Fresenius Medical Care AG (FMS) 2009 Q4 法說會逐字稿

Time to start, to be in line with our schedule for today, so thank you -- good afternoon, everybody, in the audience as well as actually on the Internet. I would like to welcome you to our fourth quarter and full year 2009 results meeting.

The objective today is to review our very good earnings performance in 2009, and to focus on the outlook for 2010. To discuss these issues in detail, I am joined by Ben Lipps, our Chairman and CEO. Ben will provide a strategic outlook of our business, followed by our CFO, Chief Financial Officer Mike Brosnan, who will discuss our results for 2009 and provide the expected growth outlook for 2010.

As always, it's my job, and I would like to remind you, everybody, that our comments today and the presentation will be governed by our Safe Harbor statement. What that means in summary is that through the course of our presentation today, we make certain forward-looking statements, and actual results may vary materially. Any non-US GAAP measure being used has been reconciled with GAAP figures in the Q4 material released earlier today.

So with that, actually, I would like to turn it to Ben for the presentation. Thank you.

Thank you, Oliver. And again, a pleasure to be here today. Oliver has covered that. So what I'd like to do is welcome you, extend my warm welcome, our warm welcome to all of you that have joined us today here. All of our associates, the Management Board who are here present with us today who have joined us also via the Internet, and to all of the associates and staff around the world who have worked so hard this year to produce the results that I'll be talking about, and also maintaining the excellent quality in both products and services.

In terms of the overall agenda, I think Oliver covered that. I'll cover basically the business update, and then Mike Brosnan, who you have met here earlier, will cover -- our new CFO will cover the financials, and then we'll go into questions and answers.

Now, as you've probably seen from the press release this morning, we're very proud of the results. It was a very strong fourth quarter. We also achieved our full year guidance, and I think as was mentioned earlier, and anyone knows, 2009 was a difficult year. But on top of that, we also had a very strong cash flow this year, and we were clearly ahead of our projections then for the year.

Now, also, I'd like to mention that we're confident about 2010. We certainly always see that there will be some tailwinds and headwinds during 2010, but we see our revenue will continue strong. We continue to see demand for our products worldwide, our services worldwide, and also, we have now the production capacity to provide any of the demands that come in terms of our products on a worldwide basis. And our renal pharma initiatives are on track, and I'll talk a little bit about that later.

And finally, we've got a pipeline of new products that are coming into the market over the next couple of years that are quite exciting, and we've also launched a number of products over the past two to three years that are doing quite well.

So all in all, it looks like 2010 will be a good year, and 2009 was. The slide I have up here now just shows a little bit of the numbers. You've probably seen them. We met our revenue projections, which we had basically improved the guidance slightly on that in third quarter, greater than $11.2 billion in revenue, net income at the top end of our guidance, and we also had an excellent, as I mentioned, cash flow. Mike will talk more about it, but we ended up having a much better leverage ratio than we had targeted at the beginning of the year. We ended up around 2.5 leverage ratio, which is at the low end of our target band.

Now, we also were at the low end of our CapEx, which was really a discipline within our own company, but we did finish all the projects that we needed to finish. And, we were at the low end of our acquisitions, primarily because there certainly are a number of acquisitions available around the world, but again, a lot of them did not meet our financial hurdles, and there was no reason to bend our hurdles at this point in time.

So that's where we ended up for the year. Now, if you look at the fourth quarter, very strong. I think, again, you've seen the numbers. We passed the $3 billion mark for the first time in our history -- very proud of that. We had an 8% constant currency. The currency was actually a little bit of a tailwind. We showed a 12% revenue growth in actual currency, and we clearly showed a net income of 15% in actual currency for the fourth quarter. And we also saw a 30 basis point improvement in our run rate in terms of our EBIT margin, so -- and again, Mike will talk a little bit about that.

So a very strong quarter financially, but for a number of other reasons, it was also excellent in terms of quality, I'll show you here, in everything across the board.

Now, the contribution to that strong quarter, again, came from around the world. If you look at the revenue for the quarter, you can see that North America had a very strong 9% organic growth, 9% growth for North America. That is when you're looking at somewhere in the $2 billion, that's really quite good. That was driven by some excellent results in the service area in terms of revenue per treatment and cost controls, and I'll point that out later.

If you look then at the International, as I mentioned, this is our first quarter where International has exceeded $1 billion in revenue. That's a new high water mark for the International group. We're very proud of that. And again, it was pretty much led by all three regions, with Europe, of course, being the largest. It contributed with a growth rate of 8% constant currency -- again, excellent -- Latin America, 11%, and Asia-Pacific, 8%.

So, it was really across the board a very strong quarter. Everyone had very good revenue growth.

The fiscal year is pretty much the same pattern. Again, North America had a growth rate of 9%, and International, essentially, stayed at 9% -- 8%, I think -- 9% for the year. So we had good growth the entire year, and it was balanced around the world. And as you look at, well, what are the drivers that will continue in 2010, International, there's many opportunities to expand our service network. We see that opportunity continuing through 2010.

Each of our major countries have had excellent growth, both in products and service in terms of their organic growth. Our acute business and our PD business has actually done very well this year in the International area, so all of those growth drivers will continue as we look at 2010.

And in the North America, we continue to have excellent growth in our renal business, our renal pharma business. We -- I'll talk a little bit about it when we talk of the products.

Our in-center clinic growth has been excellent, you'll see that. And some of our new programs like clinic nocturnal are picking up. And we had very strong revenue growth this year, which I'll emphasize. And we did a few acquisitions, which were quite attractive in filling out some of the regions, and that will continue.

So basically, most of our strategies will continue in '10, and they're pretty much an extension of what we did in '09.

Now, looking at the service sector, as I had mentioned, fourth quarter was an extremely successful quarter. Again, North America had a 10% growth rate. The Group did exceptionally well in both revenue and in quality, and in costs. We now have about 1,800 clinics in North America, counting the few that we manage. Also, if you'll look at -- the International area continued the double digit constant currency growth. We have about 770 clinics in the International area, so we have a -- we're the largest provider of dialysis outside of the US. And with that, we've got maybe 450, 435 in Europe, so again, Europe is the second largest provider outside of the US.

Now, as you look at the -- what drove fourth quarter, it again was strong treatment growth and strong revenue per treatment growth, which I'll cover in one of the other topics, so a very strong quarter for services.

If you look at the entire year, it almost mimics it. We had North America, as I mentioned, had a very strong 9% growth for the year, in International, 14%. So we essentially had all year long, then, a very good growth in the service business around the world. We now treat about 196,000 patients in our 2,500 plus clinics.

Let's talk a little bit about quality. Clearly, we do provide a life-saving service. Quality is job number one, and I've got to tell you that we're doing a very good job in that area. I'll spend a little more time on this chart. I think I'll have that time.

But we look at these metrics. I've showed them every quarter, and you can see that basically the Kt/V, or, how did we do versus what the doctor asked us to do, both in Europe and in North America, 95% to 96% of the time, we provide the prescription the doctor asked for.

Now, the hemoglobin area, we're -- that has changed, because of all of the discussions over the last couple of years in the US in terms of what is the right level of basically hemoglobin. We're staying -- we're monitoring in the 10 to 12 range. You can see there's certainly room for improvement, and the reason that we're in that range, because that's pretty much what the physicians prescribe, but one of the challenges going forward will be, can we narrow the variability, and I think under the bundle, and under some of the new procedures that we'll see in 2011, you'll see that improve by us being able to do some actual changing of some of the protocols here.

So, that one is pretty much stable where it is. Now, as far as the albumin or the nutrition, we're actually making progress in that area. I think our target would be, say, somewhere between 90% and 95% of our patients. Europe is getting very close to that, and we're actually seeing some improvement in the US. And again, I think I talked a couple quarters back that we actually have a program called the RightStart, where as patients come to dialysis, if they need nutritional supplementation, we're able to do that, and that makes a real difference.

Now, the one area that the whole industry has not, over the last number of years, done that well, is in the bone mineral and metabolism. Again, you can see that Europe does a little better than the US, but we're clearly not making progress in that area, as we can eventually do dialysis. And so, we've got some activities -- I'll show you here in a minute -- that we're working on in that area.

Now the other point I'd like to make is, we don't publish it, we don't publicize it, but we have seen in North America a 50 basis point improvement in mortality this last year. And in fact, again, our mortality is in the range of about 14.5% in the US. Now, everybody calculates it differently, so you'll get a different number from other groups, but we calculate it around the world the same way. That's really very impressive, because when we looked at this about five years ago, we were closer to the 18%, so we've come down about 400 to 500 basis points.

Now if you look at International or Europe, they're a little high on the average, but if you look at the non-diabetic patients, they're right in that 14% range too. And that's because as we have more and more diabetic patients come into the market in Europe, we're doing things to improve that, and also, we've been expanding quicker in Europe and therefore, when clinics come to us, it takes a little while for us to bring the quality systems that actually deliver the quality. So we're very pleased.

And the last data point I'll show here is the hospital days. Probably for our patients, our target of 10 days per year is probably a little bit high. We'd like to target somewhere in where Europe is, in the eight to nine range, but we're getting very close. So we're making progress in every aspect of the quality. And this impressive, because it's basically 140,000 to 150,000 patients that we're dealing with here, and so, it's not a small sample size. Very proud of it.

Now, two studies that we have going. We call them pilots, but they're basically an outgrowth of a vertically integrated company, where you can actually take and do some of the studies that you know should be done. They're not always publishable studies, but they're the types of things that you can do in enough scale that you could actually show quickly whether you're improving or not.

In the two that we have -- we have one going in the US, and one going International -- the US one is called, basically, Clinic Nocturnal Dialysis. And what we've done is opened our clinics up at night, and we have probably 200 of these that are now open. And for those patients who would like to come in and dialyze at night, we have a different setup, so it's like a -- a little more like a hospital room, but it's private, and you get a good night's sleep. But yet, we're there the whole night. And with the patient aging, this has really been very attractive.

Now, they get an extra 30% to 40% dialysis, and you can see the results. Where we do 95%, basically providing the therapy, here it's 99% plus, because we're clearly dialyzing them way more than what they normally would get.

Albumin is very interesting. Our target was 90% to 95%. Now, this is only three times a week, so this is not asking them to dialyze every night. And some other programs that are being looked at in terms of clinical studies, this is a real live situation.

And what we find is that basically, they eat about 25% more, but because of the dialysis program, we actually end up then with a nutritional status, meeting our goals of around 95%.

Now, we have a 57% phosphate removal, or meeting the target, but because they are having more nutrition, they are actually loading the phosphorus up by about 25%, and we've not yet started our monitoring, our PKM program with them, but we think this will work out very well.

Now, the end result of this will probably be every other day dialysis, or more dialysis than we do now in terms of three times a week. And we think that this program is very attractive with respect, and the results are quite good.

On the other side, in Europe and around the rest of the world, we have hemodiafiltration, and I've talked about it. It's basically been around many, many years, but the contribution that Fresenius has made, Fresenius Medical Care has made, and also to the European research teams headed up by Dr. Gatti, we clearly now have a way to do this online, so that we don't have to have 25 to 30 liters of solution sitting in the home or sitting in the clinic around each patient.

The bottom line of this is, we've got 13,000 patients. It's growing at 30% a year, and again, it meets almost the same goal as the clinic program in the US.

So that's a lot of discussion on it, but these are really two quality programs that Fresenius Medical Care is pioneering, at our cost in many situations, around the world, leading to better patient care.

Now, let's go back to the more financial, and talk a little bit about the numbers here. This chart is the description of what's our performance in terms of the care area, and you can see, as I mentioned before, we've had an excellent organic growth in the revenue per treatment area, and we've also had same market growth in the US. We reached or slightly exceeded our target of 3.5% to 3.7% in International -- it's a little bit misleading. Europe is clearly between 5% and 6%, but we've had a couple situations where, for quality reasons, we've not renewed some contracts in the International area, and so that drops it down, but you'll see it come back into the 5% to 7% range.

Revenue per treatment -- again, that is a clear indication of the quality that the staff and our clinics are producing around the world, and we continued to see a very strong growth in revenue per treatment in the US, as well as International, for 2009.

And as far as de novos, basically we had -- we put 120 of them on-stream. We have about 39 clinics in the US waiting for certification. That's clearly down from 2008, where we had about 50, so we're making some progress. We'd like to be somewhere in the 30 to 35 units waiting for certification.

Now, this is a very, very, I think, gratifying story. My compliments to the service group in North America. We have seen a 5% year-over-year growth on average revenue per treatment, and basically, this does exceed the 2% target that we had last year, and so we're really quite proud of it. And it's 75% rate and 25% utilization, because the physicians have now returned in terms of their anemia management prescriptions, and so the EPO and the iron are pretty stable at this point in time, and that's what the 25% is.

So we actually then have seen -- basically, exceeding our expectations in North America in terms of the revenue per treatment for basically fourth quarter, as well as the whole year.

Now, turning to the products area. Fourth quarter, the products area, we had an external revenue of 3%. That is down a little bit from what we normally were running. If you'll notice, International is at 5%, and the US is at minus 3%. What we see in the US is that the generic for PhosLo was introduced last quarter, introduced last year. So most of the negative, in terms of the US number, is a result of essentially the generic replacing our branded PhosLo last year, and our revenues dropped by about 80%, which was expected.

However, what I did say is that we would keep the prescriptions somewhere between [20 and 30], and I'd like to show you that we -- talk with you that we have. So actually, our prescriptions have stayed at least 30%, or higher of what we had last year. But obviously, the reimbursement for a pill or per unit went down.

Now, also in the US, we saw a 14% growth in Venofer, doing very well. We have basically about $250 million in revenue right now in our pharma business, and if you add the internal, you're worth $350 million. So we've done a very good job of moving up our pharma business around the world, and the products -- the normal hemodialysis products grew at the market or slightly above the market.

So this is essentially a one-time effect here that we saw in fourth quarter, which is the final effect of the PhosLo generic. Now, also, we expect second quarter to have our next generation PhosLo release, and so, that will basically, essentially, as we said a couple years ago, start to change this.

If you look at the International area, we again saw about a 13% growth in our pharma business, which is very encouraging, and we saw about a 5% growth in our products business, so again, what we saw internationally, then, is a 5% constant currency growth.

Now the major point that I wanted to make in Asia-Pacific, we actually saw a 40% increase in sales in machines. Very strong machine business. Excellent job, and basically now, China is our second largest machine business in, essentially, in the Company, following the US.

We also had very strong sales in China of about 50% over last year, so by and large, everything really is pretty much on track. We saw the final effect of the PhosLo, but interestingly enough, we kept the scripts that we were expecting to keep, and we're looking forward to launching our new product next year -- well, actually, this year, second quarter.

Looking at the full year, obviously, it's about the same pattern, except you don't have the fourth quarter effect in North America, but you have an 8% growth in North America, and you have a 6% overall growth in revenue in terms of the International -- again, just about the same issue. We've seen about a 53% increase in our sales in the pharma area, and by and large, we've seen the same pattern in terms of strong growth on the machines in Asia-Pacific. Good growth in each of these other areas, but Asia-Pacific has been the growth leader in terms of machines, and the rest of our products have grown at or above market, in terms of the hemodialysis and PD products.

Now, to the dividend, we have a policy of essentially half of our increase in net income, we apply that to the growth of our dividend. We had a 9% growth this year in terms of net income, so we're in the range of 50%, slightly over 50%, between 50% and 60%, so we are going to propose to the AGM and the supervisory boards that we have a 5% increase in the dividend. Again, we're quite proud to be able to do that this year. That is the 13th consecutive year that we've done it, and we think that's a very good dividend, in -- when you look at the situation in the world at this point in time. So we're very pleased to be able to provide that to our shareholders.

Now, if you look then into the future, I think I've covered this. We think the drivers, as far as the patient growth is still there. We're seeing about 6% -- we're seeing the US is basically now back at about 3.5%, and in some of the developing areas such as China and Asia-Pacific, where they're starting to fund seriously some of these dialysis programs, we're seeing basically high single digit growth.

Reimbursement, we are very confident on our reimbursement, because we've been able to very clearly talk to our payers. They understand that, really, dialysis is only about a third of the cost, and the better job we do in dialysis, the more money they save, essentially, on other costs such as hospitalization. And I think we've been able to show that, and there's clearly an understanding, meeting of the minds, then, between the payers -- actually, the governments and also ourselves.

Now, in terms of new products, we're very pleased with our progress in the renal pharma. Like I say, if you look at our renal pharma business this year, we're going to be in the $250 million range. If you add internally what we actually sell and use ourselves, you'll be closer to $350 million, so we'll make the $400 million next year, which is our target in -- actually, this year, in 2010.

Clinic acquisitions, no reason to discuss that anymore. There's many, many opportunities, but again, they have to make financial sense to us, and again, we'll see how that goes over 2010 and 2011.

Integrated care, this is our demonstration project. Again, it's consistent with the new ideas in Washington. We're seeing excellent results. And again, the challenge is to essentially be able to expand that into a pilot unit of major proportions, and that depends on some legislation that is still being discussed in Washington.

We have a number of new product launches this year. We try to, basically, each year, have a number of new product launches. I won't go into those. If there's questions, I can certainly answer them, basically at the Q&A section.

So at this point in time, that's where we stand. I'm optimistic for 2010. 2009 was not an easy year, but everybody pulled together and we got through it, I think, quite well. But we didn't sacrifice quality or basically any of our principles to get through the year, and very pleased with it.

So Mike, let me turn it over to you for the financials.

(spoken in German), Dr. Lipps, and guten tag, (spoken in German).

I would like to join Ben in extending a welcome to the conference today for all the participants, both here in the room and on the phone. And I'll continue the review of our Company's financial results, but with a little bit more detail behind operating earnings and income after taxes.

As you can see, in the fourth quarter 2009 over 2008, Ben has already commented on our revenue growth, which is 12% in actual year-over-year results, 8% in terms of constant currency, and 8% in terms of organic growth.

This produced an operating income of $491 million, or a 13% increase year-over-year. And in EBIT margin, an operating income margin of 16.2%, which is 30 basis points better than the fourth quarter of last year. I'll come back on a later slide in my presentation today to talk in a little bit more detail about the operating margins for the fourth quarter and for the full fiscal year.

Moving to interest expense, you can see that we continue to show some favorability on a year-over-year basis. That's been a consistent story for the Company over the course of 2009, and the fourth quarter, consistent with that, is showing $75 million of expense. This is a function of a reduction in our overall debt levels of $170 million, as well as the fairly low level of LIBOR rates as it relates to our variable rate debt.

Operating income, as a consequence, or income before tax as a consequence, is up 19%, to $416 million. Income tax expense was, as expected, a little bit less than 35%, or $145 million. And that leads us to the last two lines, which as you all know, in 2009, the US Accounting Standards body adopted Financial Accounting Standard 160, and for companies that consolidate their overall results, but nevertheless have a joint venture or non-controlling partners, the earnings are basically split between the non-controlling interests, which are pretax results of the operations belonging to our joint venture partners, and then the after-tax net income of the Company, which is $247 million. Double digit increase year-over-year, 15% for the fourth quarter.

Moving to the full fiscal year, again, Ben commented on the $11.2 billion, 6% growth on a year-over-year basis. But because of the effects of currency, we actually had a 9% growth for the full fiscal year on a constant currency basis, and consistent with the fourth quarter, 8% organic growth in the business for the year.

This generated just under $1.8 billion of operating income, or a 5% year-over-year growth, and an EBIT margin of 15.6%, which is down 20 basis points over the full fiscal 2008.

Interest expense is entirely consistent with our fourth quarter, at $300 million -- again, a function of managing our overall debt levels, and the low level of LIBOR over the course of the year.

Income tax -- income before taxes of $1.456 billion is again leveraged by the operating results of the Company, generating a 9% year-over-year growth on the 5% growth in operating earnings.

Income tax is, again, consistent at 34%, and net income attributable to Fresenius of $891 million, or 9% year-over-year.

Just to take a few minutes and talk about the development of operating margins for the fourth quarter and for the fiscal year. I'll comment on some of the effects contributing to the good results in the fourth quarter, and you'll find that many of those effects also are present in our full year results, but are less moderate in their impact, both in terms of those that are positive, and those that represent increases in operating expenses.

If we start with North America, you can see North America's margins were up 100 basis points in the fourth quarter. This is largely driven by the revenue per treatment information that Ben shared with you earlier. Our revenue per treatment was up 6% year-over-year in the fourth quarter, to $357 per treatment. And that generated a substantial improvement against the quarter's operations.

There was a further contribution to the positive effect in the fourth quarter, and that was the result of the hard work that folks have been contributing all year long, to effectively managing our accounts receivable in the very difficult economic environment that the world has been going through. And in North America, and I'll show you a slide in a few moments, but in North America, there was an eight day reduction in day sales outstanding, starting the year at 60 days and ending the year at 52 days.

As a consequence of that favorable effect and that effort, we were able to reduce our overall level of bad debt reserves in the fourth quarter, and that contributed favorably to the margin development that you see in North America.

Mitigating the positive effects somewhat is the change in the mix of our renal pharma business that Ben mentioned, between the generic -- the PhosLo, with the introduction of generic PhosLo in the fourth quarter of last year, and the IV iron Venofer business over the course of fiscal 2009, as well as adjustments to some of our operating expenses that we did in the fourth quarter to bring our results consistent with the achievement of our overall goals, and to address some accruals in those areas that are typically reviewed once or twice over the course of the year, but would have no ongoing effect into 2010.

Moving to International, you can see we just had a very, very minor reduction in overall margins, from 17.7% to 17.6%, roughly 10 basis points. I think the -- what warrants mentioning here, even though the effective margins had no detrimental effect on the overall Company margins for the quarter, is there were a couple of effects that also contribute to the efforts that folks have put in over the course of the year.

What you see in the fourth quarter that improved overall margins in the International business is the efforts of the European and Asian manufacturing operations, where they actually achieved production costs that were less on a year-over-year basis, making a positive contribution to the fourth quarter. And that was somewhat offset by FX and some operating costs associated with a slight increase in our bad debt provisions in the International market, to account for, essentially, a 10 basis point change.

For the total Company, you can see there's a 30 basis point increase in the year-over-year results. That's a consequence of what I just went through with regard to the operating regions, an increase in spending in corporate for the corporate R&D efforts, which are those research efforts that are directed towards the next five to ten years of the Company in terms of new product development, and some legal spending largely directed towards being proactive with regard to protecting our intellectual property rights.

So that produced a 16.2% margin for the fourth quarter, very positive, very strong margin for the fourth quarter of the year.

When you look to the full year, there is a slight decline in the year-over-year margins, from 15.8% to 15.6%, and that's essentially a consequence of the effects in the fourth quarter that were more moderate with regard to the overall year. For instance, the revenue per treatment went up 5%, average 2008 to average 2009, as opposed to the 6% increase in the fourth quarter. And the other effects that contributed to the full year were the fact that we did have some -- a reduction associated with exchange rates over the course of the year, and we did have rate increases in our pharma that's used to provide dialysis services here in the US. So, a slight increase in the costs associated with drugs used in the dialysis treatments.

This is just a chart depicting what I just described in terms of our development of days sales outstanding, which you can take as a proxy for cash flows, and also, as an indication of how aggressively we're managing our accounts receivable on a worldwide basis.

I talked about the eight day reduction in the US. I would also comment, if you look at the International operations, starting at 107 days at the end of 2008, we did see a slight tick up through the middle of the year in terms of the extension of receivables on a -- in the International segment of the business. That was addressed very aggressively in the third and fourth quarter of 2009, with a two day improvement occurring in the fourth quarter.

So overall for the Company, we had a three day, four day improvement in the -- five day improvement, excuse me, in DSO, on a consolidated basis.

Those effects generated some very, very strong and positive cash flows, not only for the fourth quarter of the year, but also for the full year results. Cash flow from operations, at 15% of revenue, we generally try to target something in the 10% or better range. And if you were to look at that 15%, the effects of better collections on receivables had a 200 basis point effect in the fourth quarter, which would take you from 15% to 13%, and the balance of that is a consequence of the very, very strong earnings in the fourth quarter, and good working capital management in areas outside of accounts receivable.

Capital expenditures and acquisitions, I'll comment on in the context of the full fiscal year. And you can see our free cash flow in the fourth quarter was 7% of revenues. Again, well above the average, with 138% improvement in free cash flow year-over-year from Q4 2008.

Taking a look at the full fiscal year, again, you can see $1.3 billion of cash flow from operations, 12% of revenues. In our guidance, we had indicated we'd be better than 10%. The full year effect associated with the receivables, collections and the DSO reduction is about 170 to 180 basis points for the year, which puts us at 10.2% to 10.3% operating cash flow to revenues for the fiscal year, and is an indication that we did achieve our guidance in that regard, a 32% improvement over the prior year.

And with that, I'll just comment a little bit on capital expenditures and acquisitions.

Capital expenditures, as you could see, we had indicated we would have a reduction in fiscal 2009, and you see that we spent about $100 million, a little more than $100 million less. If you broke that down into expansion versus maintenance, the lion's share -- I'd say, two thirds of that reduction did come out of the expansion side of our capital program, and that was a consequence of building up our production capacities over the last two to three years in the business.

We did, nevertheless, open 120 new de novo clinics, which Ben has already commented on, and ended up with an overall capital expenditure of 5% of revenues, or $562 million.

Acquisitions for the year are about $136 million. I think we initially had provided guidance of $200 million to $300 million, and then adjusted that slightly in the third quarter press conference to around $200 million to $250 million. We're a little bit less than that. The $136 million is actually net of some divestiture transactions, so on a gross basis, our acquisitions were about $188 million, or just slightly below the low end of the guidance that we provided in the third quarter.

Free cash flow of 6% of revenues, or $641 million, is partly what enabled us to reduce our debt for the full fiscal year, by $170 million.

Just a comment on our ratios. As you can see on the left hand side of the page, our debt is just under $5.6 billion for the year, down from the prior year. We continue to see good improvement in EBITDA, so we are reducing our debt, and we are also increasing our earnings before non-cash charges, and that enabled us to reduce our leverage ratio to 2.46 times EBITDA, which is consistent with the guidance we provided.

Just to take a minute on the maturities associated with our debt portfolio. I think folks are generally aware that we had a very successful Eurobond offering in January of this year, floating $250 million of Eurobond obligations with an effective yield of 5.75%. And when you look at the balance of this fiscal year, we have no obligations that would require us to do any additional refinancings, other than the annual renewal of our accounts receivable securitization facility, which is based out of North America. We would anticipate renewing that facility, and we do not anticipate having any difficulties doing that.

The balance of our obligations will next mature in the early part of 2011, and that will consist of the revolver and the term loan A, part of the $4 billion refinancing we did -- financing we did several years ago in connection with the acquisition of RCG, and our trust preferred securities.

We do anticipate that we will renew those facilities, or do one or two capital market transactions sometime over the course of the balance of the rest of this year, possibly in early Q1 of 2011.

We think we demonstrated strength in the financial markets with the Eurobond transaction, and do not anticipate having any problem achieving those renewals in the timeframe that best meets the needs of the Company.

Having said that, let me just comment on our guidance for 2010. We're anticipating net revenues to grow in excess of $12 billion. That, in terms of a numerical increase, will be in the range of 6% to 9% overall growth in revenues. Net income, as a consequence, we would expect to be in the $950 million to $980 million range, and that's a range in terms of growth year-over-year of 7% to 10%.

Our leverage ratio, we would, again, anticipate we'll be less than 2.5 times. That essentially means that we should be able to finance if not all, virtually all of our capital expenditures and acquisitions out of operating cash flows in fiscal 2010.

Capital expenditures, we're leaving at $550 million to $650 million. That is roughly 5% of our revenues, consistent with prior years.

Where we have given ourselves some headroom is in our acquisition guidance. Last year, as I indicated, we spent $188 million, and our guidance at the end of the year was $200 million to $250 million. We do think, given the environment, and given our available liquidity, that we can be a little more opportunistic in 2010 on a global basis, and as a consequence, have raised our guidance with regard to acquisition spending, up to $400 million for 2010.

With that, I'll open up the floor for questions. Thank you.

Great, thank you very much, Mike. Thank you very much, Ben, for the presentation and the update. And I think, as in the previous presentation, we start with questions in the audience, so who is going to be number one?

Good afternoon. It's Tom Jones here from Berenberg. I had three questions. One for Ben, just -- I'd be interested to get some more color on what drove the payer mix positively in Q4? You mentioned it in your press release, but not in the presentation, I see. Given the economic headwinds and what's going on with insurance coverage in the US, most expectations were flat to drift downwards, not upwards. So I'd be interested to know what's driving positive payer mix.

Secondly, I'd be interested if you could fill out your expectations regarding your second generation PhosLo a bit more. Do you actually have an approval for that, or is there a pending PDUFA date we should know about, so we can pitch when that might arrive on the US market?

And then thirdly, just on the bundle, I know it's impossible for you to know where things are going, because we're still waiting for the final details. But looking more towards 2011 when this is implemented, if CMS gets it right, as most of us expect them to do, that there will be around about a 2% haircut on the Medicare rate. I think most people's assumptions is, you can take at least that, if not a bit more out, in costs underneath. But how does that sit, timing-wise? Are you going to be able to do that in a fairly smooth fashion, or should we begin to brace ourselves for a little bit more earnings volatility in 2011 than we've come to get used to, from what is pretty steady, ploddy, easy, predictable set of numbers quarter on quarter from FMC?

Thank you. The first question, on the payer mix, again, I think you see a situation where we continue to have good relationships with the payers, and I think that you also find that there, as we mentioned at the beginning of the year, there would be essentially around a 2% increase, but we were pleased to see it be higher than that. And I think there's a tendency on the part of the payers to understand that it's better to invest in dialysis.

And so I think from that standpoint, we've essentially got a good -- had a good program going this year, and we have also seen an increase in our commercial mix, which also adds to this.

Now, I know that sounds contradictory to what folks are saying in terms of the unemployment situation, but we did see -- we have seen our commercial mix increase this year. So it's a combination then, of essentially -- and probably the last thing is, there's been an interest in bundling in the commercial area now for over two years, and with bundling, like in the bundle in the US, you have a cost of living adjustment that goes into these programs, which is fair on both sides.

So I think the combination of those three basically gave us better than targeted numbers, and essentially, also the excellent job that our team did in North America. But again, like we're saying, I think, for next year, Mike, we've talked about somewhere in the 2% to 4%. So we don't expect to stay at that 5% to 6% range.

Did you want to add anything on that one?

No. I would just say, relative to the guidance for next year, that we have had some very good results in the past couple of years with regard to rate increases, as you pointed out, and we would anticipate for guidance in 2010 to be in the 2% to 4% range.

With respect to PhosLo, I'd like to indicate that the Products Group in the US has done an outstanding job this year in terms of growth, and of course, it was just fourth quarter last year where that was the last year -- the last quarter of the PhosLo branded sales not being impacted by the generic.

Now, we did file, over 18 months ago -- we hope to have the next generation available here in second quarter of this year, or third quarter. And also, we've had very excellent results with our -- essentially, we call it our PKM program. So we are looking forward to improving the entire bone mineral metabolism issue here in the US, with essentially our next generation of product, as well as what we've been doing in terms of our pilots.

Now, as far as the bundle, again, I think the current thinking is that the final regulation will be out in late second quarter or early third quarter. That certainly gives them time to implement it for 2011 as they planned. I can't really comment too much more at this point in time. We had certainly discussed the 2% revenue haircut last year. We feel there's a number of things that we can do to mitigate that, with respect to margins. We're in the process of doing that in 2010.

More than that, if it turns out that there's something different than that, it would certainly cause us a problem, which we would solve over time. But initially, it would.

However, we're pretty comfortable that CMS understands this, not only for us, but all providers, so we're looking forward to a real coming out early summer that basically is something that we can all live with. And so at this point, not much more I can add to it. Thank you.

[Andreas] (inaudible) for (inaudible). Chart 10 displays the development of treatment quality indicators, all of which have improved over last year's Q4. So I wonder why the number of hospitalization days in EMEA has worsened, rather than improved.

Yes. What happens is, we've been growing pretty rapidly in terms of adding new clinics in Europe, and as we have pointed out in the past, as those new clinics come on, they usually don't have the quality standards we do, so it takes a while for -- essentially, to see that effect. And it takes -- this is a year-over-year measurement.

So I believe you shouldn't read anything into the difference between 8 days and 8.5 days. That's probably best in class in the world right now. And if we can get everybody down to 8 to 9 days, we'd be absolutely thrilled. And that would save the payers in the US $2 billion or $3 billion -- or, I'm sorry, that would be about $0.5 billion. So everybody wins, in that case.

Next question here? That's -- okay, Holger.

I'm Holger Blum, Deutsche Bank. Just wanted to follow up a little bit on revenue treatment, and the cost per treatment, where you had an excellent quarter. So can you confirm that there was really everything on the line business, no one-timers? Because when I compare your numbers against EBITDA, you now made much better improvements than your competitors. Are there any strategies or explanations?

I'll let Mike take that one, okay? Go ahead, Mike.

Yes, thank you, Holger. I think on the revenue per treatment, the 2% to 4% that we were talking about a few minutes ago is on the average for 2009. So it's the $347 per treatment in terms of how to look at the guidance on the top line for US services, revenues.

In terms of the dialysis treatment costs, I would say we would be in the 2% to 3% range for 2010, of the averages that you see in the scorecard.

Relative to the second part of your question, there was nothing extraordinary in the expenses, so I think it's fair to use the 2% to 3% guidance against the published numbers for the treatments.

Okay, and follow-up, maybe, on nocturnal dialysis, what you mentioned in your presentation. Maybe can talk a little bit more on the rollout? You have 200 clinics now. How does it work in terms of economics? Is it somewhat higher margin, and how does it work, then, in a bundled world, if you maybe can get two good quality figures maybe without being, then, forced to use a similar amount of drugs, if you just have to meet quality parameters?

When we started this program about four years ago, it's mainly a program of -- quality driven. Now, it balances economically, because the clinics are not being used at night, so you essentially don't have the variable costs added from the clinics. But -- and you also -- but you need to staff it and everything else. So it's really a wash in terms of margin, even though they're getting extra hours. And so, that's why we felt that it was something we could open up.

We have about 200 clinics offering it today, and clearly, there is a -- as you look at the future in the US, in terms of basically managing the bone mineral metabolism, whether the orals are in the bundle or not, we're going to have to do some selective therapy for the patients, and I think we're excited, because I think we understand this.

So I would expect it to grow, and we think it could grow to as much as 20% of our patients over time.

Now, the real therapy that I think is going to make sense is dialyzing every other day or four times a week. Now, obviously, at this point in time, there are certain criteria where you can get paid for four times a week, but I think we will be able to show that there's tremendous savings on the hospital side, and we'll probably end up to every other day dialysis, or 3.5 times a week, or four times a week.

If you do that coming to a clinic, you get a good night's sleep, you get to use your days, it's really not a bad -- and you feel good, and you're eating well, it's really a pretty good life. And so, it's much better than what we were used to the last ten years.

So I think it's going to catch on, and it could be as high as 20% of the patients.

Okay, and then a final question. You invited us to ask that, about your product launches. So what you are planning.

Oh, okay. How much time do we have?

Just the best ones, with peak sales, and --

I think around the world, we are offering a number of new products, and we're focusing really on probably two major needs in dialysis. One of them is a bone mineral metabolism, and the other one is fluid removal.

And in the area of fluid removal, we've got some products in Europe that we think are the BCM that I talked about here, the body composition monitor, which gives you an independent evaluation. So long and short is, we're bringing a new team machine out in the US that has a number of new features. We're bringing a new binder out in the US, which has, we think, will be quite attractive, along with our PKM.

In the International, we're bringing out a new 4008 machine, which is really adding new features to our 4008, where we have over 100,000 plus of these out there, and we basically have launched our -- have filed our new sorbent dialysis machine, and we expect approval on that this year. And so -- and we have some new products for our renal intensive care being offered in Europe in terms of new acetates and some new products there.

So we basically have new products in each one of our areas, plus some excellent therapy that is being done around the world. So it's kind of a fun time.

You've got time for more, or is that enough?

Maybe on the PD area, is it mainly HD, or --

Most of our programs this year are in the HD area. We clearly have new solutions that we launched in the PD, and last year, we launched a new cycler in the US in PD, and it's doing very well. So essentially, we've got a couple products in PD, and most of the others are in hemo, which is about 90% of our business.

I think there's one more question. Marcus?

Yes, Marcus Wieprecht, Main First Bank. More financial question again, to maybe Michael. Looking at your leverage ratio, which is improving dramatically, as you have strong free cash flow, and even with increasing acquisition budgets going forward, you may, in the next one to three years, fall below the 2.0, or even below, net EBITDA level.

So what's your view -- not being new in the Company, but being new in the position, of how to deal with that? What level is something you would start thinking about bringing that up, besides acquisitions?

So -- yes, if you could, tell us a bit your view here. Thank you.

I'd be happy to. It actually is a question that has come up fairly frequently, given that we just loaded the Eurobonds in January. And I think I'm often asked if FMC would -- has an objective to become an investment grade company, because of the benefits associated with lower interest expense, were we to achieve that.

And I think that is not our objective. We are a very high BB rated credit. And that has helped us be very opportunistic in terms of growing the franchise, and I think that given a choice between lower interest expense as an investor, or expanding your business and your core competencies on a global basis, most investors would choose the latter.

So our intention would be to stay in the high BB range. When acquisitions make themselves available to us that we think fit our overall strategy, we think staying where we are gives us the flexibility to address those acquisitions, or other expansion opportunities, whether it's a license arrangement, rather than setting as the objective to become investment grade.

So I would say, I'm very comfortable where we are. I would expect we'll stay in the high BB range for the near term, and take advantage of opportunities we see globally.

Just one more question here from (inaudible).

Yes, two quick ones. One is, there is increasing noise in the market about hematite, and how that might impact probably you administering EPO similar agents, going forward.

Just wondering, would you be considering to probably replace EPO with hematite going forward, if it comes to the market? I think at the time when [Rush] tried to launch [Miserol] on the DS market, you weren't quite interested in that one. But would there be any interest in replacing that?

And probably, can you also remind us about the long-term contracts you've got with Amgen, and when they are going to expire?

And the second one, I think, at the Capital Markets day in 2007, we talked about further growth opportunities, also Japanese market. Now I think the next biannual price cut is coming up on April 1, so are there any triggers for the market opening up now, or do we wait another two years, probably, until that's going to happen? Thanks.

Thank you. As far as new entrants into the ESA or the anemia management area, we have taken a -- and I think it's rightfully so, we -- 80%, 75% of our business is in the service, so as new products come in, we clearly are evaluating them, have evaluated them, and essentially make sure that our physicians get to clearly understand whether there's a quality value or better outcomes for the patients.

So far, most of the ESAs have just basically done the same thing, so if that's really all we end up with in terms of a new entry into the ESA market, I would assume that we'll stay with something that's proven, that's got over 10 years of safety profile. Because again, that's probably the best position we can be in.

If the physicians want to prescribe a (inaudible), that's a different issue, and certainly, we'll provide it. But we do err on the part of safety, and we do run long-term studies within our own clinics to make sure that essentially we have the data.

So from that standpoint, it really will take time, but over time, it will be up to the physicians to decide.

As far as our programs with Amgen, again, we know their products very well. We know they're safe. We've used them now for a number of years, a couple decades. And so our association and our working in new areas has been primarily with them in the European theater and in the US, of course, we're one of their major customers. But they clearly -- we clearly try to work together for better patient care in the US when we can.

In the Japanese market, yes, there's one more cut coming in 2010, and maybe after that one, there will be some interest to have basically low cost, high quality providers enter the Japanese market. But at this point in time, it's still pretty much as it has been for the last decade, which would be a, probably, 2011, 2012 type situation.

Okay, since there are quite some questions actually in the pipeline from the outside, I think we can open up the lines for questions from the Internet. Operator?

The first question from the telephone comes from Lisa Clive from Sanford Bernstein.

Hi, good afternoon. Three questions. One, could you update us on timing of the release of the final CMS bundled rule? I think you may have referenced early summer. I think that was a bit later than we've heard previously.

Can you hear me all right?

Absolutely, Lisa.

Okay, great. Number two would be around -- there's a lot of noise on EPO right now, the FDA looking at it again, the CMS MEDCAC meeting coming up. Clearly, a lot of this is CKD focused, but do you see any potential implications for the ESRD population? Obviously, we don't know exactly what's going to happen, but if you could comment on that, that would be great.

And then lastly, you mentioned that over the last few years, there's been more interest in bundled pricing for private patients. Could you give a rough indication of the proportion of your private patients that are under bundling today? Or if you don't want to be that specific, could you just maybe give some indication of how the level was two years ago to today, and where you see it going over the next, maybe, few years?

Thank you, Lisa. With respect to the CMS rule, the best information we have is that the target release is sometime late June or early July. That's still -- we believe, again, this is we the industry, not we, CMS, we believe that they would have time to implement this by next year. So we think they'll probably stay on target for that, and we'll see something in early June.

The MEDCAD, we've reviewed the questions. I've looked at them pretty carefully. It seems like it does -- will not have much impact on ESRD, with respect to anything changing in the anemia management [pro] area. But again, I think that's in early March. We'll see, but right now, our estimate is that it probably will have very little impact on ESRD.

As far as the private payer bundling, yes, a couple of years ago, there were very little. But after the 2008 CMS or legislation passed, there became a lot of interest in it, and we've seen significant increase. We don't quote on what percent. I think that that's probably not the right thing to do. But we can tell you, we expect it to continue, and we expect it to be significant over the next couple of years.

So it clearly is something that we believe is good for us, because we have a longer contract. We have basically some inflation adjusters. And we essentially then can invest in doing things for these patients that help them with respect to their outcomes. So it's a good move in the right direction.

Great, thanks.

Next question from the telephone comes from Michael Jungling from Morgan Stanley.

Great. Good afternoon, everyone. I have three questions. First, on the guidance, what does your more than $12 billion in revenues mean or imply for organic constant currency growth in 2010? And what does the net income guidance mean with respect to an EBIT range?

Question number two is for North America. Can you reconcile the drop in the operating costs per treatment from $283 to $282 from Q3 to Q4? Is it primarily labor costs? Is it heparin, or a combination of both?

And then thirdly, for the corporate costs over Q4, the increase was around $50 million over the previous quarters, higher than we thought. And I was wondering whether there were any unusual items in there such as legal costs, and if there are, whether you can quantify the size of them. Thank you.

I'll take the -- this is Ben. I'll take the first question. Mike, will you take the others?

Yes, sure.

Okay. If you look at our -- greater than $12 billion, it has an operating revenue, constant currency revenue growth probably in the range of 6% to 8%, and we're targeting -- we do not expect our organic growth in 2010 to be quite as strong as it is in '09, because the North American program was really at the high end, 10% growth in North America was basically very, very exceptional and great.

So we're looking at more like a 7% organic growth for 2010. So that's -- and if we find that we're going to do better than that through the year, we'll up the guidance, as we did last year.

Mike, why don't you take the rest of the questions on?

Okay. In terms of the guidance on net income, and how that relates to -- if I understood your question, guidance with regard to EBIT and margins, we typically are -- or, we've historically, internally targeted to do something on the order of 15 to 20 basis points higher in terms of EBIT margins relative to our guidance. And what we anticipate for 2010 is that the margins will be flat at the 15.6% on a consolidated basis.

And the reason for that is, as some of you may know, in early January of 2010, Venezuela devalued their currency, and that called for us to write down our investments in Venezuela to the -- one of the -- well, to a variety of the exchange rates that are published by the government, one for essential services and one for non-essential services.

So that, we anticipate in 2010, will have the impact -- the balance sheet effect we anticipate is about 10 basis points, and the ongoing effect associated with how we now need to record the results of Venezuela on a go-forward basis as a hyper-inflationary economy would have about a five basis point effect.

So what we've decided is that we've really considered Venezuela in the context of the top line and bottom line guidance we've given, but I do think that given that, we probably are expecting flat EBIT margins in 2010.

Oh, I'm sorry, we had a couple more questions.

The -- relative to the dialysis treatment costs, the Q3 to Q4, that number is small enough that it's really a function of just how the quarters fall, the number of dialysis days in the quarter, the level of overtime in the facilities, and the extent to which we don't need to use any kind of temporary or agency labor. So I don't see anything extraordinary or unusual about the $1.00 delta from Q3 to Q4, and I'd still indicate that we'd probably want to use overall a 2% to 3% increase in the guidance for 2010 on the cost side.

All right. I think, just for the operating guys, is that also reflects the strong cost controls that I think the US had in place from Q3 -- you know, the whole year, but it showed up in Q3 to Q4. Is that fair, Mike, on top of that?

That's fair.

Okay, it's fair. Thank you.

And Mike, can I just confirm that the fourth quarter cost per treatment has not yet shown any benefits from the lower cost you'll receive from the (inaudible) that will be coming slowly into your P&L?

Yes, that's correct. That's correct.

Okay. And then finally, on corporate overheads, any comments on that?

Corporate overhead, I commented in the margin discussion, that we are continuing to invest in corporate R&D, which is the R&D aimed at projects that will benefit the Company in the five to ten year mark, as well as investing proactively in protecting our intellectual property. So I think that those are two elements that contribute to the overall level of our corporate costs, and I think I'll leave it at that, in terms of the (multiple speakers).

Thank you.

Next question from the telephone comes from Kevin Ellich, from RBC Capital Markets. Please go ahead.

Good morning, guys. Thanks for taking my questions. Ben, I guess I'd like to start off with EPO. There's a meeting coming up on March 24. I'm wondering if you have any idea what that's about, and also, under bundling, what's your thoughts on EPO utilization, and is there a way you can more effectively use EPO to lower your supply costs or other alternatives?

The meeting I think that you're referring to is the MEDCAC meeting, being held -- sponsored by CMS in March. And essentially, the questions came out for that meeting last week. We have to respond by tomorrow. But if you read the questions, they're primarily looking for reassurance that the policies that are in place now with respect to ESAs for the pre-clinical, or for the pre-dialysis patients, are basically substantiated, and getting the view of the panel.

I don't expect it to have much impact on ESRD, but again, the questions are there, and we, of course, I think we're presenting, as well as other providers.

So it seems to be a CMS meeting that they have called, primarily looking at pre-ESRD.

Okay, and then the thoughts on EPO utilization, under bundling?

Well, again, I can't give you many concrete thoughts in that area, because until we see the final quality standards come out for the final regulations, that will drive, essentially, I think, the physician ordering patterns. So from this standpoint, I'd like to defer that until we actually see the final regulations. And I'm being told that they clearly will be out by the end of June, so my thought that they might be third quarter is probably wrong.

So let's see those in June, take a look at them, and I can give you a much better feeling then in the summer quarter, when we talk about the bundle, and we know the regulations.

Okay, that's helpful. And then, going back to the acquisition guidance of $400 million, or up to $400 million, how much of that do you expect to come from the US?

It's a little early. Again, acquisitions show up all year, but I think, Mike, our thought pattern is that that would be probably 50% International, 50% the US, or more biased towards International.

Yes, yes, I would say. I would agree.

Okay. And then going back to the nocturnal pilots, that (inaudible) that you're doing, I was wondering if the reimbursement cost equation is similar to the normal [balance] of treatments. Are you getting paid the same amount, or what's the benefit?

Essentially, we're getting paid the same amount. It's three times a week, so it clearly fits the Medicare program as well as the commercial. But what we think it will show is, it may be a value on the part of the payers to look at every other day dialysis for certain patients, or four times a week. And so, we have some programs that are under study in that area, basically looking at that too.

So again, it's just three times a week dialysis for longer nocturnal time, at this point, and we'll see where it leads us in the next couple years.

Okay, and then my last question. I'm sorry for so many questions. Just could you give us an update on the integrated care model, and what your plans are after bundling is done?

Well, up until the Massachusetts elections, we thought we saw a path here for -- at least, through the Senate bill, where we would see basically the ACOs approved as part of the healthcare program, or the new healthcare reform.

I think at this point, I can't really comment on what the path is for healthcare reform. It's certainly beyond my knowledge. But the one thing I want to say is that the President's proposal did have the accountable care concepts in there, so I'm very encouraged that across the board, everybody supports this. So hopefully in 2011 or 2012, we can go to a pilot, a larger pilot. But right now, it's waiting on legislation.

Okay. Thanks.

Next question from the telephone comes from Gary Lieberman from Wells Fargo.

Thanks, good morning. Thanks for taking the question. I guess a number of your comments around PD and maybe some of the home modalities here, so I guess the question is, as you think about going into bundling, is there an opportunity to potentially do more in the home setting, either PD or hemo, and how are you thinking about that?

Yes. I believe that, again, there's an opportunity, at least on the surface, it appears that way. One of the issues that we're concerned about is the average age now is in excess of 64 or 65. And so, asking people to do hemodialysis at home with insertion of needles, etc., in that situation, is really pretty cumbersome on them. So we have -- but again, there's 1% or 2% right now in the US on home hemodialysis.

And that's why we started the nocturnal program, where they actually don't have to have all this equipment in their home and somebody takes care of them.

Now, on the PD side, we think that represents a real opportunity for home, but we're not too enthusiastic -- at least, I'm not too enthusiastic about the amount of treatment that it provides, and that's why we're essentially -- bought the, and are working in the sorbent area.

So I think you'll see our new product in that area in the next couple years, and that's probably the home product that will essentially have a position in five years. But in the meantime, clinic dialysis at night is really a pretty good alternative for most of these patients, and we find them very, very satisfied with it. So we'll see where it goes over the next few years.

Okay, thanks a lot.

Next question from the telephone comes from Ilan Chaitowitz from Redburn Partners.

Good afternoon. This is Ilan Chaitowitz from Redburn Partners in London. Three questions from me.

Firstly, we saw for the first quarter in Q4 a sequential decline in the number of treatments that you did in North America. I was wondering what drove that, and if you could give us some sort of feel for what we should expect for same store growth, and acquired growth on treatment volumes in 2010.

The second question relates to the International constant currency revenue per treatment. It's actually slightly weaker growth we saw in 2010 versus North America. And I was wondering what we should expect for the International revenue per treatments over 2010.

And the final question relates to the heparin that you're using, and I've seen data that indicates that heparin can be substituted by up to 55% from the use of citricates. As you are now one of the sole distributors of citricates in North America, I was wondering what you are targeting with regard to substitution from -- of heparin, with citricate.

Thank you. I'm not sure I understood the first question. Could you -- we had a little static on the line.

Sorry. It was relating to the Q4 on Q3 growth in treatments per day in North America. It was actually negative for the first time in many years, and I just wondered why that was, and what we should expect for 2010 with regard to same market growth and acquired growth with regard to how many patient treatments you're going to perform in 2010.

Yes, I don't -- I haven't dug into that number exactly. But I think what it is, as you come to the end of the year, you have a situation on the last day of the year or the holiday, where do you dialyze? Do you dialyze them early in 2009, or do you dialyze them in 2010?

And so, I'm pretty sure that's the impact you're looking at, because the way it fell this year, it was more advantageous for our patients to dialyze in 2010 than it was in '09, so essentially, I believe that's the treatment. And of course, when you do the same market growth, you correct for all those factors. So that's probably why you see the difference there.

And I'll have to check it, but I do know -- is that -- Mike, you have anything to add on?

No, no. I was going to respond to the next question, sorry.

Okay, the next question, why don't you -- on the International --

Yes, the International constant currency, if I'm following your question, I think we're reporting that the constant currency, the revenue per treatment constant currency, grew at about 4% in International, to the -- and I think that's the question you're asking. And I would tell you that it's a combination of principally two things.

The first is, we do generally get reimbursement increases in a number of countries each fiscal year, but not necessarily the same ones. And I'd say, roughly, probably, we get increases in the major currencies about maybe one third over the course of three years.

So that constant currency measure is very dependent on the size of the reimbursement increase, and which country it occurs in.

In the case of 2009 over 2008, we did get reimbursement increases in Portugal, in France. We had an increase in 2008 in Brazil, and they were not followed in 2009 with reimbursement increases at the same level.

So I think that's principally why you're seeing a 4% constant currency revenue per treatment number, which is a little bit lower than our historical norms.

To add to that, Mike, last year, we talked about a guidance, and we have the same 2% guidance for International. So if you step back and look at it, both International and North America exceeded their guidance, their target, this year. And Mike gave you pretty much an idea of how it happened, so we're pleased with both of them.

As far as citricate, I think there's some papers published that shows you can save anywhere from 20% to 40% of the heparin. That's pretty well known. You get some better quality with respect to the actual clotting factors within the dialysis.

But again, I think that we're in the pilot. We're in a -- we published that we were doing a pilot in this area, to establish, essentially -- again, it's like any new drug or any new application. We take the time to look at it in a fairly large pilot, to make sure there's no unintended consequences.

So from that standpoint, we'll probably be in that pilot and active most of the year, but this will be a 2011 type issue, not 2010.

Thank you very much.

Okay, I think in terms of -- in light of the schedule, I think we have time for one more person to ask questions. I know there are more actually in the phone line, but we will take care of that actually separately afterwards. Thank you.

Next question comes from Stephan Gasteyger from Jefferies. Please go ahead.

Hello, and thank you very much for taking my question. Just two quick ones. The first one is on floating versus fixed interest. Could you just remind us where you are here, and whether you expect this to change, and what, basically, is the average interest rate you expect in 2010?

And the second question is, when you look at acquisitions of further clinics in the US, what is the main hurdle here? Is it antitrust issues? Is it price expectations? Or is it that many of the potential targets are just unattractive in terms of profitability or patient mix?

Thanks very much.

I'll respond to the interest question, Stefan -- I'm turned on here. The -- to answer your question, in terms of our variable rate debt, it is in the range of $2 billion, in terms of what actually floats with the market. So we are expecting an increase in interest expense in 2010. I would tell you that I'd anticipate our all-in rate would probably be in the range of 5.5% to 6% for 2010.

Okay, thank you.

With respect to acquisitions in the US, basically, you've got a couple of issues. The antitrust is only a very small region by region issues, because it's been over five years since the acquisition. It's really -- we also, most of the providers of dialysis in the US, we have about a 90% market share in machines, and so these are all our customers. So it really has to be a situation that's a win/win for them. It's not something that we want to purchase the clinics, unless they see some benefit of being associated with us. And then, of course, it's a matter of what's their expectation for the value of the clinic versus what can we really afford financially.

So it's really a combination, but I think you'll see that every year, we'll spend between $50 million and $100 million acquisitions in the US, and this is, again, just those that make sense for the seller as well as us.

Okay. Thank you very much.

Okay. Thank you very much for participating, actually today in today's meeting, as well in the audience, as well as from the Internet. And we are looking forward to talk to you again for the first quarter disclosure on May 4. Thank you so much.

Thank you very much for joining us.

Thank you.