EXHIBIT 99.1
[GRAPHIC LOGO OMITTED]
Fresenius Medical Care
FRESENIUS MEDICAL CARE AG
PRESS RELEASE INVESTOR RELATIONS
Else-Kroner-Str. 1
D-61352 Bad
Homburg
Contact:
Oliver Maier
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Phone: + 49 6172 609 2601
Fax: + 49 6172 609 2301
E-mail: ir-fms@fmc-ag.com
Heinz Schmidt
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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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May 7, 2003
FRESENIUS MEDICAL CARE REPORTS FIRST QUARTER 2003 RESULTS
SUMMARY:
o TOTAL REVENUE of $ 1,299 million up 10%. Adjusted for currency effects
revenue increased by 7%.
o NET INCOME of $ 70 million
o FREE CASH FLOW at Q1 record level of $ 84 million
o OPERATING MARGIN in North America improved in Q1 2003 compared with Q4 2002
- despite lower number of dialysis days
o International OPERATING MARGIN impacted by crisis in Middle East, Latin
America, pricing pressures in Central Europe
Fresenius Medical Care AG, May 7, 2003 1 of 11
Bad Homburg, Germany - May 7, 2003 -- Fresenius Medical Care AG ("the
Company") (Frankfurt Stock Exchange: FME, FME3) (NYSE: FMS, FMS_p), the world's
largest provider of Dialysis Products and Services, today announced the results
for the first quarter 2003.
OPERATIONS
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FIRST QUARTER 2003:
- -------------------
TOTAL REVENUE for the first quarter 2003 increased 10% (7% at constant
currency) to $ 1,299 million. Dialysis Care revenue grew by 7% to $ 944 million
(+7% at constant currency) in the first quarter of 2003. External Dialysis
Product revenue increased by 16% to $ 355 million (+6% at constant currency) in
the same period. Internal revenue growth was 4.5%.
NORTH AMERICA:
Revenue rose 4% to $ 929 million, compared to $ 892 million in the same
period last year. Dialysis Care revenue increased by 5% to $ 824 million. Same
store treatment growth year over year was 3.3%. The average revenue per
treatment decreased to $ 278 in the first quarter 2003 (Q1 2002: $ 284).
Adjusted for the announced intra division billing changes for some Medicare
Peritoneal Dialysis patients and the new billing procedures for Vitamin D
(Zemplar), the revenue per treatment was comparable with the first quarter 2002.
Dialysis Product revenue, including sales to company-owned clinics, increased 5%
to $ 190 million. Product sales to the available external market grew by 6.2%.
INTERNATIONAL:
Revenue was $ 370 million, up 26% from the first quarter of 2002, an
increase of 14% adjusted for currency. Dialysis Care revenue reached $ 121
million, an increase of 24% (19% at constant currency). Dialysis Products
revenue, including sales to company-owned dialysis clinics, increased 26% to $
275 million (12% at constant currency).
Fresenius Medical Care AG, May 7, 2003 2 of 11
OPERATING INCOME (EBIT) was $ 169 million resulting in an operating margin
of 13.0%. Operating income in the first quarter of 2002 was $ 174 million
including a one-time benefit of $ 6 million. The operating margin was 14.7%.
First quarter 2002 operating income before the one-time item was $ 168 million
and the operating margin was 14.2%. The first quarter 2003 operating margin was
below the targeted range for the year as the situation in the Middle East and
Latin America affected the International margin. Additionally, pricing pressure
in Central Europe, in particular the difficult environment in Germany following
a reimbursement change, impacted the operating margin in the International area.
In North America the operating margin increased sequentially to 13.2%,
despite a lower number of dialysis days than in the fourth quarter 2002. In the
first quarter of 2002, the North American margin was impacted by the
above-mentioned one-time benefit of $ 6 million. Adjusted for this effect the
comparable North American operating margin for the first quarter of 2002 would
have been 13.5%.
NET INCOME in the first quarter 2003 was $ 70 million, an increase of 10%.
In accordance with the new US-GAAP Accounting Standard SFAS 145, the loss from
the early redemption of the Trust Preferred Securities in the first quarter of
2002 of $ 12 million after taxes ($ 20 million before taxes) had to be
reclassified from extraordinary to operating earnings. Excluding the redemption
loss net income in the first quarter 2002 would have been $ 75 million.
EARNINGS PER SHARE (EPS) in the first quarter 2003 rose 10% to $ 0.72 per
ordinary share ($ 0.24 per ADS), compared to $ 0.66 ($ 0.22 per ADS) in the
first quarter of 2002. The weighted average number of shares outstanding during
the first quarter of 2003 was approximately 96.2 million.
Fresenius Medical Care AG, May 7, 2003 3 of 11
The Company achieved record first quarter operating and free cash flow
levels. CASH FROM OPERATIONS increased to $ 125 million. A total of $ 41 million
(net of disposals) was spent for CAPITAL EXPENDITURES, resulting in FREE CASH
FLOW before acquisitions of $ 84 million. A total of $ 28 million in cash was
spent for ACQUISITIONS. FREE CASH FLOW AFTER ACQUISITIONS was $ 56 million. In
the first quarter of 2002, Free Cash Flow after acquisitions was $ 11 million.
As of March 31, 2003, the Company operated a total of 1,500 CLINICS
worldwide [1,090 clinics in North America and 410 clinics International]. In the
first quarter 2003, the Company opened 12 new clinics (de novos). Fresenius
Medical Care AG performed approximately 4.2 million TREATMENTS, which represents
an increase of 9% year over year. North America accounted for 3.0 million
treatments (+7%) and the International segment for 1.3 million (+16%). At the
end of the first quarter 2003, Fresenius Medical Care treated about 114,300
PATIENTS worldwide, which represents an increase of 7%. North America accounted
for ~80,200 patients (+4%) and the International segment for ~34,100 patients
(+16%).
OUTLOOK 2003
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For the year 2003, the Company reconfirms its outlook and expects mid
single digit revenue growth before acquisitions (in constant currency) and net
income growth in the high single digit to low double digits range. Due to the
increased risks and unpredictability the Company expects to achieve net income
growth for the full year 2003 near the lower end within the predicted range.
Fresenius Medical Care AG, May 7, 2003 4 of 11
Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented: "We
saw continued momentum during the first quarter of 2003 in our business
segments. Our sequential operating margin improvement in North America was
achieved through the continued focus towards operating efficiencies. In our
Dialysis Care business we have accomplished our desired cost structure and our
unique position with the UltraCare therapy. We are now focused on revenue and
treatment growth. Products revenue in North America to the Net Available
External Market (NAEM) grew at above-market rates. In International we continued
to achieve strong above-market revenue growth. We also expect to sequentially
improve our International operating margin to the targeted range during the
remaining quarters of 2003. We achieved record first quarter Operating and Free
Cash Flow demonstrating our abilities to work toward achieving financial
targets."
Fresenius Medical Care AG is the world's largest, integrated provider of
products and services for individuals undergoing dialysis because of chronic
kidney failure, a condition that affects more than 1,200,000 individuals
worldwide. Through its network of approximately 1,500 dialysis clinics in North
America, Europe, Latin America and Asia-Pacific, Fresenius Medical Care provides
Dialysis Treatment to approximately 114,300 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.
- ---------------------
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.
Fresenius Medical Care AG, May 7, 2003 5 of 11
FRESENIUS MEDICAL CARE AG
STATEMENTS OF EARNINGS
(in US-$ thousands, except share and per share data)
(unaudited)
Three Months Three Months
Ended March Ended March
31, 2003 31, 2002(1) % Change
------------ ------------ ----------
NET REVENUE
Dialysis Care 944,287 881,176 7.2%
Dialysis Products 355,148 305,328 16.3%
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1,299,435 1,186,504 9.5%
Cost of revenue 882,487 809,182 9.1%
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Gross profit 416,948 377,322 10.5%
Selling, general and administrative 237,175 194,118 22.2%
Research and development 10,943 9,309 17.6%
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OPERATING INCOME (EBIT) 168,830 173,895 -2.9%
============ ============ ==========
Interest income (3,277) (2,229) 47.0%
Interest expense 57,023 74,984 -24.0%
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Interest expense, net 53,746 72,755 -26.1%
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Earnings before income taxes and minority interest 115,084 101,140 13.8%
Income tax expense 44,537 36,848 20.9%
Minority interest 537 860 -37.6%
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NET INCOME $ 70,010 $ 63,432 10.4%
============ ============ ==========
Loss on early redemption of trust preferred securities 11,777
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NET INCOME BEFORE EXTRAORDINARY LOSS
PRIOR SFAS NO. 145 $ 70,010 $ 75,209 -6.9%
============ ============ ==========
EBIT 168,830 173,895 -2.9%
Depreciation and amortization 52,846 51,030 3.6%
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EBITDA 221,676 224,925 -1.4%
EARNINGS PER ORDINARY SHARE $ 0.72 $ 0.66 10.3%
EARNINGS PER ORDINARY ADS $ 0.24 $ 0.22 10.3%
EARNINGS PER PREFERENCE SHARE $ 0.74 $ 0.67 10.5%
EARNINGS PER PREFERENCE ADS $ 0.25 $ 0.22 10.5%
AVERAGE WEIGHTED NUMBER OF SHARES
Ordinary shares 70,000,000 70,000,000
Preference shares 26,188,575 26,176,604
PERCENTAGES OF REVENUE
Cost of revenue 67.9% 68.2%
Gross profit 32.1% 31.8%
Selling, general and administrative 18.3% 16.4%
Research and development 0.8% 0.8%
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OPERATING INCOME (EBIT) 13.0% 14.7%
============ ============
Interest expense, net 4.1% 6.1%
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Earnings before income taxes and minority interest 8.9% 8.5%
Income tax expense 3.4% 3.1%
Minority interest 0.0% 0.1%
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NET INCOME 5.4% 5.3%
============ ============
EBITDA 17.1% 19.0%
============ ============
(1) Loss from early redemption of trust preferred securities ($ 19.5 million
pre-tax equals $ 11.8 million net of taxes) reclassified from extraordinary
loss into ordinary earnings as a result of the adoption of the SFAS No.145.
Fresenius Medical Care AG, May 7, 2003 6 of 11
FRESENIUS MEDICAL CARE AG
SEGMENT AND OTHER INFORMATION
- ----------------------------- Three Months Three Months
(in US-$ million) Ended March Ended March
(unaudited) 31, 2003 31, 2002 % Change
------------ ------------ ----------
NET REVENUE
North America 929 892 4.1%
International 370 294 25.8%
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TOTAL REVENUE 1,299 1,187 9.5%
============ ============ ==========
EBIT
North America 122 126 -3.2%
International 53 51 2.8%
Corporate (6) (4) 64.9%
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TOTAL EBIT 169 174 -2.9%
============ ============ ==========
IN PERCENTAGE OF REVENUE
North America 13.2% 14.2%
International 14.3% 17.5%
Total FMC 13.0% 14.7%
EBIT ADJUSTED FOR ONE-TIME ITEMS
North America 122 126 -3.2%
Pension curtailment gain and severances 0 (6)
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North America adjusted for one-time items 122 120 1.6%
International 53 51 2.8%
Corporate (6) (4) 64.9%
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EBIT FMC ADJUSTED FOR ONE-TIME ITEMS 169 168 0.6%
============ ============ ==========
IN PERCENTAGE OF REVENUE
North America 13.2% 13.5%
International 14.3% 17.5%
TOTAL FMC 13.0% 14.2%
SEGMENT INFORMATION NORTH AMERICA
NET REVENUE 929 892
Costs of revenue and research and development 684 658
Selling, general and administrative 123 109
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COSTS OF REVENUE AND OPERATING EXPENSES 807 766
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OPERATING INCOME 122 126
============ ============
BAD DEBT EXPENSES TOTAL FMC 24 23
EMPLOYEES (MARCH, 31 COMPARED TO DEC., 31)
Full-time equivalents 40,048 39,264
OUTLOOK 2003
FY 2002
NET INCOME 290
+ Loss from early redemption of trust preferred securities 12
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= NET INCOME PRIOR SFAS 145 Basis for guidance 2003 302
============
Fresenius Medical Care AG, May 7, 2003 7 of 11
BALANCE SHEET
(in US-$ million)
3/31/2003 12/31/2002
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ASSETS
Current assets 2,021 1,822
Intangible assets 3,782 3,743
Other non-current assets 1,250 1,215
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TOTAL ASSETS 7,053 6,780
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SHAREHOLDERS' EQUITY AND LIABILITIES
Current liabilities 1,306 1,295
Long-term liabilities 2,841 2,677
Shareholders' equity 2,906 2,807
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TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 7,053 6,780
============ ============
EQUITY/ASSETS RATIO: 41% 41%
DEBT
Short term borrowings 117 125
Short-term borrowings from related parties 0 6
Current portion of long-term debt and capital lease obligations 23 22
Long-term debt and capital lease obligations, less current portion 1,229 1,089
Trust Preferred Securities 1,164 1,145
Accounts receivable securitization program 312 445
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TOTAL DEBT 2,845 2,833
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CASH FLOW STATEMENT
(in US-$ million)
3/31/2003 3/31/2002
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Net income 70 63
Depreciation / amortization 53 51
Change in working capital and other non cash items 2 -44
CASH FROM OPERATING ACTIVITIES 125 70
Purchases of property, plant and equipment -44 -55
Proceeds from sale of property, plant and equipment 3 5
Capital expenditures, net -41 -50
FREE CASH FLOW 84 20
Acquisitions, net of cash acquired -28 -9
FREE CASH FLOW AFTER INVESTING ACTIVITIES 56 11
Redemption of trust preferred securities 0 -376
Redemption of Series D Preferred Stock -9 0
Change in other debt -38 376
CASH FLOW FROM FINANCING ACTIVITIES -47 0
Effects of exchange rates on cash 3 2
NET INCREASE IN CASH 13 14
Cash at beginning of period 65 62
Cash at end of period 77 76
Fresenius Medical Care AG, May 7, 2003 8 of 11
FRESENIUS MEDICAL CARE - QUARTERLY PERFORMANCE SCORECARD
Three Months Three Months
Ended March Ended March
31, 2003 31, 2002
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REVENUE
(in US-$ thousands, except per-treatment revenue)
NORTH AMERICA
- -------------
Net revenue 929,491 892,483
Growth year-over-year 4.1% 3.0%
Dialysis Care 823,760 783,871
Growth year-over-year 5.1% 3.9%
Per treatment 278 284
Sequential growth -3.0% 1.4%
Growth year-over-year -2.3% 0.7%
Dialysis Products
incl. internal sales 190,230 181,912
Growth year-over-year 4.6% 2.7%
Dialysis Products
incl. internal sales 190,230 181,912
less internal sales -84,499 -73,300
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External sales 105,731 108,612
less sales to other vertically integrated dialysis companies -2,569 -2,623
less sales to leasing company of dialysis machines
leased back -8,320 -5,392
less method II and other -34 -11,325
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Dialysis Products to available
external market 94,808 89,272
============= =============
Growth year-over-year 6.2% 7.8%
INTERNATIONAL
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Net revenue 369,944 294,020
Growth year-over-year 25.8%/13.9% cc 0.4%/11.7% cc
Dialysis Care 120,527 97,305
Growth year-over-year 23.9%/18.8% cc 1.5%/23.2% cc
Per treatment 95/91 cc 89
Sequential growth 6.3% -14.2%
Growth year-over-year 6.9%/2.5% cc -16.1%/1.8% cc
Dialysis Products
incl. internal sales 275,406 218,503
less internal sales -25,989 -21,788
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External sales 249,417 196,715
============= =============
Dialysis Products
incl. internal sales 275,406 218,503
Growth year-over-year 26.0%/11.6% cc 1.1%/7.6% cc
External sales 249,417 196,715
Growth year-over-year 26.8%/11.4% cc -0.1%/6.1% cc
cc at constant exchange rates
Fresenius Medical Care AG, May 7, 2003 9 of 11
FRESENIUS MEDICAL CARE - QUARTERLY PERFORMANCE SCORECARD
Three Months Three Months
Ended March Ended March
31, 2003 31, 2002
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DIALYSIS CARE VOLUME
NORTH AMERICA
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Number of treatments 2,972,595 2,784,120
Treatments per day adjusted for closed/sold facilities 39,101 36,632
Per day sequential growth 3.8% 1.4%
Per day year-over-year growth 7.0% 4.6%
of which
- acquisitions 1.4% 0.0%
- same store growth year-over-year 3.3% 4.6%
- method II to method I transfer 2.3%
INTERNATIONAL
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Number of treatments 1,272,722 1,098,239
Same store growth
year-over-year 7.9% 12.0%
EXPENSES
(in US-$)
NORTH AMERICA
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Costs of revenue and operating expenses
Percent of revenue 86.8% 85.8%
Selling, general and administrative
Percent of revenue 13.2% 12.2%
Bad debt expenses
Percent of revenue 2.4% 2.4%
Dialysis Care operating expenses/Treatment 244 250
Sequential growth -2.4% 1.8%
Growth year-over-year -2.6% 2.8%
TOTAL GROUP
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Costs of revenue and operating expenses
Percent of revenue 87.0% 85.3%
Selling, general and administrative
Percent of revenue 18.3% 16.4%
Effective tax rate 38.7% 36.4%
Fresenius Medical Care AG, May 7, 2003 10 of 11
FRESENIUS MEDICAL CARE - QUARTERLY PERFORMANCE SCORECARD
Three Months Three Months
Ended March Ended March
31, 2003 31, 2002
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CASH FLOW/INVESTING ACTIVITIES
(in US-$ thousands, except number of de novos)
Total Group
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Operating Cash Flow 125,186 70,484
Percent of revenue 9.6% 5.9%
Free Cash Flow, before acquisitions 84,271 20,129
Percent of revenue 6.5% 1.7%
Acquisitions, net 28,083 8,962
Capital expenditures, net 40,915 50,355
Percent of revenue 3.1% 4.2%
Maintenance 20,101 25,426
Percent of revenue 1.5% 2.1%
Growth 20,814 24,929
Percent of revenue 1.6% 2.1%
Number of de novos 12 20
North America 10 10
International 2 10
BALANCE SHEET
Total Group
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Debt (in US-$ millions) 2,845 2,895
Debt/EBITDA 3.1 3.0
North America
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Days sales outstanding 79 88
Sequential development -2.5% 1.1%
Year-over-year development -10.2% -2.2%
International
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Days sales outstanding 136 143
Sequential development -0.7% -5.3%
Year-over-year development -4.9% 1.4%
CLINICAL PERFORMANCE
North America
Urea reduction >= 65% 88% 84%
Single Pool Kt/v > 1.2 92% 89%
Hemoglobin >= 11g/dl 75% 72%
Albumin >= 3.5 g/dl 81% 81%
Hospitalization days (Last twelve months, all patients) 12.2 12.0
DEMOGRAPHICS
North America
Average age (yr) 61 61
Average time on dialysis (yr) 3.3 3.2
Average body weight (kg) 76 75
Prevalence of diabetes (%) 54% 53%
Reporting of 2002 versus 2001 scorecard mortality trend data is postponed
pending evaluation of an improved data system which provides daily update
capability rather than the prior 90 day lag in patient census. The expected
result will be greater accuracy in tracking patient counts and reporting
mortality. The Company is evaluating prospects for establishing an industry
consensus on calculating gross mortality.
********
Fresenius Medical Care AG, May 7, 2003 11 of 11