Fresenius Medical Care AG to Provide for 1996 Merger-Related Legal Matters Including Pending Commercial Insurer Litigation by Taking a Special Charge for 2001.Business Editors & Health/Medical WritersBAD HOMBURG Bad Hom·burg A city of west-central Germany at the foot of the Taunus Mountains near Frankfurt. It is a famous spa and resort. Population: 53,200. , Germany--(BW HealthWire)--Feb. 13, 2002 Fresenius Medical Care Fresenius Medical Care is a German company specializing in the production of medical supplies, primarily to facilitate or aid renal dialysis. It is 37%-owned by the health care company Fresenius SE. AG (Frankfurt Stock Exchange Frankfurt Stock Exchange The largest of Germany's eight securities exchanges, operated by Deutsche Borse AS. : FME FME Formal Methods Europe FME Faculty of Mechanical Engineering (Brno University of Technology, Czech Republic) FME Feature Manipulation Engine FME Facultat de Matemàtiques I Estadística , FME3 - NYSE NYSE See: New York Stock Exchange : FMS FMS - Flexible Manufacturing System (factory automation). , FMS_p), the world's largest provider of dialysis products and services, today announced that it will accrue a special pre-tax charge of $258 million in the fourth quarter of 2001 ($177 million after tax) principally to address potential liabilities and legal expenses of the Company arising in connection with the W.R. Grace Chapter 11 proceedings Chapter 11 Proceedings Provisions of the Bankruptcy Reform Act under which the debtor firm is reorganized by a court because the estimated value of the reorganized firm exceeds the expected proceeds from its liquidation. and the cost of resolving the pending litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and other disputes with certain commercial insurers. Fresenius Medical Care AG also announced that the Company entered into an agreement in principle outlining terms of a process to resolve the pending litigation with Aetna Life Insurance Company and its affiliates (Aetna), one of the leading U.S. commercial insurance companies. The special charge primarily comprises two major components: 1. Fresenius Medical Care has assessed the extent of potential liabilities that the Company may be exposed to as a result of the W.R. Grace Chapter 11 proceedings, in particular pre-merger tax liabilities of W.R. Grace. Fresenius Medical Care will accrue $172 million pre-tax to provide for such potential liabilities and the costs of defending the Company in litigation arising out of W.R. Grace's Chapter 11 filing. The Company will continue to vigorously seek existing indemnification against these pre-merger liabilities from W.R. Grace and from Sealed Air Sealed Air Corporation(NYSE: SEE) is a company that makes a variety of packaging materials, systems and equipment. Its brands include Bubble Wrap, Cryovac, Instapak, Shanklin and Jiffy Mailer. They have recently moved headquarters to Elmwood Park, New Jersey. Corporation, formerly known as Grace Holding, Inc. 2. Fresenius Medical Care has entered into an agreement in principle with Aetna to establish, among other things, a process for resolving its pending litigation and the basis for a cooperative relationship that will continue to improve renal patient care, reduce clinical costs and streamline administrative procedures. The Company is optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that these terms will also provide a basis for resolving pending matters with the remaining commercial litigants and has therefore included in the special charge an amount of $56 million pre-tax to provide for settlement obligations, legal expenses and disputed accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying . If the Company is unable to settle the pending matters with any of the remaining commercial insurers, whether on the basis of the Aetna agreement in principle or otherwise, the Company believes that this charge reasonably estimates the costs and expenses associated with such litigation. The remaining amount of around $ 30 million pre-tax will be accrued for other 1996 merger-related legal issues. Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented, "We are pleased with these significant steps to provide for and resolve the remaining legal matters dating back to our 1996 National Medical Care transaction and we believe that this puts those matters financially behind us. We believe we found a model with Aetna that sets the stage for a productive relationship, and I would like to compliment Aetna for its commitment to patient care and its willingness to work creatively with us. I am optimistic that this agreement will provide the basis to resolve similar disputes with other commercial insurers. We have worked hard since Grace filed for Chapter 11 in 2001 to assess the potential impact of that filing on the Company and to encourage Grace and its affiliates to honor the obligations they undertook to us in 1996. At the same time, we have carefully assessed the potential liabilities arising from that filing and the costs to enforce our legal rights. We continue to enforce vigorously our indemnification from W.R. Grace and Sealed Air Corporation and assert our rights under the law. With these steps to provide for resolution of the 1996 merger-related issues, we will continue our focus on operational excellence, strong financial performance and the transformation of Fresenius Medical Care from the largest worldwide provider of dialysis products and services to the leading renal therapy company." Fresenius Medical Care AG is to announce fourth quarter and full year 2001 results on March 5, 2002. The Company expects to achieve earnings after tax, excluding the special charge, to be in the range of $240-245 million for the fiscal year 2001. Fresenius Medical Care AG is the world's largest, integrated provider of products and services for individuals with chronic kidney failure Chronic Kidney Failure Definition Chronic kidney failure occurs when disease or disorder damages the kidneys so that they are no longer capable of adequately removing fluids and wastes from the body or of maintaining the proper level of certain , a condition that affects more than 1,000,000 individuals worldwide. Through its network of more than 1,375 dialysis clinics in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Europe, Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and Asia-Pacific, Fresenius Medical Care provides dialysis treatment to approximately 103,850 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis hemodialysis /he·mo·di·al·y·sis/ (-di-al´i-sis) removal of certain elements from the blood by virtue of the difference in rates of their diffusion through a semipermeable membrane while being circulated outside the body; the process machines, dialyzers and related disposable products. For more information about Fresenius Medical Care, visit the Company's website at http://www.fmc-ag.com. This release contains forward-looking statements that are subject to various risks and uncertainties. Actual results could differ materially from those described in these forward-looking statements due to certain factors, including changes in business, economic and competitive conditions, regulatory reforms, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. These and other risks and uncertainties are detailed in Fresenius Medical Care AG's reports filed with the U.S. Securities and Exchange Commission. Fresenius Medical Care AG does not undertake any responsibility to update the forward-looking statements in this release. |
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