Hill-Rom Reports Fourth Quarter Revenue Growth of 14.1 Percent to $424 Million and Adjusted Earnings Per Fully Diluted Share From Continuing Operations of $0.58, an Increase of 52.6 Percent From the ...(spiratory care andprior year rental rece...)

Other Fourth Quarter Financial and Operational Highlights

Gross Profit and Operating Expenses:

-- Hill-Rom gross profit grew $30.2 million, or 18.9 percent. Rental gross profit grew by 37.5 percent and associated gross margin improved 660 basis points, due primarily to increased revenue, the leveraging of our field service network, and the impact of the prior year receivable reserve adjustments outlined above. Capital gross profit grew by 11.7 percent, and gross margin was flat versus the prior year as improvement in product mix on capital margins was offset by unfavorable geographic mix and inflationary pressures. Consolidated gross margin increased 190 basis points to 44.7 percent.

-- Operating expense growth moderated significantly and was considerably lower than sales growth. Operating expenses grew 6.1 percent or $7.7 million. Most of the expense growth was attributable to our strategic initiatives related to sales channel expansion and product launch spending (up 8.8 percent) offset by reductions or slower growth in other areas resulting from expense control initiatives.

Other:

-- On October 2, 2008, the Company announced the acquisition of Liko for approximately $183 million. Liko, based in Lulea, Sweden, is a leading supplier and developer of lifts and slings that facilitate the safe movement and transfer of patients around the world and across the care continuum. The acquisition is consistent with the previously disclosed strategy for growth and expansion via highly selective acquisitions. The transaction is expected to be slightly accretive to Hill-Rom's GAAP earnings per share in 2009 and increasingly accretive thereafter.

-- Cash flow from operations was $43.3 million for the fourth quarter, down $45.2 million from the prior year comparable period. Of this decline, $35.2 million relates to p
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