| **UNITED STATES**                                                                                                                                                                                                                              |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **SECURITIES AND EXCHANGE COMMISSION**                                                                                                                                                                                                         |
| **Washington, D.C. 20549**                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                |
| **FORM 10-K/A**                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                |
| **x**                  **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                            SECURITIES**                                |
| **EXCHANGE ACT OF 1934**                                                                                                                                                                                                                       |
| **For the fiscal year ended December 31,                            2007**                                                                                                                                                                     |
| **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.

YesoNox

 

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. YesoNox

 

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. YesxNoo

 

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

 

1

 

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 filero                Accelerated filerx

Non-accelerated fileroSmaller reporting            companyo

 

(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) YesoNox

 

As            of June 30, 2007, the aggregate market value of the registrant’s common stock            held by non-affiliates of the registrant was $85,343,085 based on the last sale price            of a share of the common stock as of June 30, 2007 ($19.25), 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 7, 2008 |
|---------------------------------|------------------------------|

| Common Stock, $.10 par value per share | 5,531,921 Shares |
|----------------------------------------|------------------|

 

DOCUMENTS INCORPORATED BY REFERENCE

 

None.

 

 

2

 

**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

**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, 2007, originally filed on March 12, 2007 (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, 2007. 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) | 56 | Chairman of the Board President |
|------------------------|----|---------------------------------|

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

| C. Steven Guenthner (2) | 47 | Senior Vice President and |
|-------------------------|----|---------------------------|

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

| P. Todd Lyles (3) | 46 | Senior Vice President – Administration |
|-------------------|----|----------------------------------------------|

| Anne T. Liechty (4) | 55 | Senior Vice President - Operations |
|---------------------|----|------------------------------------|

| Phyllis Montville (5) | 59 | Senior Vice President – Operations |
|-----------------------|----|------------------------------------------|

| David Pruitt (6) | 44 | Vice President – Operations |
|------------------|----|-----------------------------------|

| John B. Walker (7) | 49 | 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 October 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 Montville became Senior Vice President –                            Operations in 2007. Ms. Montville came to the company in 2006 as Vice                            President of VN Operations in Florida. She has 23 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) | David Pruitt became Vice President – Operations in                            2002. Mr. Pruitt has been employed by the company since 1996 in various                            roles in the company’s service divisions. Prior to 1996, he was                            employed by the Medicare Intermediary in Columbia, South                            Carolina. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

| (7) | John B. Walker became Vice President and Chief                            Accounting Officer of the Company in May 2007.  He is a C.P.A.                            with 28 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 2008 Annual Meeting of            Shareholders.

 

|  

Name

                                      |  

Age | Position

or Office                                                                               | Director

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

                                | 56          | Chairman of the Board,

President and Chief Executive Officer

                              | 1991            |
| Steven B. Bing

                                    | 61          | Director                                                                                          | 1992            |
| Donald G. McClinton

                               | 74          | Director                                                                                          | 1994            |
| Tyree G. Wilburn

                                  | 55          | Director                                                                                          | 1996            |
| Jonathan D. Goldberg

                              | 56          | Director                                                                                          | 1997            |
| W. Earl Reed, III

                                 | 56          | Director                                                                                          | 2000            |
| Henry M. Altman, Jr.

                              | 71          | 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 January 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 October            1994. Mr. McClinton was President and part owner of Skylight Thoroughbred Training            Center, Inc., a thoroughbred training center, until July 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 January 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 February            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 November 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.

 

6

Goldberg, Reed (Chair), and Wilburn. The Board has designated Reed as            the “audit committee financial expert” within the meaning of the SEC            rules.

 

**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 2007, except Anne Liechty failed to timely report a sale of            714 shares, which error was corrected through the subsequent late filing of the Form            4**.**

**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, 2007 (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                                                                                                                      |  

2007

2006                                                                                                                                                                               |  

408,369

375,481                                                                                                                                                                               |  

-

-                                                                                                                                                                                          |  

-

-                                                                                                                         |  

56,660

-                                                                                 |  

400,530

390,000                                                                                                   |  

-

-                                                                                                                               |  

1,242

938                                                                                                                             |  

886,801

766,419                                                                                                                                           |
| C. Steven Guenthner

Sr. Vice President

Secretary/Treasurer & CFO                                                                                                              |  

                             

2007

2006                                                                                                                                           |  

                             

233,316

219,421                                                                                                                                           |  

                             

-

-                                                                                                                                                      |  

                             

-

-                                                                                     |  

                             

28,330

-                                             |  

                             

176,029

170,000                                                               |  

                             

-

-                                                                                           |  

                             

                             

-                                                              |  

                             

437,675

389,421                                                                                                       |
| Patrick T. Lyles

Senior Vice President                                                                                                                                             | 2007

2006                                                                                                                                                                                       | 209,874

195,412                                                                                                                                                                                       | -

-                                                                                                                                                                                                  | -

-                                                                                                                                 | 16,998

-                                                                                         | 142,508

138,000                                                                                                           |  

-                                                                                                                                  |  

-                                                                                                                                      | 369,380

333,412                                                                                                                                                   |
| Anne T. Liechty

Senior Vice President-Visiting Nurse                            Operations                                                                                         |  

                             

2007

2006                                                                                                                                           |  

                             

168,986

156,379                                                                                                                                           |  

                             

-

-                                                                                                                                                      |  

                             

-

-                                                                                     |  

                             

9,443

-                                              |  

                             

102,000

150,000                                                               |  

                             

-

-                                                                                           |  

                             

1,175

1,016                                                                                       |  

                             

281,604

307,395                                                                                                       |
| Phyllis D. Montville

Senior Vice President – Operations                                                                                                                      |  

2007

2006                                                                                                                                                                               |  

168,077

145,000                                                                                                                                                                               |  

-

-                                                                                                                                                                                          |  

-

-                                                                                                                         |  

9,443

-                                                                                  |  

75,000

50,000                                                                                                     |  

-

-                                                                                                                               |  

2,352

-                                                                                                                               |  

254,872

195,000                                                                                                                                           |

 

In            2007, the fair value of each option award 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

 

7

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, 2007: equivalent interest rate of 4.80%,            equivalent volatility of approximately 44.79%, implied expected lives of 3.5 years, and            expected lives of 7.4 years.

 

The following table provides information about equity and non-equity            awards granted to the Named Executive Officers in 2007.

**Grants of Plan-Based Awards**

 

| Name                                                             | Grant Date      | 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

                                |  

2/12/07 |  

30,000                                                                                  |  

19.40                                                             |  

256,110                                                             |
|  

C. Steven Guenthner

                               |  

2/12/07 |  

15,000                                                                                  |  

19.40                                                             |  

128,055                                                             |
|  

Patrick T. Lyles

                                  |  

2/12/07 |  

9,000                                                                                   |  

19.40                                                             |  

76,833                                                              |
|  

Anne T. Liechty

                                   |  

2/12/07 |  

5,000                                                                                   |  

19.40                                                             |  

42,685                                                              |
|  

Phyllis D. Montville

                              |  

2/12/07 |  

5,000                                                                                   |  

19.40                                                             |  

42,685                                                              |

 

 

8

 

The            following table provides information on the stock option holdings as of December 31,            2007 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 |   | Equity Incentive Plan Awards: Number of Securities                            Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expira-tion Date | Number of Shares or Units of Stock That Have Not Vested                            (#) | Market Value of Shares or Units of Stock That Have Not                            Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares,                            Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of                            Unearned Shares, Units or Other Rights That Have Not Vested                            ($) |
| William B. Yarmuth

                               |  

                                                                                   |  

                              |  

30,000 |  

(2) |   |  

19.40 |  

2/11/17 |   |   |   |   |
| C. Steven Guenthner

                              | 33,014

                                                                                   | (1)

                                 |  

15,000 |  

(2) |   | 2.13

19.40 | 2/3/11

2/11/17 |   |   |   |   |
| Patrick T. Lyles

                                 | 20,000

                                                                                   | (1)

                                 |  

9,000 |  

(2) |   | 2.13

19.40 | 2/3/11

2/11/17 |   |   |   |   |
| Anne T. Liechty

                                  |                                                                                            |                                       | 5,000 | (2) |   | 19.40 | 2/11/17 |   |   |   |   |
| Phyllis Montville

                                |                                                                                            |                                       | 5,000 | (2) |   | 19.40 | 2/11/17 |   |   |   |   |
|                                                         |                                                                                                 |                                            |  |  |  |  |  |  |  |  |  |  |

             

|   | (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-for-1 stock split. Options vest 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 over 3 years and will                            be vested on 2/10/2010. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

9

The following table provides information on the stock options exercised            by the Named Executive Officers in 2007

 

**Option Exercises and Stock Vested**

 

|                                                             | Option Awards                                      | Stock Awards                                        |
|------------------------------------------------------------------|----------------------------------------------------|-----------------------------------------------------|
| Name                                                             | Number of Shares

Acquired on Exercise (#)         | Value Realized on Exercise ($)                      | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)

                              |
|  

William B. Yarmuth

                                |  

382,516                                    |  

7,756,299                                   |  

- |  

- |
|  

C. Steven Guenthner

                               |  

14,634                                     |  

297,421

                              |  

- |  

- |
|  

Patrick T. Lyles

                                  |  

33,896

                              |  

698,173                                     |  

- |  

- |
|  

Anne T. Liechty

                                   |  

-

                                   |  

-

                                    |  

- |  

- |
|  

Phyllis D. Montville

                              |  

-                                          |  

-                                           |  

- |  

- |

 

**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, 2007, this amount            would have been $790,000. 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.

 

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, 2007, this amount would have been $2,276,500. 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            receive all compensation to which the excise tax applies absolutely net of            the

 

10

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 2007.            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       | 22,500                          | -                | 8,499             | -                                          | -                                                                                                  | -                          | 30,999     |
| Donald G. McClinton  | -                               | -                | 8,499             | -                                          | -                                                                                                  | 24,969                     | 33,468     |
| Tyree G. Wilburn     | 32,500                          | -                | 8,499             | -                                          | -                                                                                                  | -                          | 40,999     |
| Jonathan D. Goldberg | -                               | -                | 8,499             | -                                          | -                                                                                                  | 42,722                     | 51,221     |
| W. Earl Reed, III    | 30,500                          | -                | 8,499             | -                                          | -                                                                                                  | -                          | 38,999     |
| Henry M. Altman, Jr. | 21,000                          | -                | 8,499             | -                                          | -                                                                                                  | -                          | 29,499     |

 

 

The            grant date fair value of option awards for Messrs. Bing, McClinton, Wilburn, Goldberg,            Reed and Altman is $38,417. There were 27,000 options outstanding at December 31,            2007.

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, 2007, 117,040 shares have been allocated in deferred accounts, 8,622 have            been issued to previous Directors and 74,338 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 2007 fees deferred into the Non-Employee Directors            Deferred Compensation Plan by the respective directors.

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 2007, Directors were compensated 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. In addition, in 2007, the            board approved an annual grant of options to purchase 4,500 shares of common stock to            each non-employee director, which have an exercise price equal to

 

11

fair            market value (as defined below) on date of grant, the Option shall be exercisable with            respect to 25% of the shares on the first anniversary of the Grant Date, and with            respect to an additional 25% on each subsequent anniversary of the Grant Date until the            Option is fully vested on the fourth anniversary of the Grant Date The 2007 grant to            each of the six non-employee directors was made on February 12, 2007. The options have            an exercise price of $19.40, which was the last reported trade (fair market value) of            our stock on the date of grant.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The            Compensation Committee of the Board is comprised of Messrs. Bing, Goldberg, McClinton,            Reed and Wilburn, 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 members of our Compensation Committee or any of our directors is an            executive officer.

 

**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 five 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.

 

12

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. 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.

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

 

13

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            award annual increases to Ms. Liechty and Ms. Montville 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. Montville 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.

**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 2007, if the targeted level of earnings per share of            $1.21 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 $1.05 were achieved, the Committee would award a bonus equal to            50% of the target bonus amount. If earnings per share of $1.40 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 2007 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 $1.40 per share in 2007 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.            Montville. Based on the Company’s achievement of earnings per share of $1.40 and            his review of their performance and management responsibilities, Ms. Liechty was            awarded a cash bonus of $102,000 and Ms. Montville was awarded a cash bonus of            $75,000.

**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 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.

 

14

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 addition, the Committee considers information prepared            by Mercer with respect to the equity awards and considers the relative costs. In making            stock option awards for 2007, 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 2007 option awards were based on the following percentage targets for            Messrs. Yarmuth, Guenthner and Lyles: 100%, 65% and 50%, as adjusted by the Committee.)            Then the tentative number of option shares to grant was calculated by dividing that            “value” by the fair market value of one option share using the Monte            Carlo option valuation model. 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            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 to Ms. Liechty            and Ms. Montville in 2007; these amounts were based upon their relative management            responsibility within the Company. All options awarded in 2007 will vest in four equal            annual installments beginning on the first 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. 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

 

15

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 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”).

 

**REPORT OF THE COMPENSATION COMMITTEE**

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. 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

             

16

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

 

| **Shares of Common Stock Beneficially Owned as of                            March 31, 2008**(1)                              |
|-------------------------------------------------------------------------------------------------------------------------------|
|  

**Directors and Executive                            Officers**

                                                | **Amount and Nature of**

**Beneficial Ownership** 

                              | **Percent                            o****f**

**Class** |
| William B. Yarmuth

9510 Ormsby Station Road, Suite 300

Louisville, KY 40223

                                          | 613,294 | (2) | 10.9% |
| C. Steven Guenthner

                                                                                                    | 183,320 | (3) | 3.3% |
| Steven B. Bing

                                                                                                         | 1,805 |   | * |
| Donald G. McClinton

                                                                                                    | 95,307 | (4) | 1.7% |
| Tyree G. Wilburn

                                                                                                       | 52,125 | (5) | 0.9% |
| Jonathan D. Goldberg

                                                                                                   | 83,095 | (6) | 1.5% |
| W. Earl Reed, III

                                                                                                      | 145,679 | (7) | 2.6% |
| Henry M. Altman, Jr.

                                                                                                   | 21,125

                              | (8) | * |
| Patrick T. Lyles

                                                                                                       | 80,962 | (9) | 1.4% |
| Anne T. Liechty                                                                                                               | 25,555 |   | *

                              |
| Phyllis D. Montville

                                                                                                   | 2,250 |   | * |
| Directors and Named Executive Officers as a Group (12                            persons)

                              | 1,306,767 | (10) | 23.3% |
| **Other Five Percent Beneficial                            Owners**                                                           |   |   |
|                                                                                                                          |   |   |   |
| Yarmuth Family Limited Partnership

9510 Ormsby Station Road, Suite 300

Louisville, KY 40223                                 | 256,232 | (11) | 5.8% |
| David T. Russell

1414 Greenfield Avenue, Apt. 302

Los Angeles, CA 90025                                                     | 385,248 |   | 6.9% |

 

 

*            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 5,609,290 shares of                            common stock issued and outstanding as of March 31, 2008. 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. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

17

             

| (2) | Includes 5,924 shares as to which Mr. Yarmuth shares                            voting and investment power pursuant to a family trust and 7,500 shares                            subject to currently exercisable options. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

| (3) | Includes 36,764 shares subject to currently exercisable                            options. |
|-----|---------------------------------------------------------------------------------------------|

             

| (4) | Includes 21,125 shares subject to currently exercisable                            options and 29,182 phantom shares within the Non-Employee Directors                            Deferred Compensation Plan. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

| (5) | Includes 17,125 shares subject to currently exercisable                            options. |
|-----|---------------------------------------------------------------------------------------------|

             

| (6) | Includes 17,125 shares subject to currently exercisable                            options and 45,970 phantom shares within the Non-Employee Directors                            Deferred Compensation Plan. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

| (7) | Includes 33,125 shares subject to currently exercisable                            options and 12,554 phantom shares within the Non-Employee Directors                            Deferred Compensation Plan. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

| (8) | Includes 21,125 shares subject to currently exercisable                            options. |
|-----|---------------------------------------------------------------------------------------------|

             

| (9) | Includes 22,500 shares subject to currently exercisable                            options. |
|-----|---------------------------------------------------------------------------------------------|

             

| (10) | Includes currently exercisable options held by all                            directors and executive officers as a group to purchase 244,720 shares                            of Common Stock and 87,706 phantom shares held by Non-Employee                            Directors within the Non-Employee Directors Deferred Compensation                            Plan. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

| (11) | Robert N. Yarmuth is the general partner and is the                            brother of William B. Yarmuth. |
|------|---------------------------------------------------------------------------------------------------------------|

 

 

18

**Equity Compensation Plans** 

 

As            of December 31, 2007, 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 |  

317,014

-                        |   |  

$            11.87

- |   |  

495,000

-                                                             |
|                                                                       |                                      |   |                                                                                      |   |                                                                           |
| Total                                                                      | 317,014                                   |   | $            11.87            |   | 495,000                                                                        |

 

 

19

**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            $602,000 and $189,000 for professional services rendered for fiscal year 2007 and            fiscal year 2006, 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 2007            and fiscal year 2006, 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            $144,000 and $178,000 for professional services rendered for fiscal year 2007 and            fiscal year 2006, 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 2007 and 2006. |
|--------|---------------------------------------------------------------------------------------------------------------------|

 

*Pre-Approval Policies and Procedures*

 

During fiscal year 2007, 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.

 

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

a)

 

20

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.*

April 29, 2008

 

| /S/ William B. Yarmuth | April 29, 2008 |
|------------------------|----------------|

William B. Yarmuth

Chairman, President and Chief Executive Officer

 

| /S/ C. Steven Guenthner | April 29, 2008 |
|-------------------------|----------------|

C.            Steven Guenthner

Senior Vice President and Chief Financial Officer

(Principal Financial Officer)

 

21

 

|   | **EXHIBITS AND FINANCIAL STATEMENT                            SCHEDULES** |
|--------|---------------------------------------------------------------------------|

 

|   | Exhibits required to be filed by Item 601 of Regulation                            S-K, and by Item 15 I 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.

 

 

22