Fresenius Medical Care reports First Quarter 2003 results

• Total Revenue of $ 1,299 million up 10%. Adjusted for currency effects revenue increased by 7%.
• Net income of $ 70 million
• Free Cash Flow at Q1 record level of $ 84 million
• Operating margin in North America improved in Q1 2003 compared with Q4 2002 - despite lower number of dialysis days
• International Operating margin impacted by crisis in Middle East, Latin America, pricing pressures in Central Europe

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

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).

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.

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
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.

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."