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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report: November 2, 1999
Fresenius Medical Care Holdings, Inc.
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(Exact name of registrant as specified in charter)
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New York 1-3720 13-3461988
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(State/other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
Two Ledgemont Center, 95 Hayden Avenue Lexington, Massachusetts 02420
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone no., including area code (781) 402-9000
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ITEM 5. OTHER EVENTS
Fresenius Medical Care AG, the parent corporation of Fresenius Medical Care
Holdings, Inc. (the "Company"), disseminated the press release attached hereto
as Exhibit 99 on November 2, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit 99 Press Release dated November 2, 1999 issued by the
Company's parent corporation, Fresenius Medical Care
AG, announcing preliminary results from operations
for the three months ended September 30, 1999. The
Company's preliminary results from operations for the
three-month period ended September 30, 1999 are
referred to in the Press Release as "North American"
financial results.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRESENIUS MEDICAL CARE HOLDINGS, INC.
Date: November 2, 1999 By: /s/ Jerry A. Schneider
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Jerry A. Schneider
Chief Financial Officer
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INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
Exhibit 99 Press Release dated November 2, 1999 issued by the Company's
parent corporation, Fresenius Medical Care AG, announcing
preliminary results from operations for the three months ended
September 30, 1999. The Company's preliminary results from
operations for the three-month period ended September 30, 1999
are referred to in the Press Release as "North American"
financial results.
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Exhibit 99
Investor News
FRESENIUS MEDICAL CARE AG
INVESTOR RELATIONS
Else-Kroner-Str. 1
D-61352 Bad Homburg
Contact:
Oliver Maier
Petra Bassen
Phone: +49 6172 609 2525
Fax: +49 6172 609 2301
E-mail: [email protected]
North America: Heinz Schmidt
Phone: +1 781 402 9000 Ext.: 4518
Fax: +1 781 402 9733
E-mail: [email protected]
Internet: http://www.fmc-ag.com
November 2, 1999
FRESENIUS MEDICAL CARE AG ANNOUNCES PRELIMINARY THIRD QUARTER 1999 RESULTS FROM
OPERATIONS BEFORE MATERIAL CHARGE TO RESOLVE U.S.A. LEGAL ISSUES
PRELIMINARY THIRD QUARTER OPERATING RESULTS
* Net revenues increased to $ 969 million, a 10% currency-adjusted growth
* Preliminary results from operations (before charge) rose 13% to $144
million
* Above-market growth in Dialysis Products continued
* Company intends to record a material charge relating to US Government
investigations
Bad Homburg, Germany -- November 2, 1999 -- 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 preliminary results from
operations for the quarter ended September 30, 1999, before an anticipated one
time charge for U.S.A. legal issues. Net revenues for the third quarter
increased to $969 million from $890 million, an increase of 10% on a currency
adjusted basis.
Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented "Once
again, our preliminary operating results before the material charge increased
substantially, reflecting solid growth in revenues across our businesses, and we
continued progress in improving profitability in key areas
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with a keen focus on achieving cost savings and other efficiencies. The
anticipated third quarter charge will address potential liability arising from
the pending United States Government investigations."
Revenues in North America, which accounted for 73% of total revenue, increased
8% to $708 million with both Dialysis Care and Dialysis Products revenues
increasing at 8%. International revenues rose 11% to $261 million compared to
the third quarter of last year. On a currency-adjusted basis, International
revenues advanced 17% compared to the third quarter of 1998. Within the
International segment, growth in Dialysis Care revenues, which increased by over
13% on a currency-adjusted basis, once again reflected the successful expansion
of the International Dialysis Care business in key areas. The growth rate of 14%
in International Dialysis Products revenues, 19% on a currency-adjusted basis,
quite clearly surpassed the average growth rate in the markets.
"The strong revenue growth of the International business is well above the
market rate of growth and reflects our ongoing effort to expand our Dialysis
Care business, particularly in Europe and Latin America. In Asia-Pacific we can
already see the benefit of our product initiatives resulting in substantial
increases of Dialysis Product revenues. In North America, we have a solid
foundation and both the dialysis care and products grew at or above market,"
Mr. Lipps concluded.
PRELIMINARY NINE MONTH OPERATING RESULTS
At $2.83 billion, net revenues from continuing operations were 10% higher than
net revenues of $2.58 billion for the first nine months of 1998.
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In the nine month period just ended, North American revenues rose 9% to $2.1
billion compared to $1.9 billion the same period last year. North American
Dialysis Care revenue increased by 11% to $1.7 billion with an organic revenue
growth of 9%. During the period, 40 new clinics were opened and 13 clinics were
acquired bringing the total in North America to 833 clinics. North American
Dialysis Product revenues, including sales to Company-owned clinics, increased
7% to $522 million compared to the first nine months of 1998.
The continued solid performance in North American products are signs of strong
acceptance of innovative technology introduced by the Company in the market
place. In particular, its dialyzer and dialysis machine products. With respect
to Peritoneal Dialysis, the IQ card, a monitoring program for Peritoneal
Dialysis, as well as the initial market feedback from a pilot study on the
Premier Plus(TM) double bag showed very positive signs in terms of market
opportunities.
International revenues rose to $755 million,13% on a currency-adjusted basis,
from $685 million for the nine month period ended September 30, 1998. Growth in
International Dialysis Care revenue was especially strong, increasing by 18%
adjusted for currency effects. As of September 30, 1999, the Company operated a
total of 234 clinics outside of North America. In the first nine months, 18
clinics were added via acquisitions and another 11 new clinics were opened by
the Company. Adjusted for currency, International Dialysis Products revenue,
increased 12%, including sales to company-owned dialysis clinics, to $599
million compared to $545 million in the first nine months of 1998.
The substantial increase in International Dialysis Products revenues was driven
by the continuing growth in the Company's core products - dialysis machines and
dialyzers - reflecting our leading product market position in Central Europe and
driving sales growth throughout Europe, Latin America and Asia-Pacific. The
latest high-end dialyzers introduced in key markets, namely the F10 HPS
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and HDF 100S, supported the strong development of dialyzer sales. Our leadership
in developing innovative products was further demonstrated in recent studies
that again highlighted the clinical benefits of the BTM(TM). Fresenius Medical
Care's unique blood temperature monitor BTM(TM) which measures blood temperature
and supports the clinician in a time- and cost-saving manner to prevent
hypotensive episodes during dialysis has shown strong market acceptance.
Growth in peritoneal dialysis sales developed satisfactorily. The stay*safe(R)
system continues to gain recognition for its unique manner in which handling and
safety issues are addressed. Furthermore, in view of the increasing market
controversies about inherent risks associated with the use of PVC material for
peritoneal dialysis systems the stay*safe(R) system offers an alternative since
it is manufactured from Biofine(TM), a completely PVC-free film.
For the first nine months of the current year, Fresenius Medical Care generated
$260 million in cash from continuing operations. A total of $190 million was
expended net for acquisitions and capital expenditures during the same period.
THIRD QUARTER CHARGE TO RESOLVE U.S.A. LEGAL ISSUES
The Company intends to record a substantial and material charge in the quarter
ended September 30, 1999, for the resolution of the United States Government
legal investigations of National Medical Care, Inc. (NMC) and its subsidiaries.
Due to the still pending negotiations with the United States Government, the
extent of the charge is not yet determined. The United States Government legal
investigations began in 1995, prior to the acquisition of NMC.
Dr. Ben Lipps said, "We will continue to work diligently with the United States
Government to resolve the remaining legal issues. Our goal has been to
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achieve a resolution that is fair and does not compromise our ability to provide
the best available care to our critically ill patients." While there can be no
assurance that these matters can be settled without litigation, the issues have
been narrowed as a result of recent negotiations.
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 some 920,000 individuals worldwide. Through its network of
approximately 1,070 dialysis clinics the North America, Europe, Latin America
and Asia-Pacific, Fresenius Medical Care provides dialysis treatment to
approximately 78,500 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 the 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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FRESENIUS MEDICAL CARE AG
STATEMENT OF PRELIMINARY RESULTS
FROM OPERATIONS BEFORE MATERIAL
CHARGE AT CURRENT EXCHANGE RATE
(in US-$ thousands)
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Three Months Three Months Nine Months Nine Months
Ended Sept. Ended Sept. Ended Sept. Ended Sept.
30, 1999 30, 1998 30, 1999 30, 1998
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CONTINUING OPERATIONS
Net revenues
Dialysis Care $653,876 $ 607,929 $1,920,571 $1,732,276
Dialysis Products 314,824 282,385 911,437 851,626
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968,700 890,314 2,832,008 2,583,902
Cost of revenues 615,564 554,821 1,796,394 1,608,819
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Gross profit 353,136 335,493 1,035,614 975,083
Selling, general and administrative 201,140 199,715 596,250 597,467
Research and development 8,022 7,891 25,983 21,081
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PRELIMINARY RESULTS FROM OPERATIONS
BEFORE MATERIAL CHARGE TO RESOLVE
LEGAL ISSUES 143,974 127,887 413,381 356,535
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Interest expense, net 53,070 58,343 163,254 161,931
SEGMENT AND OTHER INFORMATION
(in US-$ million)
SALES
North America $ 708 $ 656 $ 2,077 $ 1,898
International 261 234 755 685
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TOTAL SALES $ 969 $ 890 $ 2,832 $ 2,584
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Depreciation / Amortization $ 71 $ 70 $ 209 $ 205
Allowance for doubtful accounts $ 8 $ 20 $ 30 $ 54
EMPLOYEES (SEPT., 30)
Full-time equivalents 28,773 26,577
AVERAGE WEIGHTED
NUMBER OF SHARES
Ordinary shares 70,000,000
Preference shares 9,023,341
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