstate merger transaction that occurs before June 1, 1997, if the conditions do not discriminate against out-of-state banks, are not preempted by Federal law and do not apply or require performance after May 31, 1997. Pennsylvania has enacted a law opting in immediately to interstate merger and interstate branching transactions. Interstate acquisitions and mergers would both be subject, in general, to certain concentration limits and state entry rules relating to the age of the bank.
Under the Interstate Act, the Federal Deposit Insurance Act is amended to permit the responsible Federal regulatory agency to approve the acquisition of a branch of an insured bank by an out-of-state bank or bank holding company without the acquisition of the entire bank or the establishment of a "de novo" branch only if the law of the state in which the branch is located permits out-of-state banks to acquire a branch of a bank without acquiring the bank or permits out-of-state banks to establish "de novo" branches. Pennsylvania has passed such a law.
The foregoing necessarily is a summary and general description of certain provisions of the Interstate Act and does not purport to be complete. Many of the provisions will be implemented through the adoption of regulations by the various Federal banking agencies. Moreover, many of the significant provisions of the legislation have not yet become effective. As of the date hereof, the Company is continuing to study the legislation and regulations relating to the legislation but cannot yet assess its impact on the Company.
NATIONAL MONETARY POLICY
In addition to being affected by general economic conditions, the earnings and growth of the Banks and, therefore, the earnings and growth of the Company, are affected by the policies of regulatory authorities, including the OCC, the FRB and the FDIC. An important function of the FRB is to regulate the money supply and credit conditions. Among the instruments used to implement these objectives are open market operations in U.S. government securities, setting the discount rate and changes in reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall growth and distribution of credit, bank loans, investments and deposits, and their use may also affect interest rates charged on loans or paid on deposits.
The monetary policies and regulations of the FRB have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. The affects of such policies upon the future businesses, earnings and growth of the Banks cannot be predicted.
EMPLOYEES
As of December 31, 1996, the Company had a total of 459 full-time employees and 101 part-time employees.
INVESTMENT CONSIDERATIONS
In analyzing whether to make or to continue an investment in the Company, investors should consider, among other factors, the following:
Economic Conditions and Related Uncertainties. Commercial banking is affected, directly and indirectly, by local, domestic, and international economic and political conditions, and by governmental monetary and fiscal policies. Conditions such as inflation, recession, unemployment, volatile interest rates, tight money supply, real estate values, international conflicts and other factors beyond the Company's control may adversely affect the potential profitability of the Company. Any future rises in interest rates, while increasing the income yield on the Company's earnings assets, may adversely affect loan demand and the cost of funds and, consequently, the profitability of the Company. Any future decreases in interest rates may adversely affect the Company's profitability because such decreases may reduce the amounts which the Company may earn on its assets. Economic downturns could result in the delinquency of outstanding loans. Management does not expect any one particular factor to materially affect the Company's results of operations. However, downtrends in several areas, including real estate, construction and consumer spending, could have an adverse impact on the Company's ability to remain profitable.
Effect of Interest Rates on the Banks and the Company. The operations of financial institutions such as the Company are dependent to a large degree on net interest income which is the difference between interest income from loans and investments and interest expense on deposits and borrowings. An institution's net interest income is significantly affected by market rates of interest which in turn are affected by prevailing economic conditions, by the fiscal and monetary policies of the federal government and by the policies of various regulatory agencies. At December 31, 1996, total interest earning assets maturing or repricing within one year exceeded total interest bearing liabilities maturing or repricing during the same time period by $2.380 million, representing a positive cumulative one year sensitivity ratio of 1.01. If interest rates fall, the Company would experience a decrease in net interest income. Like all financial institutions, the Company's balance sheet is affected by fluctuations in interest rates. Volatility in interest rates can also result in disintermediation, which is the flow of funds away from financial institutions into direct investments, such as US Government and corporate securities and other investment vehicles, including mutual funds, which, because of the absence of federal insurance premiums and reserve requirements, generally pay higher rates of return than financial institutions. See "Item 7: Management's Discussion of Financial Condition and Results of Operations."
Federal and State Government Regulations. The operations of the Company and the Banks are heavily regulated and will be affected by present and future legislation and by the policies established from time to time by various federal and state regulatory authorities. In particular, the monetary policies of the Federal Reserve Board have had a significant effect on the operating results of banks in the past, and are expected to continue to do so in the future. Among the instruments of monetary policy used by the Federal Reserve Board to implement its objectives are changes in the discount rate charged on bank borrowings and changes in the reserve requirements on bank deposits. It is not possible to predict what changes, if any, will be made to the monetary polices of the Federal Reserve Board or to existing federal and state legislation or the effect that such changes may have on the future business and earnings prospects of the Company.
During the past several years, significant legislative attention has been focused on the regulation and deregulation of the financial services industry. Non-bank financial institutions, such as securities brokerage firms, insurance companies and money market funds, have been permitted to engage in activities which compete directly with traditional bank business.
Competition. The Company faces strong competition from other banks, savings institutions and other financial institutions which have branch offices or otherwise operate in the Company's market area, as well as many other companies now offering a range of financial services. Many of these competitors have substantially greater financial resources and larger branch systems than the Company. In addition, many of the Banks' competitors have higher legal lending limits than do the Banks. Particularly intense competition exists for sources of funds including savings and retail time deposits and for loans, deposits and other services that the Banks offer. See "Item 1: BUSINESS - Competition."
Allowance for Loan Losses. The Company has established an allowance for loan losses which management believes to be adequate to offset potential loses on the Company's existing loans. However, there is no precise method of predicting loan losses. There can be no assurance that any future declines in real estate market conditions, general economic conditions or changes in regulatory policies will not require the Company to increase its allowance for loan loses.
Dividends. While the Board of Directors expects to continue its policy of regular quarterly dividend payments, this dividend policy will be reviewed periodically in light of future earnings, regulatory restrictions and other considerations. No assurance can be given, therefore, that cash dividends on common stock will be paid in the future. See "Item 5: Market for the Registrant's Common Stock and Related Shareholder Matters."
Market for Common Stock. Although the Company's Common Stock is listed on the NASDAQ National Market System, there has been only limited trading in the Common Stock. There can be no assurance that a regular and active market for the Common Stock will develop in the foreseeable future. See "Item 5: Market for the Registrant's Common Stock and Related Stockholder Matters." Investors in the shares of Common Stock must, therefore, be prepared to assume the risk of their investment for an indefinite period of time.
"Anti-Takeover" and "Anti-Greenmail" Provisions and Management Implications. The Articles of the Company presently contain certain provisions which may be deemed to be "anti-takeover" and "anti-greenmail" in nature in that such provisions may deter, discourage or make more difficult the assumption of control of the Company by another corporation or person through a tender offer, merger, proxy contest or similar transaction or series of transactions. The overall effects of the "anti-takeover" and "anti-greenmail" provisions may be to discourage, make more costly or more difficult, or prevent a future takeover offer, prevent shareholders from receiving a premium for their securities in a takeover offer, and enhance the possibility that a future bidder for control of the Company will be required to act through arms-length negotiation with the Company's Board of Directors. Copies of the Articles of the Company are on file with the Securities and Exchange Commission and the Pennsylvania Secretary of State.
Stock Not an Insured Deposit. Investments in the shares of the Company's Common Stock are not deposits insured against loss by the FDIC or any other entity.
Bespeaks Caution Doctrine. Investors should be aware that the United States Court of Appeals for the Third Circuit, in a case entitled In Re: Donald J. Trump Casino Securities Litigation - Taj Mahal Litigation (No. 92-5350, filed October 14, 1993), adopted a legal doctrine entitled the "Bespeaks Caution Doctrine" which may prevent holders of the Company's Common Stock from recovering from the Company based upon material misstatements and omissions contained in the Annual Report on Form 10-K and the Company's other disclosure documents to the extent that this Form 10-K or such other documents contained cautionary statements to apprise investors of the risks of the Company's securities. The foregoing investment considerations may have the effect of bringing this Form 10-K, as well as other Company disclosure documents, within the purview of the Bespeaks Caution Doctrine.
Item 2:

Item 2: Properties
The Company's corporation headquarters are located at 366 Walker Drive, State College, Pennsylvania. This building is owned by the Company, subject to a mortgage in the original principal amount of $5,000,000 held by Mid-State Bank and Trust Co. The Company occupies the first two floors and a portion of the third floor of this building and is leasing office space on the third floor. In addition, the Banks operate branch offices and automated teller machines, indicated by (ATM), at the following locations which are owned by the Company.
Omega Bank
117 South Allen Street, State College, PA (Main Office) (ATM) 222 South Allen Street, State College, PA 1480 East College Ave., State College, PA (ATM) 137 North Allegheny Street, Bellefonte, PA (ATM) Fourth and Olive Streets, Snow Shoe, PA Main Street, Rebersburg, PA Main Street, Millheim, PA 400 East Boal Avenue, Boalsburg, PA (ATM) 100 High Street, Port Matilda, PA (ATM) Main and Mill Streets, Loganton, PA 201 Mill Street, Milesburg, PA 32 East Market St., Lewistown, PA (Main Office) (ATM) 1250 West Fourth St., Lewistown, PA 111 North Logan Blvd., Burnham, PA Main Street, Mifflin, PA On the Square, Thompsontown, PA 10 Carriage House Lane, Reedsville, PA (ATM) East Main Street, Allensville, PA Route 522 North, Lewistown, PA (ATM only) 1519 Bloom Road, Danville, PA
Hollidaysburg Trust Company
218 - 224 Allegheny Street, Hollidaysburg, PA (Main Office) 113 West Allegheny Street, Martinsburg, PA (ATM) 215 High Street, Williamsburg, PA 1567 East Pleasant Valley Boulevard, Altoona, PA 430 East 25th Avenue, Altoona, PA (ATM)
Penn Central National Bank
431 Penn Street, Huntingdon, PA (Main Office) 16-20 East Shirley Street, Mount Union, PA Main Street, Alexandria, PA Route 26, James Creek, PA 911 Church Street, Saxton, PA 708 Main Street, Saxton, PA (ATM only)
The Banks operate branch offices and ATMs at the following locations which are leased by the Company. The leases for these properties have expiration dates ranging from 1997 to 2011.
Branches
Westerly Parkway, State College, PA (ATM) 1811 South Atherton Street, State College, PA (ATM) building owned, land leased. 1667 North Atherton Street, State College, PA (ATM) building owned, land leased. Routes 45 and 144, Centre Hall, PA 366 East College Avenue, State College, PA (ATM) 520 Third Avenue, Duncansville, PA (ATM) 3014 Pleasant Valley Boulevard, Altoona, PA (ATM) 300 Spring Plaza, Roaring Spring, PA (ATM) 5812 Sixth Avenue, Altoona, PA (ATM) building owned, land leased.
ATMs Weis Shopping Plaza, Mifflintown, PA Penn State University Campus, State College, PA (2) 414 East College Avenue, State College, PA 2844 West College Avenue, State College, PA
110 1/2 Burrowes Street, State College, PA Centre Community Hospital, 1800 East Park Avenue, State College, PA 116 W. College Ave., State College, PA 135 S. Pugh Street, State College, PA I-80 Exit 22 and Rt 144, Snow Shoe, PA Sheetz Store, 1671 East Pleasant Valley Boulevard, Altoona, PA Sheetz Store, 1100 Blair Street, Hollidaysburg, PA Martin General Store, Route 22, Alexandria, PA JC Blair Memorial Hospital, Warm Springs Avenue, Huntingdon, PA Ames Store, Route 22 Plaza, Huntingdon, PA Sheetz Store, 4th Street and Rt. 22, Huntingdon, PA Sheetz Store, Jefferson Street, Mount Union, PA Sheetz Store, 14th and Moore Streets, Huntingdon, PA Martin General Store, 300 High Street, Williamsburg, PA
Item 3:

Item 3: Legal Proceedings
The Company and the Banks are involved in various legal proceedings incidental to their business. Neither the Company, the Banks nor any of their properties is subject to any material legal proceedings, nor are any such proceedings known to be contemplated by any governmental authority.
Item 4:

Item 4: Submission of Matters to a Vote of Security Holders
None
Item 4.1: Executive Officers of the Registrant
Set forth below is certain information concerning the executive officers of the Company who are not also directors.
On March 18, 1995, Omega's banking subsidiaries, Peoples National Bank of Central Pennsylvania ("Peoples Bank") and The Russell National Bank ("Russell Bank"), merged to form Omega Bank. Any reference below to service with Omega Bank includes service with Omega Bank's predecessors prior to such merger.
PART II
Item 5:

Item 5: Market for the Registrant's Common Stock and Related Stockholder Matters
Incorporated by reference from the section entitled "Common Stock Market Prices and Dividends" in the Company's Annual Report to Shareholders for the year ended December 31, 1996. As of February 26, 1997, the number of shareholders of the Company's common stock was 2,877.
The company did not sell any equity securities during 1996 which were not registered under the Securities Act.
On March 25, 1997 the Company declared a 3 for 2 stock split to be issued in the form of a stock dividend for shareholders of record April 18, 1997, to be distributed on April 30, 1997.
Item 6:

Item 6: Selected Financial Data
Incorporated by reference from the section entitled "Selected Financial Data" in the Company's Annual Report to Shareholders for the year ended December 31, 1996.
Item 7:

Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations
Incorporated by reference from the sections entitled "Management's Discussion and Analysis - Results of Operations" and " - Financial Condition" in the Company's Annual Report to Shareholders for the year ended December 31, 1996.
Item 8:

Item 8: Financial Statements and Supplementary Data
Incorporated by reference from the Company's Consolidated Financial Statements and the Notes to Consolidated Financial Statements thereto included in the Company's Annual Report to Shareholders for the year ended December 31, 1996.
Item 9:

Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
PART III
Item 10:

Item 10: Directors and Executive Officers of the Registrant
Incorporated by reference from the Company's Proxy Statement relating to the 1997 Annual Meeting of Shareholders to be filed pursuant to General Instruction G(3) to Form 10-K, except information concerning certain Executive Officers of the Company which is set forth in Item 4.1 hereof.
Item 11:

Item 11: Executive Compensation
Incorporated by reference from the Company's Proxy Statement relating to the 1997 Annual Meeting of Shareholders to be filed pursuant to General Instruction G(3) to Form 10-K.
Item 12:

Item 12: Security Ownership of Certain Beneficial Owners and Management
Incorporated by reference from the Company's Proxy Statement relating to the 1997 Annual Meeting of Shareholders to be filed pursuant to General Instruction G(3) to Form 10-K.
Item 13:

Item 13: Certain Relationships and Related Transactions
Incorporated by reference from the Company's Proxy Statement relating to the 1997 Annual Meeting of Shareholders to be filed pursuant to General Instruction G(3) to Form 10-K.
PART IV
Item 14:

Item 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Documents filed as part of this report:
(1) Financial Statements. The following consolidated financial statements and the notes thereto of the Company, which are included in the Company's Annual Report to Shareholders for the year ended December 31, 1996, and the report of independent public accountants which is also included in such Annual Report, are incorporated herein by reference into Item 8 of this Report:
Consolidated Balance Sheets - December 31, 1996 and 1995
Consolidated Statements of Income Years ended December 31, 1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity - Years ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows Years ended December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Report of Independent Certified Public Accountants
(2) Financial Statement Schedules. Financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
Exhibits filed pursuant to Item 601 of Regulation S-K
(b) Reports on Form 8-K. None.
- ----------------- * Indicates management contract or compensatory plan, contract or arrangement.
(1) Incorporated by reference from Omega's (formerly Peoples') Annual Report on Form 10-K for the year ended December 31, 1986. (2) Incorporated by reference from Omega's (formerly Peoples' Registration Statement on Form S-4 (File No. 33-9045). (3) Incorporated by reference from Omega's Annual Report on Form 10-K for the year ended December 31, 1987. (4) Incorporated by reference from Omega's Annual Report on Form 10-K for the year ended December 31, 1988. (5) Incorporated by reference from Omega's Annual Report on Form 10-K for the year ended December 31, 1989. (6) Incorporated by reference from Omega's Quarterly Report on Form 10-Q for the period ended June 30, 1990. (7) Incorporated by reference from Omega's Annual Report on Form 10-K for the year ended December 31, 1990. (8) Incorporated by reference from Omega's Annual Report on Form 10-K for the year ended December 31, 1992. (9) Incorporated by reference from Omega's Registration Statement on Form S-4 (File No. 33-71070). (10) Incorporated by reference from Omega's Annual Report on Form 10-K for the year ended December 31, 1993.
(11) Incorporated by reference from Omega's Registration Statement on Form S-8 (Registration No. 33-82214). (12) Incorporated by reference from Omega's Registration Statement on Form S-4 (Registration No. 33-91472). (13) Incorporated by reference from Omega's Annual Report on Form 10-K for the year ended December 31, 1994. (14) Incorporated by reference from Omega's Annual Report on Form 10-K for the year ended December 31, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
OMEGA FINANCIAL CORPORATION
By: _________________________________ David B. Lee, Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


ITEM 1. BUSINESS
GENERAL
Chemed Corporation was incorporated in Delaware in 1970 as a subsidiary of W. R. Grace & Co. and succeeded to the business of W. R. Grace & Co.'s Specialty Products Group as of April 30, 1971 and remained a subsidiary of W. R. Grace & Co. until March 10, 1982. As used herein, "Company" refers to Chemed Corporation, "Chemed" refers to Chemed Corporation and its subsidiaries and "Grace" refers to W. R. Grace & Co. and its subsidiaries.
On March 10, 1982, the Company transferred to Dearborn Chemical Company, a wholly owned subsidiary of the Company, the business and assets of the Company's Dearborn Group, including the stock of certain subsidiaries within the Dearborn Group, plus $185 million in cash, and Dearborn Chemical Company assumed the Dearborn Group's liabilities. Thereafter, on March 10, 1982 the Company transferred all of the stock of Dearborn Chemical Company to Grace in exchange for 16,740,802 shares of the capital stock of the Company owned by Grace with the result that Grace no longer has any ownership interest in the Company.
On December 31, 1986, the Company completed the sale of substantially all of the business and assets of Vestal Laboratories, Inc., a wholly owned subsidiary ("Vestal"). The Company received cash payments aggregating approximately $67.4 million over the four-year period following the closing, the substantial portion of which was received on December 31, 1986.
On April 2, 1991, the Company completed the sale of DuBois Chemicals, Inc. ("DuBois"), a wholly owned subsidiary, to the Diversey Corporation ("Diversey"), a subsidiary of The Molson Companies Ltd. Under the terms of the sale, Diversey agreed to pay the Company net cash payments aggregating $223,386,000, including deferred payments aggregating $32,432,000. As of December 31, 1996, the Company had received cash payments totaling $221,738,000.
On December 21, 1992, the Company acquired The Veratex Corporation and related businesses ("Veratex Group") from Omnicare, Inc., a publicly traded company in which Chemed currently maintains a 1 percent ownership interest. The purchase price was $62,120,000 in cash paid at closing, plus a post-closing payment of $1,514,000 (paid in April 1993) based on the net assets of Veratex.
Effective January 1, 1994, the Company acquired all the capital stock of Patient Care, Inc. ("Patient Care"), for cash payments aggregating $20,582,000, including deferred payments with a present value of $6,582,000, plus 17,500 shares of the Company's Capital Stock. An additional cash payment of $1,000,000 was made on March 31, 1996 and another payment of $1,000,000 will be made on March 31, 1997.
In July 1995, the Company's Omnia Group (formerly Veratex Group) completed the sale of the business and assets of its Veratex Retail division to Henry Schein, Inc. ("HSI") for $10 million in cash plus a $4.1 million note for which payment was received in December 1995.
Effective September 17, 1996, the Company completed a merger of a subsidiary of the Company, Chemed Acquisition Corp., and Roto-Rooter, Inc. pursuant to a Tender Offer
commenced on August 8, 1996 to acquire any and all of the outstanding shares of Common Stock of Roto-Rooter, Inc. for $41.00 per share in cash.
During 1996, the Company conducted its business operations in four segments: National Sanitary Supply Company ("National Sanitary Supply"), Roto-Rooter Group ("Roto- Rooter"), Omnia Group ("Omnia") and Patient Care.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The required segment and geographic data for the Company's continuing operations (as described below) for the three years ended December 31, 1994, 1995 and 1996, are shown in the "Sales and Profit Statistics by Business Segment" and the "Additional Segment Data" on pages 34, 35 and 38 of the 1996 Annual Report to Stockholders and are incorporated herein by reference.
DESCRIPTION OF BUSINESS BY SEGMENT
The information called for by this item is included within Note 1 of the Notes to Financial Statements appearing on page 25 of the 1996 Annual Report to Stockholders and is incorporated herein by reference.
PRODUCT AND MARKET DEVELOPMENT
Each segment of Chemed's business engages in a continuing program for the development and marketing of new products. While new product and new market development are important factors for the growth of each active segment of Chemed's business, Chemed does not expect that any new product or marketing effort, including those in the development stage, will require the investment of a material amount of Chemed's assets.
RAW MATERIALS
The principal raw materials needed for each active segment of Chemed's United States manufacturing operations are purchased from United States sources. No segment of Chemed experienced any material raw material shortages during 1996, although such shortages may occur in the future. Products manufactured and sold by Chemed's active business segments generally may be reformulated to avoid the adverse impact of a specific raw material shortage.
PATENTS, SERVICE MARKS AND LICENSES
The Roto-Rooter(R) trademark and service mark have been used and advertised since 1935 by Roto-Rooter Corporation, a wholly owned subsidiary of Roto-Rooter, Inc., a 100 percent-owned subsidiary of the Company. The Roto-Rooter(R) marks are among the most highly recognized trademarks and service marks in the United States. Chemed considers the Roto-Rooter(R) marks to be a valuable asset and a significant factor in the marketing of Roto-Rooter's franchises, products and services and the products and services provided by its franchisees.
INVENTORIES
Chemed maintains local warehousing and delivery arrangements throughout the United States to provide prompt delivery service to its customers. Inventories on hand for each active segment are not considered high in relation to industry standards for the
business involved. In general, terms and conditions of sale for each segment follow usual and customary industry standards.
COMPETITION NATIONAL SANITARY SUPPLY
Chemed considers National Sanitary Supply (with its subsidiaries Century Papers, Inc. and NSS Development) to be a leader in the janitorial maintenance supply distribution market in the western, southwestern and midwestern United States (Arizona, California, Colorado, Indiana, Louisiana, Michigan, Mississippi, Missouri, Nevada, New Mexico, Ohio, Oklahoma, Oregon, Tennessee, Texas, Utah and Washington). This subsidiary markets a broad line of cleaning chemicals, paper goods, plastic products, waste handling products and other janitorial supplies to a wide range of customers. The market for sanitary maintenance and paper supplies is highly competitive and entry is relatively easy. Competition is, however, highly fragmented in most geographic markets. In the United States, approximately 9,000 firms compete in the sanitary maintenance supply distribution business on a local or regional basis. The principal competitive factors in this market are the level of service provided; range of products offered; speed, efficiency and reliability of delivery; and price. There is a number of local janitorial supply companies that compete with National Sanitary Supply in its market. The principal competitive factors in the janitorial supply market in order of importance are breadth of product line, prompt delivery and price. While remaining price competitive, National Sanitary Supply maintains a product line that is generally broader than its competitors and has earned an excellent reputation for prompt delivery and customer service.
Federal, state and local governmental agencies accounted for approximately 8 percent of National Sanitary Supply's total sales for 1996. These sales are attributable to over 1,200 different agencies whose purchasing decisions are made separately. While it is believed that the loss of the sales to these agencies in the aggregate would be material, the decentralized purchasing decisions make the loss of a significant number of such accounts at any given time unlikely. Other than sales to the aforementioned entities, in 1996 no one customer accounted for more than 4 percent of net sales.
ROTO-ROOTER
All aspects of the sewer, drain, and pipe cleaning and appliance and plumbing repair businesses are highly competitive. Competition is, however, fragmented in most markets with local and regional firms providing the primary competition. The principal methods of competition are advertising, range of services provided, speed and quality of customer service, service guarantees, and pricing.
No individual customer or market group is critical to the total sales of this segment.
OMNIA
In distributing medical and dental products, Omnia competes with manufacturers and distributors of disposable paper, cotton and gauze products. Omnia competes in this market on the basis of customer service, product quality and price. At times, its pricing policy has been subject to considerable competitive pressures, limiting the ability to implement price increases.
Omnia has contracts with several customers, the loss of any one or more of which could have a material adverse effect on this segment.
PATIENT CARE
The home healthcare services industry and, in particular, the nursing and personal care segment is highly competitive. Patient Care competes with numerous local, regional and national home healthcare services companies. Patient Care competes on the basis of quality, cost-effectiveness and its ability to service its referral base quickly throughout its regional markets.
Patient Care has contracts with several customers, the loss of any one or more of which could have a material adverse effect on this segment.
RESEARCH AND DEVELOPMENT
Chemed engages in a continuous program directed toward the development of new products and processes, the improvement of existing products and processes, and the development of new and different uses of existing products. The research and development expenditures from continuing operations have not been nor are they expected to be material.
ENVIRONMENTAL MATTERS
Chemed's operations are subject to various federal, state and local laws and regulations regarding the environmental aspects of the manufacture and distribution of chemical products. Chemed, to the best of its knowledge, is currently in compliance in all material respects with the environmental laws and regulations affecting its operations. Such environmental laws, regulations and enforcement proceedings have not required Chemed to make material increases in or modifications to its capital expenditures and they have not had a material adverse effect on sales or net income.
In connection with the sale of DuBois to the Diversey Corporation, the Company contractually assumed for a period of ten years the estimated liability for potential environmental cleanup and related costs arising from the sale of DuBois up to a maximum of $25,500,000. Based upon an updated assessment of the Company's environmental-related liability by the Company's environmental adviser, the Company has accrued a total of $10,835,000 for this potential liability, of which $3,430,000 has been paid to Diversey Corporation through December 31, 1996. Prior to the sale of DuBois, DuBois had been designated as a Potentially Responsible Party ("PRP") at fourteen Superfund sites by the U.S. Environmental Protection Agency ("USEPA"). With respect to all of these sites, the Company has been unable to locate any records indicating it disposed of waste of any kind at such sites. Nevertheless, it settled claims at five such sites at minimal cost. In addition, because there was a number of other financially responsible companies designated as PRPs relative to these sites, management believes that it is unlikely that such actions will have a material effect on the Company's financial condition or results of operations. With respect to one of these sites, the Company's involvement is based on the location of one of its manufacturing plants. Currently, the USEPA and the state governmental agency are attempting to resolve jurisdictional issues, and action against PRPs is not proceeding.
Capital expenditures for the purposes of complying with environmental laws and regulations during 1997 and 1998 with respect to continuing operations are not expected
to be material in amount; there can be no assurance, however, that presently unforeseen legislative or enforcement actions will not require additional expenditures.
EMPLOYEES
On December 31, 1996, Chemed had a total of 7,886 employees; 7,808 were located in the United States and 78 were in Canada.
ITEM 2.

ITEM 2. PROPERTIES
Chemed has plants and offices in various locations in the United States and Canada. The major facilities operated by Chemed are listed below by industry segment. All "owned" property is held in fee and is not subject to any major encumbrance. Except as otherwise shown, the leases have terms ranging from one year to ten years. Management does not foresee any difficulty in renewing or replacing the remainder of its current leases. Chemed considers all of its major operating properties to be maintained in good operating condition and to be generally adequate for present and anticipated needs.
(10) Excludes 28,000 square feet of office space that housed the Veratex Retail operation which was sold in July 1995. The lease on these facilities expires in 1997. Approximately 4,000 square feet of this space have been sublet to an outside third party and the remainder is vacant as of December 31, 1996.
(11) Excludes 36,000 square feet of office, manufacturing and warehouse facilities in Pomona, California that are leased to an outside third party.
(12) Comprising locations in Princeton, Ridgewood, Montclair, Orange, Providence, Westfield and West Orange, New Jersey.
(13) Comprising locations in Greenwich, Madison and Newington, Connecticut.
(14) Comprising locations in Brooklyn, Manhattan, Queens, Bronx and Staten Island, New York.
(15) Excludes 92,000 square feet in current Cincinnati, Ohio office facilities that are sublet to outside parties - portions of this space may revert to the Company beginning in the year 2000. Includes 38,000 square feet leased for the Company's corporate office facilities.
ITEM 3.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
EXECUTIVE OFFICERS OF THE COMPANY
(6) 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.
Each executive officer holds office until the annual election at the next annual organizational meeting of the Board of Directors of the Company which is scheduled to be held on May 19, 1997.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Capital Stock (par value $1 per share) is traded on the New York Stock Exchange under the symbol CHE. The range of the high and low sale prices on the New York Stock Exchange and dividends paid per share for each quarter of 1995 and 1996 are set forth below.
Future dividends are necessarily dependent upon the Company's earnings and financial condition, compliance with certain debt covenants and other factors not presently determinable.
As of March 19, 1997, there were approximately 5,633 stockholders of record of the Company's Capital Stock. This number only includes stockholders of record and does not include stockholders with shares beneficially held for them in nominee name or within clearinghouse positions of brokers, banks or other institutions.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA.
The information called for by this Item for the five years ended December 31, 1996 is set forth on pages 36 and 37 of the 1996 Annual Report to Stockholders and is incorporated herein by reference.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The information called for by this Item is set forth on pages 40 through 43 of the 1996 Annual Report to Stockholders and is incorporated herein by reference.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements, together with the report thereon of Price Waterhouse dated February 4, 1997, appearing on pages 19 through 35 and 38 of the 1996 Annual Report to Stockholders, along with the Supplementary Data (Unaudited Summary of Quarterly Results) appearing on page 39, are incorporated herein by reference.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None. PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Except for information relating to Mr. Cunningham, the additional information required under this Item with respect to the directors and executive officers is set forth in the Company's 1997 Proxy Statement and in Part I hereof under the caption "Executive Officers of the Registrant" and is incorporated herein by reference. Mr. Cunningham, who is 52 years old, is a Senior Chemical Adviser with Schroder Wertheim & Co. Incorporated, New York, New York (an investment banking, asset management and securities firm) and has held this position since March 1992. Previously, he was Managing Director of Furman Selz Incorporated, New York, New York (an institutional investment company) and held this position from October 1990 to March 1992. Mr. Cunningham is a director of National Sanitary Supply Company.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION.
Information required under this Item is set forth in the Company's 1997 Proxy Statement, which is incorporated herein by reference.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required under this Item is set forth in the Company's 1997 Proxy Statement, which is incorporated herein by reference.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required under this Item is set forth in the Company's 1997 Proxy Statement, which is incorporated herein by reference.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K.
EXHIBITS
3.1 Certificate of Incorporation of Chemed Corporation.*
3.2 By-Laws of Chemed Corporation.*
10.1 Agreement and Plan of Merger among Diversey U.S. Holdings, Inc., D. C. Acquisition Inc., Chemed Corporation and DuBois Chemicals, Inc., dated as of February 25, 1991.*
10.2 Stock Purchase Agreement between Omnicare, Inc. and Chemed Corporation, dated as of August 5, 1992.*
10.4 1981 Stock Incentive Plan, as amended through May 20, 1991.*,**
10.5 1983 Incentive Stock Option Plan, as amended through May 20, 1991.*,**
10.6 1986 Stock Incentive Plan, as amended through May 20, 1991.*,**
10.7 1988 Stock Incentive Plan, as amended through May 20, 1991.*,**
10.8 1993 Stock Incentive Plan.*,**
10.9 Excess Benefits Plan, as amended effective November 1, 1985.*,**
10.10 Non-Employee Directors' Deferred Compensation Plan.*,**
10.11 Directors Emeriti Plan.*,**
10.12 Employment Contracts with Executives.*,**
10.13 Amendment No. 8 to Employment Contracts with Executives.**
10.14 1995 Stock Incentive Plan.*,**
10.15 Split Dollar Agreement with Executives.*,**
10.16 Split Dollar Agreement with Edward L. Hutton.*,**
10.17 Split Dollar Agreement with Paul C. Voet.*,**
10.18 Amendment No. 7 to Employment Agreement with Edward L. Hutton.**
11. Statement re: Computation of Earnings Per Common Share.
13. 1996 Annual Report to Stockholders.
21. Subsidiaries of Chemed Corporation.
23. Consent of Independent Accountants.
24. Powers of Attorney.
27. Financial Data Schedule +
* 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.
+ Not filed herewith.
FINANCIAL STATEMENT SCHEDULE
See Index to Financial Statements and Financial Statement Schedule on page S-1.
REPORTS ON FORM 8-K
A Form 8-K was filed October 2, 1996 announcing Chemed Corporation's acquisition of all the outstanding shares of Common Stock of Roto-Rooter, Inc. for $41.00 per share in cash.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CHEMED CORPORATION
March 27, 1997 By /s/ Edward L. Hutton -------------------- Edward L. Hutton Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
1994, 1995 AND 1996
- ----------------
The consolidated financial statements of Chemed Corporation listed above, appearing in the 1996 Annual Report to Stockholders, are incorporated herein by reference. The Financial Statement Schedule should be read in conjunction with the consolidated financial statements listed above. Schedules not included have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto as listed above.
S-1
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Chemed Corporation
Our audits of the consolidated financial statements referred to in our report dated February 4, 1997 appearing on page 19 of the 1996 Annual Report to Stockholders of Chemed Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in Item 14 of this Form 10-K. In our opinion, the Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
/s/ Price Waterhouse LLP - ------------------------ PRICE WATERHOUSE LLP
Cincinnati, Ohio February 4, 1997
S-2
SCHEDULE II
CHEMED CORPORATION AND SUBSIDIARY COMPANIES VALUATION AND QUALIFYING ACCOUNTS (a) (in thousands) Dr/(Cr)
S-3
(a) Amounts are presented on a continuing operations basis.
(b) Deductions include accounts considered uncollectible or written off, payments, companies divested, etc.
(c) Classified in consolidated balance sheet as a reduction of accounts receivable.
(d) Classified in consolidated balance sheet as a reduction of other assets.
S-4
INDEX TO EXHIBITS