Quarterly Report • May 9, 2014
Quarterly Report
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applying United States Generally Accepted Accounting Principles (U.S. GAAP)
1st Quarter 2014
5 Fresenius share
47 Financial Calendar
Fresenius is a global health care group providing products and services for dialysis, hospitals, and outpatient medical care. In addition, Fresenius focuses on hospital operations. We also manage projects and provide services for hospitals and other health care facilities. In 2013, Group sales were € 20.3 billion. As of March 31, 2014, more than 200,000 employees have dedicated themselves to the service of health in about 100 countries worldwide.
| € in millions | Q1 / 2014 | Q1 / 2013 | Change |
|---|---|---|---|
| Sales | 5,212 | 4,890 | 7% |
| EBIT 1 | 643 | 696 | - 8% |
| Net income 2 | 228 | 224 | 2% |
| Earnings per share in € 2 | 1.27 | 1.26 | 1% |
| Operating cash fl ow | 140 | 444 | - 68% |
| € in millions | March 31, 2014 | Dec. 31, 2013 | Change |
|---|---|---|---|
| Total assets | 34,284 | 32,758 | 5% |
| Non-current assets | 25,628 | 24,786 | 3% |
| Equity 3 | 13,619 | 13,260 | 3% |
| Net debt | 12,940 | 11,940 | 8% |
| Investments 4 | 1,158 | 258 | -- |
| € in millions | Q1 / 2014 | Q1 / 2013 |
|---|---|---|
| EBITDA margin 1 | 16.6% | 18.4 % |
| EBIT margin 1 | 12.3% | 14.2 % |
| Depreciation and amortization in % of sales | 4.3 | 4.1 |
| Operating cash fl ow in % of sales | 2.7 | 9.1 |
| Equity ratio (March 31 / December 31) |
39.7% | 40.5% |
| Net debt / EBITDA (March 31 / December 31) 5 |
3.2 | 2.5 |
€ 248 million. 2013 before Fenwal integration costs (€ 5 million) Equity including noncontrolling interest
2014 pro forma including acquired hospitals from Rhön-Klinikum AG; before Fenwal integration costs and book gain from the divestment of two HELIOS hospitals; 2013 pro forma excluding advances made for the acquisition of hospitals from Rhön-Klinikum AG; before Fenwal integration costs
2014 before Fenwal integration costs (€ 1 million) and book gain from the divestment of two HELIOS hospitals (€ 22 million); 2013 before Fenwal integration costs (€ 7 million) Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2014 before Fenwal integration costs (€ 1 million) and book gain from the divestment of two HELIOS hos-
pitals (€ 21 million); including these effects, net income attributable to shareholders of Fresenius SE & Co. KGaA increased by 13% (+14% in constant currency) to
Investments in property, plant and equipment, and intangible assets, acquisitions (Q1)
| US\$ in millions | Q1 / 2014 | Q1 / 2013 | Change |
|---|---|---|---|
| Sales | 3,564 | 3,464 | 3% |
| EBIT | 445 | 493 | - 10% |
| Net income 1 | 205 | 225 | - 9% |
| Operating cash fl ow | 112 | 315 | - 64% |
| Investments / Acquisitions | 401 | 223 | 79% |
| R & D expenses | 30 | 30 | - 1% |
| Employees, per capita on balance sheet date (March 31 / December 31) | 96,573 | 95,637 | 1% |
Medical devices / Transfusion technology
| € in millions | Q1 / 2014 | Q1 / 2013 | Change |
|---|---|---|---|
| Sales | 1,213 | 1,260 | - 4% |
| EBIT 2 | 201 | 237 | - 15% |
| Net income 3 | 106 | 119 | - 11% |
| Operating cash fl ow | 42 | 132 | - 68% |
| Investments / Acquisitions | 71 | 58 | 22% |
| R & D expenses | 59 | 53 | 11% |
| Employees, per capita on balance sheet date (March 31 / December 31) | 32,325 | 31,961 | 1% |
| € in millions | Q1 / 2014 | Q1 / 2013 | Change |
|---|---|---|---|
| Sales | 1,227 | 841 | 46% |
| EBIT 4 | 114 | 87 | 31% |
| Net income 5 | 77 | 56 | 38% |
| Operating cash fl ow | 77 | 33 | 133% |
| Investments / Acquisitions | 792 | 23 | -- |
| Employees, per capita on balance sheet date (March 31 / December 31) | 64,867 | 42.913 | 51% |
FRESENIUS VAMED – Projects and services for hospitals and other health care facilities
| € in millions | Q1 / 2014 | Q1 / 2013 | Change |
|---|---|---|---|
| Sales | 191 | 184 | 4% |
| EBIT | 6 | 5 | 20% |
| Net income 6 | 4 | 3 | 33% |
| Operating cash fl ow | - 54 | 45 | -- |
| Investments / Acquisitions | 3 | 8 | - 63% |
| Order intake | 115 | 93 | 24% |
| Employees, per capita on balance sheet date (March 31 / December 31) | 7,342 | 7.010 | 5% |
Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
Before Fenwal integration costs
Net income attributable to shareholders of Fresenius Kabi AG; before Fenwal integration costs 2014 before book gain from the divestment of two HELIOS hospitals (€ 22 million)
Net income attributable to shareholders of HELIOS Kliniken GmbH; 2014 before book gain from the divestment of two HELIOS hospitals (€ 21 million)
6 Net income attributable to shareholders of VAMED AG
After a positive start to the year, the Fresenius share reached a new all-time high of € 119.70 on February 17. Later in the quarter, the equity markets were influenced by geopolitical tensions and moved sideways. The Fresenius share followed this trend. Since the beginning of the year, the share price increased by 2%.
After a strong start to the year, the equity markets were infl uenced later in the quarter by geopolitical tensions and economic uncertainty in the emerging markets. At the same time, the Eurozone economy continued to recover and, according to current ECB estimates, will grow by 1.2% this year. In support of this positive trend, the ECB continues to keep interest rates low. Growth of about 3% is forecast for the US. As a result, the US Federal Reserve announced a further reduction in its bond purchases and did not rule out an increase in interest rates in the medium term.
On January 17, the DAX reached an all-time high of 9,742. The Fresenius share also initially continued its upward trend, reaching a new all-time high of € 119.70 on February 17. Later in the quarter, tensions between Russia and Ukraine led to a sharp increase in volatility and sideways movements on the equity markets. The closing price of the Fresenius share on March 31, 2014 was € 113.60. This represents an increase of 2% over the 2013 closing price. At 9,556, the DAX was nearly unchanged compared to its level at year-end.
| Q1 / 2014 | 2013 | Change | |
|---|---|---|---|
| Number of shares (March 31 / December 31) | 179,824,079 | 179,694,829 | |
| Quarter-end quotation in € | 113.60 | 111.60 | 2% |
| High in € | 119.70 | 111.95 | 7% |
| Low in € | 105.00 | 81.91 | 28% |
| Ø Trading volume (number of shares per trading day) | 427,639 | 423,064 | 1% |
| Market capitalization, € in millions (March 31 / December 31) | 20,428 | 20,054 | 2% |
The moderate start of Fresenius into the year was expected. We are therefore fully on track to achieve our growth targets for 2014. The integration of the hospitals acquired from Rhön-Klinikum AG is progressing well. Our expansion in fast-growing emerging markets continues unabated.
| Q1 / 2014 | at actual rates |
in constant currency |
|
|---|---|---|---|
| Sales | € 5.2 bn | + 7% | + 11% |
| EBIT 1 | € 643 m | - 8% | - 6% |
| Net income 2 | € 228 m | + 2% | + 3% |
The health care sector is one of the world's largest industries. It is relatively insensitive to economic fl uctuations compared to other sectors and has posted above-average growth over the past several years.
The main growth factors are rising medical needs deriving from aging populations, the growing number of chronically ill and multimorbid patients, stronger demand for innovative products and therapies, advances in medical technology and the growing health consciousness, which increases the demand for health care services and facilities.
In the emerging countries, drivers are the expanding availability and correspondingly greater demand for basic health care and increasing national incomes and hence higher spending on health care.
Health care structures are being reviewed and cost-cutting potential identifi ed in order to contain the steadily rising health care expenditures. However, such measures cannot compensate for the cost pressure. Market-based elements are increasingly being introduced into the health care system to create incentives for cost- and quality-conscious behavior. Overall treatment costs shall be reduced through improved quality standards. In addition, ever-greater importance is being placed on disease prevention and innovative reimbursement models linked to treatment quality standards.
Group sales increased by 7% (11% in constant currency) to € 5,212 million (Q1 2013: € 4,890 million). Organic sales growth was 2%. Acquisitions contributed 9%. Divestitures had a marginal effect on sales growth.
Organic sales growth was 3% in North America and 2% in Europe. In Asia-Pacifi c organic sales growth was 2% impacted by a slow start in China for Fresenius Medical Care and Fresenius Kabi. In Latin America organic sales growth
2014 before Fenwal integration costs (€ 1 million) and book gain from the divestment of two HELIOS hospitals (€ 22 million); 2013 before Fenwal integration costs (€ 7 million) Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2014 before Fenwal integration costs (€ 1 million) and book gain from the divestment of two HELIOS hospitals (€ 21 million); including these effects, net income attributable to shareholders of Fresenius SE & Co. KGaA increased by 13% (+14% in constant currency) to € 248 million. 2013 before Fenwal integration costs (€ 5 million)
was 8%. In Africa, the decline in sales is mainly due to fl uctuations in the project business at Fresenius Vamed.
Adverse currency translation effects weighed on Group sales in all regions, particularly in Latin America (- 21%), Asia-Pacifi c (- 7%), Africa (- 7%) and North America (- 4%).
Group EBITDA1 decreased by 3% (- 1% in constant currency) to € 867 million (Q1 2013: € 898 million). Group EBIT 1 decreased by 8% (- 6% in constant currency) to € 643 million (Q1 2013: € 696 million). This decrease is mainly attributable to the year-over-year comparison of issues at Fresenius Medical Care and Fresenius Kabi which occurred in 2013. The EBIT margin was 12.3% (Q1 2013: 14.2%).
Group net interest was - € 138 million (Q1 2013: - € 163 million). Improved fi nancing terms as well as favorable currency effects contributed to the decrease. In addition, net interest in Q1 2013 included € 14 million one-time costs resulting from the early redemption of a Senior Note.
The Group tax rate4 improved to 26.3% (Q1 2013: 29.1%) due to a one-time effect at Fresenius Medical Care.
| Q1 / 2014 | Q1 / 2013 |
|---|---|
| 643 | 696 |
| 228 | 224 |
| 248 | 219 |
| 1.27 | 1.26 |
| 1.38 | 1.23 |
Noncontrolling interest was € 144 million (Q1 2013: € 154 million), of which 93% was attributable to the noncontrolling interest in Fresenius Medical Care.
Group net income 2 increased by 2% (3% in constant currency) to € 228 million (Q1 2013: € 224 million). Earnings per share 2 increased by 1% to € 1.27 (Q1 2013: € 1.26).
Group net income attributable to shareholders of Fresenius SE & Co. KGaA including integration costs for Fenwal and a book gain from the divestment of two HELIOS hospitals increased by 13% (+ 14% in constant currency) to € 248 million. Earnings per share increased by 12% (+ 13% in constant currency) to € 1.38. There were no integration costs related to the newly acquired hospitals from Rhön-Klinikum AG in the fi rst quarter.
| € in millions | Q1 / 2014 | Q1 / 2013 | Change at actual rates |
Currency trans lations effects |
Change at constant rates |
Organic growth |
Acquisitions / divestitures |
% of total sales |
|---|---|---|---|---|---|---|---|---|
| North America | 2,100 | 2,102 | 0% | - 4% | 4% | 3% | 1% | 40% |
| Europe | 2,358 | 1,974 | 19% | - 1% | 20% | 2% | 18% | 45% |
| Asia-Pacifi c | 439 | 454 | - 3% | - 7% | 4% | 2% | 2% | 9% |
| Latin America | 247 | 276 | - 11% | - 21% | 10% | 8% | 2% | 5% |
| Africa | 68 | 84 | - 19% | - 7% | - 12% | - 13% | 1% | 1% |
| Total | 5,212 | 4,890 | 7% | - 4% | 11% | 2% | 9% | 100% |
| € in millions | Q1 / 2014 | Q1 / 2013 | Change at actual rates |
Currency trans lations effects |
Change at constant rates |
Organic growth |
Acquisitions / divestitures |
% of total sales |
|---|---|---|---|---|---|---|---|---|
| Fresenius Medical Care | 2,602 | 2,623 | - 1% | - 5% | 4% | 3% | 1% | 50% |
| Fresenius Kabi | 1,213 | 1,260 | - 4% | - 5% | 1% | 1% | 0% | 23% |
| Fresenius Helios | 1,227 | 841 | 46% | 0% | 46% | 4% | 42% | 23% |
| Fresenius Vamed | 191 | 184 | 4% | 0% | 4% | - 2% | 6% | 4% |
2014 before Fenwal integration costs (€ 1 million) and book gain from the divestment of two HELIOS hospitals (€ 22 million);
2013 before Fenwal integration costs (€ 7 million)
Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2014 before Fenwal integration costs (€ 1 million) and book gain from the divestment of two HELIOS hospitals (€ 21 million); including these effects, net income attributable to shareholders of Fresenius SE & Co. KGaA increased by 13% (+14% in constant currency) to
€ 248 million. 2013 before Fenwal integration costs (€ 5 million)
Net income attributable to shareholders of Fresenius SE & Co. KGaA
2014 before book gain from the divestment of two HELIOS hospitals; 2013 before Fenwal integration costs
The Group's U.S. GAAP fi nancial results as of March 31, 2014 and March 31, 2013 comprise special items. Net income attributable to shareholders of Fresenius SE & Co. KGaA excludes integration costs for Fenwal and the book gain from the divestment of two HELIOS hospitals. There were no integration costs for the newly acquired hospitals from Rhön-Klinikum AG in the fi rst quarter. Adjusted earnings represent the Group's business operations in the reporting period.
The Fresenius Group spent € 234 million on property, plant and equipment (Q1 2013: € 179 million). Investments were mainly used for the equipment of new, and the expansion of existing dialysis clinics as well as the modernization and expansion of production facilities and hospitals.
Acquisition spending was € 924 million (Q1 2013: € 79 million), thereof € 759 million as a further payment for the acquisition of hospitals from Rhön-Klinikum AG.
Operating cash fl ow was € 140 million (Q1 2013: € 444 million) with a margin of 2.7% (Q1 2013: 9.1%). The decrease was mainly attributable to the payment for the W.R. Grace bankruptcy settlement of US\$ 115 million 1 , increased working capital at Fresenius Medical Care and Fresenius Kabi as well as a change from annual to monthly upfront payments to Fresenius Vamed for a technical management contract.
Net capital expenditure increased to € 243 million (Q1 2013: € 188 million). Free cash fl ow before acquisitions
| € in millions | Q1 / 2014 before special items |
Fenwal integration costs |
book gain from divestment of two HELIOS hospitals |
Q1 / 2014 according to U.S. GAAP (incl. special items) |
Q1 / 2013 before special items |
Fenwal integration costs |
Q1 / 2013 according to U.S. GAAP (incl. special items) |
|---|---|---|---|---|---|---|---|
| Sales | 5,212 | 5,212 | 4,890 | 4,890 | |||
| EBIT | 643 | - 1 | 22 | 664 | 696 | - 7 | 689 |
| Interest result | - 138 | - 138 | - 163 | - 163 | |||
| Net income before taxes | 505 | - 1 | 22 | 526 | 533 | - 7 | 526 |
| Income taxes | - 133 | - | - 1 | - 134 | - 155 | 2 | - 153 |
| Net income | 372 | - 1 | 21 | 392 | 378 | - 5 | 373 |
| Less noncontrolling interest | - 144 | - 144 | - 154 | - 154 | |||
| Net income attributable to shareholders of Fresenius SE & Co. KGaA |
228 | - 1 | 21 | 248 | 224 | - 5 | 219 |
| € in millions | Q1 / 2014 | Q1 / 2013 | thereof property, plant and equipment |
thereof acquisitions |
Change | % of total |
|---|---|---|---|---|---|---|
| Fresenius Medical Care | 293 | 169 | 146 | 147 | 73% | 25% |
| Fresenius Kabi | 71 | 58 | 54 | 17 | 22% | 6% |
| Fresenius Helios | 792 | 23 | 32 | 760 | -- | 69% |
| Fresenius Vamed | 3 | 8 | 2 | 1 | -63% | 0% |
| Corporate / Other | - 1 | – | – | - 1 | -- | 0% |
| Total | 1,158 | 258 | 234 | 924 | -- | 100% |
and dividends was - € 103 million (Q1 2013: € 256 million). Free cash fl ow after acquisitions and dividends was - € 1,006 million (Q1 2013: 229 million).
The Group's total assets increased by 5% (at actual rates and in constant currency) to € 34,284 million (Dec. 31, 2013: € 32,758 million). This increase is mainly attributable to the fi rst-time consolidation of hospitals acquired from Rhön-Klinikum AG. Current assets grew by 9% to € 8,656 million
(Dec. 31, 2013: € 7,972 million). Non-current assets increased by 3% to € 25,628 million (Dec. 31, 2013: € 24,786 million).
Total shareholders' equity increased by 3% to € 13,619 million (Dec. 31, 2013: € 13,260 million). The equity ratio was 39.7% (Dec. 31, 2013: 40.5%).
Group debt was € 13,769 million (Dec. 31, 2013: € 12,804 million). Net debt was € 12,940 million (Dec. 31, 2013: € 11,940 million).
As of March 31, 2014, the net debt / EBITDA ratio was 3.21 1 (Dec. 31, 2013: 2.51 2 ). The increase is mainly due to the acquisition of hospitals from Rhön-Klinikum AG.
| € in millions | Q1 / 2014 | Q1/ 2013 | Change |
|---|---|---|---|
| Net income | 392 | 373 | 5% |
| Depreciation and amortization | 224 | 202 | 11% |
| Change in accruals for pensions | - 3 | 15 | -120% |
| Cash fl ow | 613 | 590 | 4% |
| Change in working capital | - 473 | - 146 | -- |
| Operating cash fl ow | 140 | 444 | -68% |
| Property, plant and equipment | - 246 | -190 | -29% |
| Proceeds from the sale of property, plant and equipment | 3 | 2 | 50% |
| Cash fl ow before acquisitions and dividends | - 103 | 256 | -140% |
| Cash used for acquisitions, net | - 875 | 23 | -- |
| Dividends paid | - 28 | - 50 | 44% |
| Free cash fl ow paid after acquisitions and dividends | - 1,006 | 229 | -- |
| Cash provided by / used for fi nancing activities | 976 | - 277 | -- |
| Effect of exchange rates on change in cash and cash equivalents | - 5 | 13 | -138% |
| Net change in cash and cash equivalents | - 35 | - 35 | 0% |
Pro forma including acquired hospitals from Rhön-Klinikum AG; before Fenwal integration costs and book gain from the divestment of two HELIOS hospitals Pro forma excluding advances made for the acquisition of hospitals from Rhön-Klinikum AG; before Fenwal integration costs
Fresenius Medical Care is the world's leading provider of services and products for patients with chronic kidney failure. As of March 31, 2014, Fresenius Medical Care was treating 270,570 patients in 3,263 dialysis clinics.
| US\$ in millions | Q1 / 2014 | Q1 / 2013 | Change |
|---|---|---|---|
| Sales | 3,564 | 3,464 | 3% |
| EBITDA | 612 | 650 | - 6% |
| EBIT | 445 | 493 | - 10% |
| Net income 1 | 205 | 225 | - 9% |
| Employees (March 31 / December 31) | 96,573 | 95,637 | 1% |
Sales increased by 3% (4% in constant currency) to US\$ 3,564 million (Q1 2013: US\$ 3,464 million). Organic sales growth was 3%. Acquisitions contributed 1%. Adverse currency effects reduced sales by 1%.
Sales in dialysis services increased by 4% (5% in constant currency) to US\$ 2,782 million (Q1 2013: US\$ 2,678 million). Dialysis product sales decreased by 1% (0% in constant currency) to US\$ 782 million (Q1 2013: US\$ 786 million).
In North America sales grew by 5% to US\$ 2,393 million (Q1 2013: US\$ 2,287 million). Dialysis services sales increased by 5% to US\$ 2,201 million (Q1 2013: US\$ 2,104 million). Dialysis product sales grew by 5% to US\$ 192 million (Q1 2013: US\$ 183 million).
Sales outside North America ("International" segment) decreased by 1% (4% increase in constant currency) to US\$ 1,161 million (Q1 2013: US\$ 1,169 million) impacted inter alia by the reorganization of the distribution network in China. Sales in dialysis services increased by 1% (8% in constant currency) to US\$ 581 million (Q1 2013: US\$ 574 million).
Dialysis product sales decreased by 2% (-1% in constant currency) to US\$ 580 million (Q1 2013: US\$ 595 million).
EBIT decreased by 10% to US\$ 445 million (Q1 2013: US\$ 493 million). The EBIT margin was 12.5% (Q1 2013: 14.2%). As expected, EBIT was impacted by sequestration and rebasing of Medicare's reimbursement rate in the United States.
Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA decreased by 9% to US\$ 205 million (Q1 2013: US\$ 225 million).
Operating cash fl ow was US\$ 112 million (Q1 2013: US\$ 315 million) with a margin of 3.2% (Q1 2013: 9.1%). The decrease was mainly attributable to the payment for the W.R. Grace bankruptcy settlement of US\$ 115 million and increased working capital.
Please see page 15 of the Management Report for the 2014 outlook of Fresenius Medical Care.
For further information, please see Fresenius Medical Care's Investor News at www.fmc-ag.com.
Fresenius Kabi offers infusion therapies, intravenously administered generic drugs and clinical nutrition for seriously and chronically ill patients in the hospital and outpatient environments. The company is also a leading supplier of medical devices and transfusion technology products.
| € in millions | Q1 / 2014 | Q1 / 2013 | Change |
|---|---|---|---|
| Sales | 1,213 | 1,260 | - 4% |
| EBITDA 1 | 253 | 288 | - 12% |
| EBIT 1 | 201 | 237 | - 15% |
| Net income 2 | 106 | 119 | - 11% |
| Employees (March 31 / December 31) | 32,325 | 31,961 | 1% |
Sales decreased by 4% (1% increase in constant currency) to € 1,213 million (Q1 2013: € 1,260 million). Organic sales growth was 1%. Adverse currency translation effects weighed on sales (- 5%), mainly due to the weaker currencies in the United States, Brazil, Argentina and South Africa against the Euro.
Sales in Europe decreased by 3% (organic sales growth: - 2%) to € 500 million (Q1 2013: € 517 million) mainly due to lower HES sales (blood volume substitutes) and changes in Fresenius Kabi's Russian distribution model. Sales in North America decreased by 5% (organic sales growth: 0%) to € 382 million (Q1 2013: € 401 million). Asia-Pacifi c sales were € 222 million (organic sales growth: + 3%;Q1 2013: € 223 million) infl uenced by the 2013 price cut and the discontinuation of HES200 in China as well as delayed tenders in Australia and Vietnam. Sales in Latin America / Africa decreased by 8% (organic sales growth: + 11%) to € 109 million (Q1 2013: € 119 million).
EBIT 1 was € 201 million (Q1 2013: € 237 million), a decrease of 13% in constant currency. EBIT was impacted by lower HES sales and the 2013 price cuts in China. The EBIT margin of 16.6% (Q1 2013: 18.8%) was in line with expectations and our guidance range.
Net income2 decreased by 11% to € 106 million (Q1 2013: € 119 million).
Fresenius Kabi's operating cash fl ow was € 42 million (Q1 2013: € 132 million) with a margin of 3.5% (Q1 2013: 10.5%), mainly due to temporarily higher working capital requirements. Cash fl ow before acquisitions and dividends was - € 23 million (Q1 2013: € 76 million).
Integration costs for Fenwal were € 1 million (pre-tax). These costs are reported in the Group Corporate / Other segment. The vast majority of planned integration costs of € 40 – 50 million are expected to accrue towards the end of 2014.
Please see page 15 of the Management Report for the 2014 outlook of Fresenius Kabi.
Fresenius Helios is Germany's largest hospital operator. HELIOS owns 109 hospitals, thereof 85 acute care clinics including six maximum care hospitals in Berlin-Buch, Duisburg, Erfurt, Krefeld, Schwerin and Wuppertal and 24 post-acute care clinics. HELIOS treats more than 4.2 million patients per year, thereof more than 1.2 million inpatients, and operates more than 33,000 beds.
| € in millions | Q1 / 2014 | Q1 / 2014 | Change |
|---|---|---|---|
| Sales | 1,227 | 841 | 46% |
| EBITDA1 | 158 | 114 | 39% |
| EBIT1 | 114 | 87 | 31% |
| Net income 2 | 77 | 56 | 38% |
| Employees (March 31 / December 31) | 64,867 | 42,913 | 51% |
Sales increased by 46% to € 1,227 million (Q1 2013: € 841 million). The strong increase in sales is mainly due to the newly acquired hospitals from Rhön-Klinikum AG. Organic sales growth was 4%. The divestment of two HELIOS hospitals reduced sales growth by 2%.
EBIT 1 grew by 31% to € 114 million (Q1 2013: € 87 million). The EBIT margin was 9.3% (Q1 2013: 10.3%). The margin decline is due to the consolidation of the newly acquired hospitals from Rhön-Klinikum AG.
Net income 2 increased by 38% to € 77 million (Q1 2013: € 56 million).
Sales of the established hospitals grew by 4% to € 857 million. EBIT improved by 4% to € 88 million. The EBIT margin was unchanged at 10.3%.
Sales of the acquired hospitals were € 370 million, EBIT was € 26 million.
In the fi rst quarter, approximately 90% of the acquisition of hospitals from Rhön-Klinikum AG was closed. Approximately 70% of the acquired business was consolidated as of January 1, 2014, and approximately 20% as of March 1, 2014. For HSK Dr. Horst Schmidt Kliniken in Wiesbaden, the municipal shareholder approval is still pending. Fresenius Helios expects to close this part of the acquisition at the latest by the end of June.
The integration of the newly acquired hospitals is progressing as planned. The acquisition was EPS accretive in the fi rst quarter. No integration costs accrued in the fi rst quarter.
Please see page 16 of the Management Report for the 2014 outlook of Fresenius Helios.
2014 before book gain from the divestment of two HELIOS hospitals (€ 22 million)
Net income attributable to shareholders of HELIOS Kliniken GmbH; 2014 before book gain from the divestment of two HELIOS hospitals (€ 21 million)
Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide.
| € in millions | Q1 / 2014 | Q1 / 2013 | Change |
|---|---|---|---|
| Sales | 191 | 184 | 4% |
| EBITDA | 8 | 7 | 14% |
| EBIT | 6 | 5 | 20% |
| Net income 1 | 4 | 3 | 33% |
| Employees (March 31 / December 31) | 7,342 | 7,010 | 5% |
Sales increased by 4% to € 191 million (Q1 2013: € 184 million). Organic sales growth was -2%. Acquisitions contributed 6%, e.g. the acquisition of two hospitals in the Czech Republic in 2013. Sales in the project business decreased by 2% to € 80 million (Q1 2013: € 82 million). Sales in the service business grew by 9% to € 111 million (Q1 2013: € 102 million).
EBIT was € 6 million (Q1 2013: € 5 million) with a margin of 3.1% (Q1 2013: 2.7%).
Net income 1 increased to € 4 million (Q1 2013: € 3 million).
Order intake increased by 24% to € 115 million (Q1 2013: € 93 million). As of March 31, 2014, order backlog was € 1,170 million (Dec. 31, 2013: € 1,139 million).
Please see page 16 of the Management Report for the 2014 outlook of Fresenius Vamed.
As of March 31, 2014, the number of employees increased by 13% to 201,924 (Dec. 31, 2013: 178,337). This is almost entirely due to the acquisition of hospitals from Rhön-Klinikum AG.
| Number of employees | March 31, 2014 |
Dec 31, 2013 | Change |
|---|---|---|---|
| Fresenius Medical Care | 96,573 | 95,637 | 1% |
| Fresenius Kabi | 32,325 | 31,961 | 1% |
| Fresenius Helios | 64,867 | 42,913 | 51% |
| Fresenius Vamed | 7,342 | 7,010 | 5% |
| Corporate / Other | 817 | 816 | 0% |
| Total | 201,924 | 178,337 | 13% |
Product and process development as well as the improvement of therapies are at the core of our growth strategy. Fresenius focuses its R & D efforts on its core competencies in the following areas:
Apart from new products, we are concentrating on developing optimized or completely new therapies, treatment methods, and services.
| € in millions | Q1 / 2014 | Q1 / 2013 | Change |
|---|---|---|---|
| Fresenius Medical Care | 22 | 23 | - 4% |
| Fresenius Kabi | 59 | 53 | 11% |
| Fresenius Helios | – | – | -- |
| Fresenius Vamed | 0 | 0 | |
| Corporate / Other | 0 | 1 | - 100 % |
| Total | 81 | 77 | 5% |
The complex interactions and side effects that lead to kidney failure are better explored today than ever before. Technological advances develop in parallel with medical insights to improve the possibilities for treating patients. Our R & D activities at Fresenius Medical Care aim to translate new insights into novel or improved developments and to bring them to market as quickly as possible, and thus make an important contribution towards rendering the treatment of patients increasingly comfortable, safe, and individualized.
Fresenius Kabi's research and development activities concentrate on products for the therapy and care of critically and chronically ill patients. Our focus is on areas with high medical needs, such as in the treatment of oncology patients. Our products help to support medical advancements in acute and post-acute care and improve the patients' quality of life. We develop new products in areas such as clinical nutrition. In addition, we develop generic drug formulations ready to launch at the time of market formation as well as new formulations for non-patented drugs. Our medical devices signifi cantly contribute to a safe and effective application of infusion solutions and clinical nutrition. In transfusion technology our R & D focus is on medical devices and disposables to support the secure, user-friendly, and effi cient production of blood products.
Compared to the presentation in the 2013 annual report, there have been no material changes in Fresenius' overall opportunities and risk situation in the fi rst quarter of 2014.
In the ordinary course of Fresenius Group's operations, the Fresenius Group is subject to litigation, arbitration and investigations relating to various aspects of its business. The Fresenius Group regularly analyzes current information about such claims for probable losses and provides accruals for such matters, including estimated expenses for legal services, as appropriate.
In addition, we report on legal proceedings, currency and interest risks on pages 38 to 44 in the Notes of this report.
There were no signifi cant changes in the Group position or the health care sector since the end of the fi rst quarter of 2014.
Fresenius is covered by the rating agencies Moody's, Standard & Poor's and Fitch.
The following table shows the company rating of Fresenius SE & Co. KGaA:
| Standard & Poor's |
Moody's | Fitch | |
|---|---|---|---|
| Company rating | BB + | Ba1 | BB + |
| Outlook | positive | negative | positive |
On March 20, 2014, Fitch confi rmed the BB+ rating of Fresenius with positive outlook. The rating confi rmation refl ects the performance in 2013 as well as the completion and fi nancing of the acquisition of hospitals from Rhön-Klinikum AG. Fitch had placed Fresenius on rating watch in September 2013 following Rhön transaction announcement.
Fresenius fully confi rms its guidance for 2014 1 . Sales are expected to increase by 12% to 15% in constant currency. Net income 2 is expected to increase by 2% to 5% in constant currency. The earnings forecast primarily refl ects lower reimbursement rates for Medicare dialysis patients and substantial uncertainties regarding the IV drug shortage situation in the U.S. market.
The net debt / EBITDA ratio is expected to be in the range of 3.0 to 3.25.
Fresenius Medical Care confi rms its outlook for 2014. Fresenius Medical Care expects sales to grow to approximately US\$ 15.2 billion. Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected in the range of US\$ 1.0 to US\$ 1.05 billion. The company has initiated a global effi ciency program designed to enhance its performance over a multi-year period. Potential cost savings before income taxes of up to US\$ 60 million generated from this program are not included in the outlook for 2014.
Fresenius Kabi narrows its 2014 outlook and now projects organic sales growth of 4% to 6% (previously: 3% to 7%) and an EBIT margin of 16.5% to 18% (previously: 16% to 18%). These ranges primarily refl ect substantial uncertainties regarding the IV drug shortage situation in the U.S. market as well as full-year effects from the restrictions on the use of our blood volume substitutes.
Includes contributions from the acquisition of hospitals from Rhön-Klinikum AG
Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2014 before integration costs for Fenwal (€ 30-40 million) and the hospitals acquired from Rhön-Klinikum AG and net of book gain from the divestment of two HELIOS hospitals (€ 21 million); 2013 before Fenwal integration costs (€ 40 million)
Fresenius Helios fully confi rms its outlook for 2014. Fresenius Helios projects organic sales growth of 3 to 5%. EBIT (excluding the hospitals acquired from Rhön-Klinikum AG) is expected to increase to € 390 to € 410 million. Fresenius Helios will provide an outlook for all its hospitals (including HSK) with the announcement of Q2 results.
Fresenius Vamed fully confi rms its outlook for 2014 and expects to achieve organic sales growth of 5% to 10% and EBIT growth of 5% to 10%.
The Group plans to invest around 6% of sales in property, plant and equipment.
The number of employees in the Group will continue to rise in the future as a result of the expected expansion. We expect the number of employees to be more than 200,000 in 2014. This is mainly the result of the acquisition of hospitals from Rhön-Klinikum AG. The number of employees is expected to increase in all business segments.
Our R & D activities will continue to play a key role in securing the Group's long-term growth through innovations and new therapies. We plan to increase the Group's R & D spending in 2014. About 4% to 5% of our product sales will be reinvested in research and development.
Market-oriented research and development with strict time-to-market management processes is crucial for the success of new products. We continually review our R & D results using clearly defi ned milestones. Innovative ideas, product development, and therapies with a high level of quality will continue to be the basis for future market-leading positions. Given the continued cost-containment efforts in the health care sector, cost effi ciency combined with a strong quality focus is acquiring ever-greater importance in product development, and in the improvement of treatment concepts.
| Previous guidance | New guidance | |
|---|---|---|
| Sales, growth (constant currency) | 12% – 15% | confi rmed |
| Net income 2 , growth (in constant currency) |
2% – 5% | confi rmed |
Includes contributions from the acquisition of hospitals from Rhön-Klinikum AG
Net income attributable to shareholders of Fresenius SE & Co. KGaA; 2014 before integration costs for Fenwal (€ 30 - 40 million) and the hospitals acquired from Rhön-Klinikum
AG and net of book gain from the divestment of two HELIOS hospitals (€ 21 million); 2013 before Fenwal integration costs (€ 40 million)
| Previous guidance | New guidance | ||
|---|---|---|---|
| Fresenius Medical Care | Sales | ~ US\$ 15.2 bn | confi rmed |
| Net income 1 | US\$ 1.0 bn – US\$ 1.05 bn | confi rmed | |
| Fresenius Kabi | Sales growth (organic) | 3% – 7% | 4% – 6% |
| EBIT margin | 16% – 18% | 16.5% – 18% | |
| Fresenius Helios | Sales growth (organic) 2 | 3% – 5% | confi rmed |
| EBIT 2 | € 390 m – € 410 m | confi rmed | |
| Fresenius Vamed | Sales growth | 5% – 10% | confi rmed |
| EBIT, growth | 5% – 10% | confi rmed |
Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
Excluding hospitals acquired from Rhön-Klinikum AG
| € in millions | Q1 / 2014 | Q1 / 2013 |
|---|---|---|
| Sales | 5,212 | 4,890 |
| Cost of sales | - 3,694 | - 3,362 |
| Gross profi t | 1,518 | 1,528 |
| Selling, general and administrative expenses | - 773 | - 762 |
| Research and development expenses | - 81 | - 77 |
| Operating income (EBIT) | 664 | 689 |
| Net interest | - 138 | - 163 |
| Income before income taxes | 526 | 526 |
| Income taxes | - 134 | - 153 |
| Net income | 392 | 373 |
| Less noncontrolling interest | 144 | 154 |
| Net income attributable to shareholders of Fresenius SE & Co. KGaA | 248 | 219 |
| Earnings per ordinary share in € | 1.38 | 1.23 |
| Fully diluted earnings per ordinary share in € | 1.37 | 1.22 |
The following notes are an integral part of the unaudited condensed interim fi nancial statements.
| € in millions | Q1 / 2014 | Q1 / 2013 |
|---|---|---|
| Net income | 392 | 373 |
| Other comprehensive income (loss) | ||
| Foreign currency translation | - 62 | 220 |
| Cash flow hedges | 4 | 12 |
| Change of fair value of available for sale financial assets | 14 | 9 |
| Actuarial gains on defined benefit pension plans | 3 | - 3 |
| Income taxes related to components of other comprehensive income (loss) | - 6 | - 7 |
| Other comprehensive income (loss), net | - 47 | 231 |
| Total comprehensive income | 345 | 604 |
| Comprehensive income attributable to noncontrolling interest subject to put provisions |
19 | 29 |
| Comprehensive income attributable to noncontrolling interest not subject to put provisions |
100 | 271 |
| Comprehensive income attributable to shareholders of Fresenius SE & Co. KGaA |
226 | 304 |
| € in millions | March 31, 2014 | December 31, 2013 |
|---|---|---|
| Cash and cash equivalents | 829 | 864 |
| Trade accounts receivable, less allowance for doubtful accounts | 3,733 | 3,474 |
| Accounts receivable from and loans to related parties | 18 | 28 |
| Inventories | 2,180 | 2,014 |
| Other current assets | 1,563 | 1,261 |
| Deferred taxes | 333 | 331 |
| I. Total current assets | 8,656 | 7,972 |
| Property, plant and equipment | 6,099 | 5,082 |
| Goodwill | 16,674 | 14,826 |
| Other intangible assets | 1,229 | 1,241 |
| Other non-current assets | 1,385 | 3,433 |
| Deferred taxes | 241 | 204 |
| II. Total non-current assets | 25,628 | 24,786 |
| Total assets | 34,284 | 32,758 |
| € in millions | March 31, 2014 | December 31, 2013 |
|---|---|---|
| Trade accounts payable | 812 | 885 |
| Short-term accounts payable to related parties | 1 | 2 |
| Short-term accrued expenses and other short-term liabilities | 3,208 | 3,057 |
| Short-term debt | 297 | 959 |
| Short-term loans from related parties | 4 | 6 |
| Current portion of long-term debt and capital lease obligations | 1,053 | 855 |
| Short-term accruals for income taxes | 266 | 211 |
| Deferred taxes | 56 | 48 |
| A. Total short-term liabilities | 5,697 | 6,023 |
| Long-term debt and capital lease obligations, less current portion | 5,432 | 5,871 |
| Senior Notes | 6,529 | 5,113 |
| Convertible bonds | 454 | 0 |
| Long-term accrued expenses and other long-term liabilities | 500 | 434 |
| Pension liabilities | 708 | 714 |
| Long-term accruals for income taxes | 176 | 180 |
| Deferred taxes | 709 | 691 |
| B. Total long-term liabilities | 14,508 | 13,003 |
| I. Total liabilities | 20,205 | 19,026 |
| II. Noncontrolling interest subject to put provisions | 460 | 472 |
| A. Noncontrolling interest not subject to put provisions | 5,182 | 5,065 |
| Subscribed capital | 180 | 180 |
| Capital reserve | 3,330 | 3,314 |
| Other reserves | 5,300 | 5,052 |
| Accumulated other comprehensive loss | - 373 | - 351 |
| B. Total Fresenius SE & Co. KGaA shareholders' equity | 8,437 | 8,195 |
| III. Total shareholders' equity | 13,619 | 13,260 |
| Total liabilities and shareholders' equity | 34,284 | 32,758 |
| € in millions | Q1 / 2014 | Q1 / 2013 |
|---|---|---|
| Operating activities | ||
| Net income | 392 | 373 |
| Adjustments to reconcile net income to cash and cash equivalents provided by operating activities |
||
| Depreciation and amortization | 224 | 202 |
| Gain on sale of investments and divestitures | - 21 | - 40 |
| Change in deferred taxes | - 14 | - 31 |
| Gain / loss on sale of fixed assets | – | 1 |
| Changes in assets and liabilities, net of amounts from businesses acquired or disposed of |
||
| Trade accounts receivable, net | - 80 | - 89 |
| Inventories | - 121 | - 92 |
| Other current and non-current assets | - 30 | 64 |
| Accounts receivable from / payable to related parties | 7 | - 4 |
| Trade accounts payable, accrued expenses and other short-term and long-term liabilities |
- 268 | - 17 |
| Accruals for income taxes | 51 | 77 |
| Net cash provided by operating activities | 140 | 444 |
| Investing activities | ||
| Purchase of property, plant and equipment | - 246 | - 190 |
| Proceeds from sales of property, plant and equipment | 3 | 2 |
| Acquisitions and investments, net of cash acquired and net purchases of intangible assets |
- 872 | - 72 |
| Proceeds from sale of investments and divestitures | - 3 | 95 |
| Net cash used in investing activities | - 1,118 | - 165 |
| Financing activities | ||
| Proceeds from short-term loans | 97 | 540 |
| Repayments of short-term loans | - 810 | - 54 |
| Proceeds from short-term loans from related parties | – | – |
| Repayments of short-term loans from related parties | – | – |
| Proceeds from long-term debt and capital lease obligations | 1,357 | 134 |
| Repayments of long-term debt and capital lease obligations | - 1,648 | - 130 |
| Proceeds from the issuance of Senior Notes | 1,420 | 500 |
| Repayments of liabilities from Senior Notes | 0 | - 1,150 |
| Proceeds from the issuance of Convertible Bonds | 500 | 0 |
| Changes of accounts receivable securitization program | 50 | - 123 |
| Proceeds from the exercise of stock options | 10 | 7 |
| Dividends paid | - 28 | - 50 |
| Change in noncontrolling interest | – | - 1 |
| Exchange rate effect due to corporate financing | – | – |
| Net cash provided by / used in fi nancing activities | 948 | - 327 |
| Effect of exchange rate changes on cash and cash equivalents | - 5 | 13 |
| Net decrease in cash and cash equivalents | - 35 | - 35 |
| Cash and cash equivalents at the beginning of the reporting period | 864 | 885 |
| Cash and cash equivalents at the end of the reporting period | 829 | 850 |
| Subscribed Capital | Reserves | ||||
|---|---|---|---|---|---|
| Number of ordinary shares in thousand |
Amount € in thousands |
Amount € in millions |
Capital reserve € in millions |
Other reserves € in millions |
|
| As of December 31, 2012 | 178,188 | 178,188 | 178 | 3,225 | 4,358 |
| Proceeds from the exercise of stock options | 83 | 83 | – | 4 | |
| Compensation expense related to stock options |
6 | ||||
| Dividends paid | |||||
| Sale of noncontrolling interest not subject to put provisions |
|||||
| Change in fair value of noncontrolling interest subject to put provisions |
- 7 | ||||
| Comprehensive income (loss) | |||||
| Net income | 219 | ||||
| Other comprehensive income (loss) | |||||
| Cash flow hedges | |||||
| Change of fair value of available for sale financial assets |
|||||
| Foreign currency translation | |||||
| Actuarial losses on defined benefit pension plans |
|||||
| Comprehensive income | 219 | ||||
| As of March 31, 2013 | 178,271 | 178,271 | 178 | 3,228 | 4,577 |
| As of December 31, 2013 | 179,695 | 179,695 | 180 | 3,314 | 5,052 |
| Proceeds from the exercise of stock options | 129 | 129 | – | 7 | |
| Compensation expense related to stock options |
6 | ||||
| Dividends paid | |||||
| Purchase of noncontrolling interest not subject to put provisions |
|||||
| Change in fair value of noncontrolling interest subject to put provisions |
3 | ||||
| Comprehensive income (loss) | |||||
| Net income | 248 | ||||
| Other comprehensive income (loss) | |||||
| Cash flow hedges | |||||
| Change of fair value of available for sale financial assets |
|||||
| Foreign currency translation | |||||
| Actuarial gains on defined benefit pension plans |
|||||
| Comprehensive income (loss) | 248 | ||||
| As of March 31, 2014 | 179,824 | 179,824 | 180 | 3,330 | 5,300 |
| Accumulated other com prehensive income (loss) € in millions |
Total Fresenius SE & Co. KGaA shareholders' equity € in millions |
Non controlling interest not subject to put provisions € in millions |
Total shareholders' equity € in millions |
|
|---|---|---|---|---|
| As of December 31, 2012 | - 128 | 7,633 | 5,125 | 12,758 |
| Proceeds from the exercise of stock options | 4 | 3 | 7 | |
| Compensation expense related to | ||||
| stock options | 6 | 3 | 9 | |
| Dividends paid | 0 | - 28 | - 28 | |
| Sale of noncontrolling interest not subject to put provisions |
0 | - 2 | - 2 | |
| Change in fair value of noncontrolling interest subject to put provisions |
- 7 | - 14 | - 21 | |
| Comprehensive income (loss) | ||||
| Net income | 219 | 135 | 354 | |
| Other comprehensive income (loss) | ||||
| Cash flow hedges | 4 | 4 | 4 | 8 |
| Change of fair value of | ||||
| available for sale financial assets | 9 | 9 | – | 9 |
| Foreign currency translation | 73 | 73 | 133 | 206 |
| Actuarial losses on defined benefit pension plans |
- 1 | - 1 | - 1 | - 2 |
| Comprehensive income | 85 | 304 | 271 | 575 |
| As of March 31, 2013 | - 43 | 7,940 | 5,358 | 13,298 |
| As of December 31, 2013 | - 351 | 8,195 | 5,065 | 13,260 |
| Proceeds from the exercise of stock options | 7 | 3 | 10 | |
| Compensation expense related to stock options |
6 | 3 | 9 | |
| Dividends paid | 0 | - 7 | - 7 | |
| Purchase of noncontrolling interest not subject to put provisions |
0 | 11 | 11 | |
| Change in fair value of noncontrolling interest subject to put provisions |
3 | 7 | 10 | |
| Comprehensive income (loss) | ||||
| Net income | 248 | 125 | 373 | |
| Other comprehensive income (loss) | ||||
| Cash flow hedges | 1 | 1 | 2 | 3 |
| Change of fair value of available for sale financial assets |
10 | 10 | – | 10 |
| Foreign currency translation | - 34 | - 34 | - 28 | - 62 |
| Actuarial gains on defined benefit pension plans |
1 | 1 | 1 | 2 |
| Comprehensive income (loss) | - 22 | 226 | 100 | 326 |
| As of March 31, 2014 | - 373 | 8,437 | 5,182 | 13,619 |
| N ME G D SE ATE D OLI NS CO |
T REP | RTI O |
G FI N |
RST Q | U | ARTE | N R (U |
DI AU |
D) TE |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fresenius Medical Care | Fresenius Kabi | Fresenius Helios | Fresenius Vamed | Corporate / Other | Fresenius Group | |||||||||||||
| by business segment, € in millions | 2014 | 2013 | Change | 2014 2 | 2013 2 | Change | 2014 3 | 2013 | Change | 2014 | 2013 | Change | 2014 4,5 | 2013 4 | Change | 2014 | 2013 | Change |
| Sales | 2,602 | 2,623 | - 1% | 1,213 | 1,260 | - 4% | 1,227 | 841 | 46% | 191 | 184 | 4% | - 21 | - 18 | - 17% | 5,212 | 4,890 | 7% |
| thereof contribution to consolidated sales |
2,596 | 2,618 | - 1% | 1,205 | 1,249 | - 4% | 1,227 | 841 | 46% | 183 | 175 | 5% | 1 | 7 | - 86% | 5,212 | 4,890 | 7% |
| thereof intercompany sales | 6 | 5 | 20% | 8 | 11 | - 27% | 0 | 0 | 8 | 9 | - 11% | - 22 | - 25 | 12% | 0 | 0 | ||
| contribution to consolidated sales | 50% | 54% | 23% | 25% | 23% | 17% | 4% | 4% | 0% | 0% | 100% | 100% | ||||||
| EBITDA | 447 | 492 | - 9% | 253 | 288 | - 12% | 158 | 114 | 39% | 8 | 7 | 14% | 22 | - 10 | -- | 888 | 891 | 0% |
| Depreciation and amortization | 122 | 118 | 3% | 52 | 51 | 2% | 44 | 27 | 63% | 2 | 2 | 0% | 4 | 4 | 0% | 224 | 202 | 11% |
| EBIT | 325 | 374 | - 13% | 201 | 237 | - 15% | 114 | 87 | 31% | 6 | 5 | 20% | 18 | - 14 | -- | 664 | 689 | - 4% |
| Net interest | - 70 | - 79 | 11% | - 48 | - 66 | 27% | - 16 | - 15 | - 7% | - 1 | - 1 | 0% | - 3 | - 2 | - 50% | - 138 | - 163 | 15% |
| Income taxes | - 74 | - 98 | 24% | - 42 | - 45 | 7% | - 18 | - 14 | - 29% | - 1 | - 1 | 0% | 1 | 5 | - 80% | - 134 | - 153 | 12% |
| shareholders of Fresenius SE & Co. KGaA Net income attributable to |
150 | 171 | - 12% | 106 | 119 | - 11% | 77 | 56 | 38% | 4 | 3 | 33% | - 89 | - 130 | 32% | 248 | 219 | 13% |
| Operating cash fl ow | 82 | 239 | - 66% | 42 | 132 | - 68% | 77 | 33 | 133% | - 54 | 45 | -- | - 7 | - 5 | - 40% | 140 | 444 | - 68% |
| Cash fl ow before acquisitions and dividends |
- 62 | 128 | - 148% | - 23 | 76 | - 130% | 46 | 14 | - 55 | 44 | - 9 | - 6 | - 50% | - 103 | 256 | - 140% | ||
| -- | -- | |||||||||||||||||
| Total assets 1 | 16,988 | 16,764 | 1% | 8,616 | 8,598 | 0% | 7,920 | 6,597 | 20% | 686 | 726 | - 6% | 74 | 73 | 1% | 34,284 | 32,758 | 5% |
| Debt 1 | 6,244 | 6,103 | 2% | 4,726 | 4,735 | 0% | 1,496 | 3,538 | - 58% | 117 | 117 | 0% | 1,186 | - 1,689 | 170% | 13,769 | 12,804 | 8% |
| Capital expenditure, gross | 146 | 112 | 30% | 54 | 45 | 20% | 32 | 20 | 60% | 2 | 1 | 100% | 0 | 1 | - 100% | 234 | 179 | 31% |
| Acquisitions, gross / investments | 147 | 57 | 158% | 17 | 13 | 31% | 760 | 3 | -- | 1 | 7 | - 86% | - 1 | - 1 | 0% | 924 | 79 | -- |
| Research and development expenses | 22 | 23 | - 4% | 59 | 53 | 11% | – | – | -- | 0 | 0 | 0 | 1 | - 100% | 81 | 77 | 5% | |
| (per capita on balance sheet date) 1 Employees |
96,573 | 95,637 | 1% | 32,325 | 31,961 | 1% | 64,867 | 42,913 | 51% | 7,342 | 7,010 | 5% | 817 | 816 | 0% | 201,924 | 178,337 | 13% |
| Key fi gures | ||||||||||||||||||
| EBITDA margin | 17.2% | 18.8% | 20.9% | 22.9% | 12.9% | 13.6% | 4.2% | 3.8% | 16.6% 2,3 | 18.4% 2 |
FRESENIUS SE & CO. KGAA
1 2013: December 31 2 Before Fenwal integration costs
Depreciation and amortization
3 Before book gain from the divestment of two HELIOS hospitals
4 After Fenwal integration costs
5 After book gain from the divestment of two HELIOS hospitals
6 The underlying pro forma EBIT does not include Fenwal integration costs and book gain from the divestment of two HELIOS hospitals. 7 The underlying pro forma EBIT does not include Fenwal integration costs.
The consolidated segment reporting is an integral part of the notes. The following notes are an integral part of the unaudited condensed interim fi nancial statements.
EBIT margin 12.5% 14.2% 16.6% 18.8% 9.3% 10.3% 3.1% 2.7% 12.3% 2,3 14.2% 2
in % of sales 4.7% 4.5% 4.3% 4.0% 3.6% 3.2% 1.0% 1.1% 4.3% 4.1% Operating cash flow in % of sales 3.2% 9.1% 3.5% 10.5% 6.3% 3.9% - 28.3% 24.5% 2.7% 9.1% ROOA 1 10.2% 10.5% 11.2% 11.9% 7.2% 9.3% 11.4% 11.6% 9.6% 6 10.6% 7
Fresenius is a global health care group with products and services for dialysis, hospitals and outpatient medical care. In addition, the Fresenius Group focuses on hospi tal operations and also manages projects and provides services for hospitals and other health care facilities worldwide. Besides the activities of the parent company Fresenius SE & Co. KGaA, Bad Homburg v. d. H., the operating activities were split into the following legally independent business segments (subgroups) as of March 31, 2014:
The reporting currency in the Fresenius Group is the euro. In order to make the presentation clearer, amounts are mostly shown in million euros. Amounts under € 1 million after rounding are marked with "–".
The accompanying condensed consolidated fi nancial statements have been prepared in accordance with the United States Generally Accepted Accounting Principles (U.S. GAAP).
Fresenius SE & Co. KGaA, as a stock exchange listed company with a domicile in a member state of the European Union, fulfi lls its obligation to prepare and publish the consolidated fi nancial statements in accordance with the International Financial Reporting Standards (IFRS) applying Section 315a of the German Commercial Code (HGB). Simultaneously, the Fresenius Group voluntarily prepares and publishes the consolidated fi nancial statements in accordance with U.S. GAAP.
The accounting policies underlying these interim fi nancial statements are mainly the same as those applied in the consolidated fi nancial statements as of December 31, 2013.
The condensed consolidated fi nancial statements and management report for the fi rst quarter ended March 31, 2014 have not been audited nor reviewed and should be read in conjunction with the notes included in the consolidated fi nancial statements as of December 31, 2013, published in the 2013 Annual Report.
Except for the reported acquisitions (see note 2, Acquisitions, divestitures and investments), there have been no other major changes in the entities consolidated.
The consolidated fi nancial statements for the fi rst quarter ended March 31, 2014 include all adjustments that, in the opinion of the Management Board, are of a normal and recurring nature and are necessary to provide an appropriate view of the assets and liabilities, fi nancial position and results of operations of the Fresenius Group.
The results of operations for the fi rst quarter ended March 31, 2014 are not necessarily indicative of the results of operations for the fi scal year 2014.
Certain items in the consolidated fi nancial statements for the fi rst quarter of 2013 and for the year 2013 have been reclassifi ed to conform with the current year's presentation.
The preparation of consolidated fi nancial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated fi nancial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The Fresenius Group has prepared its consolidated fi nancial statements at March 31, 2014 in conformity with U.S. GAAP in force for interim periods on January 1, 2014.
The Fresenius Group applied the following standards, as far as they are relevant for Fresenius Group's business, for the fi rst time:
In July 2013, the "Financial Accounting Standards Board" (FASB) issued Accounting Standards Update 2013-11 (ASU 2013-11), FASB "Accounting Standards Codifi cation" (ASC) Topic 740, Income Taxes – Presentation of an Unrecognized Tax Benefi t When a Net Operating Loss Carryforward,
a Similar Tax Loss, or a Tax Credit Carryforward Exists. The purpose of ASU 2013-11 is to align the fi nancial statement presentation of an unrecognized tax benefi t when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. In most cases, the unrecognized tax benefi t should be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward. The update is effective for fi scal years, and interim periods within those years, beginning on or after December 15, 2013. The Fresenius Group adopted ASU 2013- 11 as of January 1, 2014. ASU 2013-11 does not have a material impact on the consolidated fi nancial statements of the Fresenius Group.
In July 2013, the FASB issued Accounting Standards Update 2013-10 (ASU 2013-10), FASB ASC Topic 815, Derivatives and Hedging – Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. The purpose of ASU 2013-10 is to provide the inclusion of the Fed Funds Effective Swap Rate as a U.S. benchmark interest rate for hedge accounting purposes. This rate will now be available to use along with the U.S. government interest rates and the London Interbank Offered Rate. This update is effective prospectively for new or designated hedging relationships entered into on or after July 17, 2013. Currently, the Fresenius Group does not intend to utilize the newly available Fed Funds Effective Swap Rate for its hedge accounting.
In March 2013, the FASB issued Accounting Standards Update 2013-05 (ASU 2013-05), FASB ASC Topic 830, Foreign Currency Matters – Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. The purpose of ASU 2013- 05 is to provide clarifi cation and further refi nement regarding the treatment of the release of a cumulative translation adjustment into net income. This occurs in instances where the parent sells either a part or all of its investment in a foreign entity, as well as when a company ceases to hold a controlling interest in a subsidiary or group of assets that is a nonprofi t activity or business within a foreign entity. The update is effective for fi scal years, and interim periods within those
years, beginning on or after December 15, 2013. The Fresenius Group adopted ASU 2013-05 as of January 1, 2014. ASU 2013-05 does not have a material impact on the consolidated fi nancial statements of the Fresenius Group.
In February 2013, the FASB issued Accounting Standards Update 2013-04 (ASU 2013-04), FASB ASC Topic 405, Liabilities – Obligations Resulting from Joint and Several Liability Arrangements for which the Total Amount of the Obligations is Fixed at the Reporting Date. ASU 2013-04's objective is to provide guidance and clarifi cation on the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements such as debt arrangements, other contractual obligations and settled litigation and judicial rulings. The update is effective for fi scal years, and interim periods within those years, beginning on or after December 15, 2013. The Fresenius Group adopted ASU 2013-04 as of January 1, 2014. ASU 2013-04 does not have a material impact on the consolidated fi nancial statements of the Fresenius Group.
In July 2011, the FASB issued Accounting Standards Update 2011-06 (ASU 2011-06), FASB ASC Topic 720, Other Expenses – Fees Paid to the Federal Government by Health Insurers. The amendments in ASU 2011-06 address how health insurers should recognize and classify their income statement fees mandated by the Health Care and Educational Affordability Reconciliation Act. These amendments require that the liability for the fee be estimated and recorded in full once the entity provides qualifying health insurance in the applicable calendar year in which the fee is payable. In conjunction, the corresponding deferred cost is amortized to expense using a straight-line allocation method unless another method better allocates the fee over the entire calendar year for which it is payable. In addition, the ASU states that this fee does not meet the defi nition of an acquisition cost. The disclosures required under ASU 2011-06 are effective for calendar years beginning after December 31, 2013, when the fee initially becomes effective. The Fresenius Group adopted ASU 2011-06 effective January 1, 2014. ASU 2011-06 does not have a material impact on the consolidated fi nancial statements of the Fresenius Group.
The FASB issued the following relevant new standards for the Fresenius Group:
In January 2014, the FASB issued Accounting Standards Update 2014-05 (ASU 2014-05), FASB ASC Topic 853, Service Concession Arrangements. ASU 2014-05's objective is to specify that an operating entity should not account for a service concession arrangement that is within the scope of ASU 2014-05 as a lease. The update is effective for fi scal years and interim periods within those years beginning on or after December 15, 2014. The Fresenius Group is currently evaluating the impact of ASU 2014-05 on its consolidated fi nancial statements.
In April 2014, the FASB issued Accounting Standards Update 2014-08 (ASU 2014-08), FASB ASC Topic 205, Presentation of Financial Statements and FASB ASC Topic 360, Property, Plant, and Equipment – Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08's objective is to reduce the complexity and diffi culty in applying guidance for discontinued operations. ASU 2014-08's main focus is to limit the presentation to disposals representing a strategic shift that has a major effect on operations or fi nancial results. The update is effective for fi scal years and interim periods within those years beginning on or after December 15, 2014. The Fresenius Group is currently evaluating the impact of ASU 2014-08 on its consolidated fi nancial statements.
The Fresenius Group made acquisitions and investments of € 924 million and € 79 million in the fi rst quarter of 2014 and 2013, respectively. Of this amount, € 872 million was paid in cash and € 52 million was assumed obligations in the fi rst quarter of 2014.
In the fi rst quarter of 2014, Fresenius Medical Care spent € 147 million on acquisitions, mainly for the short-term investment in available for sale securities.
In the fi rst quarter of 2014, Fresenius Kabi spent € 17 million on acquisitions, mainly for the purchase of further shares in Fresenius Kabi Oncology Ltd., India.
Fresenius Helios spent € 760 million on acquisitions in the fi rst quarter of 2014. Thereof, € 759 million related to the acquisition of hospitals and outpatient facilities of Rhön-Klinikum AG, Germany. Taking into account the advance payment of € 2,178 million made at the end of the year 2013 in conjunction with this acquisition, the transaction amount added up to € 2,937 million.
In connection with the acquisition of hospitals of Rhön-Klinikum AG, Fresenius Helios sold two hospitals in Borna and Zwenkau in the fi rst quarter of 2014 due to antitrust authority requirements. The corresponding book gain in the amount of € 22 million before tax is included in selling, general and administrative expenses in the consolidated statement of income.
On February 27 and March 6, 2014, Fresenius Helios completed the acquisition of 39 hospitals and 11 outpatient facilities of Rhön-Klinikum AG, Germany. In most instances, 100% of the share capital was purchased, only in a few cases 94% to 99% of the share capital was acquired.
The transaction strengthens Fresenius Helios' position as Europe's largest hospital operator and provides the basis for offering nationwide care models across Germany.
Due to contractual conditions, the Fresenius Group was primary benefi ciary of the majority of the acquired hospitals and outpatient facilities for the period from January 1, 2014 until the closing of the majority of the transaction on February 27, 2014. During this period, the Fresenius Group therefore fully consolidated these companies according to regulations for variable interest entities. All other acquired companies have been fully consolidated as of February 27, 2014.
The transaction was accounted for as a business combination. The following table summarizes the current estimated fair values of assets acquired and liabilities assumed at the date of the acquisition. This allocation of the purchase price
is based upon the best information available to management at present. Due to the relatively short interval between the closing date of the acquisition and the date of the statement of fi nancial position, this information may be incomplete. Any adjustments to acquisition accounting, net of related income tax effects, will be recorded with a corresponding adjustment to goodwill.
| € in millions | |
|---|---|
| Trade accounts receivable | 205 |
| Working capital and other assets | 266 |
| Assets | 1,035 |
| Liabilities | - 370 |
| Goodwill | 1,879 |
| Noncontrolling interest | - 14 |
| Consideration transferred | 3,001 |
| Net cash acquired | - 64 |
| Transaction amount | 2,937 |
The goodwill in the amount of € 1,879 million that was acquired as part of the acquisition is not deductible for tax purposes.
Goodwill is an asset representing the future economic benefi ts arising from other assets acquired in a business combination that are not individually identifi ed and separately recognized. Goodwill arises principally due to the fair value placed on an established stream of future cash fl ows versus building a similar business.
The noncontrolling interests acquired as part of the acquisition are stated at fair value.
In the fi rst quarter of 2014, the acquired hospitals and outpatient facilities have contributed € 370 million to sales and € 26 million to the operating income (EBIT) of the Fresenius Group.
In the fi rst quarter of 2014, Fresenius Vamed spent € 1 million on acquisitions.
Net income attributable to shareholders of Fresenius SE & Co. KGaA for the fi rst quarter of 2014 in the amount of € 248 million includes special items relating to the integration of Fenwal and the divestment of two HELIOS hospitals.
The special items had the following impact on the consolidated statement of income:
| € in millions | EBIT | Net income attributable to share holders of Fresenius SE & Co. KGaA |
|---|---|---|
| Earnings Q1 2014, adjusted | 228 | |
| Fenwal integration costs | - 1 | - 1 |
| Book gain from the divestment of two HELIOS hospitals |
22 | 21 |
| Earnings Q1 2014 according to | ||
| U.S. GAAP | 248 |
Sales by activity were as follows:
| € in millions | Q1 / 2014 | Q1 / 2013 |
|---|---|---|
| Sales of services | 3,414 | 3,019 |
| less patient service bad debt provision | - 46 | - 49 |
| Sales of products and related goods | 1,761 | 1,834 |
| Sales from long-term production contracts |
81 | 83 |
| Other sales | 2 | 3 |
| Sales | 5,212 | 4,890 |
During the fi rst quarter of 2014, there were no material changes relating to tax audits, accruals for income taxes, unrecognized tax benefi ts as well as recognized and accrued payments for interest and penalties. Explanations regarding the tax audits and further information can be found in the consolidated fi nancial statements in the 2013 Annual Report.
The following table shows the earnings per share including and excluding the dilutive effect from stock options issued:
| Q1 / 2014 | Q1 / 2013 | |
|---|---|---|
| Numerators, € in millions | ||
| Net income attributable to | ||
| shareholders of | ||
| Fresenius SE & Co. KGaA | 248 | 219 |
| less effect from dilution due to | ||
| Fresenius Medical Care shares | – | – |
| Income available to | ||
| all ordinary shares | 248 | 219 |
| Denominators in number of shares | ||
| Weighted-average number of | ||
| ordinary shares outstanding | 179,803,512 | 178,236,155 |
| Potentially dilutive | ||
| ordinary shares | 1,667,274 | 1,838,889 |
| Weighted-average number | ||
| of ordinary shares outstanding | ||
| assuming dilution | 181,470,786 | 180,075,044 |
| Basic earnings per | ||
| ordinary share in € | 1.38 | 1.23 |
| Fully diluted earnings | ||
| per ordinary share in € | 1.37 | 1.22 |
As of March 31, 2014 and December 31, 2013, cash and cash equivalents were as follows:
| € in millions | March 31, 2014 | Dec. 31, 2013 |
|---|---|---|
| Cash | 807 | 846 |
| Time deposits and securities | ||
| (with a maturity of up to 90 days) | 22 | 18 |
| Total cash and cash equivalents | 829 | 864 |
As of March 31, 2014 and December 31, 2013, earmarked funds of € 29 million and € 22 million, respectively, were included in cash and cash equivalents.
As of March 31, 2014 and December 31, 2013, trade accounts receivable were as follows:
| € in millions | March 31, 2014 | Dec. 31, 2013 |
|---|---|---|
| Trade accounts receivable | 4,231 | 3,961 |
| less allowance for doubtful accounts | 498 | 487 |
| Trade accounts receivable, net | 3,733 | 3,474 |
As of March 31, 2014 and December 31, 2013, inventories consisted of the following:
| € in millions | March 31, 2014 | Dec. 31, 2013 |
|---|---|---|
| Raw materials and purchased components |
499 | 445 |
| Work in process | 349 | 323 |
| Finished goods | 1,417 | 1,314 |
| less reserves | 85 | 68 |
| Inventories, net | 2,180 | 2,014 |
The purchase price deposit in the amount of € 2,178 million, that was shown under other non-current assets as of December 31,2013, was offset in the course of the acquisition of hospitals and outpatient facilities of Rhön-Klinikum AG in the fi rst quarter of 2014.
As of March 31, 2014, investments, securities and long-term loans were comprised of investments of € 533 million (December 31, 2013: € 482 million), mainly regarding the joint venture between Fresenius Medical Care and Galenica Ltd., that were accounted for under the equity method. In the fi rst quarter of 2014, income of € 9 million (Q1 2013: € 4 million) resulting from this valuation was included in selling, general and administrative expenses in the consolidated statement of
income. Moreover, investments, securities and long-term loans included € 285 million fi nancial assets available for sale as of March 31, 2014 (December 31, 2013: € 197 million). These mainly refer to shares in Rhön-Klinikum AG with acquisition costs of € 124 million and a fair value of € 161 million. Furthermore, investments and long-term loans included € 121 million as of March 31, 2014 that Fresenius Medical Care loaned to a middle-market dialysis provider.
As of March 31, 2014 and December 31, 2013, intangible assets, split into amortizable and non-amortizable intangible assets, consisted of the following:
| March 31, 2014 | Dec. 31, 2013 | |||||
|---|---|---|---|---|---|---|
| € in millions | Acquisition cost |
Accumulated amortization |
Carrying amount |
Acquisition cost |
Accumulated amortization |
Carrying amount |
| Patents, product and distribution rights | 571 | 241 | 330 | 571 | 235 | 336 |
| Technology | 304 | 53 | 251 | 303 | 48 | 255 |
| Non-compete agreements | 238 | 179 | 59 | 237 | 174 | 63 |
| Other | 789 | 387 | 402 | 771 | 371 | 400 |
| Total | 1,902 | 860 | 1,042 | 1,882 | 828 | 1,054 |
Estimated regular amortization expenses of intangible assets for the next fi ve years are shown in the following table:
| € in millions | Q2 – 4 / 2014 | 2015 | 2016 | 2017 | 2018 | Q1 / 2019 |
|---|---|---|---|---|---|---|
| Estimated amortization expenses | 103 | 131 | 122 | 118 | 115 | 27 |
| March 31, 2014 | December 31, 2013 | |||||
|---|---|---|---|---|---|---|
| € in millions | Acquisition cost |
Accumulated amortization |
Carrying amount |
Acquisition cost |
Accumulated amortization |
Carrying amount |
| Tradenames | 182 | 0 | 182 | 182 | 0 | 182 |
| Management contracts | 5 | 0 | 5 | 5 | 0 | 5 |
| Goodwill | 16,674 | 0 | 16,674 | 14,826 | 0 | 14,826 |
| Total | 16,861 | 0 | 16,861 | 15,013 | 0 | 15,013 |
The carrying amount of goodwill has developed as follows:
| € in millions | Fresenius Medical Care |
Fresenius Kabi |
Fresenius Helios |
Fresenius Vamed |
Corporate / Other |
Fresenius Group |
|---|---|---|---|---|---|---|
| Carrying amount as of January 1, 2013 | 8,657 | 4,123 | 2,151 | 77 | 6 | 15,014 |
| Additions | 195 | 138 | 14 | 8 | 0 | 355 |
| Disposals | 0 | - 4 | 0 | 0 | 0 | - 4 |
| Reclassifi cations | – | 0 | 0 | 0 | 0 | – |
| Foreign currency translation | - 398 | - 141 | 0 | 0 | 0 | - 539 |
| Carrying amount as of December 31, 2013 | 8,454 | 4,116 | 2,165 | 85 | 6 | 14,826 |
| Additions | 9 | – | 1,879 | 0 | 0 | 1,888 |
| Disposals | 0 | 0 | - 25 | 0 | 0 | - 25 |
| Reclassifi cations | 0 | 0 | – | 0 | 0 | – |
| Foreign currency translation | - 16 | 1 | 0 | 0 | 0 | - 15 |
| Carrying amount as of March 31, 2014 | 8,447 | 4,117 | 4,019 | 85 | 6 | 16,674 |
The goodwill additions in the segment Fresenius Helios in the fi rst quarter of 2014 resulted from the acquisition of hospitals and outpatient facilities of Rhön-Klinikum AG.
As of March 31, 2014 and December 31, 2013, the carrying amounts of the other non-amortizable intangible assets were € 158 million, respectively, for Fresenius Medical Care as well as € 29 million, respectively, for Fresenius Kabi.
The Fresenius Group had short-term debt of € 297 million and € 959 million at March 31, 2014 and December 31, 2013, respectively. As of March 31, 2014, this debt consisted of borrowings by certain entities of the Fresenius Group under lines of credit with commercial banks of € 292 million. Furthermore, € 5 million were outstanding under the commercial paper program of Fresenius SE & Co. KGaA, which was increased to € 1,000 million in March 2014.
As of March 31, 2014 and December 31, 2013, long-term debt and capital lease obligations consisted of the following:
| € in millions | March 31, 2014 | Dec. 31, 2013 |
|---|---|---|
| Fresenius Medical Care 2012 Credit Agreement | 2,111 | 1,963 |
| 2013 Senior Credit Agreement | 2,868 | 1,709 |
| Bridge Financing Facility | 0 | 1,410 |
| Euro Notes | 859 | 859 |
| European Investment Bank Agreements | 48 | 188 |
| Accounts receivable facility of Fresenius Medical Care | 304 | 255 |
| Capital lease obligations | 95 | 94 |
| Other | 200 | 248 |
| Subtotal | 6,485 | 6,726 |
| less current portion | 1,053 | 855 |
| Long-term debt and capital lease obligations, less current portion | 5,432 | 5,871 |
Fresenius Medical Care 2012 Credit Agreement Fresenius Medical Care AG & Co. KGaA (FMC-AG & Co. KGaA) entered into a syndicated credit facility ( Fresenius Medical Care 2012 Credit Agreement) of initially US\$ 3,850 million
with a large group of banks and institutional investors (collectively, the Lenders) on October 30, 2012 which replaced a prior credit agreement.
The following tables show the available and outstanding amounts under the Fresenius Medical Care 2012 Credit Agreement at March 31, 2014 and at December 31, 2013:
| March 31, 2014 | |||||||
|---|---|---|---|---|---|---|---|
| Maximum amount available | Balance outstanding | ||||||
| € in millions | € in millions | ||||||
| Revolving Credit (in US\$) | US\$ 600 million | 435 | US\$336 million | 244 | |||
| Revolving Credit (in €) | € 500 million | 500 | € 90 million | 90 | |||
| Term Loan A | US\$ 2,450 million | 1,777 | US\$ 2,450 million | 1,777 | |||
| Total | 2,712 | 2,111 | |||||
| December 31, 2013 | |||||||
| Maximum amount available | Balance outstanding | ||||||
| € in millions | € in millions | ||||||
| Revolving Credit (in US\$) | US\$ 600 million | 435 | US\$138 million | 100 | |||
| Revolving Credit (in €) | € 500 million | 500 | € 50 million | 50 | |||
| Term Loan A | US\$ 2,500 million | 1,813 | US\$2,500 million | 1,813 | |||
| Total | 2,748 | 1,963 |
In addition, at March 31, 2014 and December 31, 2013, Fresenius Medical Care had letters of credit outstanding in the amount of US\$ 7 million and US\$ 9 million, respectively, which were not included above as part of the balance outstanding at those dates but which reduce available borrowings under the Revolving Credit Facility.
As of March 31, 2014, FMC-AG & Co. KGaA and its subsidiaries were in compliance with all covenants under the Fresenius Medical Care 2012 Credit Agreement.
On December 20, 2012, Fresenius SE & Co. KGaA and various subsidiaries entered into a delayed draw syndicated credit agreement (2013 Senior Credit Agreement) in the initial amount of US\$ 1,300 million and € 1,250 million. The 2013 Senior Credit Agreement was funded on June 28, 2013 and
replaced the 2008 Senior Credit Agreement. On August 7, 2013, the 2013 Senior Credit Agreement was extended by a term loan B facility in the amount of US\$ 500 million.
The 2013 Senior Credit Agreement allows for establishment of incremental facilities if certain conditions are met. In line with these provisions, the 2013 Senior Credit Agreement has been increased on November 27, 2013 by facilities in the initial amount of € 1,200 million, which consisted initially of an incremental term loan facility A of € 600 million, an incremental term loan facility B of € 300 million and an incremental revolving facility of € 300 million. These incremental facilities were drawn down on February 27, 2014 and were used to fund the acquisition of hospitals from Rhön-Klinikum AG.
The following tables show the available and outstanding amounts under the 2013 Senior Credit Agreement at March 31, 2014 and at December 31, 2013:
| March 31, 2014 | ||||||
|---|---|---|---|---|---|---|
| Maximum amount available | Balance outstanding | |||||
| € in millions | € in millions | |||||
| Revolving Credit Facilities (in €) | € 900 million | 900 | € 300 million | 300 | ||
| Revolving Credit Facilities (in US\$) | US\$ 300 million | 218 | US\$ 0 million | 0 | ||
| Term Loan A (in €) | € 1,212 million | 1,212 | € 1,212 million | 1,212 | ||
| Term Loan A (in US\$) | US\$ 960 million | 696 | US\$ 960 million | 696 | ||
| Term Loan B (in €) | € 299 million | 299 | € 299 million | 299 | ||
| Term Loan B (in US\$) | US\$ 498 million | 361 | US\$ 498 million | 361 | ||
| Total | 3,686 | 2,868 |
| December 31, 2013 | ||||
|---|---|---|---|---|
| Maximum amount available | Balance outstanding | |||
| € in millions | € in millions | |||
| Revolving Credit Facilities (in €) | € 600 million | 600 | € 0 million | 0 |
| Revolving Credit Facilities (in US\$) | US\$ 300 million | 218 | US\$ 0 million | 0 |
| Term Loan A (in €) | € 637 million | 637 | € 637 million | 637 |
| Term Loan A (in US\$) | US\$ 980 million | 710 | US\$ 980 million | 710 |
| Term Loan B (in US\$) | US\$ 499 million | 362 | US\$ 499 million | 362 |
| Total | 2,527 | 1,709 |
As of March 31, 2014, the Fresenius Group was in compliance with all covenants under the 2013 Senior Credit Agreement.
On October 15, 2013, Fresenius SE & Co. KGaA entered into a Bridge Financing Facility in the amount of € 1,800 million with a group of banks. The Bridge Financing Facility was guaranteed by Fresenius ProServe GmbH and Fresenius Kabi AG. The Bridge Financing Facility had been drawn in an amount of € 1,500 million on December 30, 2013. The proceeds were used for advances made in the amount of € 2,178 million under a fi duciary arrangement for the acquisition of hospitals and outpatient facilities of Rhön-Klinikum AG. The majority of the transaction was closed on February 27, 2014.
The Bridge Financing Facility initially had a one year tenor and had to be mandatorily reduced by the net proceeds of any capital markets transaction. In line with these provisions, the facility has been reduced by the net proceeds of the € 1,200 million Senior Notes issuances as well as the US\$ 300 million Senior Notes issuance that were made in January and February 2014. For more information, see note 13, Senior Notes. Due to the refi nancing, this portion of the Bridge Financing Facility in the amount of € 1,410 million is shown under longterm debt in the consolidated statement of fi nancial position at December 31, 2013. On February 27, 2014, the Bridge Financing Facility was voluntarily cancelled before maturity and the remaining outstanding amount of € 90 million was prepaid.
As of March 31, 2014 and December 31, 2013, Euro Notes (Schuldscheindarlehen) of the Fresenius Group consisted of the following:
| Book value / nominal value € in millions |
||||
|---|---|---|---|---|
| Maturity | Interest rate | March 31, 2014 | Dec. 31, 2013 | |
| Fresenius Finance B.V. 2008 / 2014 | April 2, 2014 | 5.98% | 112 | 112 |
| Fresenius Finance B.V. 2008 / 2014 | April 2, 2014 | variable | 88 | 88 |
| Fresenius Finance B.V. 2007 / 2014 | July 2, 2014 | 5.75% | 38 | 38 |
| Fresenius Finance B.V. 2007 / 2014 | July 2, 2014 | variable | 62 | 62 |
| Fresenius SE & Co. KGaA 2012 / 2016 | April 4, 2016 | 3.36% | 156 | 156 |
| Fresenius SE & Co. KGaA 2012 / 2016 | April 4, 2016 | variable | 129 | 129 |
| Fresenius SE & Co. KGaA 2013 / 2017 | Aug. 22, 2017 | 2.65% | 51 | 51 |
| Fresenius SE & Co. KGaA 2013 / 2017 | Aug. 22, 2017 | variable | 74 | 74 |
| Fresenius SE & Co. KGaA 2012 / 2018 | April 4, 2018 | 4.09% | 72 | 72 |
| Fresenius SE & Co. KGaA 2012 / 2018 | April 4, 2018 | variable | 43 | 43 |
| Fresenius Medical Care AG & Co. KGaA 2009 / 2014 | Oct. 27, 2014 | 8.38% | 11 | 11 |
| Fresenius Medical Care AG & Co. KGaA 2009 / 2014 | Oct. 27, 2014 | variable | 23 | 23 |
| Euro Notes | 859 | 859 |
All Euro Notes due in 2014 are shown as current portion of long-term debt and capital lease obligations in the consolidated statement of fi nancial position.
The Euro Notes issued by Fresenius Finance B.V. in the amount of € 200 million, which were due on April 2, 2014, were repaid as scheduled. Fresenius SE & Co. KGaA issued Euro Notes in the amount of € 334 million for the refi nancing of the € 200 million Euro Notes as well as for general corporate purposes on April 2, 2014. In addition, an agreement for the issuance of further Euro Notes in an amount of € 166 million was reached. These additional Euro Notes will be issued on July 2, 2014. The new Euro Notes are guaranteed by Fresenius Kabi AG and Fresenius ProServe GmbH.
As of March 31, 2014, the Fresenius Group was in compliance with all of its covenants under the Euro Notes.
The following table shows the amounts outstanding under the European Investment Bank (EIB) facilities as of March 31, 2014 and December 31, 2013:
| Book value € in millions |
||||
|---|---|---|---|---|
| Maturity | March 31, 2014 | Dec. 31, 2013 | ||
| Fresenius Medical Care AG & Co. KGaA | 2013 / 2014 | 0 | 140 | |
| HELIOS Kliniken GmbH | 2019 | 48 | 48 | |
| Loans from EIB | 48 | 188 |
The loans borrowed by FMC-AG & Co. KGaA, which were due on February 3 and 17, 2014, respectively, were repaid as scheduled.
As of March 31, 2014, the Fresenius Group was in compliance with the respective covenants.
In addition to the fi nancial liabilities described before, the Fresenius Group maintains additional credit facilities which have not been utilized, or have only been utilized in part, as of the reporting date. At March 31, 2014, the additional fi nancial cushion resulting from unutilized credit facilities was approximately € 2.3 billion.
As of March 31, 2014 and December 31, 2013, Senior Notes of the Fresenius Group consisted of the following:
| Book value € in millions |
|||||
|---|---|---|---|---|---|
| Notional amount | Maturity Feb. 1, 2019 |
Interest rate | March 31, 2014 | Dec. 31, 2013 | |
| Fresenius Finance B.V. 2014 / 2019 | € 300 million | 2.375% | 299 | 0 | |
| Fresenius Finance B.V. 2012 / 2019 | € 500 million | Apr. 15, 2019 | 4.25% | 500 | 500 |
| Fresenius Finance B.V. 2013 / 2020 | € 500 million | July 15, 2020 | 2.875% | 500 | 500 |
| Fresenius Finance B.V. 2014 / 2021 | € 450 million | Feb. 1, 2021 | 3.00% | 444 | 0 |
| Fresenius Finance B.V. 2014 / 2024 | € 450 million | Feb. 1, 2024 | 4.00% | 453 | 0 |
| Fresenius US Finance II, Inc. 2009 / 2015 | € 275 million | July 15, 2015 | 8.75% | 271 | 270 |
| Fresenius US Finance II, Inc. 2009 / 2015 | US\$ 500 million | July 15, 2015 | 9.00% | 358 | 357 |
| Fresenius US Finance II, Inc. 2014 / 2021 | US\$ 300 million | Feb. 1, 2021 | 4.25% | 216 | 0 |
| FMC Finance VI S.A. 2010 / 2016 | € 250 million | July 15, 2016 | 5.50% | 249 | 249 |
| FMC Finance VII S.A. 2011 / 2021 | € 300 million | Feb. 15, 2021 | 5.25% | 295 | 295 |
| FMC Finance VIII S.A. 2011 / 2016 | € 100 million | Oct. 15, 2016 | variable | 100 | 100 |
| FMC Finance VIII S.A. 2011 / 2018 | € 400 million | Sept. 15, 2018 | 6.50% | 396 | 396 |
| FMC Finance VIII S.A. 2012 / 2019 | € 250 million | July 31, 2019 | 5.25% | 243 | 243 |
| Fresenius Medical Care US Finance, Inc. 2007 / 2017 | US\$ 500 million | July 15, 2017 | 6.875% | 361 | 360 |
| Fresenius Medical Care US Finance, Inc. 2011 / 2021 | US\$ 650 million | Feb. 15, 2021 | 5.75% | 468 | 468 |
| Fresenius Medical Care US Finance II, Inc. 2011 / 2018 | US\$ 400 million | Sept. 15, 2018 | 6.50% | 288 | 287 |
| Fresenius Medical Care US Finance II, Inc. 2012 / 2019 | US\$ 800 million | July 31, 2019 | 5.625% | 580 | 580 |
| Fresenius Medical Care US Finance II, Inc. 2012 / 2022 | US\$ 700 million | Jan. 31, 2022 | 5.875% | 508 | 508 |
| Senior Notes | 6,529 | 5,113 |
On January 23, 2014, Fresenius Finance B.V. issued unsecured Senior Notes of € 750 million. The € 300 million tranche due 2019 has a coupon of 2.375% and was issued at a price of 99.647%. The € 450 million tranche which has a coupon of 3.00% was issued at a price of 98.751% and is due in 2021.
Moreover, Fresenius Finance B.V. placed € 300 million of unsecured Senior Notes with a maturity of 10 years on January 28, 2014. The Senior Notes have a coupon of 4.00% and were placed at par. On February 6, 2014, these Senior Notes were increased by an amount of € 150 million at a price of 102%. The Senior Notes in the nominal amount of € 450 million were issued on February 11, 2014.
Furthermore, on February 14, 2014, Fresenius US Finance II, Inc. issued US\$ 300 million of unsecured Senior Notes with a maturity of seven years. The Senior Notes have a coupon of 4.25% and were issued at par.
Net proceeds of the Senior Notes issued in January and February 2014 were used to partially refi nance the drawing under the Bridge Financing Facility. On February 27, 2014, the Bridge Financing Facility was voluntarily cancelled before maturity and the remaining outstanding amount of € 90 million was repaid.
As of March 31, 2014, the Fresenius Group was in compliance with all of its covenants.
On March 18, 2014, the Fresenius Group placed € 500 million equity-neutral convertible bonds due 2019. The bonds were issued at par. The coupon was fi xed at 0%, the initial conversion price has been determined at € 149.3786. This represents a 35% premium over the reference share price of € 110.65081. The reference share price has been determined as the arithmetic average of Fresenius' daily volume-weighted average XETRA share prices over a period of 10 consecutive XETRA trading days, starting on March 19, 2014. Net proceeds were used to partially fund the acquisition of hospitals and outpatient facilities of Rhön-Klinikum AG.
The fair value of the derivative embedded in the convertible bonds was € 46 million at March 31, 2014. Fresenius SE & Co. KGaA has purchased stock options (call options) to secure against future fair value fl uctuations of this derivative. The stock options also had an aggregate fair value of € 46 million at March 31, 2014.
The conversion will be cash-settled. Any increase of Fresenius' share price above the conversion price would be offset by a corresponding value increase of the call options.
The derivative embedded in the convertible bonds and the stock options are recognized in other non-current liabilities / assets in the consolidated statement of fi nancial position.
At March 31, 2014, the pension liability of the Fresenius Group was € 723 million. The current portion of the pension liability of € 15 million is recognized in the consolidated statement of fi nancial position within short-term accrued expenses and other short-term liabilities. The non-current portion of € 708 million is recorded as pension liability.
Contributions to Fresenius Group's pension fund were € 25 million in the fi rst quarter of 2014. The Fresenius Group expects approximately € 38 million contributions to the pension fund during 2014.
Defi ned benefi t pension plans' net periodic benefi t costs of € 18 million (Q1 2013: € 19 million) were comprised of the following components:
| € in millions | Q1 / 2014 | Q1 / 2013 |
|---|---|---|
| Service cost | 8 | 7 |
| Interest cost | 10 | 10 |
| Expected return on plan assets | - 4 | - 4 |
| Amortization of unrealized | ||
| actuarial losses, net | 4 | 6 |
| Amortization of prior service costs | – | – |
| Amortization of transition obligations | – | – |
| Settlement loss | – | – |
| Net periodic benefi t cost | 18 | 19 |
Noncontrolling interest subject to put provisions changed as follows:
| € in millions | Q1 / 2014 |
|---|---|
| Noncontrolling interest subject to put provisions as of January 1, 2014 |
472 |
| Noncontrolling interest subject to put provisions in profi t |
19 |
| Dividend payments | - 21 |
| Currency effects, fi rst-time consolidations and other changes |
- 10 |
| Noncontrolling interest subject to put provisions as of March 31, 2014 |
460 |
As of March 31, 2014 and December 31, 2013, put options with an aggregate purchase obligation of € 182 million and € 200 million, respectively, were exercisable. No put options were exercised in the fi rst quarter of 2014 and 2013.
As of March 31, 2014 and December 31, 2013, noncontrolling interest not subject to put provisions in the Fresenius Group was as follows:
| € in millions | March 31, 2014 | Dec. 31, 2013 |
|---|---|---|
| Noncontrolling interest not subject to put provisions in Fresenius Medical Care AG & Co. KGaA |
4,696 | 4,599 |
| Noncontrolling interest not subject to put provisions in VAMED AG |
38 | 38 |
| Noncontrolling interest not subject to put provisions in the business segments |
||
| Fresenius Medical Care | 186 | 182 |
| Fresenius Kabi | 126 | 126 |
| Fresenius Helios | 132 | 117 |
| Fresenius Vamed | 4 | 3 |
| Total noncontrolling interest not subject to put provisions |
5,182 | 5,065 |
Noncontrolling interest not subject to put provisions changed as follows:
| € in millions | Q1 / 2014 |
|---|---|
| Noncontrolling interest not subject to put provisions as of January 1, 2014 |
5,065 |
| Noncontrolling interest not subject to put provisions in profi t |
125 |
| Purchase of noncontrolling interest not subject to put provisions |
11 |
| Stock options | 6 |
| Dividend payments | - 7 |
| Currency effects, fi rst-time consolidations and other changes |
- 18 |
| Noncontrolling interest not subject to put provisions as of March 31, 2014 |
5,182 |
During the fi rst quarter of 2014, 129,250 stock options were exercised. Consequently, as of March 31, 2014, the subscribed capital of Fresenius SE & Co. KGaA consisted of 179,824,079 bearer ordinary shares. The shares are issued as non-par value shares. The proportionate amount of the subscribed capital is € 1.00 per share.
Corresponding to the stock option plans, the Conditional Capital of Fresenius SE & Co. KGaA is divided into Conditional Capital I, Conditional Capital II, Conditional Capital III and Conditional Capital IV. These are used to satisfy the subscription rights in connection with previously issued stock options or convertible bonds, as the case may be, for bearer ordinary shares under the stock option plans of 2003, 2008 and 2013 (see note 24, Stock options).
The following table shows the development of the Conditional Capital:
| in € | Ordinary shares |
|---|---|
| Conditional Capital I Fresenius AG Stock Option Plan 2003 | 2,111,517 |
| Conditional Capital II Fresenius SE Stock Option Plan 2008 | 4,262,602 |
| Conditional Capital III, approved on May 11, 2012 | 16,323,734 |
| Conditional Capital IV Fresenius SE & Co. KGaA Stock Option Plan 2013 | 8,400,000 |
| Total Conditional Capital as of January 1, 2014 | 31,097,853 |
| Fresenius AG Stock Option Plan 2003 – options exercised | - 44,598 |
| Fresenius SE Stock Option Plan 2008 – options exercised | - 84,652 |
| Total Conditional Capital as of March 31, 2014 | 30,968,603 |
Under the German Stock Corporation Act (AktG), the amount of dividends available for distribution to shareholders is based upon the unconsolidated retained earnings of Fresenius SE & Co. KGaA as reported in its statement of fi nancial position determined in accordance with the German Commercial Code (HGB).
In May 2014, the general partner and the Supervisory Board of Fresenius SE & Co. KGaA propose a dividend of € 1.25 per bearer ordinary share to the Annual General Meeting, i. e. a total dividend payment of € 224.6 million.
Other comprehensive income (loss) comprises all amounts recognized directly in equity (net of tax) resulting from the currency translation of foreign subsidiaries' fi nancial statements and the effects of measuring fi nancial instruments at their fair value as well as the change in benefi t obligation.
Changes in accumulated other comprehensive income (loss) net of tax by component were as follows:
| € in millions | Cash fl ow hedges |
Change of fair value of available for sale fi nancial assets |
Foreign currency translation |
Actuarial gains / losses on defi ned benefi t pension plans |
Total, before non controlling interest |
Non controlling interest |
Total, after non controlling interest |
|---|---|---|---|---|---|---|---|
| Balance as of December 31, 2012 | - 122 | - 17 | 168 | - 157 | - 128 | 13 | - 115 |
| Other comprehensive income (loss) before reclassifi cations | 3 | 9 | 73 | - 3 | 82 | 142 | 224 |
| Amounts reclassifi ed from accumulated | |||||||
| other comprehensive income (loss) | 1 | 0 | – | 2 | 3 | 4 | 7 |
| Other comprehensive income (loss), net | 4 | 9 | 73 | - 1 | 85 | 146 | 231 |
| Balance as of March 31, 2013 | - 118 | - 8 | 241 | - 158 | - 43 | 159 | 116 |
| Balance as of December 31, 2013 | - 107 | 17 | - 99 | - 162 | - 351 | - 255 | - 606 |
| Other comprehensive income (loss) before reclassifi cations | - 3 | 10 | - 34 | - 1 | - 28 | - 29 | - 57 |
| Amounts reclassifi ed from accumulated | |||||||
| other comprehensive income (loss) | 4 | 0 | – | 2 | 6 | 4 | 10 |
| Other comprehensive income (loss), net | 1 | 10 | - 34 | 1 | - 22 | - 25 | - 47 |
| Balance as of March 31, 2014 | - 106 | 27 | - 133 | - 161 | - 373 | - 280 | - 653 |
Reclassifi cations out of accumulated other comprehensive income (loss) were as follows:
| Amount of gain or loss reclassifi ed from accumulated other comprehensive (income) loss |
||||
|---|---|---|---|---|
| € in millions | Q1 / 2014 | Q1 / 2013 | Affected line item in the consolidated statement of income |
|
| Details about accumulated other comprehensive (income) loss components | ||||
| Cash fl ow hedges | ||||
| Interest rate contracts | 8 | 6 | Interest income / expense | |
| Foreign exchange contracts | 1 | - 1 | Cost of sales | |
| Foreign exchange contracts | – | – | Selling, general and administrative expenses |
|
| Foreign exchange contracts | 0 | – | Interest income / expense | |
| Other comprehensive income (loss) | 9 | 5 | ||
| Tax expense or benefi t | - 2 | - 2 | ||
| Other comprehensive income (loss), net | 7 | 3 | ||
| Amortization of defi ned benefi t pension items | ||||
| Prior service costs | – | – | 1 | |
| Transition obligations | – | – | 1 | |
| Actuarial gains / losses on defined benefit pension plans | 4 | 6 | 1 | |
| Other comprehensive income (loss) | 4 | 6 | ||
| Tax expense or benefi t | - 1 | - 2 | ||
| Other comprehensive income (loss), net | 3 | 4 | ||
| Total reclassifi cations for the period | 10 | 7 |
Net periodic benefi t cost is allocated as personnel expense within cost of sales or selling,
general and administrative expenses as well as research and development expenses.
The Fresenius Group is routinely involved in numerous claims, lawsuits, regulatory and tax audits, investigations and other legal matters arising, for the most part, in the ordinary course of its business of providing health care services and products. Legal matters that the Fresenius Group currently deems to be material are described below. For the matters described below in which the Fresenius Group believes a loss is both reasonably possible and estimable, an estimate of the loss or range of loss exposure is provided. For the other matters described below, the Fresenius Group believes that the loss probability is remote and / or the loss or range of possible losses cannot be reasonably estimated at this time. The outcome of litigation and other legal matters is always diffi cult to predict accurately and outcomes that are not consistent with Fresenius Group's view of the merits can occur. The Fresenius Group believes that it has valid defenses to the legal matters pending against it and is defending itself vigorously. Nevertheless, it is possible that the resolution of one or more of the legal matters currently pending or threatened could have a material adverse effect on its business, results of operations and fi nancial condition.
Further information regarding legal disputes, court proceedings and investigations can be found in detail in the consolidated fi nancial statements in the 2013 Annual Report. In the following, only the changes during the fi rst quarter ended March 31, 2014 compared to the information provided in the consolidated fi nancial statements are described. These changes should be read in conjunction with the overall information in the consolidated fi nancial statements in the 2013 Annual Report; defi ned terms or abbreviations having the same meaning as in the 2013 Annual Report.
On February 3, 2014, the Court of Appeals dismissed the last of the appeals of the District Court order confi rming the plan of reorganization, and the Grace Bankruptcy Plan went effective on that date. Pursuant to the terms of the Settlement Agreement and the Grace Bankruptcy Plan, all actions asserting fraudulent conveyance and other claims raised on behalf of asbestos claimants were dismissed with prejudice and Fresenius Medical Care received protection against existing and potential future W.R. Grace & Co. related claims, including fraudulent conveyance and asbestos claims by operation of injunctions and releases and Fresenius Medical Care also received indemnifi cation against income tax claims related to the non-NMC members of the W.R. Grace & Co. consolidated tax group. Also, pursuant to the Settlement Agreement on February 3, 2014, Fresenius Medical Care paid a total of US\$ 115 million, which had previously been accrued and is included on Fresenius Group's consolidated statement of fi nancial position, to the asbestos personal injury and property damage trusts created under the Grace Bankruptcy Plan. No admission of liability was made.
On March 5, 2014, Baxter petitioned the United States Supreme Court to review the decisions of the Federal Circuit.
In addition, similar cases have been fi led in state courts outside Massachusetts, in some of which the judicial authorities have established consolidated proceedings for their disposition.
Fresenius Medical Care has recorded a non-material accrual for an identifi ed matter. Given the current status of the internal review, Fresenius Medical Care cannot reasonably estimate the range of possible loss that may result from additional identifi ed matters or from the fi nal outcome of the continuing internal review.
The Fresenius Group regularly analyzes current information including, as applicable, Fresenius Group's defenses and insurance coverage and, as necessary, provides accruals for probable liabilities for the eventual disposition of these matters.
The Fresenius Group, like other health care providers, conducts its operations under intense government regulation and scrutiny. It must comply with regulations which relate to or govern the safety and effi cacy of medical products and supplies, the marketing and distribution of such products, the operation of manufacturing facilities, laboratories and dialysis clinics, and environmental and occupational health and safety. With respect to its development, manufacture, marketing and distribution of medical products, if such compliance is not maintained, the Fresenius Group could be subject to signifi cant adverse regulatory actions by the U.S. Food and Drug Administration (FDA) and comparable regulatory authorities outside the U.S. These regulatory actions could include warning letters or other enforcement notices from the FDA and / or comparable foreign regulatory authority, which may require the Fresenius Group to expend signifi cant time and resources in order to implement appropriate corrective actions. If the Fresenius Group does not address matters raised in warning letters or other enforcement notices to the satisfaction of the FDA and / or comparable regulatory authorities outside the U.S., these regulatory authorities could take additional actions, including product recalls, injunctions against the distribution of products or operation of manufacturing plants, civil penalties, seizures of Fresenius Group's
products, and / or criminal prosecution. FMCH is currently engaged in remediation efforts with respect to three pending FDA warning letters. The Fresenius Group must also comply with the laws of the United States, including the federal Anti-Kickback Statute, the federal False Claims Act, the federal Stark Law and the federal Foreign Corrupt Practices Act as well as other federal and state fraud and abuse laws. Applicable laws or regulations may be amended, or enforcement agencies or courts may make interpretations that differ from Fresenius Group's interpretations or the manner in which it conducts its business. Enforcement has become a high priority for the federal government and some states. In addition, the provisions of the False Claims Act authorizing payment of a portion of any recovery to the party bringing the suit encourage private plaintiffs to commence "qui tam" or "whistle blower" actions. In May 2009, the scope of the False Claims Act was expanded and additional protections for whistle blowers and procedural provisions to aid whistle blowers' ability to proceed in a False Claims Act case were added. By virtue of this regulatory environment, Fresenius Group's business activities and practices are subject to extensive review by regulatory authorities and private parties, and continuing audits, subpoenas, other inquiries, claims and litigation relating to Fresenius Group's compliance with applicable laws and regulations. The Fresenius Group may not always be aware that an inquiry or action has begun, particularly in the case of "whistle blower" actions, which are initially fi led under court seal.
The following table presents the carrying amounts and fair values as well as the fair value hierarchy levels of Fresenius Group's fi nancial instruments as of March 31, 2014 and December 31, 2013, classifi ed into classes:
| March 31, 2014 | Dec. 31, 2013 | ||||
|---|---|---|---|---|---|
| € in millions | Fair value hierarchy level |
Carrying amount |
Fair value | Carrying amount |
Fair value |
| Cash and cash equivalents | 1 | 829 | 829 | 864 | 864 |
| Assets recognized at carrying amount | 3 | 3,872 | 3,885 | 3,622 | 3,629 |
| Assets recognized at fair value | 1 | 285 | 285 | 197 | 197 |
| Liabilities recognized at carrying amount | 2 | 14,582 | 15,160 | 13,691 | 14,225 |
| Liabilities recognized at fair value | 2 | 62 | 62 | 16 | 16 |
| Noncontrolling interest subject to put provisions recognized at fair value |
3 | 460 | 460 | 472 | 472 |
| Derivatives for hedging purposes | 2 | 50 | 50 | 10 | 10 |
The signifi cant methods and assumptions used to estimate the fair values of fi nancial instruments as well as classifi cation of fair value measurements according to the three-tier fair value hierarchy are as follows:
Cash and cash equivalents are stated at nominal value, which equals the fair value.
The nominal value of short-term fi nancial instruments such as accounts receivable and payable and short-term debt represents its carrying amount, which is a reasonable estimate of the fair value due to the relatively short period to maturity for these instruments.
The fair values of major long-term fi nancial instruments are calculated on the basis of market information. Financial instruments for which market quotes are available are measured with the market quotes at the reporting date. The fair values of the other long-term fi nancial liabilities are calculated at the present value of respective future cash fl ows. To determine these present values, the prevailing interest rates and credit spreads for the Fresenius Group as of the date of the statement of fi nancial position are used.
The class assets recognized at carrying amount consists of trade accounts receivable and a loan which Fresenius Medical Care granted to a middle-market dialysis provider. The fair value of the loan is based on signifi cant unobservable inputs of comparable instruments and thus the class is classifi ed as fair value hierarchy Level 3.
The class assets recognized at fair value is comprised of European government bonds, shares and shares in funds. The fair values of these assets are calculated on the basis of market information. Therefore, this class is classifi ed as Level 1.
The class liabilities recognized at carrying amount is classifi ed as hierarchy Level 2.
The derivative embedded in the convertible bonds is included in the class liabilities recognized at fair value. The fair value of this derivative is derived from market quotes. The class was classifi ed as Level 2.
The valuation of the class noncontrolling interest subject to put provisions recognized at fair value is determined using signifi cant unobservable inputs. It is therefore classifi ed as Level 3.
Derivatives, mainly consisting of interest rate swaps and foreign exchange forward contracts, are valued as follows: The fair value of interest rate swaps is calculated by discounting the future cash fl ows on the basis of the market interest rates applicable for the remaining term of the contract as of the date of the statement of fi nancial position. To determine the fair value of foreign exchange forward contracts, the contracted forward rate is compared to the current forward rate for the remaining term of the contract as of the date of the statement of fi nancial position. The result is then discounted on the basis of the market interest rates prevailing at the date of the statement of fi nancial position for the respective currency.
Fresenius Group's own credit risk is incorporated in the fair value estimation of derivatives that are liabilities. Counterparty credit risk adjustments are factored into the valuation of derivatives that are assets. The Fresenius Group monitors
and analyses the credit risk from derivative fi nancial instruments on a regular basis. For the valuation of derivative fi nancial instruments, the credit risk is considered in the fair value of every individual instrument. The basis for the default probability are Credit Default Swap Spreads of each counterparty appropriate for the duration. The calculation of the credit risk considered in the valuation is done by multiplying the default probability appropriate for the duration with the expected discounted cash fl ows of the derivative fi nancial instrument.
In the class derivatives for hedging purposes, stock options are included to secure the convertible bonds. The fair values of these stock options are derived from market quotes. For the fair value measurement of the class deriv atives for hedging purposes, signifi cant other observable inputs are used. Therefore, the class is classifi ed as Level 2 in accordance with the defi ned fair value hierarchy levels.
Currently, there is no indication that a decrease in the value of Fresenius Group's fi nancing receivables is probable. Therefore, the allowances on credit losses of fi nancing receivables are immaterial.
| March 31, 2014 | Dec. 31, 2013 | ||||
|---|---|---|---|---|---|
| € in millions | Assets | Liabilities | Assets | Liabilities | |
| Interest rate contracts (current) | 0 | 2 | 0 | 4 | |
| Interest rate contracts (non-current) | 0 | 4 | 0 | 4 | |
| Foreign exchange contracts (current) | 11 | 5 | 15 | 5 | |
| Foreign exchange contracts (non-current) | – | – | 1 | – | |
| Derivatives designated as hedging instruments 1 | 11 | 11 | 16 | 13 | |
| Interest rate contracts (current) | 0 | 0 | 0 | – | |
| Interest rate contracts (non-current) | 0 | 1 | 0 | 1 | |
| Foreign exchange contracts (current) 1 | 12 | 7 | 15 | 8 | |
| Foreign exchange contracts (non-current) 1 | – | 1 | 1 | 1 | |
| Derivative embedded in the convertible bonds | 0 | 46 | 0 | 0 | |
| Stock options to secure the convertible bonds 1 | 46 | 0 | 0 | 0 | |
| Derivatives not designated as hedging instruments | 58 | 55 | 16 | 10 |
Derivatives designated as hedging instruments, foreign exchange contracts not designated as hedging instruments and stock options to secure the convertible bonds are classifi ed as derivatives for hedging purposes.
Derivative fi nancial instruments are marked to market each reporting period, resulting in carrying amounts equal to fair values at the reporting date.
Derivatives not designated as hedging instruments, which are derivatives that do not qualify for hedge accounting, are also solely entered into to hedge economic business transactions and not for speculative purposes.
Derivatives for hedging purposes as well as the derivative embedded in the convertible bonds were recognized at gross value within other assets in an amount of € 69 million and other liabilities in an amount of € 65 million.
The current portion of interest rate contracts and foreign exchange contracts indicated as assets in the preceding table is recognized within other current assets in the consolidated statement of fi nancial position, while the current portion of those indicated as liabilities is included in short-term accrued expenses and other short-term liabilities. The non-current portions indicated as assets or liabilities are recognized in other non-current assets or in long-term accrued expenses and other long-term liabilities, respectively. The derivative embedded in the convertible bonds and the stock options to secure the convertible bonds are recognized in other non-current liabilities / assets in the consolidated statement of fi nancial position.
| Q1 / 2014 | ||||
|---|---|---|---|---|
| € in millions | Gain or loss recognized in other comprehensive income (loss) (effective portion) |
Gain or loss reclassifi ed from accumulated other comprehensive income (loss) (effective portion) |
Gain or loss recognized in the consolidated statement of income |
|
| Interest rate contracts | 1 | 8 | 1 | |
| Foreign exchange contracts | - 6 | 1 | – | |
| Derivatives in cash fl ow hedging relationships 1 | - 5 | 9 | 1 | |
| Foreign exchange contracts | – | |||
| Derivatives in fair value hedging relationships | – | |||
| Derivatives designated as hedging instruments | - 5 | 9 | 1 |
| Q1 / 2013 | ||||
|---|---|---|---|---|
| € in millions | Gain or loss recognized in other comprehensive income (loss) (effective portion) |
Gain or loss reclassifi ed from accumulated other comprehensive income (loss) (effective portion) |
Gain or loss recognized in the consolidated statement of income |
|
| Interest rate contracts | 8 | 6 | 1 | |
| Foreign exchange contracts | - 1 | - 1 | – | |
| Derivatives in cash fl ow hedging relationships 1 | 7 | 5 | 1 | |
| Foreign exchange contracts | - 8 | |||
| Derivatives in fair value hedging relationships | - 8 | |||
| Derivatives designated as hedging instruments | 7 | 5 | - 7 |
The amount of gain or loss recognized in the consolidated statement
of income solely relates to the ineffective portion.
| Gain or loss recognized in the consolidated statement of income |
||
|---|---|---|
| € in millions | Q1 / 2014 | Q1 / 2013 |
| Interest rate contracts | – | 2 |
| Foreign exchange contracts | 6 | 31 |
| Derivatives not designated as hedging instruments | 6 | 33 |
Gains from derivatives in fair value hedging relationships and from foreign exchange contracts not designated as hedging instruments recognized in the consolidated statement of income are faced by losses from the underlying transactions in the corresponding amount.
The Fresenius Group expects to recognize a net amount of € 183 thousand of the existing losses for foreign exchange contracts deferred in accumulated other comprehensive income (loss) in the consolidated statement of income within the next 12 months. For interest rate contracts, the Fresenius Group expects to recognize € 31 million of losses in the course of normal business during the next 12 months in interest expense.
Gains and losses from foreign exchange contracts and the corresponding underlying transactions are accounted for as cost of sales, selling, general and administrative expenses and net interest. Gains and losses resulting from interest rate contracts are recognized as net interest in the consolidated statement of income.
In the fi rst quarter of 2014, gains of € 10 million (Q1 2013: € 9 million) for available for sale fi nancial assets were recognized in other comprehensive income (loss).
The Fresenius Group is exposed to effects related to foreign exchange fl uctuations in connection with its international business activities that are denominated in various currencies. In order to fi nance its business operations, the Fresenius Group issues senior notes and commercial papers and enters into mainly long-term credit agreements and euro notes (Schuld scheindarlehen) with banks. Due to these fi nancing activities, the Fresenius Group is exposed to interest risk caused by changes in variable interest rates and the risk of changes in the fair value of statement of fi nancial position items bearing fi xed interest rates.
In order to manage the risk of interest rate and foreign exchange rate fl uctuations, the Fresenius Group enters into certain hedging transactions with highly rated fi nancial institutions as authorized by the Management Board. Derivative fi nancial instruments are not entered into for trading purposes.
The Fresenius Group defi nes benchmarks for individual exposures in order to quantify interest and foreign exchange risks. The benchmarks are derived from achievable and sustainable market rates. Depending on the individual benchmarks, hedging strategies are determined and generally implemented by means of micro hedges.
Securities, which are predominantly held as European government bonds, shares and shares in funds, are generally subject to the risk of changing stock exchange prices. Therefore, the stock exchange prices of these securities are continuously monitored to identify possible price risks on time.
To reduce the credit risk arising from derivatives, the Fresenius Group concluded master netting agreements with banks. Through such agreements, positive and negative fair values of the derivative contracts could be offset against one another if a partner becomes insolvent. This offsetting is valid for transactions where the aggregate amount of obligations owed to and receivable from are not equal. If insolvency occurs, the party which owes the larger amount is obliged to pay the other party the difference between the amounts owed in the form of one net payment.
Fresenius elects not to offset the fair values of derivative fi nancial instruments subject to master netting agreements in the consolidated statement of fi nancial position.
At March 31, 2014 and December 31, 2013, the Fresenius Group had € 22 million and € 29 million of derivative fi nancial assets subject to netting arrangements and € 19 million and € 22 million of derivative fi nancial liabilities subject to netting arrangements. Offsetting these derivative fi nancial instruments would have resulted in net assets of € 15 million and € 22 million as well as net liabilities of € 12 million and € 15 million at March 31, 2014 and December 31, 2013, respectively.
Solely for the purpose of hedging existing and foreseeable foreign exchange transaction exposures, the Fresenius Group enters into foreign exchange forward contracts and, on a small scale, foreign exchange options. To ensure that no foreign exchange risks result from loans in foreign currencies, the Fresenius Group enters into foreign exchange swap contracts.
As of March 31, 2014, the notional amounts of foreign exchange contracts totaled € 1,592 million. These foreign exchange contracts have been entered into to hedge risks from operational business and in connection with loans in foreign currency. The predominant part of the foreign exchange forward contracts to hedge risks from operational business was recognized as cash fl ow hedge, while foreign exchange contracts in connection with loans in foreign currencies are partly recognized as fair value hedges. The fair value of cash fl ow hedges was € 6 million. As of March 31, 2014, no fair value hedges were recognized in the Fresenius Group.
As of March 31, 2014, the Fresenius Group was party to foreign exchange contracts with a maximum maturity of 20 months.
The Fresenius Group enters into interest rate swaps and, on a small scale, into interest rate options in order to protect against the risk of rising interest rates. These interest rate derivatives are mainly designated as cash fl ow hedges and have been entered into in order to convert payments based on variable interest rates into payments at a fi xed interest rate.
As of March 31, 2014, the interest rate swaps had a notional volume of US\$ 600 million (€ 435 million) and € 263 million as well as fair values of - US\$ 3 million and - € 5 million, respectively, which expire between 2014 and 2022.
In addition, the Fresenius Group also enters into interest rate hedges (pre-hedges) in anticipation of future debt issuance to effectively convert the variable interest rate related to the future debt to a fi xed interest rate. These pre-hedges are settled at the issuance date of the corresponding debt with the settlement amount recorded in accumulated other comprehensive income (loss) amortized to interest expense over the life of the pre-hedges. At March 31, 2014 and December 31, 2013, the Fresenius Group had € 107 million and € 113 million, respectively, related to such settlements of pre-hedges deferred in accumulated other comprehensive income (loss), net of tax.
Price risks arise from changing stock prices of available for sale fi nancial assets. Gains and losses arising from available for sale fi nancial assets are recognized directly in the consolidated statement of equity until the asset is disposed of or if it is considered to be impaired. A decline of 10% in prices of the recognized assets would have an effect of less than 0.4% on Fresenius SE & Co. KGaA shareholders' equity.
The Fresenius Group has a solid fi nancial profi le. As of March 31, 2014, the equity ratio was 39.7% and the debt ratio (debt / total assets) was 40.2%. As of March 31, 2014, the net debt / EBITDA ratio (pro forma, before special items) was 3.2.
The aims of the capital management and further information can be found in the consolidated fi nancial statements in the 2013 Annual Report.
Fresenius is covered by the rating agencies Moody's, Standard & Poor's and Fitch.
The following table shows the company rating of Fresenius SE & Co. KGaA:
| Standard & Poor's | Moody's | Fitch | |
|---|---|---|---|
| Company rating | BB + | Ba1 | BB + |
| Outlook | positive | negative | positive |
In March 2014, Fitch confi rmed the BB+ rating with a positive outlook. Fitch had put the rating on "watch evolving" in September 2013 after the announcement of the acquisition of hospitals from Rhön-Klinikum AG. The rating confi rmation refl ects Fresenius Group's performance in 2013 as well as the completion of the Rhön hospital acquisition.
| € in millions | Q1 / 2014 | Q1 / 2013 |
|---|---|---|
| Interest paid | 197 | 239 |
| Income taxes paid | 94 | 91 |
Cash paid for acquisitions (without investments in licenses) consisted of the following:
| € in millions | Q1 / 2014 | Q1 / 2013 |
|---|---|---|
| Assets acquired | 1,244 | 89 |
| Liabilities assumed | - 362 | - 15 |
| Noncontrolling interest | - 14 | - 8 |
| Notes assumed in connection with acquisitions |
- 11 | - 8 |
| Cash paid | 857 | 58 |
| Cash acquired | - 69 | - 3 |
| Cash paid for acquisitions, net | 788 | 55 |
| Cash paid for investments, net of cash acquired |
82 | 17 |
| Cash paid for intangible assets, net | 2 | – |
| Total cash paid for acquisitions and investments, net of cash acquired, and net purchases of intangible assets |
872 | 72 |
The consolidated segment reporting shown on page 22 of this interim report is an integral part of the notes.
The Fresenius Group has identifi ed the business segments Fresenius Medical Care, Fresenius Kabi, Fresenius Helios and Fresenius Vamed, which corresponds to the internal organi za tional and reporting structures (Management Approach) at March 31, 2014.
The business segments were identifi ed in accordance with FASB ASC Topic 280, Segment Reporting, which defi nes the segment reporting requirements in the annual fi nancial statements and interim reports with regard to the operating business, product and service businesses and regions. The business segments of the Fresenius Group are as follows:
Fresenius Medical Care is the world's leading provider of services and products for patients with chronic kidney failure. As of March 31, 2014, Fresenius Medical Care was treating 270,570 patients in 3,263 dialysis clinics.
Fresenius Kabi offers infusion therapies, intravenously administered generic drugs and clinical nutrition for seriously and chronically ill patients in the hospital and outpatient environments. The company is also a leading supplier of medi cal devices and transfusion technology products.
Fresenius Helios is Germany's largest hospital operator. At March 31, 2014, Fresenius Helios owned 109 hospitals, thereof 85 acute care clinics including 6 maximum care hospitals in Berlin-Buch, Duisburg, Erfurt, Krefeld, Schwerin and Wuppertal and 24 post-acute care clinics. Fresenius Helios treats more than 4.2 million patients per year, thereof more than 1.2 million inpatients, and operates more than 33,000 beds.
Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide.
The segment Corporate / Other is mainly comprised of the holding functions of Fresenius SE & Co. KGaA as well as Fresenius Netcare GmbH, which provides services in the fi eld of information technology and, until June 28, 2013, Fresenius Biotech, which did not fulfi ll the characteristics of a reportable segment. In addition, the segment Corporate / Other includes inter segment consolidation adjustments as well as special items (see note 3, Special items).
Explanations regarding the notes on the business segments can be found in the consolidated fi nancial statements in the 2013 Annual Report.
| € in millions | Q1 / 2014 | Q1 / 2013 |
|---|---|---|
| Total EBIT of reporting segments | 646 | 703 |
| General corporate expenses Corporate / Other (EBIT) |
18 | - 14 |
| Group EBIT | 664 | 689 |
| Net interest | - 138 | - 163 |
| Income before income taxes | 526 | 526 |
| € in millions | March 31, 2014 | Dec. 31, 2013 |
|---|---|---|
| Short-term debt | 297 | 959 |
| Short-term loans from related parties | 4 | 6 |
| Current portion of long-term debt and capital lease obligations |
1,053 | 855 |
| Long-term debt and capital lease obligations, less current portion |
5,432 | 5,871 |
| Senior Notes | 6,529 | 5,113 |
| Convertible bonds | 454 | 0 |
| Debt | 13,769 | 12,804 |
| less cash and cash equivalents | 829 | 864 |
| Net debt | 12,940 | 11,940 |
As of March 31, 2014, Fresenius SE & Co. KGaA had three stock option plans in place: the Fresenius AG Stock Option Plan 2003 (2003 Plan) which is based on convertible bonds, the stock option based Fresenius SE Stock Option Plan 2008 (2008 Plan) and the Fresenius SE & Co. KGaA Long Term Incentive Program 2013 (2013 LTIP) which is based on stock options and phantom stocks. The 2013 LTIP is the only program under which options can be granted.
During the fi rst quarter of 2014, Fresenius SE & Co. KGaA received cash of € 6 million from the exercise of 129,250 stock options.
495,724 convertible bonds were outstanding and exercisable under the 2003 Plan at March 31, 2014. The members of the Fresenius Management SE Management Board held 111,698 convertible bonds. At March 31, 2014, out of 3,115,296 outstanding stock options issued under the 2008 Plan, 925,986 were exercisable and 603,460 were held by the members of the Fresenius Management SE Management Board. 702,231 stock options issued under the 2013 LTIP were outstanding at March 31, 2014. The members of the Fresenius Management SE Management Board held 105,000 stock options. 109,460 phantom stocks issued under the 2013 LTIP were outstanding at March 31, 2014. The members of the Fresenius Management SE Management Board held 27,272 phantom stocks.
As of March 31, 2014, 1,421,710 options for ordinary shares were outstanding and exercisable. On March 31, 2014, total unrecognized compensation cost related to non-vested options granted under the 2008 Plan and the 2013 LTIP was € 26 million. This cost is expected to be recognized over a weightedaverage period of 2.4 years.
During the fi rst quarter of 2014, 115,395 stock options were exercised. Fresenius Medical Care AG & Co. KGaA received cash of € 3.8 million upon exercise of these stock options and € 0.4 million from a related tax benefi t.
Prof. Dr. med. D. Michael Albrecht, a member of the Supervisory Board of Fresenius SE & Co. KGaA, is medical director and spokesman of the management board of the University Hospital Carl Gustav Carus Dresden and a member of the supervisory board of the University Hospital Aachen. Furthermore, he was a member of the supervisory board of the University Hospital Magdeburg until October 3, 2013 and a member of the supervisory board of the University Hospital Rostock until February 28, 2013. The Fresenius Group maintains business relations with these hospitals in the ordinary course and under customary conditions.
Prof. Dr. h. c. Roland Berger, a member of the Supervisory Board of Fresenius Management SE and of Fresenius SE & Co. KGaA, is a partner of Roland Berger Strategy Consultants Holding GmbH. In the fi rst quarter of 2014, after discussion and approval by the Supervisory Board of Fresenius Management SE and Fresenius SE & Co. KGaA, the Fresenius Group paid € 1.8 million to affi liated companies of the Roland Berger group for consulting serv ices rendered.
Klaus-Peter Müller, a member of the Supervisory Board of Fresenius Management SE and of Fresenius SE & Co. KGaA, is the chairman of the supervisory board of Commerzbank AG. The Fresenius Group maintains business relations with Commerzbank under customary conditions.
Dr. Gerhard Rupprecht, a member of the Supervisory Board of Fresenius Management SE and of Fresenius SE & Co. KGaA, is a member of the supervisory board of Allianz France SA. In the fi rst quarter of 2014, the Fresenius Group paid € 2.9 million for insurance premiums to the Allianz group under customary conditions.
Dr. Dieter Schenk, deputy chairman of the Supervisory Board of Fresenius Management SE, is a partner in the international law fi rm Noerr LLP, which provides legal serv ices to the Fresenius Group. In the fi rst quarter of 2014, after discussion and approval of each mandate by the Supervisory Board of Fresenius Management SE, the Fresenius Group paid € 0.3 million to this law fi rm for legal services rendered.
The payments mentioned in this note are net amounts. In addition, VAT and insurance tax were paid.
There have been no signifi cant changes in the Fresenius Group's operating environment following the end of the fi rst quarter of 2014. No other events of material importance on the assets and liabilities, fi nancial position, and results of operations of the Group have occurred following the end of the fi rst quarter of 2014.
For each consolidated stock exchange listed entity, the declaration pursuant to Section 161 of the German Stock Corporation Act (Aktiengesetz) has been issued and made available to shareholders on the website of Fresenius SE & Co. KGaA www.fresenius.com under Who we are – Corporate Governance – Declaration of Conformity and of Fresenius Medical Care AG & Co. KGaA www.fmc-ag.com under Investor Relations – Cor porate Governance – Declaration of Compliance, respectively.
| Annual General Meeting, Frankfurt am Main | |
|---|---|
| Live webcast of the speech of the Chairman of the Management Board |
May 16, 2014 |
| Payment of dividend 1 | May 19, 2014 |
| Report on 1st half 2014 Conference call, Live webcast |
July 31, 2014 |
| Report on 1st – 3rd quarter 2014 Conference call, Live webcast |
November 4, 2014 |
Subject to prior approval by the annual General Meeting Subject to change
| Ordinary share | ADR | ||
|---|---|---|---|
| Securities identifi cation no. | 578 560 | CUSIP | 35804M105 |
| Ticker symbol | FRE | Ticker symbol | FSNUY |
| ISIN | DE0005785604 | ISIN | US35804M1053 |
| Bloomberg symbol | FRE GR | Structure | Sponsored Level 1 ADR |
| Reuters symbol | FREG.de | Ratio | 8 ADR = 1 Share |
| Main trading location | Frankfurt / Xetra | Trading platform | OTCQX |
Else-Kröner-Straße 1 Bad Homburg v. d. H. Germany
Fresenius SE & Co. KGaA 61346 Bad Homburg v. d. H. Germany
Investor Relations Telephone: ++ 49 61 72 6 08-24 64 Telefax: ++ 49 61 72 6 08-24 88 E-mail: [email protected]
Corporate Communications Telefon: ++ 49 61 72 6 08-23 02 Telefax: ++ 49 61 72 6 08-22 94 E-mail: [email protected]
Commercial Register: Bad Homburg v. d. H.; HRB 11852 Chairman of the Supervisory Board: Dr. Gerd Krick
General Partner: Fresenius Management SE Registered Offi ce and Commercial Register: Bad Homburg v. d. H.; HRB 11673 Management Board: Dr. Ulf M. Schneider (President and CEO), Dr. Francesco De Meo, Dr. Jürgen Götz, Mats Henriksson, Rice Powell, Stephan Sturm, Dr. Ernst Wastler Chairman of the Supervisory Board: Dr. Gerd Krick
Forward-looking statements:
This Quarterly Financial Report contains forward-looking statements. These statements represent assessments which we have made on the basis of the information available to us at the time. Should the assumptions on which the statements are based on not occur, or if risks should arise – as mentioned in the risk report in the 2013 Annual Report and the SEC fi lings of Fresenius Medical Care AG & Co. KGaA – the actual results could differ materially from the results currently expected.
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