EX-99.01 2 r3qtr2008pr102208.htm 3RD QTR 2008 EARNINGS RELEASE r3qtr2008pr102208.htm
Exhibit 99.1
 
 
KCI Logo

 

KINETIC CONCEPTS REPORTS FINANCIAL RESULTS
FOR THIRD QUARTER AND FIRST NINE MONTHS OF 2008

QUARTERLY REVENUE SETS NEW HIGH EXCEEDING $500 MILLION


Third Quarter Highlights

      -  Total revenue increased 22% to $503.3 million, including $61.2 million of LifeCell revenue
      -  Net earnings decreased 4% to $56.6 million
      -  Net earnings per diluted share decreased 5% to $0.78
      -  Non-GAAP net earnings, excluding certain non-cash acquisition-related expenses, increased 17% to $69.2 million
      -  Non-GAAP net earnings per diluted share, excluding certain non-cash acquisition-related expenses, increased 17% to $0.96


First Nine Months Highlights

      -  Total revenue increased 18% to $1.385 billion, including $88.8 million of LifeCell revenue
      -  Net earnings decreased 29% to $121.8 million
      -  Net earnings per diluted share decreased 29% to $1.69
      -  Non-GAAP net earnings, excluding certain non-cash acquisition-related expenses, increased 19% to $202.5 million
      -  Non-GAAP net earnings per diluted share, excluding certain non-cash acquisition-related expenses, increased 18% to $2.81



San Antonio, Texas, October 22, 2008 – Kinetic Concepts, Inc. (NYSE: KCI) today reported third quarter 2008 total revenue of $503.3 million, an increase of 22% from the third quarter of 2007.  Total revenue for the first nine months of 2008 was $1.385 billion, an 18% increase from the prior-year period.  Foreign currency exchange movements favorably impacted total revenue for the third quarter and first nine months of 2008 by approximately 2% and 3%, respectively, compared to the corresponding periods of the prior year.

Net earnings for the third quarter of 2008 were $56.6 million, compared to $59.0 million for the same period one year ago.  Net earnings per diluted share for the third quarter of 2008 decreased 5% to $0.78, compared to $0.82 for the same period in the prior year.  The decrease in reported net earnings and net earnings per diluted share is due to after-tax transaction-related costs and expenses of $12.7 million, or $0.18 per diluted share, associated with our acquisition of LifeCell Corporation in the second quarter of 2008.

“Our third quarter results demonstrated that our business fundamentals remain solid,” said Catherine Burzik, President and Chief Executive Officer of KCI.  “We continued to grow global V.A.C.® revenue despite increased competition.  Our LifeCell® acquisition is meeting our expectations and we continue to drive operating efficiencies that fund the investments which will help deliver sustainable top-line growth and increased shareholder value.”

For the first nine months of 2008, net earnings were $121.8 million, down 29%, compared to $170.7 million from last year.  Net earnings per diluted share for the first nine months of 2008 were $1.69, a decrease of 29% from the same period one year ago.  Non-GAAP net earnings, excluding certain non-cash acquisition-related expenses increased 19% from the prior year to $202.5 million.


Revenue Recap – Third Quarter and First Nine Months of 2008

North American revenue was $386.3 million for the third quarter and $1.038 billion for the first nine months of 2008, representing increases of 24% and 15%, respectively, from the prior year due to revenue associated with the LifeCell acquisition and increased rental and sales volumes for V.A.C. wound healing devices and related disposables.  North American V.A.C. revenue of $270.0 million for the third quarter and $781.9 million for the first nine months of 2008 increased approximately 6% and 7%, respectively, compared to the same periods of the prior year due primarily to higher rental and sales unit volume.  The rate of North American V.A.C. revenue growth has declined from the prior-year periods due to a number of factors including increased competitive activity, institutional budget constraints and shorter average treatment periods.  Order demand in the period exceeded unit volume growth as average treatment periods have declined due to improved treatment protocols, faster healing times and wound mix primarily in the acute care setting.  LifeCell revenue was $61.2 million for the quarter and $88.8 million for the year-to-date period post-acquisition.  LifeCell regenerative tissue revenue for the third quarter of 2008 represented an increase of approximately 29% over the same period one year ago due primarily to growth in its core challenging hernia repair and breast reconstruction applications.  North American revenue from therapeutic support systems was $55.1 million for the third quarter and $167.7 million for the first nine months of 2008, representing decreases of 3% and 1%, respectively, from the prior-year periods due primarily to the loss of a large GPO contract announced earlier this year.

EMEA/APAC revenue of $117.0 million for the third quarter and $347.0 million for the first nine months of 2008 increased 19% and 25%, respectively, compared to the prior year due primarily to increased V.A.C. revenue.  EMEA/APAC V.A.C. revenue of $90.3 million for the third quarter and $264.6 million for the first nine months of 2008 increased 24% and 29%, respectively, compared to the same periods of the prior year due primarily to higher rental and sales unit volume.  EMEA/APAC therapeutic support systems revenue for the third quarter of 2008 of $26.7 million was up approximately 6% compared to the prior year period, while therapeutic support systems revenue of $82.4 million for the first nine months of 2008 increased 14% period-to-period.  Foreign currency exchange movements favorably impacted total EMEA/APAC revenue by 8% and 12% for the third quarter and first nine months of 2008, respectively, compared to the corresponding periods of the prior year.

Worldwide V.A.C. revenue was $360.3 million for the third quarter of 2008 and $1.046 billion for the first nine months of 2008, representing increases of 10% and 12%, respectively, due primarily to increased rental and sales volumes for V.A.C. wound healing devices and related supplies, resulting from increased market penetration.  Foreign currency exchange movements favorably impacted worldwide V.A.C. revenue by 2% and 3%, respectively, compared to the third quarter and first nine months of the prior year.

Worldwide therapeutic support systems revenue was $81.8 million for the third quarter of 2008 and $250.1 million for the first nine months of 2008, representing flat revenue levels for the comparative quarterly periods and an increase of approximately 4% for the first nine months of 2008.  Foreign currency exchange movements favorably impacted worldwide therapeutic support systems revenue by 3% and 4%, respectively, for the third quarter and first nine months of 2008 compared to the same periods one year ago.


Profit Margins

Gross profit for the third quarter and first nine months of 2008 was $251.6 million and $687.5 million, respectively, representing increases of 23% and 22% from the same periods of the prior year.  Gross profit margin improved approximately 30 basis points in the 2008 third quarter, compared to the year-ago period, due primarily to higher gross margins associated with the LifeCell acquisition and increased productivity of service operations.

Operating earnings for the third quarter and first nine months of 2008 were $112.9 million and $255.0 million, respectively, representing an increase of 14% for the third quarter and a decrease of 6% for the first nine months of 2008 compared to the same periods one year ago.  Excluding the impact of certain non-cash acquisition-related expenses on the Company’s financial results, non-GAAP operating earnings for the third quarter and first nine months of 2008 increased approximately 32% and 26%, respectively, from the corresponding periods of one year ago.  The non-GAAP operating earnings improvement for the third quarter, excluding certain non-cash acquisition-related expenses, was due primarily to higher gross profit combined with operating efficiencies, process improvements and lower general and administrative expenses.  Research and development expenses for the third quarter and first nine months of 2008 increased 99% and 65%, respectively, compared to the same periods one year ago as the Company continued to expand its product development pipeline.


Interest Expense

Interest expense for the third quarter and first nine months was $25.6 million and $41.4 million, respectively, compared to $10.2 million and $18.4 million for the corresponding periods of the prior year due to the addition of $1.7 billion in acquisition financing completed during the second quarter of 2008.  The acquisition financing was comprised of a senior secured term loan of $1.0 billion, due 2013, and $690.0 million of 3.25% convertible senior notes due 2015.  Proceeds from these facilities were used to repay $68.0 million of outstanding debt under the previous credit facility, purchase all of the outstanding shares of LifeCell and pay related fees and expenses associated with the transaction.  The senior secured term loan has a stated variable interest rate of 3-month LIBOR plus an applicable margin, however, we have entered into agreements that effectively fix the variable interest rate component on approximately $490 million of the term loan at an average of 3.3% plus the applicable margin.


Income Tax Rate

The effective income tax rates for the third quarter and the first nine months of 2008 were 33.3% and 43.6%, respectively, compared to 34.2% and 33.7% for the corresponding periods in 2007.  The lower income tax rate for the third quarter resulted primarily from a higher percentage of total income being generated in lower tax foreign jurisdictions. The effective income tax rate for the first nine months of 2008 increased significantly from the year-ago period due primarily to the non-deductibility of the $61.6 million write-off of in-process research and development associated with the LifeCell acquisition.


Reconciliation to Adjusted Diluted Earnings per Share

Diluted net earnings per share, on a non-GAAP basis, adjusted for certain non-cash acquisition-related expenses, were as follows:

   
Three months ended
 
Nine months ended
   
September 30, 2008
 
September 30, 2008
         
Diluted EPS – GAAP basis
  $  0.78   $  1.69
In-process research and development
  -   0.85
Amortization of acquired intangibles
  0.09   0.13
Expense from LifeCell inventory step-up
  0.06   0.09
Debt issuance cost amortization
 
0.03
  0.05
         
Adjusted diluted EPS – Non-GAAP basis
  $  0.96   $  2.81


Balance Sheet

At September 30, 2008, total cash was $245.2 million and total long-term debt outstanding was $1.74 billion.  Subsequent to September 30, 2008, the Company made a voluntary revolving credit facility repayment of $75.0 million from cash on hand.  The Company’s leverage ratio at the end of September 2008 was approximately 2.9 times trailing-twelve-months EBITDA.
 
 
Outlook

The following guidance is based on current information and expectations as of October 22, 2008 (in millions, except per share data):
 
           
% Change
   
FY 2007
 
FY 2008
 
from 2007
Total revenue
  $1,610   $1,885 – $1,905   17 % – 18 %
Diluted EPS -- GAAP basis
  $3.31   $2.47 – $2.57   (25)% – (22)%
Weighted average shares outstanding
  71.7   72.0 – 72.5   0 % – 1 %
             
Adjusted Diluted EPS -- Non-GAAP basis
  $3.31   $3.75 – $3.85   13 % – 16 %
 
The revenue guidance for 2008 reflects the impact of increased competition in the area of negative pressure wound therapy, unfavorable foreign currency exchange rate fluctuations in the second half of the 2008 calendar year and shorter lengths of treatment for V.A.C. Therapy.


KCI 2008 Analyst Day Event

KCI plans to host an Analyst Day event on Thursday, October 30, 2008 at the Grand Hyatt in San Antonio.  The event will include presentations by key opinion leaders in the field of advanced wound care, as well as presentations by KCI leaders.  To learn more about the event, go to KCI’s Investor Relations web site at http://www.kci1.com/investor/index.asp and click on the Analyst Day link.


Non-GAAP Financial Information

Within this document, we have included our results for the third quarter and nine months ended September 30, 2008 along with our outlook on a non-GAAP basis to exclude the impact of the specified non-cash expenses set forth above associated with our acquisition of LifeCell in the second quarter of 2008.  These non-GAAP financial measures do not replace the presentation of our GAAP outlook.  We have provided this supplemental non-GAAP information because it may provide meaningful information regarding our outlook on a basis that better facilitates an understanding of our expected results of operations which may not be otherwise apparent under purchase accounting for the LifeCell acquisition in accordance with GAAP.  Management uses this non-GAAP financial information, along with GAAP information, for reviewing the operating results of its business segments and for analyzing potential future business trends.  In addition, we believe some investors may use this information in a similar fashion.  A reconciliation of our GAAP selected financial information for the periods presented to the non-GAAP selected financial information provided is included herein.


Earnings Release Conference Call

As previously announced, we have scheduled an earnings release conference call for 8:30 a.m. Eastern Daylight Time today, Wednesday, October 22, 2008.  The dial-in numbers for this conference call are as follows:

Domestic Dial-in Number:
888-313-5249
International Dial-in Number:
+706-679-5386

This call is also being webcast and can be accessed at the Kinetic Concepts, Inc. web site at http://www.kci1.com/investor/index.asp, and clicking on Webcast – Q3 2008 Kinetic Concepts, Inc. Earnings Conference Call.  An archive of the web cast will be available until October 21, 2009 at http://www.kci1.com/investor/index.asp.

KCI's business outlook as of today is expected to be available on KCI's Investor Relations web site.  KCI does not currently expect to update this business outlook until the release of KCI's next quarterly earnings announcement, notwithstanding subsequent developments.


About KCI

Kinetic Concepts, Inc. (NYSE: KCI) is a leading global medical technology company devoted to the discovery, development, manufacture and marketing of innovative, high-technology therapies and products for the wound care, tissue regeneration and therapeutic support system markets.  Headquartered in San Antonio, Texas, KCI’s success spans more than three decades and can be traced to a history deeply rooted in innovation and a passion for significantly improving the healing – and the lives – of patients around the world.

KCI’s three primary businesses include:

Advanced Wound Care – Includes KCI’s proprietary Vacuum Assisted Closure®, or V.A.C.® Therapy System, which has been clinically demonstrated to promote wound healing through unique mechanisms of action while reducing the overall cost of treating patients with complex wounds.

Regenerative Medicine – Represented by KCI’s LifeCell business and includes tissue-based products for use in reconstructive, orthopedic and urogynecologic surgical procedures to repair soft tissue defects.

Therapeutic Support Systems – Includes specialty hospital beds, mattress replacement systems and overlays designed to address pulmonary complications associated with immobility, to reduce skin breakdown and assist caregivers in the safe and dignified handling of patients of size.

The Company employs approximately 7,000 people and markets its products in more than 20 countries.  For more information about KCI, and how its products are changing the practice of medicine, visit www.kci1.com.


Forward-Looking Statements

This press release contains forward-looking statements including, among other things, management's outlook, estimates of future performance, revenue, earnings per share, growth objectives and weighted average shares outstanding.  These forward-looking statements contained herein are based on our current expectations and are subject to a number of risks and uncertainties that could cause us to fail to achieve our current financial projections and other expectations, such as changes in the demand for the V.A.C. resulting from increased competition, in payer reimbursement policies or in our ability to protect our intellectual property. All information set forth in this release and its attachments is as of October 22, 2008.  We undertake no duty to update this information.  More information about potential factors that could cause our results to differ or adversely affect our business and financial results is included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and in our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2008 and June 30, 2008, including, among other sections, under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."  These reports are 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 quarterly period ended September 30, 2008, which will be filed with the SEC in early November 2008.


FOR MORE INFORMATION CONTACT:

Investor Relations:
Rich Cockrell, 210-255-6331
rich.cockrell@kci1.com

Media Relations:
Kristie Madara, 210-255-6232
kristie.madara@kci1.com
 

 


 
KINETIC CONCEPTS, INC. AND SUBSIDIARIES
 
Condensed Consolidated Statements of Earnings
 
(in thousands, except per share data)
 
(unaudited)
 
   
   
 
Three months ended September 30,
   
Nine months ended September 30,
 
             
%
               
%
 
 
2008
   
2007
   
Change
   
2008
   
2007
   
Change
 
Revenue:
                                 
   Rental
$ 305,205     $ 295,371     3.3 %      $ 906,393     $ 844,400     7.3 %   
   Sales
  198,094       115,509     71.5       479,046       331,948     44.3  
                                           
Total revenue
  503,299       410,880     22.5       1,385,439       1,176,348     17.8  
                                           
Rental expenses
  185,136       170,742     8.4       545,729       506,047     7.8  
Cost of sales
  66,542       35,917     85.3       152,220       104,764     45.3  
                                           
Gross profit
  251,621       204,221     23.2       687,490       565,537     21.6  
                                           
Selling, general and administrative expenses
  106,676       94,349     13.1       302,754       261,183     15.9  
Research and development expenses
  21,884       10,996     99.0       53,279       32,200     65.5  
Acquired intangible asset amortization
  10,189       -     -       14,843       -     -  
In-process research and development
  -       -     -       61,571       -     -  
                                           
Operating earnings
  112,872       98,876     14.2       255,043       272,154     (6.3 )      
                                           
Interest income and other
  835       689     21.2       4,997       3,569     40.0  
Interest expense
  (25,648 )     (10,176 )   152.0       (41,350 )     (18,398 )   124.8  
Foreign currency gain (loss)
  (3,253 )     328     -       (2,740 )     (124 )   -  
                                           
Earnings before income taxes
  84,806       89,717     (5.5 )           215,950       257,201     (16.0 )      
                                           
Income taxes
  28,254       30,692     (7.9 )           94,154       86,548     8.8  
                                           
Net earnings
$ 56,552     $ 59,025     (4.2 )%   $ 121,796     $ 170,653     (28.6 )%  
                                           
Net earnings per share:
                                         
         Basic
$ 0.79     $ 0.83     (4.8 )%   $ 1.70     $ 2.41     (29.5 )%  
                                           
         Diluted
$ 0.78     $ 0.82     (4.9 )%   $ 1.69     $ 2.39     (29.3 )%  
                                           
Weighted average shares outstanding:
                                         
         Basic
  71,831       71,214             71,756       70,791        
                                           
         Diluted
  72,130       71,929             72,110       71,490        

 


 
KINETIC CONCEPTS, INC. AND SUBSIDIARIES
 
Condensed Consolidated Balance Sheets
 
(in thousands)
 
             
             
   
September 30,
   
December 31,
 
   
2008
   
2007
 
   
(unaudited)
       
             
Assets:
           
Current assets:
           
   Cash and cash equivalents
  $ 245,236     $ 265,993  
   Accounts receivable, net
    408,339       356,965  
   Inventories, net
    126,435       50,341  
   Deferred income taxes
    18,849       41,504  
   Prepaid expenses and other
    46,958       31,176  
                 
          Total current assets
    845,817       745,979  
                 
Net property, plant and equipment
    282,850       228,471  
Debt issuance costs, less accumulated amortization of
               
    $6,387 at 2008 and $218 at 2007
    56,991       2,456  
Deferred income taxes
    7,500       8,743  
Goodwill
    1,337,388       48,897  
Identifiable intangible assets, less accumulated amortization of
               
    $26,142 at 2008 and $10,678 at 2007
    481,711       7,196  
Other non-current assets
    16,475       15,843  
                 
    $ 3,028,732     $ 1,057,585  
                 
Liabilities and Shareholders' Equity:
               
Current liabilities:
               
   Accounts payable
  $ 58,996     $ 50,804  
   Accrued expenses and other
    194,333       212,874  
   Current installments of long-term debt
    100,000       -  
                 
          Total current liabilities
    353,329       263,678  
                 
Long-term debt, net of current installments
    1,640,000       68,000  
Non-current tax liabilities
    35,327       31,313  
Deferred income taxes
    169,997       9,921  
Other non-current liabilities
    6,778       7,653  
                 
          Total liabilities
    2,205,431       380,565  
                 
Shareholders' equity:
               
   Common stock; authorized 225,000 at 2008 and 2007,
               
      issued and outstanding 72,535 at 2008 and 72,153 at 2007
    73       72  
   Preferred stock; authorized 50,000 at 2008 and 2007; issued and
               
      outstanding 0 at 2008 and 2007
    -       -  
   Additional paid-in capital
    677,757       644,347  
   Retained earnings (deficit)
    114,615       (7,181 )
   Accumulated other comprehensive income
    30,856       39,782  
                 
          Shareholders' equity
    823,301       677,020  
                 
    $ 3,028,732     $ 1,057,585  
 
 


 
KINETIC CONCEPTS, INC. AND SUBSIDIARIES
 
Condensed Consolidated Statements of Cash Flows
 
(in thousands)
 
(unaudited)
 
       
       
   
Nine months ended September 30,
 
   
2008
   
2007
 
Cash flows from operating activities:
           
   Net earnings
  $ 121,796     $ 170,653  
   Adjustments to reconcile net earnings to net cash provided
               
      by operating activities:
               
           Depreciation, amortization and other
    87,019       67,785  
           Provision for bad debt
    5,986       5,519  
           Amortization of deferred gain on sale of headquarters facility
    (803 )     (803 )
           Write-off of deferred debt issuance costs
    860       3,922  
           Share-based compensation expense
    19,678       17,908  
           Excess tax benefit from share-based payment arrangements
    (258 )     (12,582 )
           Write-off of in-process research and development
    61,571       -  
           Change in assets and liabilities, net of business acquired:
               
                 Increase in accounts receivable, net
    (19,879 )     (30,781 )
                 Increase in inventories, net
    (8,297 )     (7,284 )
                 Increase in prepaid expenses and other
    (9,712 )     (7,987 )
                 Increase (decrease) in deferred income taxes, net
    71,073       (17,135 )
                 Decrease in accounts payable
    (8,230 )     (2,934 )
                 Decrease in accrued expenses and other
    (49,603 )     (9,779 )
                 Increase in tax liabilities, net
    554       27,963  
                 
                     Net cash provided by operating activities
    271,755       204,465  
                 
Cash flows from investing activities:
               
   Additions to property, plant and equipment
    (83,748 )     (53,947 )
   Increase in inventory to be converted into equipment
               
      for short-term rental
    (12,100 )     (13,500 )
   Dispositions of property, plant and equipment
    4,638       1,239  
   Business acquired in purchase transaction, net of cash acquired
    (1,745,522 )     -  
   Purchase of investments
    -       (36,425 )
   Maturities of investments
    -       36,425  
   Increase in intangible assets and other non-current assets
    (3,753 )     (1,288 )
                 
                     Net cash used by investing activities
    (1,840,485 )     (67,496 )
                 
Cash flows from financing activities:
               
   Proceeds from revolving credit facility
    75,000       188,000  
   Repayments of long-term debt, capital lease and other obligations
    (25,193 )     (307,584 )
   Payment of debt issuance costs
    -       (2,268 )
   Excess tax benefit from share-based payment arrangements
    258       12,582  
   Proceeds from exercise of stock options
    2,431       21,634  
   Purchase of immature shares for minimum tax withholdings
    (886 )     (2,321 )
   Proceeds from purchase of stock in ESPP and other
    2,346       2,142  
   Acquisition financing:
               
      Proceeds from senior credit facility
    1,000,000       -  
      Proceeds from convertible senior notes
    690,000       -  
      Repayment of long-term debt
    (68,000 )     -  
      Proceeds from convertible debt warrant
    102,458       -  
      Purchase of convertible debt hedge
    (151,110 )     -  
      Payment of debt issuance costs
    (60,704 )     -  
                 
                     Net cash provided (used) by financing activities
    1,566,600       (87,815 )
                 
Effect of exchange rate changes on cash and cash equivalents
    (18,627 )     7,874  
                 
Net increase (decrease) in cash and cash equivalents
    (20,757 )     57,028  
Cash and cash equivalents, beginning of period
    265,993       107,146  
                 
Cash and cash equivalents, end of period
  $ 245,236     $ 164,174  
 
 


 
KINETIC CONCEPTS, INC. AND SUBSIDIARIES
 
Supplemental Revenue Data
 
(in thousands)
 
(unaudited)
 
   
   
   
Three months ended September 30,
 
               
Variance
 
   
2008
   
2007 (1)
   
$
     
%
 
Total Revenue:
                         
  V.A.C.
                         
     Rental
  $ 237,387     $ 226,114     $ 11,273       5.0 %
     Sales
    122,902       102,781       20,121       19.6  
                                 
         Total V.A.C.
    360,289       328,895       31,394       9.5  
                                 
  Therapeutic Support Systems
                               
     Rental
    67,818       69,257       (1,439 )     (2.1 )
     Sales
    13,959       12,728       1,231       9.7  
                                 
         Total Therapeutic Support Systems
    81,777       81,985       (208 )     (0.3 )
                                 
  LifeCell sales
    61,233       -       61,233       -  
                                 
  Total rental revenue
    305,205       295,371       9,834       3.3  
  Total sales revenue
    198,094       115,509       82,585       71.5  
                                 
       Total Revenue
  $ 503,299     $ 410,880     $ 92,419       22.5 %
                                 
                                 
North America Revenue:
                               
  V.A.C.
                               
     Rental
  $ 192,799     $ 189,035     $ 3,764       2.0 %
     Sales
    77,166       66,795       10,371       15.5  
                                 
         Total V.A.C.
    269,965       255,830       14,135       5.5  
                                 
  Therapeutic Support Systems
                               
     Rental
    46,461       49,225       (2,764 )     (5.6 )
     Sales
    8,621       7,497       1,124       15.0  
                                 
         Total Therapeutic Support Systems
    55,082       56,722       (1,640 )     (2.9 )
                                 
  LifeCell sales
    61,233       -       61,233       -  
                                 
  Total North America rental
    239,260       238,260       1,000       0.4  
  Total North America sales
    147,020       74,292       72,728       97.9  
                                 
       Total – North America Revenue
  $ 386,280     $ 312,552     $ 73,728       23.6 %
                                 
                                 
EMEA/APAC Revenue:
                               
  V.A.C.
                               
     Rental
  $ 44,588     $ 37,079     $ 7,509       20.3 %
     Sales
    45,736       35,986       9,750       27.1  
                                 
         Total V.A.C.
    90,324       73,065       17,259       23.6  
                                 
  Therapeutic Support Systems
                               
     Rental
    21,357       20,032       1,325       6.6  
     Sales
    5,338       5,231       107       2.0  
                                 
         Total Therapeutic Support Systems
    26,695       25,263       1,432       5.7  
                                 
  Total EMEA/APAC rental
    65,945       57,111       8,834       15.5  
  Total EMEA/APAC sales
    51,074       41,217       9,857       23.9  
                                 
       Total – EMEA/APAC Revenue
  $ 117,019     $ 98,328     $ 18,691       19.0 %
                                 
                                   
                               
(1) Prior year amounts have been reclassified to conform to our current year presentation.
 
 
 


 
KINETIC CONCEPTS, INC. AND SUBSIDIARIES
 
Supplemental Revenue Data
 
(in thousands)
 
(unaudited)
 
   
   
   
Nine months ended September 30,
 
               
Variance
 
   
2008
   
2007 (1)
   
$
     
%
 
Total Revenue:
                         
  V.A.C.
                         
     Rental
  $ 693,948     $ 641,713     $ 52,235       8.1 %
     Sales
    352,549       293,052       59,497       20.3  
                                 
         Total V.A.C.
    1,046,497       934,765       111,732       12.0  
                                 
  Therapeutic Support Systems
                               
     Rental
    212,445       202,687       9,758       4.8  
     Sales
    37,661       38,896       (1,235 )     (3.2 )
                                 
         Total Therapeutic Support Systems
    250,106       241,583       8,523       3.5  
                                 
  LifeCell sales
    88,836       -       88,836       -  
                                 
  Total rental revenue
    906,393       844,400       61,993       7.3  
  Total sales revenue
    479,046       331,948       147,098       44.3  
                                 
       Total Revenue
  $ 1,385,439     $ 1,176,348     $ 209,091       17.8 %
                                 
                                 
North America Revenue:
                               
  V.A.C.
                               
     Rental
  $ 562,982     $ 539,110     $ 23,872       4.4 %
     Sales
    218,902       190,932       27,970       14.6  
                                 
         Total V.A.C.
    781,884       730,042       51,842       7.1  
                                 
  Therapeutic Support Systems
                               
     Rental
    144,784       145,366       (582 )     (0.4 )
     Sales
    22,921       24,053       (1,132 )     (4.7 )
                                 
         Total Therapeutic Support Systems
    167,705       169,419       (1,714 )     (1.0 )
                                 
  LifeCell sales
    88,836       -       88,836       -  
                                 
  Total North America rental
    707,766       684,476       23,290       3.4  
  Total North America sales
    330,659       214,985       115,674       53.8  
                                 
       Total – North America Revenue
  $ 1,038,425     $ 899,461     $ 138,964       15.4 %
                                 
                                 
EMEA/APAC Revenue:
                               
  V.A.C.
                               
     Rental
  $ 130,966     $ 102,603     $ 28,363       27.6 %
     Sales
    133,647       102,120       31,527       30.9  
                                 
         Total V.A.C.
    264,613       204,723       59,890       29.3  
                                 
  Therapeutic Support Systems
                               
     Rental
    67,661       57,321       10,340       18.0  
     Sales
    14,740       14,843       (103 )     (0.7 )
                                 
         Total Therapeutic Support Systems
    82,401       72,164       10,237       14.2  
                                 
  Total EMEA/APAC rental
    198,627       159,924       38,703       24.2  
  Total EMEA/APAC sales
    148,387       116,963       31,424       26.9  
                                 
       Total – EMEA/APAC Revenue
  $ 347,014     $ 276,887     $ 70,127       25.3 %
                                 
                                   
                               
(1) Prior year amounts have been reclassified to conform to our current year presentation.
 

 

 

KINETIC CONCEPTS, INC. AND SUBSIDIARIES
 
Selected Financial Information - GAAP to Non-GAAP Reconciliation
 
(in thousands, except per share data)
 
(unaudited)
 
   
   
 
Three months ended September 30,
 
             
Expense
                 
     
In-process
     
From
 
Debt
             
     
Research
 
Amortization
 
LifeCell
 
Issuance
             
 
2008
 
and
 
of Acquired
 
Inventory
 
Cost
 
Adjusted
 
2007
 
%
 
 
GAAP
 
Development
 
Intangibles
 
Step-up
 
Amortization
 
2008
 
GAAP
 
Change
 
                                 
Operating earnings
$ 112,872   $ -   $ 10,189   $ 6,999   $ -   $ 130,060   $ 98,876   31.5
Net earnings
$ 56,552   $ -   $ 6,266   $ 4,304   $ 2,107   $ 69,229   $ 59,025   17.3
Diluted earnings per share
$ 0.78   $ -   $ 0.09   $ 0.06   $ 0.03   $ 0.96   $ 0.82   17.1
     
     
     
 
Nine months ended September 30,
 
                   
Expense
                       
       
In-Process
       
From
 
Debt
                 
       
Research
 
Amortization
 
LifeCell
 
Issuance
                 
 
2008
 
and
 
of Acquired
 
Inventory
 
Cost
 
Adjusted
 
2007
 
%
 
 
GAAP
 
Development
 
Intangibles
 
Step-Up
 
Amortization
 
2008
 
GAAP
 
Change
 
                                               
Operating earnings
$ 255,043   $ 61,571   $ 14,843   $ 10,162   $ -   $ 341,619   $ 272,154   25.5
Net earnings
$ 121,796   $ 61,571   $ 9,128   $ 6,250   $ 3,794   $ 202,539   $ 170,653   18.7
Diluted earnings per share
$ 1.69   $ 0.85   $ 0.13   $ 0.09   $ 0.05   $ 2.81   $ 2.39   17.6