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Fresenius Medical (FUA)

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Wednesday 25 February, 2004

Fresenius Medical

Annual Report and Accounts

Fresenius Medical Care AG
25 February 2004

Fresenius Medical Care AG reports Fourth Quarter and Full Year Results 2003

Summary Full Year 2003:

Company met or exceeded financial targets for 2003 and will propose

7th consecutive dividend increase

Net Revenues                                 $ 5,528 million          +   9%

Operating income (EBIT)                      $   757 million          +   9%

Net income                                   $   331 million          +  14%

Operating Cash Flow                          $   754 million          +  37%

Free Cash Flow                               $    478 million         +  37%

Dividend Proposal

(Ordinary Share)                             EUR 1.02                  +    8%

(Preference Share)                           EUR 1.08                  +   8%

Bad Homburg, Germany - February 25, 2004 -- 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

the results for the fourth quarter and the full year of 2003.

Ben Lipps, Chief Executive Officer of Fresenius Medical Care,

commented: 'We have accomplished or even slightly exceeded our

targets for 2003. Our results for the year 2003 improved in key

financial metrics and showed a strong performance of our operations.

We achieved another record operating and free cash flow for 2003 and

we are confident that our global strategy is on the right track. We

ended the year with a strong momentum, which we believe is a good

foundation to look optimistically toward 2004 and beyond.'


Fourth Quarter 2003:

Fresenius Medical Care AG reports a 15% increase in net income to $

94.5 million for the fourth quarter 2003

Total revenue for the fourth quarter 2003 increased 7% (+2% at

constant currency) to $ 1,452 million. Dialysis Care revenue grew by

7% to $ 1,038 million (+4% at constant currency) in the fourth

quarter of 2003. Dialysis Product revenue (including internal sales)

increased by 13% to $ 551 million (+3% at constant currency) in the

same period. The internal sales increased to $ 136 million after $

105 million in the fourth quarter of 2002.

North America:

Revenue rose 1% to $ 993 million, compared to $ 979 million in the

same period last year. Dialysis Care revenue in the US increased by

3% to $ 887 million. Same store treatment growth improved again in

the fourth quarter to 4.1%. Excluding Puerto Rico the North American

same store treatment growth was 4.3% in the fourth quarter of 2003.

The average revenue per treatment was at $ 280 in the fourth quarter

of 2003 (Q3 2003: $ 279). North American Dialysis Product revenue,

including sales to company-owned clinics, increased 5% to $ 207



Revenue was $ 459 million, up 21% (+5% at constant currency).

Dialysis Care revenue reached $ 151 million in the fourth quarter

2003, up 34% (+15% at constant currency). Same store treatment growth

in the fourth quarter was very strong at 7%. Dialysis Products

revenue, including sales to company-owned dialysis clinics, increased

18% to $ 345 million (3% at constant currency).

Operating Income (EBIT) increased 13% to $ 208 million resulting in

an operating margin of 14.3% (Q4 2002: 13.6%). The increase of 70

basis points was mainly due to increased treatments and efficiency

improvements in North America and reimbursement increases in Italy,

Portugal and Venezuela but partially offset by the impacts from the

changes in the distribution network in Asia-Pacific and increased

cost of revenue due to the strengthening of the Euro. Sequentially,

in the fourth quarter the margin in North America increased by 60

basis points to 14.6%. In our International segment it increased by

30 basis points to 15.8% compared to the prior quarter.

Earnings per share (EPS) in the fourth quarter 2003 rose 15% to $

0.98 per ordinary share ($ 0.33 per ADS), compared to $ 0.85 ($ 0.28

per ADS) in the fourth quarter of 2002. The weighted average number

of shares outstanding during the fourth quarter of 2003 was

approximately 96.2 million.

In the fourth quarter of 2003, the Company generated $ 251 million in

cash from operations. The company benefited from the roll-over of

certain hedged inter-company financing transactions in the amount of

$ 104 million in the fourth quarter of 2003. A total of $ 147 million

(net of disposals) was spent for capital expenditures. The capital

expenditures were higher in the fourth quarter since the company used

the high operating cash flow as an opportunity for an early lease

buyout refinancing of $ 66 million for the Ogden production plant in

North America. Including this re-financing transaction the Free Cash

Flow before acquisitions for the fourth quarter 2003 was $ 104

million compared to fourth quarter of 2002 with $ 110 million. A

total of $ 13 million in cash was spent for acquisitions. Free Cash

Flow after acquisitions was $ 91 million compared to $ 103 million in

the fourth quarter of 2002.

Full Year 2003:

For a complete overview of the full year 2003 please refer to the


For the full year 2003, net income was $ 331 million, up 14% from the

same period in 2002.

In accordance with the 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 loss to

interest expense and income tax expense. Excluding the redemption

loss, net income for the full year of 2002 was $ 302 million. Net

revenue was $ 5,528 million, up 9% from the full year 2002. Currency

adjusted, net revenue rose 5% in 2003 compared to 2002. Operating

Income (EBIT) increased 9% to $ 757 million resulting in an operating

margin of 13.7%. For the full year 2003, earnings per ordinary share

rose 14% to $ 3.42. Earnings per ordinary ADS for the full year 2003

were $ 1.14.

Cash from operations during the full year 2003 was up 37% or $ 754

million compared to $ 550 million in the year 2002. A total of $ 276

million was spent for capital expenditures (net of disposals)

resulting in a Free Cash Flow before acquisitions for the full year

2003 of $ 478 million, an increase of 37% compared to $ 349 million

for the full year 2002. This exceptional Cash Flow performance was

driven by strong improvements in working capital management. The

company reduced the days sales outstanding (DSO) by 7 days to 89 days

in 2003, with strong contributions from North America as well as the

International region. In addition, cash flow for the fiscal year 2003

benefited from the roll-over of certain hedged inter-company

financing transactions in the amount of $ 132 million. Net cash used

for acquisitions was $ 92 million. Free Cash Flow after acquisitions

increased therefore 43% to $ 386 million.

As of December 31, 2003, the Company operated a total of 1,560

clinics worldwide (1,110 clinics/+3% in North America and 450

clinics/+13% International).

Fresenius Medical Care AG performed approximately 17.8 million

treatments, which represents an increase of 9% year over year. North

America accounted for 12.4 million treatments (+6%) and the

International segment for 5.5 million (+15%).

At the end of the fourth quarter 2003, Fresenius Medical Care served

about 119,250 patients worldwide which represents an increase of 6%.

North America cared for 82,400 patients (+3%) and the International

segment for 36,850 patients (+13%).


The Company will continue to follow an earnings-driven dividend

policy. For the seventh consecutive year, shareholders can expect an

increased dividend for the fiscal year 2003. At the Annual General

Meeting on May 27, 2004 shareholders will be asked to approve a

dividend of EUR 1.02 per ordinary share (2002: EUR 0.94) and EUR 1.08

per preference share (2002: EUR 1.00). This is an increase of 8%

compared to 2002.

Management Board

Ben Lipps was reconfirmed as Chairman of the Management Board and

Chief Executive Officer of Fresenius Medical Care AG.

Rainer Runte, who joined the Management Board in 2002 as a deputy

member, has been appointed to be a full member of the Management

Board responsible for Law and Compliance worldwide. In addition, Rice

Powell and Mats Wahlstrom have been appointed as new board members of

the Company's Management Board. Both will be responsible for North

America. All appointments are effective as of January 1st, 2004.

Rice Powell, age 48, has more than 25 years of experience in the

healthcare industry. Since 1997 Rice Powell has been the President of

Renal Products division of Fresenius Medical Care in North America

including the Extracorporal Therapy and Laboratory Services.

Mats Wahlstrom, age 49, also has nearly 20 years of experience in the

renal field. Since November 2002 Mats Wahlstrom has been the

President of Fresenius Medical Care's Medical Services division in

North America.

Ben Lipps, Chief Executive Officer of Fresenius Medical Care,

commented: 'I am pleased with the breadth and experience of our

management board with more than 120 years of combined renal

experience. Mats and Rice also bring significant renal experience and

a history of accomplishments and I whole heartedly welcome them to

the Management Board. Clearly we intend to achieve our strategic

initiatives and objectives to ensure stakeholder value'.


For the year 2004, the Company expects revenue growth at constant

currencies in the mid-single digit and net income growth in the

high-single digit to low-double digit range. In 2004 the company

expects capital expenditures of about $ 250 million and spending on

acquisitions of about $ 100 million.

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

1,300,000 individuals worldwide. Through its network of approximately

1,560 dialysis clinics in North America, Europe, Latin America and

Asia-Pacific, Fresenius Medical Care provides Dialysis Treatment to

approximately 119,250 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

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

Corporate Communications

Oliver Heieck

Phone: ++49-6172-6082101

Fax: ++49-6172-6082294

e-mail: [email protected]

                      This information is provided by RNS
            The company news service from the London Stock Exchange                                                              

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