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Fresenius Medical Care
FRESENIUS MEDICAL CARE AG
INVESTOR NEWS INVESTOR RELATIONS
Else-Kroner-Str. 1
D-61352 Bad Homburg
Contact:
Oliver Maier
Phone: + 49 6172 609 2601
Fax: + 49 6172 609 2301
E-mail: ir-fms@fmc-ag.com
North America: Heinz Schmidt
Phone: + 1 781 402 9000 Ext.: 4518
Fax: + 1 781 402 9741
E-mail: ir-fmcna@fmc-ag.com
Internet: http://www.fmc-ag.com
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FEBRUARY 13, 2002
FRESENIUS MEDICAL CARE AG TO PROVIDE FOR 1996
MERGER-RELATED LEGAL MATTERS INCLUDING PENDING
COMMERCIAL INSURER LITIGATION BY TAKING A SPECIAL CHARGE FOR 2001
Fresenius Medical Care AG (Frankfurt Stock Exchange: FME, FME3 - NYSE:
FMS, 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 AND the cost of resolving the pending
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 US commercial insurance companies.
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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 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 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. 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, a condition
that affects more than 1,000,000 individuals worldwide. Through its network of
more than 1,375 dialysis clinics in North America, Europe, Latin America 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 machines,
dialyzers and related disposable products.
For more information about Fresenius Medical Care, visit the Company's website
at http://www.fmc-ag.com.
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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.