Fresenius Medical Care First Quarter Earnings Grew 38% to US$ 75 Million; Cash Flow from Operations reached $ 70 million.Business Editors and Health/Medical Writers BAD 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)--April 30, 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 dialysis (dīăl`ĭsĭs), in chemistry, transfer of solute (dissolved solids) across a semipermeable membrane. Strictly speaking, dialysis refers only to the transfer of the solute; transfer of the solvent is called osmosis. Products and Services, today announced a 38% increase in earnings after tax (EAT) after minorities to $75 million (before extraordinary items)(A) for the first quarter 2002. Total revenue for the first quarter 2002 increased 2% (5% constant currency) to $ 1,187 million. Adjusted for the number of dialysis treatment days revenue growth at constant currency was 6%. North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. revenue rose 3% to $ 892 million, compared to $ 867 million in the same period last year. Dialysis Care revenue in the US increased by 4% to $ 784 million. Same store treatment growth and same store revenue growth for the first quarter of 2002 were 5%. North American Dialysis Product revenue, including sales to company-owned clinics, increased 3% to $ 182 million compared to the first quarter of 2001. Product sales to the available external market grew by 8%. International revenue was $ 294 million, up 12% in constant currency. Dialysis Care reached $ 97 million in the first quarter 2002 (+23% at constant currency). Adjusted for currency, Dialysis Products revenue, including sales to company-owned dialysis clinics, increased 8% to $ 219 million in the first quarter 2002. EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). (Earnings before interest and taxes In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.[1] EBIT = Operating Revenue – Operating Expenses + Non-operating Income ) increased 11% to $ 174 million resulting in an operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 14.7%. This compares to 14.1% before special charges for legal matters in the fourth quarter of 2001, adjusted for the new goodwill accounting rules. The operating margin benefited from reduced costs for the single-use dialyzers strategy (0.3%) and a lower personnel cost run-rate (0.4%) in the US. The margin in the International segment was reduced primarily as a result of lower machine sales (-0.5%). In addition, the operating margin was positively influenced by a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. curtailment Curtailment The act of contracting or reducing operations of a company in the hope of bringing it financial or operational stability. This management technique is often used when a company has grown too fast and is unable to effectively manage its operations. gain from freezing freezing, change of a substance from the liquid to the solid state. The temperature at which freezing occurs for a pure crystalline solid is called the freezing point and is a characteristic of the particular substance. the US pension plan (1.1%), partially set off by severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. costs for workforce reductions (-0.6%). Earnings per share (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) before extraordinary item in the first quarter 2002 rose 38% to $ 0.78 ($ 0.26 per ADS), compared to $ 0.56 ($ 0.19 per ADS) in the first quarter of 2001. The weighted average number of shares outstanding during the first quarter of 2002 was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 96.2 million, compared to 95.9 million in the same period of 2001. The results for the first quarter 2002 are based on the new accounting standards on Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. (FAS 142) which came into effect January January: see month. 1, 2002. The Company anticipates no impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of goodwill as of January 1, 2002 in any of its operating segments as a result of this accounting change. In order to facilitate a year-over-year comparison, adjusted figures for the first quarter 2001 are provided in the appendix appendix, small, worm-shaped blind tube, about 3 in. (7.6 cm) long and 1-4 in. to 1 in. (.64–2.54 cm) thick, projecting from the cecum (part of the large intestine) on the right side of the lower abdominal cavity. . As of March 31, 2002, the Company operated a total of 1,405 clinics worldwide of which 375 clinics were outside of 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. . In the first quarter 2002, the Company added 2 clinics through acquisitions and 20 new clinics were opened by the Company (DeNovos). Fresenius Medical Care AG performed approximately 3.9 million treatments, which represents an increase of 8% year-over-year. North America accounted for 2.8 million treatments (+3%). The International segment accounted for 1.1 million treatments (+21%). Fresenius Medical Care generated $ 70 million in cash from operations in the first quarter of 2002. A total of $ 50 million (net of disposals) was spent for capital expenditures, resulting in a Free Cash Flow of $ 20 million, compared to $ 16 million in the first quarter of 2001. A total of $ 9 million in cash was spent for acquisitions. Ben Lipps Lipps may refer to:
di·a·lyz·er n. 1. A machine equipped with a semipermeable membrane and used for performing dialysis. 2. program and expected cost savings in the FMC See fixed mobile convergence. North American clinics are on track. In the International segment we have seen deferral deferral - Waiting for quiet on the Ethernet. of purchases of dialysis machines due to financial constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. . In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a challenging currency environment and temporarily less funds available for dialysis machines purchases the company continues to be on track to achieve its full-year financial targets". 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 1,100,000 individuals worldwide. Through its network of approximately 1,400 dialysis clinics in North America, Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , 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 The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). , Fresenius
Medical Care provides dialysis treatment to approximately 106,400
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 Disposable products are items that are not intended by the manufacturer to be reused more than once or a few times as compared to more permanent serviceable and reusable items. Some products that have disposable versions are:
For more information about Fresenius Medical Care, visit the Company's website at http://www.fmc-ag.com. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 Regulatory Reform concerns improvements to the quality of government regulation. At the international level, the "OECD Regulatory Reform Programme is aimed at helping governments improve regulatory quality -- that is, reforming regulations that raise unnecessary obstacles to , foreign exchange rate fluctuations, uncertainties in 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. or investigative proceedings, and the continued availability of financing and liquidity. 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. Users of this financial information should consider the types of events and transactions for which adjustments have been made.
Fresenius Medical Care AG
Statements of Earnings at current exchange rate
(in US-$ thousands, except share and per share data)
(unaudited)
Three Months Three Months
Ended Ended % Change
31-Mar-2002 31-Mar-2001
as reported as reported
------------ ------------ ------------
Net revenue
Dialysis Care 881,176 849,984 3.7%
Dialysis Products 305,328 309,506 -1.3%
------------ ------------ ------------
1,186,504 1,159,490 2.3%
Cost of revenue 809,182 769,710 5.1%
------------ ------------ ------------
Gross profit 377,322 389,780 -3.2%
Selling, general and
administrative 194,118 224,499 -13.5%
Research and development 9,309 7,966 16.9%
------------ ------------ ------------
Operating income (EBIT) 173,895 157,315 10.5%
============ ============ ============
Interest (income)
expense, net 53,238 52,789 0.9%
------------ ------------ ------------
Earnings before income taxes
and minority interest 120,657 104,526 15.4%
Income tax expense 44,588 49,692 -10.3%
Minority interest 860 327 163.0%
------------ ------------ ------------
Income before
extraordinary items $75,209 $54,507 38.0%
------------ ------------ ------------
Extraordinary loss,
net of taxes 11,777 0
------------ ------------ ------------
Net income after
extraordinary items $63,432 $54,507 16.4%
------------ ------------ ------------
Earnings per ordinary share(B) $0.78 $0.56 37.9%
Earnings per ordinary ADS(B) $0.26 $0.19 37.9%
Earnings per preference share(B) $0.79 $0.58 36.8%
Earnings per preference ADS(B) $0.26 $0.19 36.8%
Average weighted number
of shares
Ordinary shares 70,000,000 70,000,000
Preference shares 26,176,508 25,894,569
Segment and other Information
(in US-$ million)
(unaudited)
Net revenue
North America 892 867 3.0%
International 294 293 0.4%
------------ ------------ ------------
Total revenue 1,187 1,159 2.3%
============ ============ ============
EBIT
North America 126 109 15.7%
International 51 52 -0.4%
Corporate (4) (3) 9.7%
------------ ------------ ------------
EBIT 174 157 10.5%
============ ============ ============
Depreciation / Amortization 51 79
Bad debt expenses 23 19
Three Months Three Months
Ended Ended % Change
31-Mar-2002 31-Mar-2001
as reported as reported
------------ ------------ ------------
Percentages of revenue
Cost of revenue 68.2% 66.4%
Gross profit 31.8% 33.6%
Selling, general and
administrative 16.4% 19.4%
Research and development 0.8% 0.7%
------------ ------------
Operating income
(EBIT) 14.7% 13.6%
============ ============
Interest (income)
expense, net 4.5% 4.6%
------------ ------------
Earnings before income taxes
and minority interest 10.2% 9.0%
Income tax expense 3.8% 4.3%
Minority interest 0.1% 0.0%
------------ ------------
Income before
extraordinary items 6.3% 4.7%
------------ ------------
------------ ------------
EBITDA 19.0% 20.4%
------------ ------------
Three Months Three Months
Ended Ended % Change
31-Mar-2002 31-Mar-2001
Goodwill Goodwill
adjusted adjusted
------------ ------------ ------------
Key figures Goodwill adjusted
(in US-$ millions,
except per share data)
Net revenues 1,187 1,159 2.3%
EBITDA 225 237 -5.0%
EBIT - Operating income 174 190 -8.7%
Income before extraordinary items 75 82 -8.2%
Earnings per ordinary share (B) $0.78 $0.85 -8.2%
Earnings per ordinary ADS (B) $0.26 $0.28 -8.2%
Percentages of revenue
EBITDA 19.0% 20.4%
EBIT - Operating income 14.7% 16.4%
Income before extraordinary items 6.3% 7.1%
Employees (March, 31 compared to Dec., 31)
Full-time equivalents 37,233 37,331
Cash Flow Statement Three Months Three Months
in US-$ Mio. (unaudited) Ended Ended Fiscal Year
3/31/2002 3/31/2001 Dec. 31, 2001
Net income 63 55 63
Depreciation / amortization 51 79 324
Change in working capital
and other non cash items -44 -57 37
Cash from operating activities 70 77 424
Capital expenditures, net -50 -62 -251
Free Cash flow 20 16 173
Acquisitions, net of cash acquired -9 -117 -217
Free Cash flow after
investing activities 11 -102 -44
Proceeds from issuance of stock 1 6
Proceeds from issuance of
Trust Preferred Securities 471
Redemption of trust
preferred securities -376
Change in other debt 376 111 -368
Dividends paid -66
Cash flow from financing activities 0 111 43
Effects of exchange rates on cash 2 -2 -3
Net increase (change) in cash 13 8 -3
Cash at beginning of period 62 65 65
Cash at end of period 75 73 62
Balance Sheet Three Months Three Months
in US-$ Mio. (unaudited) Ended Ended Fiscal Year
3/31/2002 3/31/2001 Dec. 31, 2001
Assets
Current assets 1,776 1,706 1,779
Intangible assets 3,652 3,722 3,682
Other non-current assets 1,061 964 1,055
----------------------------------------------------------------------
Total assets 6,488 6,391 6,516
Shareholders' equity and liabilities
Current liabilities 1,389 1,427 1,377
Long-term liabilities 2,487 2,192 2,522
Shareholders' equity 2,612 2,772 2,617
----------------------------------------------------------------------
Total Shareholders'
equity and liabilities 6,488 6,391 6,516
Debt 2,895 2,860 2,884
Equity/assets ratio: 40% 43% 40%
Fresenius Medical Care - Quarterly Performance Scorecard
Three Months Three Months
Ended Ended
31-Mar-2002 31-Mar-2001
Revenue
(in US-$ thousands, except per-treatment revenue)
North America
-------------
Net revenue 892,483 866,691
Growth year-over-year 3.0% 16.8%
Dialysis Care 783,871 754,101
Growth year-over-year 3.9% 20.5%
Per treatment 283 279
Sequential growth 1.9% 4.5%
Growth year-over-year 1.3% 2.2%
Dialysis Products
incl. internal sales 181,912 177,190
Growth year-over-year 2.7% 2.9%
Dialysis Products to available
external market 89,272 82,784
Growth year-over-year 7.8% 6.1%
International
-------------
Net revenue 294,020 292,799
Growth year-over-year 0% / 12% cc 13% / 21% cc
Dialysis Care 97,305 95,883
Growth year-over-year 1% / 23% cc 40% / 47% cc
Per treatment 89 / 108 cc 106
Sequential growth -16% 3%
Growth year-over-year -16% / 2% cc 5% / 10% cc
Dialysis Products
incl. internal sales 218,503 216,175
Growth year-over-year 1% / 8% cc 5% / 13% cc
cc at constant exchange rates
Fresenius Medical Care - Quarterly Performance Scorecard
Three Months Three Months
Ended Ended
31-Mar-2002 31-Mar-2001
Dialysis Care Volume
North America
-------------
Number of treatments 2,784,120 2,698,122
Treatments per day 36,632 35,021
Per day sequential growth 1.4% 10.8%
Per day year-over-year growth 4.6% 19.5%
of which
- acquisitions 0% 13.4%
Same store growth
year-over -year 4.6% 6.1%
International
-------------
Number of treatments 1,098,239 907,960
Same store growth
year-over -year 12.0% 8.0%
Expenses
North America
-------------
Operating expenses(C)
Percent of revenues 85.8% 84.0%
Selling, general and
administrative(C)
Percent of revenues 12.2% 12.1%
Bad debt expenses
Percent of revenues 2.4% 2.1%
Cost of Dialysis Care
Services/Treatment 244 236
Sequential growth 1.1% 5.5%
Growth year-over-year 3.1% 6.6%
Total Group
-----------
Operating expenses(C)
Percent of revenues 85.3% 83.6%
Selling, general and
administrative(C)
Percent of revenues 16.4% 16.5%
Effective tax rate(C) 37.0% 40.2%
Fresenius Medical Care - Quarterly Performance Scorecard
Three Months Three Months
Ended Ended
31-Mar-2002 31-Mar-2001
Cash Flow/Investing Activities
(in US-$ thousands)
Total Group
-----------
Operating Cash Flow 70,484 77,114
Percent of revenues 5.9% 6.7%
Free Cash Flow, before
acquisitions 20,129 15,519
Percent of revenues 1.7% 1.3%
Acquisitions, net 8,962 117,348
Capital expenditures, net 50,355 61,595
Percent of revenues 4.2% 5.3%
Maintenance 25,426 37,295
Percent of revenues 2.1% 3.2%
Growth 24,929 24,300
Percent of revenues 2.1% 2.1%
Number of de novos 20 22
North America 10 18
International 10 4
Balance Sheet
Total Group
-----------
Debt (in US-$ millions) 2,895 2,860
Debt/EBITDA (annualized) 3.0 3.0
North America
-------------
Days sales outstanding 88 90
Sequential development 1.1% 0%
Year-over -year development -2.2% 8.4%
International
-------------
Days sales outstanding 143 141
Sequential development -5.3% -3.4%
Year-over -year development 1.4% 8.5%
Fresenius Medical Care - Quarterly Performance Scorecard
Three Months Three Months
Ended Ended
31-Mar-2002 31-Mar-2001
Clinical Performance
North America
-------------
URR > 65 85% 84%
Kt/v > 1.2 92% 91%
Hemoglobin >= 11g/dl 73% 71%
Albumin >= 3.5 g/dl 83% 83%
Mortality rate (12 months) 17.6 17.9
Hospitalization days (12 months) 9.1 9.4
Demographics
North America
-------------
Average age (yr) 61 61
Average time on dialysis (yr) 3.2 3.1
Average body weight (kg) 75 75
Prevalence of diabetes (%) 50% 47%
(A) $ 12 million, net of taxes, for the early redemption of 9% Trust
Pref. Securities.
(B) before extraordinary items
(C) Excluding goodwill amortization
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