EX-99.1 CHARTER 2 r2004pr080304.htm PRESS RELEASE 2Q 2004

Exhibit 99.1

Contact Martin J. Landon - Investors
KCI
(210) 255-6494

Elliot Sloane - Media
Sloane & Company
(212) 446-1860

KINETIC CONCEPTS REPORTS
SECOND QUARTER AND SIX MONTH
FINANCIAL RESULTS FOR 2004

 

San Antonio, Texas, August 3, 2004 - Kinetic Concepts, Inc. (NYSE: KCI) today reported second quarter 2004 net revenue of $237.0 million, an increase of 30% from second quarter 2003 revenue of $182.9 million. Net revenue for the first half of 2004 was $461.8 million, representing a 32% increase from the same period a year ago. Foreign currency exchange movements favorably impacted net revenue for the second quarter and first half of 2004 by 2% and 3%, respectively, over the corresponding periods of the prior year.

Net earnings for the second quarter of 2004 were $24.0 million, including after-tax expenses of $3.6 million associated with a follow-on stock offering, compared to net earnings of $19.0 million for the same period one year ago. For the first six months of 2004, net earnings were $29.5 million. Net loss available to stockholders for the first six months of 2004 was $36.1 million, after recognition of $65.6 million of preferred stock dividends in connection with the IPO. Earnings per diluted share for the second quarter of 2004 were $0.34, compared to earnings per diluted share of $0.25 for the same period in the prior year. For the first half of 2004, the Company reported a net loss per diluted share, after dividends, of $0.63, compared to net earnings per diluted share of $0.47 for the prior year period.

Non-GAAP Financial Information (1)

On February 27, 2004, KCI completed an initial public offering ("IPO") of common stock. A total of 20.7 million shares of KCI common stock were sold in the IPO, including 3.5 million newly-issued shares. Upon the closing of the IPO, the Company accelerated recognition of in-kind preferred stock dividends and converted all outstanding shares of preferred stock into 19.2 million shares of common stock. On June 16, 2004, KCI completed a follow-on secondary stock offering of 16.1 million previously-issued common shares. These transactions had the effect of reducing net earnings for the second quarter by $3.6 million, or $0.05 per diluted share. Excluding expenses associated with the stock offerings and debt prepayments, net earnings for the 2004 second quarter of $27.6 million, were up 45% from the same period a year ago. Earnings per diluted share, excluding expenses associated with the stock offerings and debt prepayments, were $0.39 in the quarter compared to $0.25 in 2003, a 56% improvement over the prior year. Net earnings for the first half of 2004, excluding expenses and preferred stock dividends associated with the stock offerings and debt prepayments, were $51.1 million, up 42% from net earnings of $35.9 million for the same period a year ago. Net earnings per diluted share, excluding expenses and dividends associated with the KCI stock offerings and debt prepayments, were $0.73 in the first six months of 2004 compared to $0.47, an increase of 55% from the prior year.

(1) Throughout this press release, we have presented income statement items on a non-GAAP basis to exclude the impact of expenses and the acceleration of the in-kind preferred stock dividends incurred as result of the stock offerings and debt prepayments. These non-GAAP financial measures do not replace the presentation of our GAAP financial results. We have provided this supplemental non-GAAP information because it provides meaningful information regarding our results on a basis that better facilitates comparisons between the periods presented. Management uses this non-GAAP financial information, along with other GAAP information, for reviewing the operating results of its business segments and for analyzing potential future business trends. In addition, we believe investors may use the information in a similar fashion. A reconciliation of our GAAP income statement for the periods presented to the non-GAAP financial information provided is included herein. See the attached Reconciliation of Condensed Consolidated Statement of Earnings.

"We continue to execute on our strategic plan with programs aimed at increasing awareness of the benefits of V.A.C. therapy," noted Dennert O. Ware, president and chief executive officer of KCI. "The many physician presentations concerning negative pressure wound therapy made at the recent World Union of Wound Healing Societies held in Paris bolsters our confidence that we are on the right track and we look forward to a good second half of 2004."

Revenue Recap

Domestic revenue was $179.6 million for the second quarter and $349.6 million for the first half of 2004, representing increases of 30% and 32%, respectively, due primarily to increased demand for V.A.C. wound healing devices and related disposables. International revenue of $57.3 million for the second quarter and $112.2 million for the first six months of 2004 increased 28% and 33%, respectively, compared to the prior year, as a result of increased V.A.C. demand and favorable foreign currency exchange movements. Foreign currency exchange movements favorably impacted international revenue by 8% and 13%, respectively, compared to the second quarter and first six months of the prior year.

Worldwide V.A.C. revenue was $166.5 million for the second quarter of 2004, an increase of 47% from the prior-year period, while worldwide V.A.C. revenue for the first half of 2004 grew 49% to $314.8 million. Excluding the effects of foreign currency exchange movements, worldwide V.A.C. revenue for the second quarter and first six months of 2004 increased 45% and 46%, respectively, from the prior year. The growth in V.A.C. was bolstered by increased physician and payer awareness of the benefits of V.A.C. therapy and increased product adoption across wound types.

Worldwide surface revenue was $70.5 million for the second quarter and $147.0 million for the first half of 2004, representing increases of 2% and 6%, respectively, from the corresponding periods in the prior year. Favorable currency exchange rate movements accounted for the majority of the second quarter 2004 surface revenue increase as higher rental revenue, resulting from favorable product mix changes, was offset by lower sales of therapeutic surfaces. For the first six months, foreign currency exchange movements accounted for half of the worldwide surfaces revenue increase compared to the prior year. Higher bariatric surfaces revenue for the first half was partially offset by lower wound care surfaces sales, accounting for the remainder of the surfaces revenue increase.

Income Tax Rate

The effective tax rate for the second quarter and first half of 2004 was 36% compared to 37.5% for the same periods a year ago. The income tax rate reduction is primarily attributable to a higher proportion of taxable income in lower tax jurisdictions.

Liquidity

As of June 30, 2004, KCI had $499.7 million of total debt (long-term debt and capital lease obligations outstanding). During the quarter, the Company redeemed $34.3 million of its 7 3/8% Senior Subordinated Notes due 2013, and paid down an additional $30.0 million under the senior credit facility. Total debt prepayments made in the first half of 2004 were $186.1 million. Total cash at June 30, 2004 was $75.5 million.

Outlook

The following guidance is based on current information and expectations as of August 3, 2004.

                           Full Year 2004                            

Forecast

Forecast

(As Adjusted) (1)

Revenue

$950 - $980 million

$950 - $980 million

Net Earnings

$82 - $88 million

$104 - $110 million

EPS

$0.24 - $0.33  

$1.48 - $1.54

Diluted Shares

67.5 - 68.5 million  (2)

70.5 - 71.5 million

(1) "As adjusted" forecast information is non-GAAP and excludes approximately $21.6 million of expenses
       and $65.6 million of preferred stock dividends associated with the Company's public stock offerings
       and debt prepayments.
(2) Due to their antidilutive effect, 2,990,089 dilutive potential common shares from preferred stock
       conversion have been excluded from the diluted weighted average shares calculation.

Earnings Release Conference Call

As previously announced, the Company has scheduled an earnings release conference call for 8:30 a.m. eastern daylight time today, Tuesday, August 3, 2004. The dial-in numbers for this conference call are as follows:

Domestic Dial-in Number: 800-599-9829
International Dial-in Number: +617-847-8703
Participant Code: 49054465

This call is being web cast by CCBN and can be accessed at the Kinetic Concepts, Inc. Web site at
http://www.kci1.com/investor/index.asp, and clicking on Web cast - Q2 2004 Kinetic Concepts Earnings Call. The web cast is also being distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at www.fulldisclosure.com and institutional investors can access the call via CCBN's password-protected event management site, StreetEvents (www.streetevents.com). An archive of the Web cast will be available at http://www.kci1.com/investor/index.asp until August 2, 2005.

KCI's business outlook as of today is expected to be available on KCI's Investor Relations Web site. It is currently expected that the full business outlook will not be updated until the release of KCI's next quarterly earnings announcement, notwithstanding subsequent developments. However, although KCI undertakes no duty to update its business outlook, KCI may update the full business outlook or any portion thereof at any time.

 

About KCI

Kinetic Concepts, Inc. is a global medical technology company with leadership positions in advanced wound care and therapeutic surfaces. We design, manufacture, market and service a wide range of proprietary products that can significantly improve clinical outcomes while reducing the overall cost of patient care by accelerating the healing process or preventing complications. Our advanced wound care systems incorporate our proprietary Vacuum Assisted Closureâ , or V.A.C.â , technology, which has been clinically demonstrated to promote wound healing and reduce the cost of treating patients with serious wounds. Our therapeutic surfaces, including specialty hospital beds, mattress replacement systems and overlays, are designed to address complications associated with immobility and obesity, such as pressure sores and pneumonia. We have an infrastructure designed to meet the specific needs of medical professionals and patients across all health care settings including acute care hospitals, extended care facilities and patients' homes both in the United States and abroad.

Forward-Looking Statements

This press release contains forward-looking statements including, among other things, management's estimates of future performance, revenue and earnings, our management's growth objectives and our management's ability to produce consistent operating improvements. The forward-looking statements contained herein are based on our current expectations and are subject to a number of risks and uncertainties which could cause us to fail to achieve our current financial projections and other expectations, such as a change in the demand for the V.A.C. resulting from increased competition, a change in payer reimbursement policies, our ability to protect our intellectual property rights and general economic conditions. All information set forth in this release and its attachments is as of August 3, 2004. We undertake no duty to update this information. More information about potential factors that could affect our business and financial results is included in our Annual Report on form 10-K for the fiscal year ended December 31, 2003, including, among other sections, under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," which is on file with the SEC and available at the SEC's website at www.sec.gov. Additional information will also be set forth in those sections in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, which will be filed with the SEC in the third quarter of 2004.

 

KINETIC CONCEPTS, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Earnings

(in thousands, except per share data)

(unaudited)

      Three months ended June 30,      

                Six months ended June 30,                

%     

%     

2004 

2003 

 Change 

2004 

2003 

 Change 

Revenue:

   Rental

$ 175,579 

$140,854 

24.7 %   

$ 341,487 

$ 270,296 

26.3 %   

   Sales

61,406 

42,023 

46.1       

120,332 

79,584 

51.2       

_______ 

_______ 

_______ 

_______ 

     Total revenue

236,985 

182,877 

29.6       

461,819 

349,880 

32.0       

_______ 

_______ 

_______ 

_______ 

Rental expenses

109,572 

87,911 

24.6       

214,978 

167,290 

28.5       

Cost of goods sold

16,560 

14,713 

12.6       

33,328 

28,358 

17.5       

_______ 

_______ 

_______ 

_______ 

      Gross profit

110,853 

80,253 

38.1       

213,513 

154,232 

38.4       

Selling, general and administrative expenses

52,898 

40,050 

32.1       

101,440 

76,531 

32.5       

Research and development expenses

7,188 

4,439 

61.9       

14,307 

8,864 

61.4       

Initial public offering expenses

302 

- 

-       

19,836 

- 

-       

Secondary offering expenses

2,219 

- 

-       

2,219 

- 

-       

_______ 

_______ 

_______ 

_______ 

      Operating earnings

48,246 

35,764 

34.9       

75,711 

68,837 

10.0       

_______ 

_______ 

_______ 

_______ 

Interest income

158 

347 

(54.5)      

529 

747 

(29.2)      

Interest expense

(11,050)

(8,050)

(37.3)      

(29,894)

(16,228)

(84.2)      

Foreign currency gain (loss)

201 

2,368 

(91.5)      

(263)

4,156 

(106.3)      

_______ 

_______ 

_______ 

_______ 

      Earnings before income taxes

37,555 

30,429 

23.4       

46,083 

57,512 

(19.9)      

Income taxes

13,520 

11,411 

18.5       

16,590 

21,567 

(23.1)      

_______ 

_______ 

_______ 

_______ 

      Net earnings

$   24,035 

$  19,018 

26.4 %  

$   29,493 

$   35,945 

(17.9) % 

Series A convertible preferred stock dividends

- 

- 

-       

(65,604)

- 

-       

_______ 

_______ 

_______ 

_______ 

      Net earnings (loss) available to

         common shareholders

$   24,035 

$  19,018 

26.4 %  

$  (36,111)

$   35,945 

(200.5) % 

_______ 

_______ 

_______ 

_______ 

      Net earnings (loss) per share available

         to common shareholders:

         Basic

$       0.37 

$      0.27 

37.0 %  

$      (0.63)

$       0.51 

(223.5) % 

_______ 

_______ 

_______ 

_______ 

        Diluted

$       0.34 

$      0.25 

36.0 %  

$      (0.63)

$       0.47 

(234.0) % 

_______ 

_______ 

_______ 

_______ 

      Weighted average shares outstanding:

         Basic

65,087 

71,070 

57,709 

71,032 

_______ 

_______ 

_______ 

_______ 

         Diluted

71,303 

77,236 

57,709 

(1)

76,904 

_______ 

_______  

_______ 

_______ 

(1) Due to their antidilutive effect, 6,128 dilutive potential common shares from stock options and 6,013 dilutive potential common
       shares from preferred stock conversion have been excluded from the diluted weighted average shares calculation for the six months
       ended June 30, 2004.

 

 

 

KINETIC CONCEPTS, INC. AND SUBSIDIARIES

Reconciliation of Condensed Consolidated Statement of Earnings (1)

For the Three Months ended June 30,

(in thousands, except per share data)

(unaudited)

                                      2004                                             

Excluding

Costs and

Costs and

Expenses Related

Expenses Related

to Offerings and

to Offerings and

Debt Prepayments

Debt Prepayments

    GAAP 

%       

 GAAP 

(non-GAAP)

(non-GAAP)

      2003  

 Change (2)

Revenue:

   Rental

$ 175,579 

$            -           

$ 175,579         

$ 140,854 

24.7 %  

   Sales

61,406 

-           

61,406         

42,023 

46.1      

_______ 

_______           

_______         

_______ 

     Total revenue

236,985 

-           

236,985         

182,877 

29.6      

_______ 

_______           

_______         

_______ 

Rental expenses

109,572 

-           

109,572         

87,911 

24.6      

Cost of goods sold

16,560 

-           

16,560         

14,713 

12.6      

_______ 

_______           

_______         

_______ 

      Gross profit

110,853 

-           

110,853         

80,253 

38.1      

Selling, general and administrative expenses

52,898 

-           

52,898         

40,050 

32.1      

Research and development expenses

7,188 

-           

7,188         

4,439 

61.9      

Initial public offering expenses

302 

(302)          

-         

- 

-      

Secondary offering expenses

2,219 

(2,219)          

-         

- 

-      

_______ 

_______           

_______         

_______ 

      Operating earnings

48,246 

2,521           

50,767         

35,764 

42.0      

_______ 

_______           

_______         

_______ 

Interest income

158 

-           

158         

347 

(54.5)     

Interest expense

(11,050)

3,055           

(7,995)        

(8,050)

0.7      

Foreign currency gain

201 

-           

201         

2,368 

(91.5)     

_______ 

_______           

_______         

_______ 

      Earnings before income taxes

37,555 

5,576           

43,131         

30,429 

41.7      

Income taxes

13,520 

2,008           

15,528         

11,411 

36.1      

_______ 

_______           

_______         

_______ 

      Net earnings

$   24,035 

$     3,568           

$  27,603         

$  19,018 

45.1 % 

_______ 

_______           

_______         

_______ 

      Net earnings per share:

  

         Basic

$       0.37 

$      0.42         

$      0.27 

55.6 % 

_______ 

_______         

_______ 

        Diluted

$       0.34 

$      0.39         

$      0.25 

56.0 % 

_______ 

_______         

_______ 

      Weighted average shares outstanding:

  

         Basic

65,087 

65,087         

71,070 

_______ 

_______         

_______ 

         Diluted

71,303 

71,303         

77,236 

_______ 

_______         

_______ 

(1) These adjusted non-GAAP financial measures should be read in conjunction with our GAAP financial results. See footnote 1 on page 1
       of this press release for further discussion of our non-GAAP financial information.
(2) Percentage change reflects the percentage variance between the 2004 (non-GAAP) results, excluding offering and debt prepayment
       related costs and expenses, and the 2003 GAAP results.

KINETIC CONCEPTS, INC. AND SUBSIDIARIES

Reconciliation of Condensed Consolidated Statement of Earnings (1)

For the Six Months ended June 30,

(in thousands, except per share data)

(unaudited)

                                      2004                                             

Costs and

Excluding

Expenses

Costs and

Related to

Expenses Related

Offerings

to Offerings

and Debt

and Debt

Prepayments

Prepayments

    GAAP 

%       

 GAAP 

(non-GAAP)

(non-GAAP)

      2003  

 Change (2)

Revenue:

   Rental

$ 341,487 

$             -   

$ 341,487        

$ 270,296 

26.3 %   

   Sales

120,332 

-   

120,332        

79,584 

51.2       

_______ 

_______   

_______        

_______ 

     Total revenue

461,819 

-   

461,819        

349,880 

32.0       

_______ 

_______   

_______        

_______ 

Rental expenses

214,978 

-   

214,978        

167,290 

28.5       

Cost of goods sold

33,328 

-   

33,328        

28,358 

17.5       

_______ 

_______   

_______        

_______ 

      Gross profit

213,513 

-   

213,513        

154,232 

38.4       

Selling, general and administrative expenses

101,440 

-   

101,440        

76,531 

32.5       

Research and development expenses

14,307 

-   

14,307        

8,864 

61.4       

Initial public offering expenses

19,836 

(19,836)  

-        

- 

-       

Secondary offering expenses

2,219 

(2,219)  

-        

- 

-       

_______ 

_______   

_______        

_______ 

      Operating earnings

75,711 

22,055   

97,766        

68,837 

42.0       

_______ 

_______   

_______        

_______ 

Interest income

529 

-   

529        

747 

(29.2)      

Interest expense

(29,894)

11,689   

(18,205)       

(16,228)

(12.2)      

Foreign currency gain (loss)

(263)

-   

(263)       

4,156 

(106.3)      

_______ 

_______   

_______        

_______ 

      Earnings before income taxes

46,083 

33,744   

79,827        

57,512 

38.8       

Income taxes

16,590 

12,148   

28,738        

21,567 

33.2       

_______ 

_______   

_______        

_______ 

      Net earnings

$   29,493 

$   21,596   

$  51,089        

$   35,945 

42.1 %  

Series A convertible preferred stock dividends

(65,604)

65,604   

-        

- 

-      

_______ 

_______   

_______        

_______ 

      Net earnings (loss) available to

  

  

         common shareholders

$  (36,111)

$   87,200   

$  51,089        

$   35,945 

42.1 %  

_______ 

_______   

_______        

_______ 

      Net earnings (loss) per share available

         to common shareholders:

         Basic

$      (0.63)

$      0.89        

$       0.51 

74.5 %  

_______ 

_______        

_______ 

        Diluted

$      (0.63)

$      0.73        

$       0.47 

55.3 %  

_______ 

_______        

_______ 

      Weighted average shares outstanding:

         Basic

57,709 

57,709        

71,032 

_______ 

_______        

_______ 

         Diluted

57,709 

(3)

69,850        

76,904 

_______ 

_______        

_______ 

(1) These adjusted non-GAAP financial measures should be read in conjunction with our GAAP financial results. See footnote 1 on page 1
       of this press release for further discussion of our non-GAAP financial information.
(2) Percentage change reflects the percentage variance between the 2004 (non-GAAP) results, excluding offering and debt prepayment
       related costs and expenses, and the 2003 GAAP results.
(3) Due to their antidilutive effect, 6,128 dilutive potential common shares from stock options and 6,013 dilutive potential common shares
       from preferred stock conversion have been excluded from the diluted weighted average shares calculation for the six months ended
       June 30, 2004.

 

KINETIC CONCEPTS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

June 30,  

December 31,

      2004      

       2003      

(unaudited) 

Assets:

Current assets:

   Cash and cash equivalents

$   75,493 

$ 156,064    

   Accounts receivable, net

214,556 

199,938    

   Inventories, net

30,823 

32,253    

   Deferred income taxes

24,095 

22,749    

   Derivative financial instruments

1,282 

-    

   Prepaid expenses and other current assets

15,793 

11,811    

_______ 

_______    

          Total current assets

362,042 

422,815    

_______ 

_______    

Net property, plant and equipment

162,913 

145,208    

Loan and preferred stock issuance costs, less accumulated amortization

    of $3,248 in 2004 and $1,014 in 2003

13,273 

19,779    

Goodwill

48,791 

48,797    

Other assets, less accumulated amortization of $8,530 in 2004 and

    $8,190 in 2003

29,214 

28,497    

_______ 

_______    

$  616,233 

$ 665,096    

_______ 

_______    

Liabilities and Shareholders' Deficit:

Current liabilities:

   Accounts payable

$    33,594 

$   34,386    

   Accrued expenses

122,275 

112,652    

   Current installments of long-term debt

4,166 

4,800    

   Current installments of capital lease obligations

1,504 

1,576    

   Derivative financial instruments

- 

2,402    

   Income taxes payable

- 

39,403    

_______ 

_______    

          Total current liabilities

161,539 

195,219    

_______ 

_______    

Long-term debt, net of current installments

492,682 

678,100    

Capital lease obligations, net of current installments

1,298 

1,351    

Deferred income taxes, net

29,248 

26,566    

Deferred gain, sale of headquarters facility

8,647 

9,183    

Other non-current liabilities

213 

212    

_______ 

_______    

693,627 

910,631    

Series A convertible preferred stock, 0 issued and outstanding

   at June 30, 2004 and 264 at December 31, 2003

- 

261,719    

Shareholders' equity (deficit):

   Common stock; authorized 225,000 at June 30, 2004 and

      150,000 at December 31, 2003; issued and outstanding 66,654

       at June 30, 2004 and 41,270 at December 31, 2003

67 

41    

   Additional paid-in capital

468,479 

1,157    

   Deferred compensation

(1,515)

185    

   Retained deficit

(555,066)

(518,955)   

   Accumulated other comprehensive income

10,641 

10,318    

_______ 

_______    

          Shareholders' deficit

(77,394)

(507,254)   

_______ 

_______    

$  616,233 

$ 665,096    

_______ 

_______    

 

 

KINETIC CONCEPTS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

   Six months ended June 30, 

           2004   

       2003  

Cash flows from operating activities:

   Net earnings

$   29,493 

$  35,945 

   Adjustments to reconcile net earnings to net cash provided by operating activities:

         Depreciation and amortization

27,763 

21,991 

         Provision for uncollectible accounts receivable

6,053 

3,527 

         Amortization of deferred gain on sale of headquarters facility

(535)

(521)

         Write-off of deferred loan fees

4,534 

- 

         Non-cash amortization of stock award to directors

114 

- 

         Tax benefit related to exercise of stock options

30,177 

- 

         Change in assets and liabilities:

               Increase in accounts receivable, net

(20,741)

(10,342)

               Decrease (increase) in other accounts receivable

(784)

175,000 

               Decrease in current deferred income taxes

(1,346)

(66,838)

               Decrease in inventories

1,406 

4,148 

               Increase in prepaid expenses and other current assets

(3,981)

(1,979)

               Increase (decrease) in accounts payable

(800)

1,218 

               Increase in accrued expenses

15,945 

18,100 

               Increase (decrease) in income taxes payable

(39,403)

20,282 

               Increase (decrease) in deferred income taxes, net

    1,580 

  (1,826)

                  Net cash provided by operating activities

49,475 

198,705 

_______ 

_______ 

Cash flows from investing activities:

   Additions to property, plant and equipment

(42,376)

(34,381)

   Increase in inventory to be converted into equipment for short-term rental

(4,800)

(1,300)

   Dispositions of property, plant and equipment

1,293 

634 

   Business acquisitions, net of cash acquired

- 

(2,224)

   Increase in other assets

      (264)

      (425)

                  Net cash used by investing activities

(46,147)

(37,696)

_______ 

_______ 

Cash flows from financing activities:

   Repayment of notes payable, long term, capital lease and other obligations

(186,177)

(114,856)

   Initial public offering of common stock:

      Proceeds from issuance of common stock

105,000 

- 

      Stock issuance costs

(10,604)

- 

   Proceeds from exercise of stock options

8,214 

846 

_______ 

_______ 

                  Net cash used by financing activities

(83,567)

(114,010)

_______ 

_______ 

Effect of exchange rate changes on cash and cash equivalents

     (332)

   1,489 

Net increase (decrease) in cash and cash equivalents

(80,571)

48,488 

Cash and cash equivalents, beginning of period

 156,064 

   54,485 

Cash and cash equivalents, end of period

$   75,493 

$ 102,973 

_______ 

_______ 

Cash paid during the six months for:

   Interest (1)

$   25,431 

$   14,903 

   Income taxes

$   28,283 

$   69,392 

Non-cash activity:

   Non-cash consideration for exercise of stock options

$     6,354 

$             - 

(1) 2004 amount includes bond call premiums of $7.7 million related to the prepayments

       on our 7 3/8% Senior Subordinated Notes due 2013.

 

KINETIC CONCEPTS, INC. AND SUBSIDIARIES

SUPPLEMENTAL REVENUE DATA

(unaudited)

(in thousands)

                             Three months ended June 30,                            

             Variance               

         2004     

         2003   

         $       

        %        

USA

  V.A.C.

     Rental

$  101,447 

$   74,555 

$  26,892 

36.1 

%

     Sales

34,602 

19,855 

14,747 

74.3 

_______ 

_______ 

______ 

         Total V.A.C.

136,049 

94,410 

41,639 

44.1 

  Therapeutic surfaces/other

     Rental

37,406 

36,373 

1,033 

2.8 

     Sales

6,193 

7,260 

(1,067)

(14.7)

_______ 

_______ 

______ 

         Total therapeutic surfaces/other

43,599 

43,633 

(34)

(0.1)

  Total USA rental

138,853 

110,928 

27,925 

25.2 

  Total USA sales

40,795 

27,115 

13,680 

50.5 

_______ 

_______ 

______ 

       Subtotal - USA

$ 179,648 

$ 138,043 

$  41,605 

30.1 

%

_______ 

_______ 

______ 

International

  V.A.C.

     Rental

$   15,413 

$    9,842 

$    5,571 

56.6 

%

     Sales

15,019 

9,181 

5,838 

63.6 

_______ 

_______ 

______ 

         Total V.A.C.

30,432 

19,023 

11,409 

60.0 

  Therapeutic surfaces/other

     Rental

21,313 

20,084 

1,229 

6.1 

     Sales

5,592 

5,727 

(135)

(2.4)

_______ 

_______ 

______ 

         Total therapeutic surfaces/other

26,905 

25,811 

1,094 

4.2 

  Total International rental

36,726 

29,926 

6,800 

22.7 

  Total International sales

20,611 

14,908 

5,703 

38.3 

_______ 

_______ 

______ 

       Subtotal - International

$   57,337 

$   44,834 

$  12,503 

27.9 

%

_______ 

_______ 

______ 

  Total revenue

$ 236,985 

$ 182,877 

$  54,108 

29.6 

%

_______ 

_______ 

______ 

 

 

KINETIC CONCEPTS, INC. AND SUBSIDIARIES

SUPPLEMENTAL REVENUE DATA

(unaudited)

(in thousands)

                                Six months ended June 30,                                

                Variance                

         2004     

        2003  

         $         

        %        

USA

  V.A.C.

     Rental

$  191,354 

$ 139,843 

$   51,511 

36.8 

%

     Sales

66,284 

36,947 

29,337 

79.4 

_______ 

_______ 

______ 

         Total V.A.C.

257,638 

176,790 

80,848 

45.7 

  Therapeutic surfaces/other

     Rental

77,207 

74,235 

2,972 

4.0 

     Sales

14,744 

14,646 

98 

0.7 

_______ 

_______ 

______ 

         Total therapeutic surfaces/other

91,951 

88,881 

3,070 

3.5 

  Total USA rental

268,561 

214,078 

54,483 

25.5 

  Total USA sales

81,028 

51,593 

29,435 

57.1 

_______ 

_______ 

______ 

       Subtotal - USA

$ 349,589 

$ 265,671 

$   83,918 

31.6 

%

_______ 

_______ 

______ 

International

  V.A.C.

     Rental

$   28,787 

$   17,660 

$   11,127 

63.0 

%

     Sales

28,366 

17,187 

11,179 

65.0 

_______ 

_______ 

______ 

         Total V.A.C.

57,153 

34,847 

22,306 

64.0 

  Therapeutic surfaces/other

     Rental

44,139 

38,558 

5,581 

14.5 

     Sales

10,938 

10,804 

134 

1.2 

_______ 

_______ 

______ 

         Total therapeutic surfaces/other

55,077 

49,362 

5,715 

11.6 

  Total International rental

72,926 

56,218 

16,708 

29.7 

  Total International sales

39,304 

27,991

11,313 

40.4 

_______ 

_______ 

______ 

       Subtotal - International

$ 112,230 

$   84,209 

$   28,021 

33.3 

%

_______ 

_______ 

______ 

  Total revenue

$ 461,819 

$ 349,880 

$ 111,939 

32.0 

%

_______ 

_______ 

______