| **UNITED STATES**                                                                                                                                                                                                   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **SECURITIES AND EXCHANGE COMMISSION**                                                                                                                                                                              |
| **Washington, D.C. 20549**                                                                                                                                                                                          |
|                                                                                                                                                                                                                     |
| **FORM 10-K/A**

**(Amendment No. 1)**                                                                                                                                                                              |
|                                                                                                                                                                                                                     |
| **x**                  **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES**                                |
| **EXCHANGE ACT OF 1934**                                                                                                                                                                                            |
| **For the fiscal year ended December 31, 2008**                                                                                                                                                                     |
| **OR**                                                                                                                                                                                                              |
| **o**                   **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
| For the transition period from ___________to____________                                                                                                                                                            |
| Commission file number 001-09848                                                                                                                                                                                    |
|                                                                                                                                                                                                                     |
| **ALMOST FAMILY, INC.**                                                                                                                                                                                             |
| **(Exact name of Registrant as specified in its charter)**                                                                                                                                                          |
|                                                                                                                                                                                                                     |
| **Delaware**                                                                                                                                                                                                        | **06-1153720** |
| (State or other jurisdiction of incorporation or organization)                                                                                                                                                      | (I.R.S. Employer Identification Number) |
|                                                                                                                                                                                                                |   |
| **9510 Ormsby Station Road, Suite 300, Louisville, Kentucky 40223**                                                                                                                                                 |
| (Address of principal executive offices)                                                                                                                                                                            |
|                                                                                                                                                                                                                |
| **(502) 891-1000**                                                                                                                                                                                                  |
| (Registrant’s telephone number, including area code)                                                                                                                                                          |
|                                                                                                                                                                                                                |
| **Not Applicable**                                                                                                                                                                                                  |
| (Former name, former address and former fiscal year, if changed since last report)                                                                                                                                  |
|                                                                                                                                                                                                                |
| Securities registered pursuant to Section 12(b) of the Act                                                                                                                                                          |
| Title of Each Class                                                                                                                                                                                                 |
| Common Stock, par value $.10 per share, with Preferred Stock Purchase Rights                                                                                                                                        |
|                                                                                                                                                                                                                |
| Name of Each Exchange on Which Registered:                                                                                                                                                                          |
| NASDAQ Global Market                                                                                                                                                                                                |
|                                                                                                                                                                                                                |
| Securities registered pursuant to Section 12(g) of the Act: None                                                                                                                                                    |

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes oNo x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes oNo x

 

1

 

 

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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes xNo        o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer oAccelerated filer x

Non-accelerated filer oSmaller reporting company o

 

(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes oNo x

 

As of June 30, 2008, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $189,198,033 based on the last sale price of a share of the common stock as of June 30, 2008 ($26.60), as reported by the NASDAQ Global Market. 

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

| ____________Class______________ | Outstanding at March 6, 2009 |
|---------------------------------|------------------------------|

| Common Stock, $.10 par value per share | 8,175,473 Shares |
|----------------------------------------|------------------|

 

DOCUMENTS INCORPORATED BY REFERENCE

 

None.

 

 

2

 

 

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**TABLE OF CONTENTS**

 

| **PART III** | **4** |
|--------------|-------|

|   | **ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE** | **4** |
|--------|---------------------------------------------------------------------|-------|

|   | **ITEM 11 EXECUTIVE COMPENSATION** | **7** |
|--------|------------------------------------|-------|

|   | **ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS** | **17** |
|--------|-------------------------------------------------------------------------------------------------------------|--------|

|   | **Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE** | **20** |
|--------|----------------------------------------------------------------------------------------|--------|

|   | **Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES** | **20** |
|--------|-----------------------------------------------------|--------|

|   | **Item 15. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES** | **21** |
|--------|----------------------------------------------------------|--------|

 

 

3

 

 

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**EXPLANATORY NOTE**

 

This Amendment No. 1 on Form 10-K/A (this “Amendment”) amends Almost Family, Inc.’s (the “Company”) Annual Report on Form 10-K for the fiscal year ended December 31, 2008, originally filed on March 6, 2009 (the “Original Filing”). We are filing this Amendment to include the information required by Part III and not included in the Original Filing as        we will not file our definitive proxy statement within 120 days of the end of the Company’s fiscal year ended December 31, 2008. Solely for this reason, we are filing certifications required under Section 302 of the Sarbanes-Oxley Act of 2002. Except as set forth above, this Amendment does not alter or restate any of the information set forth in the Original Filing. 

 

**PART III**

 

**ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**

 

**Executive Officers**

The following table sets forth certain information with respect to the Company’s executive officers.

 

| **Name** | **Age** | **Position with the Company** |
|----------|---------|-------------------------------|

| William B. Yarmuth (1) | 57 | Chairman of the Board, President |
|------------------------|----|----------------------------------|

|   | and Chief Executive Officer |
|--------|-----------------------------|

| C. Steven Guenthner (2) | 48 | Senior Vice President and |
|-------------------------|----|---------------------------|

|   | Chief Financial Officer |
|--------|-------------------------|

| P. Todd Lyles (3) | 47 | Senior Vice President – Administration |
|-------------------|----|----------------------------------------------|

| Anne T. Liechty (4) | 56 | Senior Vice President – VN Operations |
|---------------------|----|---------------------------------------------|

| Phyllis D. Montville (5) | 60 | Senior Vice President – VN Operations |
|--------------------------|----|---------------------------------------------|

| Cathy S. Newhouse (6) | 47 | Senior Vice President – Sales and Clinical |
|-----------------------|----|--------------------------------------------------|

|   | Programs |
|--------|----------|

| John B. Walker (7) | 51 | Vice President and Chief Accounting |
|--------------------|----|-------------------------------------|

Officer

 

Executive officers of the Company are elected by the Board of Directors for one year and serve at the pleasure of the Board of Directors with the exception of William B. Yarmuth who has an employment agreement with the Company. There are no family relationships between any director or executive officer.

 

| (1) | William B. Yarmuth has been a director of the Company since 1991, when the Company acquired National Health Industries (“National”), where Mr. Yarmuth was Chairman, President and Chief Executive Officer. After the acquisition, Mr. Yarmuth became the President and Chief Operating Officer of the Company. Mr. Yarmuth became Chairman and CEO in                        1992. He was Chairman of the Board, President and Chief Executive Officer of National from 1981 to 1991. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| (2) | C. Steven Guenthner has been Senior Vice President and Chief Financial Officer of the Company since 1992. From 1983 through 1992 Mr. Guenthner was employed as a C.P.A. with Arthur Andersen LLP. Prior to joining the Company he served as a Senior Manager in the firm’s Accounting and Audit division specializing in mergers and acquisitions, public                        companies and the healthcare industry. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| (3) | P. Todd Lyles joined the Company as Senior Vice President Planning and Development in 1997 and now serves as Senior Vice President – Administration. Prior to joining the Company Mr. Lyles was Vice President Development for the Kentucky Division of Columbia/HCA, a position he had held since 1993. Mr. Lyles experience also includes 8 years with                        Humana Inc. in various financial and hospital management positions. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

4

 

 

----

| (4) | Anne T. Liechty became Senior Vice President – VN Operations in 2001. Ms. Liechty has been employed by the Company since 1986 in various capacities including Vice President of Operations for the Company’s VN segment and its Product segment. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| (5) | Phyllis D. Montville became Senior Vice President – VN Operations in 2007. Ms Montville came to the Company in 2006 as Vice President of VN Operations in Florida. Before coming to the Company, she served as President with Best Choice Home Health from November, 2004 through December, 2005. She has 24 years experience in home care management, most of                        which is in the Florida market. Ms. Montville owned and operated her own franchise for 10 years. She started in the home care field as a branch manager and home care nurse. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| (6) | Cathy S. Newhouse became Senior Vice President – Sales and Clinical Programs in 2008 after joining the Company in 2007 as Vice President of Clinical Programs. During 2006 and 2007, she was Chief Operations and Clinical Officer with US Medical Management. From 1983 to 2006, she was with Gentiva Health Services, Inc. in progressive leadership roles.                        Her last position was Vice President of Specialty Programs. She has over 25 years experience in home care management focused on business development. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| (7) | John B. Walker became Vice President and Chief Accounting Officer of the Company in May 2007.  He is a C.P.A. with 29 years of financial management experience.  In 2003, he founded American Pipe Lining – MidAmerica, Inc. and served as its president until the company’s sale in 2007.  Prior to that, he held various senior                        financial management positions with high-growth companies in health insurance, home health and energy industries.     |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Board of Directors**

 

Set forth below is a list of members of the Board of Directors, together with their ages, all Company positions and offices each person currently holds and the year in which each person joined the Board. Each of the current members of the Board of Directors is expected to stand for re-election of the 2009 Annual Meeting of Shareholders.

 

|  

Name                 |  

Age | Position

or Office                                            | Director

Since |
|------------------------------|-------------|----------------------------------------------------------------|-----------------|
| William B. Yarmuth

    | 57          | Chairman of the Board,

President and Chief Executive

Officer | 1991            |
| Steven B. Bing

        | 62          | Director                                                       | 1992            |
| Donald G. McClinton

   | 75          | Director                                                       | 1994            |
| Tyree G. Wilburn

      | 56          | Director                                                       | 1996            |
| Jonathan D. Goldberg

  | 57          | Director                                                       | 1997            |
| W. Earl Reed, III

     | 57          | Director                                                       | 2000            |
| Henry M. Altman, Jr.

  | 72          | Director                                                       | 2004            |

 

William B. Yarmuth. Mr. Yarmuth has been a director of the Company since 1991, when the Company acquired National Health Industries ("National"), where Mr. Yarmuth was Chairman, President and Chief Executive Officer. After the acquisition, Mr. Yarmuth became the President and Chief Operating Officer of the Company. Mr. Yarmuth became Chairman and CEO in 1992. He was Chairman of the        Board, President and Chief Executive Officer of National from 1981 to 1991.

 

5

 

 

----

 

Steven B. Bing. Mr. Bing was elected a director in 1992. From 1999 to 2007, Mr. Bing served with Prosperitas Investment Partners, L.P., a private investment company located in Louisville, Kentucky, most recently as its Chief Operating Officer. He is also a director of various closely-held business entities. Since 2005, Mr. Bing has served as Senior Vice President Sales &        Marketing, New Business and Video Services for National Rural Telecommunications Cooperative, a large member owned cooperative in Herndon, Virginia serving in excess of 1,200 telephone and electric cooperatives across the country.

 

Donald G. McClinton. Mr. McClinton was elected a director in 1994. Mr. McClinton was President and part owner of Skylight Thoroughbred Training Center, Inc., a thoroughbred training center, until 2002, when it was sold. From 1986 to 1994, Mr. McClinton was co-chairman of Interlock Industries, a privately held conglomerate in the metals and transportation industries.

 

Tyree G. Wilburn. Mr. Wilburn was elected a director in 1996. Since 2003, Mr. Wilburn has served as Chairman of the Board, President and Chief Executive Officer of Merit Health Systems, LLC, a private hospital management company. He was a private investor from 1996 to 2002. From 1992 to 1996, Mr. Wilburn was Chief Development Officer of Community Health Systems, Inc., and, most        recently, Executive Vice President and Chief Financial and Development Officer. From 1974 to 1992, Mr. Wilburn was with Humana Inc. where he held senior and executive positions in mergers and acquisitions, finance, planning, hospital operations, audit and investor relations. He is also a director of several private companies.

 

Jonathan D. Goldberg. Mr. Goldberg was elected a director in 1997. Mr. Goldberg is the managing partner of the law firm of Goldberg and Simpson in Louisville, Kentucky and has served in that capacity since 1991.

 

W. Earl Reed, III. Mr. Reed was elected a director in 2000. Since 1998, Mr. Reed has served as Chief Executive Officer of The Allegro Group, a healthcare financial advisory firm that advises public and private healthcare organizations including providing interim management services. From August 2005 to September 2007, Mr. Reed served as Chief Executive Officer and Chairman of the        Board of LifeCare Holdings, Inc., a privately owned operator of 18 long-term hospitals. From May 2000 to December 2001, Mr. Reed served as Chairman, President and Chief Executive Officer of Rehab Designs of America Corporation, a private venture capital backed orthotics and prosthetics healthcare company, as part of a turnaround project. From 1987 to 1998, Mr. Reed was Chief Financial Officer and member of the board of directors of Vencor, Inc.

 

       Henry M. Altman, Jr. Mr. Altman was elected a director in 2004. Mr. Altman retired in 2002 following over 40 years of experience in public accounting, most recently serving as the president and managing director of the Deming, Malone, Livesay & Ostroff CPA firm. He is currently the owner of Altman Consulting LLC, an independent business        consulting firm. Mr. Altman currently serves on the boards of Jewish Hospital & St. Mary’s HealthCare and University Medical Center in Louisville, Kentucky, and the American Hospital Association's Leadership Development Committee. He also serves on the boards of Louisville Medical Center Development Corporation and the Institute for Bioethics, Health Policy and Law. In 2001, Mr. Altman was presented with the inaugural Kentucky Hospital Association Health Care Governance        Award.

 

**Audit Committee of the Board of Directors**

 

The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. As described in its charter, the principal duties of the Audit Committee include appointing the Company’s independent auditors, reviewing the scope of the audit, reviewing the corporate accounting practices and policies with the independent auditors,        reviewing with the independent auditors their final report, reviewing with independent auditors overall accounting and financial controls and consulting with the independent auditors. All of the members of the Audit Committee are "independent," as that term is defined in the applicable rules for companies traded on The Nasdaq Global Select Market (Nasdaq) and meet the criteria for independence under the Sarbanes-Oxley Act of 2002 and the rules adopted by the Securities and Exchange        Commission. The members of the Audit Committee are Messrs. Reed (Chair), Wilburn, Goldberg and Altman. The Board has designated Mr. Reed as the “audit committee financial expert” within the meaning of the SEC rules. 

 

6

 

 

----

 

**Code of Ethics and Business Conduct**

 

The Board has adopted a Code of Ethics and Business Conduct that applies to all its directors, officers and employees, including the principal executive and financial officers, the controller and the principal accounting officer of the Company. The Code of Ethics and Business Conduct is available in its entirety on the Company’s website,        www.almostfamily.com. The Company intends to post amendments to, or waivers from, its Code of Ethics and Business Conduct, if any, that apply to the principal executive and financial officers, the controller or the principal accounting officer on its website.

 

**SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE**

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers, and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities, to file with the Securities and Exchange Commission initial reports of stock ownership and reports of changes in stock ownership and to provide the Company with copies of        all such filed forms. Section 16(a) of the Securities Exchange Act of 1934 provides that any profit realized by an insider from any purchase and sale, or sale and purchase, of the Company’s equity securities within less than six months must be disgorged to the Company. Based solely on its review of such copies or written representations from reporting persons, the Company believes that all Section 16(a) reports were filed on a timely basis during fiscal 2008, except that John        Walker filed a Form 4 reporting one transaction late by three days**.**

**ITEM 11. EXECUTIVE COMPENSATION**

The following Summary Compensation Table shows the compensation earned for the time period served as an executive officer during the last fiscal year by: (1) the President and Chief Executive Officer, (2) the Chief Financial Officer, and (3) each of the three other highest compensated executive officers of the Company serving at December 31, 2008 (collectively, the “Named        Executive Officers”). 

**Summary Compensation Table**

 

|  

 

 

 

 

 

Name and Principal Position    |  

 

 

 

 

 

Year |  

 

 

 

 

 

Salary ($) |  

 

 

 

 

Bonus ($) |  

 

 

 

 

Stock Awards ($) |  

 

 

 

 

Option Awards ($) |  

 

 

 

 

Non-Equity Incentive Plan Compensation ($) |  

 

 

 

Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) |  

 

 

 

 

 

All Other Compensation ($) |  

 

 

 

 

 

Total

($) |
|--------------------------------------------------------------------------------|------------------------------------------------------|------------------------------------------------------------|---------------------------------------------------|----------------------------------------------------------|-----------------------------------------------------------|------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------|------------------------------------------------------------|
| William B. Yarmuth

Chairman of the Board, President & CEO                 | 2008

2007

2006                                     | 421,418

408,369

375,481                                  | -

-

-                                           | 45,382

-

-                                             | 101,333

56,660

-                                        | 515,000

400,530

390,000                                                          | -

-

-                                                                                                     | 162

1,242

938                                                            | 1,083,295

866,801

766,419                                |
| C. Steven Guenthner

Sr. Vice President

Secretary/Treasurer & CFO         | 2008

2007

2006                                     | 240,772

233,316

219,421                                  | -

-

-                                           | 18,153

-

-                                             | 46,003

28,330

-                                         | 250,000

176,029

170,000                                                          | -

-

-                                                                                                     | -

-

-                                                                    | 554,928

437,675

389,421                                  |
| Patrick T. Lyles

Senior Vice President

Administration                        | 2008

2007

2006                                     | 216,580

209,874

195,412                                  | -

-

-                                           | 12,102

-

-                                             | 28,535

16,998

-                                         | 190,000

142,508

138,000                                                          | -

-

-                                                                                                     | -

-

-                                                                    | 447,216

369,380

333,412                                  |
| Anne T. Liechty

Senior Vice President-Visiting Nurse Operations               | 2008

2007

2006                                     | 184,135

168,986

156,379                                  | -

-

-                                           | 6,051

-

-                                              | 16,267

9,443

-                                          | 150,000

102,000

150,000                                                          | -

-

-                                                                                                     | 1,006

1,175

1,016                                                        | 357,459

281,604

307,395                                  |
| Cathy S. Newhouse

Senior Vice President – Sales & Clinical Programs | 2008

2007

2006                                     | 182,116

85,000

-                                         | -

-

-                                           | 6,051

-

-                                              | 9,326

-

-                                               | 110,000

75,000

-                                                                 | -

-

-                                                                                                     | -

-

-                                                                    | 307,493

160,000

-                                        |

 

In 2008, the fair value of each option award as presented in the Summary Compensation Table was estimated on the date of grant using the Monte Carlo option valuation model with suboptimal exercise behavior. The Company adopted the Monte Carlo option valuation pricing model in 2007. This lattice model places greater emphasis on market evidence and predicts more realistic results, because it considers open        form information including volatility, employee exercise behaviors and turnover. The following assumptions were used for the year ended December 31, 2008: equivalent interest rate of 3.14%, equivalent volatility of approximately 45.08%, implied expected lives of 3.3 years, and expected lives of 5.9 years.

 

7

 

 

----

 

The following table provides information about equity and non-equity awards granted to the Named Executive Officers in 2008. Options and restricted stock were granted pursuant to the Company’s 2007 Stock and Incentive Compensation Plan. Options vest ratably over 4 years and will be fully vested on 3/07/2012. Restricted stock vests on the third anniversary of the grant date.

**Grants of Plan-Based Awards**

 

| Name                                | Grant Date      | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) |
|-------------------------------------|-----------------|----------------------------------------------------------------|----------------------------------------------------------------------|------------------------------------------------|------------------------------------------------------|
|  

William B. Yarmuth

   |  

3/07/08 |  

7,500                                                  |  

20,000                                                       |  

22.18                                  |  

348,510                                      |
|  

C. Steven Guenthner

  |  

3/07/08 |  

3,000                                                  |  

7,500                                                        |  

22.18                                  |  

134,850                                      |
|  

Patrick T. Lyles

     |  

3/07/08 |  

2,000                                                  |  

5,000                                                        |  

22.18                                  |  

89,900                                       |
|  

Anne T. Liechty

      |  

3/07/08 |  

1,000                                                  |  

3,000                                                        |  

22.18                                  |  

49,504                                       |
|  

Cathy S. Newhouse

    |  

3/07/08 |  

1,000                                                  |  

5,000                                                        |  

22.18                                  |  

67,720                                       |

 

 

8

 

 

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The following table provides information on the outstanding equity awards as of December 31, 2008 for the Named Executive Officers.

 

**Outstanding Equity Awards at Fiscal Year-End**

 

|                        | Option Awards                                                        | Stock Awards   |
|-----------------------------|----------------------------------------------------------------------|----------------|
| Name                        | Number of Securities Underlying Unexercised Options (#)

Exercisable |           | Number of Securities Underlying Unexercised Options (#) Unexercisable |   | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) |
| William B. Yarmuth

   | 7,500

-                                                             |  

  | 22,500

20,000 | (2)

(3) | 19.40

22.18 | 2/11/17

3/07/18 |  

7,500 |  

337,350 |
| C. Steven Guenthner

  | 33,014

3,750

-                                                     | (1)

(2)       | -

11,250

7,500 |  

(2)

(3) | 2.13

19.40

22.18 | 2/03/11

2/11/17

3/07/18 |  

 

3,000 |  

 

134,940 |
| Patrick T. Lyles

     | 20,000

2,250

-                                                     | (1)

(2)       | -

6,750

5,000 |  

(2)

(3) | 2.13

19.40

22.18 | 2/03/11

2/11/17

3/07/18 |  

 

2,000 |  

 

89,960 |
| Anne T. Liechty

      | 1,250

-                                                             | (2)            | 3,750

3,000 | (2)

(3) | 19.40

22.18 | 2/11/17

3/07/18 |  

1,000 |  

44,980 |
| Cathy S. Newhouse           | -                                                                    |           | 2,500 | (3) | 22.18 | 3/07/18 | 1,000 | 44,980 |

 

| (1) | Options granted pursuant to the Company’s Amended and Restated 2000 Stock Option Plan. On the effective date of the January 2007 2-for-1 stock split the number of shares was multiplied by two and the exercise price was divided by two. Information is presented as adjusted for the 2-for1 stock split. Options vested ratably over 3 years and were fully                        vested on 2/5/2004. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Options granted pursuant to the Company’s Amended and Restated 2000 Stock Option Plan. Options vest ratably over 4 years and will be fully vested on 2/10/2011. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Options and restricted stock were granted pursuant to the Company’s 2007 Stock and Incentive Compensation Plan. Options vest ratably over 4 years and will be fully vested on 3/07/2012.  Restricted stock vests on the third anniversary of the grant date. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

9

 

 

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**Potential Payments Under Termination or Change in Control of the Company**

 

The Company has a year-to-year employment agreement with William B. Yarmuth, its Chairman of the Board, President and Chief Executive Officer. The agreement had an initial term of two years and provides that it will automatically be renewed for successive one-year terms. Either the Company or Mr. Yarmuth may terminate the agreement as of the last day of any renewal term by giving at least 60 days' prior        written notice of termination. In addition, the Company may by decision of the Board of Directors terminate the agreement at any time by written notice to Mr. Yarmuth. Mr. Yarmuth is entitled to certain payments upon termination of employment with the Company. If Mr. Yarmuth's employment is terminated under either provision stated above, he would be entitled to a payment equal to two times the base salary earned by him during the preceding twelve months, payable within 30 days following        termination. As of December 31, 2008, this amount would have been $821,600. If Mr. Yarmuth's employment is terminated by reason of his death or disability, he would be entitled to an amount equal to the excess of (i) 200% of his base salary over (ii) the present value of the disability payments to be received by him under any disability insurance policy maintained and paid for by the Company, if any, during the first two years in which such payments are to be received. This amount is        payable within 90 days following the date of his death or disability. As of January 1, 2009, the employment agreement was amended to provide that payments upon termination (including following a change in control as described below) will not be made until Mr. Yarmuth has terminated employment within the meaning of the Internal Revenue Code Section 409A, and that to the extent payments are not exempt from 409A and are triggered by termination, payments will be delayed for six months        following termination as required by Code Section 409A.

 

Following a "change of control," as defined in the employment agreement, if Mr.Yarmuth's employment with the Company is terminated for any reason (including cause, as defined) other than death or disability, he would be entitled to 290% of the base salary and bonus payments paid to him during the one-year period immediately preceding termination. This payment would be in a lump sum on the date of        termination. As of December 31, 2008, this amount would have been $2,352,857. For purposes of the agreement, a "change of control" includes (i) any person’s acquisition of 50% or more of the Company's common stock, (ii) 75% or more of the Company's directors being replaced, unless the current directors approved of the replacements, and (iii) stockholder approval of a merger or consolidation of the Company or its complete liquidation. If any of the above payments would be subject        to excise taxes, then Mr. Yarmuth would be entitled to receive a payment for the purpose of assuring that he receives all compensation to which the excise tax applies absolutely net of the excise tax. The agreement includes a covenant not to compete that prohibits Mr. Yarmuth from competing with the Company within any county of any state in which the Company was at the time of termination conducting business or had a bona fide plan to begin conducting business.

 

No other Named Executive Officer has termination or change in control arrangements.

 

**Directors’ Compensation**

The following table summarizes compensation paid to non-employee directors for 2008. Mr. Yarmuth is the only employee director and he does not receive any additional compensation for his service on the board of directors. 

 

**Director Compensation Table**

 

| Name                 | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation ($) | Total 

($) |
|----------------------|---------------------------------|------------------|-------------------|--------------------------------------------|-------------------------------------------------------------------------|----------------------------|-------------|
| William B. Yarmuth   | -                               | -                | -                 |                                       | -                                                                       | -                          | -           |
| Steven B. Bing       | 28,000                          | -                | 9,604             | -                                          | -                                                                       | -                          | 37,604      |
| Donald G. McClinton  | 28,000                          | -                | 9,604             | -                                          | -                                                                       | -                          | 37,604      |
| Tyree G. Wilburn     | 40,000                          | -                | 9,604             | -                                          | -                                                                       | -                          | 49,604      |
| Jonathan D. Goldberg | -                               | -                | 9,604             | -                                          | -                                                                       | 49,908                     | 59,512      |
| W. Earl Reed, III    | 40,000                          | -                | 9,604             | -                                          | -                                                                       | -                          | 49,604      |
| Henry M. Altman, Jr. | 26,500                          | -                | 9,604             | -                                          | -                                                                       | -                          | 36,104      |

 

 

10

 

 

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The Option Awards column reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2008, in accordance with Statement of Financial Accounting Standards No. 123 (Revised 2004),*Share-Based Payment*("SFAS 123R") of awards pursuant to the Company's equity incentive program and thus        include amounts from awards granted before, as well as in, fiscal year 2008, because the expense is being recognized over each award's vesting period. Assumptions used in the calculation of these amounts for the fiscal year ended December 31, 2008 are included in Footnote 1 "Summary of Significant Accounting Policies—Stock-Based Compensation" to the Company's audited financial statements for the fiscal year ended December 31, 2008, included in the Company's Annual Report on        Form 10-K filed with the SEC on March 6, 2009.

 

The Company cautions that the amounts reported in the Director Compensation Table for these awards may not represent the amounts that the directors will actually realize from the awards. Whether, and to what extent, a director realizes value will depend on the Company's actual operating performance, stock price fluctuations and the director's continued service. 

 

At December 31, 2008, the aggregate number of option awards outstanding held by each director was as follows: Mr. Bing: 4,500; Mr. McClinton: 16,500; Mr. Wilburn: 20,500; Mr. Goldberg: 4,500; Mr. Reed: 36,500; and Mr. Altman: 14,500. No options were granted to non-employee directors in 2008.

The Company has a Non-Employee Directors Deferred Compensation Plan which allows Directors to elect to receive fees for Board services in the form of shares of the Company’s common stock. The Plan authorized 200,000 shares for such use. As of December 31, 2008, 92,131 shares have been allocated in deferred accounts, 35,262 have been issued to previous Directors and 72,607 remain available for future        allocation. Allocated shares are to be issued to Directors when they cease to be Directors or upon a change in control. Directors’ fees are expensed as incurred whether paid in cash or deferred into the Plan. Amounts shown in the column “All Other Compensation” above represent 2008 fees deferred into the Non-Employee Directors Deferred Compensation Plan by Mr. Goldberg.

In February 2007, the Company implemented the recommendations of Mercer regarding compensation of non-employee directors. As a result, the Company has targeted cash compensation between the 25th and 50th percentile of the peer group. For 2008, Directors received cash compensation according to the following table:

 

| Annual retainer                                        | $ | 15,000 |
|--------------------------------------------------------|---|--------|
| Chairman of audit committee additional retainer        | $ | 7,500  |
| Chairman of compensation committee additional retainer | $ | 5,000  |
| Meeting fee per board meeting attended                 | $ | 1,500  |
| Meeting fee per committee meeting attended             | $ | 1,000  |

The Company also reimburses directors for the reasonable expenses they incur to attend board of directors, board committee and shareholder meetings. For 2009, the annual retainer is $25,000.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Board is comprised of Messrs. Goldberg (chair), Bing, McClinton, Reed, Wilburn and Altman, each a non-employee director of the Company. None of our executive officers serve on the Compensation Committee or board of directors of any other company of which any member of our Compensation Committee or any of our directors is an executive officer.

 

 

 

11

 

 

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****COMPENSATION DISCUSSION AND ANALYSIS****

 

**Overview**

The Company’s executive compensation program is designed to (1) motivate and retain executive officers, (2) reward the achievement of short-term and long-term performance goals, (3) establish an appropriate relationship between executive pay and short-term and long-term performance and (4) align executive officers’ interests with those of the        Company’s shareholders. The primary elements of the Company’s compensation program are base salary, annual cash incentive awards and equity-based compensation. The Company believes that each element supports one or more of the objectives of the Company’s compensation program and provides sufficient flexibility to the Compensation Committee (the “Committee”) to structure future awards to address new issues and challenges facing the Company. The        Company’s executive compensation program attempts to target total direct compensation for the Named Executive Officers (as defined herein) between the 50th and 75th percentiles of the healthcare industry, depending upon the individual performance of the Named Executive Officer, his level of responsibility, and the performance of the Company. The Company believes that this range of compensation allows it to attract and retain qualified and experienced        healthcare executives. 

**Performance Measures**

The primary elements of the Company’s executive compensation program are designed to promote the achievement of financial operating goals established by the Committee and to increase shareholder value. The Company uses a cash incentive plan providing annual short-term incentives for achievement of goals. These plans provide certain of the Named Executive Officers with the opportunity to earn cash        awards for achieving financial operating goals primarily related to targeted levels of earnings per share. The Company believes that this measure is generally used by investors to value the Company’s Common Stock. 

The equity-based component of the Company’s executive compensation program is designed to incentivize the Named Executive Officers to increase the value of the Company’s Common Stock. As such, equity-based compensation directly links the total direct compensation of the Named Executive Officers to increases in stock price appreciation and shareholder value. 

**The Executive Compensation Process**

The Committee is comprised of six directors, each of whom is independent as defined under the Nasdaq listing standards and qualifies as an outside director within the meaning of Section 162(m) of the Code and a non-employee director within the meaning of Rule 16b-3 under the Exchange Act. The Committee meets periodically to review and oversee the Company’s executive compensation program. The        Committee makes all compensation decisions regarding the top three Named Executive Officers but has typically delegated to the CEO subject to the committee’s review, compensation decisions regarding the remaining Named Executive Officers. On an annual basis, the Committee reviews base salaries and incentive compensation targets for the Named Executive Officers, for the upcoming fiscal year. At this time, the Committee also determines whether performance targets under each of the        cash incentive plans were achieved for the prior fiscal year. 

During 2006, the Company engaged Mercer Human Resources Consulting (“Mercer”), a global human resources consulting firm, to assist management and the Committee in a comprehensive evaluation of the Company’s executive compensation program. Mercer assisted the Company by reviewing the Company’s executive compensation strategy and providing compensation benchmarks to the Committee for        each Named Executive Officer, including comparisons of base salary, cash incentives and equity-based compensation. Mercer also provided the Committee with other relevant market data and alternatives to consider when making compensation decisions for the Named Executive Officers. The Committee has continued to consult with Mercer on executive compensation issues since the 2006 comprehensive review. The Company from time to time uses Mercer for various other employee benefit matters.        

The Committee made no grants of equity-based awards to the Named Executive Officers from 2002 through 2006 although the Committee did make grants of equity-based awards in 2007 and 2008. The Committee currently plans to consider additional grants on an annual basis in conjunction with its review and approval of annual salaries, short-term cash incentives and financial operating goals. The Committee may        grant equity-based awards on a periodic basis, particularly in connection with promotions, exceptional performance or changes in a Named Executive Officer’s level of responsibility.

 

12

 

 

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During its comprehensive review in 2006, the Committee compared each element of compensation for the Named Executive Officers against a peer group of companies in the healthcare industry. The Company used the following companies for compensation benchmarking purposes: 1) its publicly reported industry peer group: Amedisys, Inc., Gentiva Health Services, Inc., National Home Health Care, LHC Group Inc., and        2) a health care industry survey group compiled by Mercer so that market conditions could also be appropriately considered. These peer groups may be periodically reviewed and updated by the Committee based upon recommendations from Mercer. The Committee believes these peer companies have competed for executives with similar talents and expertise to those of the Named Executive Officers.

**Components of Executive Compensation**

The Company’s executive compensation program uses the following elements to structure the total direct compensation for the Named Executive Officers: 

 

|         | • |   | base salary;                        |
|--------------|--------|--------|-------------------------------------|
|    | • |   | annual cash incentives; and         |
|    | • |   | equity-based incentive compensation |

 

The Company believes that the combination of these elements enables the Committee to award competitive total direct compensation between the 50th and 75th percentiles in the healthcare industry. 

The Committee does not have a pre-established policy for the allocation between fixed compensation, such as base salary, and variable or “at risk” compensation, such as short-term cash incentives and equity. However, the Committee places a significant portion of total direct compensation for the Named Executive Officers at risk. At risk compensation under the Company’s cash incentive        plans incentivizes the Named Executive Officers to reach or exceed desired financial operating goals. Moreover, at risk compensation under the Company’s equity incentive plans incentivizes the Named Executive Officers since the full benefit of equity-based compensation cannot be realized unless the Named Executive Officers are able to grow the value of the Common Stock over several years. 

**Base Salary**

Base salaries are provided to the Named Executive Officers to compensate them for their services performed during the year. As part of its 2006 analysis, the Committee considered salary comparisons prepared by Mercer to determine if base salaries for the Named Executive Officers were competitive with similarly situated executives in the peer group and the healthcare industry generally.        The Committee then undertook to generally structure base salaries to be in the range of the 50th to 75th percentile of its peer group, with the intent to move base salary closer to the 75th percentile of the peer group.  

The base salary for each of Messrs. Yarmuth, Guenthner and Lyles has since been increased consistent with the cost-of-living increases awarded to employees generally in the Company. With respect to the other Named Executive Officers, the Committee has delegated discretion in this area to Mr. Yarmuth as chief executive officer. He has awarded annual increases to Ms. Liechty and Ms. Newhouse based on his        subjective judgment of a number of factors. While certain aspects of performance of the Named Executive Officers can be measured in financial operating metrics, the Committee and Mr. Yarmuth also evaluate the Named Executive Officers in other performance areas that are more subjective. These areas include the success of the Named Executive Officer in developing and executing the Company’s strategic objectives, capitalizing on growth opportunities, addressing significant challenges        affecting the Company, developing key employees and exercising leadership. Mr. Yarmuth’s establishment of base salaries for Ms. Liechty and Ms. Newhouse reflected his judgment with respect to their favorable job performance, increases in executive officer responsibility, an assessment of overall Company performance, and general market salary increases for all employees.

 

13

 

 

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**Cash Incentives**

 

Under the Company’s executive compensation program, a significant portion of total cash compensation for the Named Executive Officers is subject to the attainment of measurable financial operating goals. This approach creates a direct incentive for the Named Executive Officers to achieve pre-established performance objectives and places a significant percentage of each Named Executive        Officer’s total direct compensation at risk. 

The Company maintains an annual cash incentive plan under which the Committee establishes annual financial operating goals for the Company’s key employees, including the Named Executive Officers. For 2008, if the targeted level of earnings per share of $1.75 were achieved, the Committee would award a target bonus amount to Messrs. Yarmuth, Guenthner and Lyles based on a targeted percentage of their        base salary. If earnings per share of $1.49 were achieved, the Committee would award a bonus equal to 50% of the target bonus amount. If earnings per share of $2.01 or greater were achieved, the Committee would award a bonus equal to 150% of the target bonus amount. The target bonus amounts as a percent of base salary for 2008 for these persons were based upon their respective levels of management responsibility and the recommendations in the 2006 Mercer analysis. The target bonus        amounts as a percent of base salary were as follows: Mr. Yarmuth – 65%; Mr. Guenthner – 50%, and Mr. Lyles – 45%. The awards under these plans are formulaic, based upon the achievement of financial operating goals established by the Committee. Nevertheless, the Committee retains the discretion to increase or decrease cash incentive awards for unforeseen events or circumstances, including restatements to the Company’s financial statements.

Because the Company earned $2.18 per share in 2008 and satisfied the criteria for payment of the maximum bonus amounts, each of these officers received a cash bonus equal to 150% of the target bonus amount. The Committee delegated to Mr. Yarmuth discretion in the payment of cash bonus amounts to Ms. Liechty and Ms. Newhouse. Based on the Company’s achievement of earnings per share of $2.18 and his        review of their performance and management responsibilities, Ms. Liechty was awarded a cash bonus of $113,000 and Ms. Newhouse was awarded a cash bonus of $110,000.

Following the formulaic awards under the annual cash incentive plan, the Committee determined to award additional cash bonuses to the following executive officers: William B. Yarmuth - $102,000; C. Steven Guenthner - $68,000; P. Todd Lyles - $43,000; and Anne T. Liechty - $37,000. The Committee considered the remarkable corporate accomplishments during 2008, including EPS growth of approximately 60% from        2007 on 47% more shares outstanding, the successful common stock offering, significant acquisitions, establishment of a syndicated bank credit facility, and an outstanding increase in the per share market value. The Committee also considered Mr. Yarmuth’s input with regard to Name Executive Officers other than himself.

**Equity-Based Compensation**

Although no equity-based awards were made to the Named Executive Officers from 2002 to 2006, the Committee granted equity-based awards in 2007 and 2008 and plans to use equity-based compensation as a key component of its overall executive compensation strategy in the future. Such awards provide a direct and long-term link between the results achieved for the Company’s shareholders and the total        direct compensation provided to the Named Executive Officers. Stock-based compensation is designed to retain the Named Executive Officers through time-based vesting conditions and to motivate them to enhance the value of the Common Stock by aligning the financial interests of the Named Executive Officers with those of the Company’s shareholders. Equity-based compensation also provides an effective incentive for management to create shareholder value over several years since the        full benefit of this element of compensation is primarily realized as a result of the appreciation in the price of the Common Stock. 

The Company does not currently have a security ownership policy for its Named Executive Officers or its Directors. The Committee generally does not take into consideration equity awards granted in previous years when evaluating awards for the current year. 

The Committee does not grant options with an exercise price that is less than the closing price of the Common Stock on the NASDAQ on the grant date (fair market value) and it does not grant stock options that are priced on a date other than the grant date.

 

The amount of equity awarded to the Named Executive Officers is based upon a number of factors. First, the Committee considers an overall assessment of the Company’s performance and the equity granting practices of other companies in the healthcare industry and its peer group. In 

 

14

 

 

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addition, the Committee considers information prepared by Mercer with respect to the equity awards and considers the relative costs. In making equity awards for 2008, the Committee considered Mercer’s recommendation to frame the awards by creating a target “value” of the award by multiplying a market based percentage for equity compensation times the executive’s annual base salary.        (The 2008 equity awards were based on the following percentage targets for Messrs. Yarmuth, Guenthner and Lyles: 100%, 65% and 50%, as adjusted by the Committee.) The Committee then considered the overall performance of each of Messrs. Yarmuth, Guenthner and Lyles and his actual and potential contribution to the Company’s growth and long-term performance in determining individual awards. The Chief Executive Officer also provided an assessment of the overall level of performance        for the other Named Executive Officers. The assessment of actual and potential contribution is based upon the Committee’s subjective evaluation of each Named Executive Officer. Based on these assessments, the Committee determined the actual award for each of Messrs. Yarmuth, Guenthner and Lyles. The number of options and restricted shares was then rounded to the nearest thousand share number. The Committee followed the recommendation of Mr. Yarmuth with respect to the award of        stock options and restricted shares to Ms. Liechty and Ms. Newhouse in 2008; these amounts were based upon their relative management responsibility within the Company and a 30% of salary target value, as adjusted. The Committee chose to use a mix of stock options and restricted shares, viewing stock options as effective in focusing management on share-price appreciation and restricted shares as encouraging ownership of Company shares while using fewer shares eligible for issuance under        the Company’s equity incentive plan. The Committee chose to target approximately one-half of the value of the equity award as stock options, with the other half of the value as restricted shares. For this purpose, the Committee valued the option shares using the Black-Scholes valuation model; the restricted shares were valued at the fair market value as reflected on the NASDAQ Global Select Market. All options awarded in 2008 will vest in four equal annual installments beginning        on the first anniversary of the date of grant; all restricted shares vest in full on the third anniversary of the date of grant. 

**Section** **401(k) Plan and Other Perquisites and Benefits**

The Company maintains a Section 401(k) plan (the “401(k) Plan”) that is a tax-qualified defined contribution retirement savings plan under which all eligible employees may contribute up to the limit prescribed by the IRS, on a pre-tax basis. The Named Executive Officers are eligible to contribute on a pre-tax basis at a discretionary level, which varies annually based upon results of        the Plan’s prior year non-discrimination testing. After one year of service, the Company matches 25% of the first 5% of pay that a participant contributes to the 401(k) Plan and may also provide additional profit sharing contributions based upon the Company’s achievement of financial goals established by the Committee. All employee contributions to the 401(k) Plan are fully vested upon contribution and the Company’s matching contribution vests in full immediately once        the employee has three years of service. Contributions to the 401(k) Plan by the Named Executive Officers are usually limited by IRS rules. 

 

**Employment and Other Agreements**

The Company has a year-to-year employment agreement with William B. Yarmuth, its Chairman of the Board, President and Chief Executive Officer. The parties entered into the agreement effective January 1, 1996. The agreement includes a covenant not to compete for a period of two years following Mr. Yarmuth’s termination as an employee of the Company. With respect to Mr. Yarmuth’s employment        agreement, he and the Company entered into an amendment to ensure that the Employment Agreement complies with Section 409A of the Internal Revenue Code of 1986, as amended, and the final Treasury Regulations promulgated thereunder. As described elsewhere in this Item 11 of the Form 10-K/A, the agreement also provides for payments to be made to Mr. Yarmuth under certain circumstances upon his termination of employment.

 

The Company has no other employment agreements.

 

**Executive Compensation Tax Deductibility**

Section 162(m) of the Code generally provides that the compensation paid by publicly held corporations to the chief executive officer and the four most highly paid senior executive officers in excess of $1,000,000 per executive will be deductible by the Company only if paid pursuant to qualifying performance-based compensation plans approved by shareholders of the Company. Compensation as defined        by the Code includes, among other things, base salary, incentive compensation and gains on stock options and restricted Common Stock. Although the Company currently attempts to 

15

 

 

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structure all incentive compensation to be deductible for federal income tax purposes, the Company’s primary policy is to maximize the effectiveness of the Company’s executive compensation program. In that regard, the Committee intends to remain flexible to take actions which are deemed to be in the best interests of the Company and its shareholders. Such actions have not always qualified        for tax deductibility under the Code and may not do so in the future. 

Beginning on January 1, 2006, the Company began accounting for equity-based incentive compensation in accordance with the requirements of Statement of Financial Accounting Standards No. 123 (revised 2004) (“SFAS 123R”). 

 

**COMPENSATION COMMITTEE REPORT**

The Compensation Committee of the Board is composed entirely of independent directors satisfying the requirements of the Nasdaq listing standards. The Committee is composed of Messrs. Jonathan D. Goldberg (Chairman), Steven B. Bing, Donald G. McClinton, W. Earl Reed, III, Tyree G. Wilburn and Henry M. Altman, Jr. The Compensation Committee is responsible for establishing and administering the        policies and programs that govern both annual cash compensation and stock-based incentive compensation plans for the executive officers of the Company. 

The Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” section with management. Based upon the foregoing review and discussion with management, the Compensation Committee recommended to the Board that the “Compensation Discussion and Analysis” section be included in this Form 10-K/A. 

All members of the Compensation Committee of the Company listed below submit the foregoing report. 

COMPENSATION COMMITTEE 

 

Jonathan D. Goldberg, Chairman 

Steven B. Bing

Donald G. McClinton

W. Earl Reed, III

Tyree G. Wilburn

Henry M. Altman, Jr.

 

16

 

 

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**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

 

| **Shares of Common Stock Beneficially Owned as of March 31, 2009**(1)                 |
|---------------------------------------------------------------------------------------|
| **Directors, Executive Officers and 5%**

**Beneficial Owners**                       | **Amount and Nature of Beneficial**

**Ownership** |  

**Percent of Class** |
| William B. Yarmuth

9510 Ormsby Station Road, Suite 300

Louisville, KY 40223

  | 581,794 | (2) | 7.1% |
| C. Steven Guenthner

                                                            | 192,945 | (3) | 2.3% |
| Steven B. Bing

                                                                 | 2,930 | (4) | * |
| Donald G. McClinton

                                                            | 67,444 | (5) | * |
| Tyree G. Wilburn

                                                               | 38,250 | (6) | * |
| Jonathan D. Goldberg

                                                           | 91,061 | (7) | 1.1% |
| W. Earl Reed, III 

                                                             | 146,804 | (8) | 1.8% |
| Henry M. Altman, Jr.

                                                           | 22,250

  | (9) | * |
| Patrick T. Lyles

                                                               | 86,562 | (10) | 1.1% |
| Anne T. Liechty                                                                       | 16,040 | (11) | *

  |
| Phyllis D. Montville                                                                  | 5,125 | (12) | * |
| Cathy S. Newhouse

                                                              | 4,400 | (13) | * |
| John B. Walker                                                                        | 4,725 | (14) | * |
| Directors and Executive Officers as a Group (13 persons)

                       | 1,260,330 | (15) | 15.1% |

 

 

* Represents less than 1% of class.

 

| (1) | Based upon information furnished to the Company by the named persons, information contained in filings with the Securities and Exchange Commission (the "Commission"), and on the 8,175,473 shares of common stock issued and outstanding as of March 31, 2009. Under the rules of the Commission, a person is deemed to beneficially own shares over which the                        person has or shares voting or investment power or has the right to acquire beneficial ownership within 60 days, and such shares are deemed to be outstanding for the purpose of computing the percentage beneficially owned by such person or group. Unless otherwise indicated, the named person has the sole voting and investment power with respect to the number of shares of Common Stock set forth opposite such person's name. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| (2) | Includes 5,924 shares as to which Mr. Yarmuth shares voting and investment power pursuant to a family trust and 20,000 shares subject to currently exercisable options. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| (3) | Includes 42,389 shares subject to currently exercisable options. |
|-----|------------------------------------------------------------------|

 

17

 

 

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| (4) | Includes 2,250 shares subject to currently exercisable options. |
|-----|-----------------------------------------------------------------|

 

| (5) | Includes 2,250 shares subject to currently exercisable options and 30,194 phantom shares within the Non-Employee Directors Deferred Compensation Plan. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| (6) | Includes 14,250 shares subject to currently exercisable options. |
|-----|------------------------------------------------------------------|

 

| (7) | Includes 2,250 shares subject to currently exercisable options, 50,211 phantom shares within the Non-Employee Directors Deferred Compensation Plan and includes 2,000 shares held by spouse’s self-directed 401(k) plan over which Mr. Goldberg disclaims any beneficial interest. 31,100 shares of common stock have been pledged as loan                        security. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| (8) | Includes 34,250 shares subject to currently exercisable options and 12,554 phantom shares within the Non-Employee Directors Deferred Compensation Plan. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| (9) | Includes 12,250 shares subject to currently exercisable options. |
|-----|------------------------------------------------------------------|

 

| (10) | Includes 25,750 shares subject to currently exercisable options. |
|------|------------------------------------------------------------------|

 

| (11) | Includes 3,250 shares subject to currently exercisable options. |
|------|-----------------------------------------------------------------|

 

| (12) | Includes 3,125 shares subject to currently exercisable options. |
|------|-----------------------------------------------------------------|

 

| (13) | Includes 2,500 shares subject to currently exercisable options. |
|------|-----------------------------------------------------------------|

 

| (14) | Includes 3,125 shares subject to currently exercisable options. |
|------|-----------------------------------------------------------------|

 

| (15) | Includes currently exercisable options held by all directors and executive officers as a group to purchase 167,639 shares of Common Stock and 92,959 phantom shares held by Non-Employee Directors within the Non-Employee Directors Deferred Compensation Plan. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

18

 

 

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**Equity Compensation Plans** 

 

As of December 31, 2008, shares of common stock authorized for issuance under our equity compensation plans are summarized in the following table. See note 7 to the consolidated financial statements for a description of the plans. The table below is furnished pursuant to item 12.

 

|  

 

Plan Category                                                |  

Shares to Be Issued Upon Exercise |   | Weighted-Average Option Exercise Price                                                                 |   |  

 

Shares Available for Future Grants |
|------------------------------------------------------------------------------|-------------------------------------------|--------|--------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|
|  

Plans approved by shareholders

Plans not approved by 

shareholders |  

   371,139

-           |   |  

$               14.24

- |   |  

  377,250

-                     |
|                                                                         |                                      |   |                                                                                                   |   |                                               |
| Total                                                                        |    371,139                      |   | $               14.24            |   |   377,250                                     |

 

 

19

 

 

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**ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**

 

The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. All members of these committees are “independent” as defined in the NASDAQ listing standards. As described in its charter, the principal duties of the Audit Committee include appointing the Company’s independent auditors, reviewing the scope of        the audit, reviewing the corporate accounting practices and policies with the independent auditors, reviewing with the independent auditors their final report, reviewing with independent auditors overall accounting and financial controls and consulting with the independent auditors. The Audit Committee is also responsible for the review and approval of all related-party transactions required to disclosed under the rules of the Securities and Exchange Commission; the Company is not        currently party to any such transactions. A copy of the Audit Committee charter is available in its entirety on the Company’s website, www.almostfamily.com.

 

**ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

 

**Fees Paid to the Independent Auditors**

 

*Audit Fees*

 

Ernst & Young LLP charged to the Company an aggregate amount of $753,000 and $602,000 for professional services rendered for fiscal year 2008 and fiscal year 2007, respectively, for the audit of the Company’s annual financial statements, the reviews of the Company’s financial statements included in the Company’s reports on Form 10-Q, the review of internal        control over financial reporting and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.

 

*Audit-Related Fees*

 

Ernst & Young LLP charged to the Company an aggregate amount of $17,000 and $17,000 for assurance and related services rendered for fiscal year 2008 and fiscal year 2007, respectively, that are primarily related to the audit of the Company’s 401(k) employee benefit plan.

 

*Tax Fees*

 

Ernst & Young LLP charged to the Company an aggregate amount of $177,000 and $144,000 for professional services rendered for fiscal year 2008 and fiscal year 2007, respectively, for tax compliance, tax advice, and tax planning. 

 

*All Other Fees*

 

|   | There were no other services or fees provided by Ernst & Young LLP in 2008 and 2007. |
|--------|------------------------------------------------------------------------------------------|

 

*Pre-Approval Policies and Procedures*

 

During fiscal year 2008, the Audit Committee approved all audit, audit-related and non-audit services provided to the Company by Ernst & Young LLP before management engaged the auditor for those purposes. The Audit Committee’s current practice is to consider for pre-approval all audit, audit-related, tax and non-audit services proposed to be provided by our independent        auditors for the fiscal year.

 

20

 

 

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**ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES**

a)

1. and 2. No financial statements or schedules are filed with this report on Form 10-K/A. 

3. Exhibits 

 

A list of the exhibits filed or furnished with this report on Form 10-K/A is provided in the Exhibit Index beginning on page 22 of this report. 

 

**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.

 

*ALMOST FAMILY, INC.*

 

 

| By   /S/ William B. Yarmuth | April 29, 2009 |
|---------------------------------------|----------------|

|   | William B. Yarmuth |
|--------|--------------------|

|   | Chairman, President and Chief Executive Officer |
|--------|-------------------------------------------------|

 

| By  /S/ C. Steven Guenthner | April 29, 2009 |
|----------------------------------|----------------|

|   | C. Steven Guenthner |
|--------|---------------------|

|   | Senior Vice President and Chief Financial Officer |
|--------|---------------------------------------------------|

|   | (Principal Financial Officer) |
|--------|-------------------------------|

 

 

21

 

 

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**EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**

 

|   | Exhibits required to be filed by Item 601 of Regulation S-K and by Item 15  are set forth below: |
|--------|-------------------------------------------------------------------------------------------------------|

 

|   | **Number** | **Description of Exhibit** | **Page Number** |
|--------|------------|----------------------------|-----------------|

 

|   | 31.1* | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) | 23 |
|--------|-------|---------------------------------------------------------------------|----|

|   | and Rule 15d-14(a) of the Securities Exchange Act, as amended. |
|--------|----------------------------------------------------------------|

 

|   | 31.2* | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and | 24 |
|--------|-------|-------------------------------------------------------------------------|----|

|   | Rule 15d-14(a) of the Securities Exchange Act, as amended. |
|--------|------------------------------------------------------------|

 

 

*****Denotes filed herein.

 

 

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