Quarterly Report • May 11, 2011
Quarterly Report
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applying United States Generally Accepted Accounting Principles (U.S. GAAP)
1st Quarter 2011
45 Financial calendar
Fresenius is a health care group providing products and services for dialysis, hospitals and the medical care of patients at home. In addition, Fresenius focuses on hospital operation, as well as on engineering and services for hospitals and other health care facilities. In 2010, group sales were approximately €16.0 billion. On March 31, 2011, more than 140,000 employees have dedicated themselves to the service of health in about 100 countries worldwide.
| € in millions | Q1 / 2011 | Q1 / 2010 | Change |
|---|---|---|---|
| Sales | 3,962 | 3,643 | 9% |
| EBIT | 575 | 501 | 15% |
| Net income 1 | 170 | 119 | 43% |
| Earnings per ordinary share in € 1 | 1.05 | 0.74 | 41% |
| Operating cash fl ow | 278 | 438 | - 37% |
| € in millions | March 31, 2011 | Dec. 31, 2010 | Change |
|---|---|---|---|
| Total assets | 23,572 | 23,577 | 0% |
| Non-current assets | 16,764 | 17,142 | - 2% |
| Equity 2 | 8,788 | 8,844 | - 1% |
| Net debt | 7,929 | 8,015 | - 1% |
| Investments 3 | 447 | 205 | 118% |
| € in millions | Q1 / 2011 | Q1 / 2010 |
|---|---|---|
| EBITDA margin | 18.6% | 17.8% |
| EBIT margin | 14.5% | 13.8% |
| Depreciation and amortization in % of sales | 4.1 | 4.1 |
| Operating cash flow in % of sales | 7.0 | 12.0 |
| Equity ratio (March 31 / December 31) |
37.3% | 37.5% |
| Net debt / EBITDA (March 31 / December 31) |
2.5 | 2.6 |
Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) relating to the acquisition of APP Pharmaceuticals. Both are non-cash items.
Equity including noncontrolling interest
Investments in property, plant and equipment and intangible assets, acquisitions (Q1)
| US\$ in millions | Q1 / 2011 | Q1 / 2010 | Change |
|---|---|---|---|
| Sales | 3,036 | 2,882 | 5% |
| EBIT | 445 | 425 | 5% |
| Net income 1 | 221 | 211 | 5% |
| Operating cash fl ow | 175 | 349 | - 50% |
| Capital expenditure / acquisitions | 463 | 200 | 132% |
| R & D expenses | 26 | 23 | 13% |
| Employees, per capita on balance sheet date (March 31 / December 31) | 78,985 | 77,442 | 2% |
Medical devices / Transfusion technology
| € in millions | Q1 / 2011 | Q1 / 2010 | Change |
|---|---|---|---|
| Sales | 960 | 800 | 20% |
| EBIT | 197 | 145 | 36% |
| Net income 2 | 87 | 46 | 89% |
| Operating cash fl ow | 67 | 74 | - 9% |
| Capital expenditure / acquisitions | 32 | 34 | - 6% |
| R & D expenses | 38 | 33 | 15% |
| Employees, per capita on balance sheet date (March 31 / December 31) | 23,369 | 22,851 | 2% |
| € in millions | Q1 / 2011 | Q1 / 2010 | Change |
|---|---|---|---|
| Sales | 648 | 608 | 7% |
| EBIT | 58 | 52 | 12% |
| Net income 3 | 33 | 28 | 18% |
| Operating cash fl ow | 68 | 36 | 89% |
| Capital expenditure / acquisitions | 21 | 23 | - 9% |
| Employees, per capita on balance sheet date (March 31 / December 31) | 33,783 | 33,321 | 1% |
FRESENIUS VAMED – Engineering and services for hospitals and other health care facilities
| € in millions | Q1 / 2011 | Q1 / 2010 | Change |
|---|---|---|---|
| Sales | 140 | 156 | - 10% |
| EBIT | 5 | 7 | - 29% |
| Net income 4 | 4 | 6 | - 33% |
| Operating cash fl ow | 26 | 89 | - 71% |
| Capital expenditure / acquisitions | 1 | 1 | 0% |
| Order intake | 127 | 260 | - 51% |
| Employees, per capita on balance sheet date (March 31 / December 31) | 3,157 | 3,110 | 2% |
Net income attributable to Fresenius Medical Care AG & Co. KGaA
Net income attributable to Fresenius Kabi AG Net income attributable to HELIOS Kliniken GmbH
Net income attributable to VAMED AG
In the first quarter of 2011, the change of legal form from Fresenius SE into an SE & Co. KGaA in combination with the conversion of all preference shares into ordinary shares took effect. The ordinary shares of Fresenius SE & Co. KGaA commenced trading at the stock markets on January 31, 2011.
The Fresenius shares had a reluctant start into 2011 compared to the DAX. After the successful change of legal form in combination with the share conversion on January 28, 2011, an upwind considerably supported the Fresenius ordinary share price. But the positive development at the capital markets was impacted by the catastrophe in Japan in March 2011 .
The Fresenius share increased by 6% to €65.27 as of March 31, 2011, compared with the year-end quotation of 2010. In the same period, the DAX only grew by 2%.
In the fi rst quarter of 2011, the Fresenius shares also improved the average daily trading volume by 12% compared to the average daily trading volume of fi scal year 2010.
| Q1 / 2011 | 2010 | Change | |
|---|---|---|---|
| Number of shares (March 31 / December 31) | 162,450,090 | 162,450,090 1 | |
| Quarter-end quotation in € | 65.27 | 62.75 | 4% |
| High in € | 67.09 | 67.59 | - 1% |
| Low in € | 59.90 | 41.80 | 43% |
| Ø Trading volume (number of shares per trading day) | 482,111 | 431,460 2 | 12% |
| Market capitalization, € in millions (March 31 / December 31) | 10,603 | 10,301 3 | 3% |
Number of shares of the legal predecessor Fresenius SE, equally divided into 81,225,045 preference shares and 81,225,045 ordinary shares Based on the average XETRA trading volume of both the ordinary and preference shares of the legal predecessor Fresenius SE in 2010 Based on the XETRA closing prices of both the ordinary and preference shares of the legal predecessor Fresenius SE as of Dec. 31, 2010
After record results in 2010, we are pleased to report strong sales and earnings growth for the first quarter of 2011. All of our business segments had an excellent start. We have seen particularly strong growth at Fresenius Kabi in North America, where we continue to benefi t from successful product launches and supply constraints in the injectable drugs market. Based on Fresenius Kabi's prospects, Fresenius Medical Care's successful implementation of the ESRD prospective payment system in the United States and Fresenius Helios' strong earnings development, we raise our Group's sales and earnings guidance for 2011.
| Q1 / 2011 | at actual rates |
in constant currency |
|
|---|---|---|---|
| Sales | €4.0 bn | + 9% | + 7% |
| EBIT | €575 m | + 15% | + 13% |
| Net income 1 | €170 m | + 43% | + 39% |
The health care sector is one of the world's largest industries. It is relatively in-sensitive to economic fl uctuations compared to other sectors and has posted above-average growth over the past years.
The main growth factors are: the rising medical needs, stronger demand for innovative products and therapies, advances in medical technology as well as growing health consciousness, which increases the demand for health care services and facilities.
In the emerging countries additional drivers are: expanding availability and correspondingly greater demand for primary health care and the increasing national incomes and hence higher spending on health care.
At the same time, the cost of health care is rising and claiming an ever-increasing share of national income.
Health care structures are being reviewed and possible cost-cutting potential identifi ed in order to contain the steadily rising health care expenditures. Market-based elements are being introduced increasingly in the health care system to create incentives for cost and quality-conscious behaviour. Overall treatment cost shall be reduced through improved quality standards and optimized medical processes.
In addition, ever greater importance is being placed on disease prevention and innovative reimbursement models linked to treatment quality standards.
Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) relating to the acquisition of APP Pharmaceuticals. Both are non-cash items.
Group sales increased by 9% (7% in constant currency) to €3,962 million (Q1 2010: €3,643 million). Organic sales growth was 6%. Acquisitions contributed a further 1%. Currency translation had a positive effect of 2%.
Organic sales growth was 5% in North America and 2% in Europe. Prior year sales in Europe were positively influenced by Fresenius Vamed's large medical supply contract to the Ukraine. Organic sales growth reached 13% in Latin America, 18% in Asia-Pacific and 28% in Africa.
Group EBITDA increased by 13% (12% in constant currency) to €737 million (Q1 2010: €650 million). Group EBIT increased by 15% (13% in constant currency) to €575 million (Q1 2010: €501 million). The EBIT margin increased to 14.5% (Q1 2010:
Group net interest improved to -€135 million (Q1 2010:
The other financial result was -€62 million and includes valuation changes of the fair redemption value of the Mandatory Exchangeable Bonds (MEB) of -€67 million and the Contingent Value Rights (CVR) of €5 million. Both are non-cash items. The CVR were delisted in March 2011. The MEB will come to maturity in August 2011.
The Group tax rate 1 was 30.7% (Q1 2010: 33.2%). The prior year was impacted by non-tax deductible charges related to the devaluation of the Venezuelan Bolivar.
Noncontrolling interest increased to €135 million (Q1 2010: €120 million), of which 93% was attributable to the noncontrolling interest in Fresenius Medical Care.
| € in millions | Q1/2011 | Q1/2010 |
|---|---|---|
| EBIT | 575 | 501 |
| Net income 2 | 170 | 119 |
| Net income 3 | 128 | 88 |
| Earnings per ordinary share in €2 | 1.05 | 0.74 |
| Earnings per ordinary share in €3 | 0.79 | 0.54 |
Group net income 2 increased by 43% (39% in constant currency) to €170 million (Q1 2010: €119 million). Earnings per ordinary share increased by 41% to €1.05.
| € in millions | Q1/2011 | Q1/2010 | Change at actual rates |
Currency translations effects |
Change at constant rates |
Organic growth |
Acquisitions/ Divestitures |
% of total sales |
|---|---|---|---|---|---|---|---|---|
| North America | 1,676 | 1,579 | 6% | 1% | 5% | 5% | 0% | 42% |
| Europe | 1,640 | 1,560 | 5% | 0% | 5% | 2% | 3% | 42% |
| Asia-Pacific | 362 | 271 | 34% | 7% | 27% | 18% | 9% | 9% |
| Latin America | 208 | 175 | 19% | 5% | 14% | 13% | 1% | 5% |
| Africa | 76 | 58 | 31% | 5% | 26% | 28% | -2% | 2% |
| Total | 3,962 | 3,643 | 9% | 2% | 7% | 6% | 1% | 100% |
| € in millions | Q1/2011 | Q1/2010 | Change at actual rates |
Currency translations effects |
Change at constant rates |
Organic Growth |
Acquisitions/ Divestitures |
% of total sales |
|---|---|---|---|---|---|---|---|---|
| Fresenius Medical Care | 2,220 | 2,084 | 7% | 2% | 5% | 3% | 2% | 56% |
| Fresenius Kabi | 960 | 800 | 20% | 3% | 17% | 16% | 1% | 24% |
| Fresenius Helios | 648 | 608 | 7% | 0% | 7% | 5% | 2% | 16% |
| Fresenius Vamed | 140 | 156 | -10% | 0% | -10% | -10% | 0% | 4% |
Adjusted for the effect of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) related to the acquisition of APP Pharmaceuticals
2 Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds
(MEB) and the Contingent Value Rights (CVR) relating to the acquisition of APP Pharmaceuticals. Both are non-cash items.
3 Net income attributable to Fresenius SE & Co. KGaA
-€143 million).
EARNINGS
13.8%).
The Group's U.S. GAAP fi nancial results as of March 31, 2011 and as of March 31, 2010 include the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) related to the acquisition of APP Pharmaceuticals. Those special items are recognized in the fi nancial result of the "Corporate / Other" segment. Adjusted earnings represent the Group's business operations in the reporting period.
The table reconciles adjusted net income to net income according to U.S. GAAP in the fi rst quarter:
| € in millions | Q1 / 2011 | Q1 / 2010 |
|---|---|---|
| Earnings 1 | 170 | 119 |
| Other fi nancial result: | ||
| Mandatory Exchangeable Bonds (MEB) (mark-to-market) |
-47 | - 49 |
| Contingent Value Rights (CVR) (mark-to-market) |
5 | 18 |
| Earnings according to U.S. GAAP 2 | 128 | 88 |
Both the Mandatory Exchangeable Bonds and the Contingent Value Rights are viewed as liabilities and therefore recognized with their fair redemption value. Valuation changes will lead to gains or expenses on a quarterly basis until maturity of the instruments. This will only have an effect on 2011 results.
The CVR were delisted in March 2011. The MEB come to maturity in August 2011.
Group net income 2 (including special items) reached €128 million or €0.79 per ordinary share.
The Fresenius Group spent €136 million on property, plant and equipment (Q1 2010: €124 million). Acquisition spending was €311 million (Q1 2010: €81 million), mainly due to acquisitions at Fresenius Medical Care.
Operating cash fl ow was €278 million (Q1 2010: €438 million). Strong earnings growth was more than offset by increased DSOs (days sales outstanding), primarily related to the introduction of the new Medicare end-stage renal disease prospective payment system in the U.S. dialysis service business, and raised inventory levels. The cash fl ow margin was 7.0% (Q1 2010: 12.0%). Net capital expenditure increased to €147 million (Q1 2010: €130 million). Free cash fl ow before acquisitions and dividends was €131 million (Q1 2010: €308 million). Free cash fl ow after acquisitions and dividends was -€133 million (Q1 2010: €218 million).
The Group's total assets were €23,572 million (Dec. 31, 2010: €23,577 million). In constant currency, the increase
| € in millions | Q1 / 2011 | Q1 / 2010 | thereof property, plant and equipment |
thereof acquisitions |
Change | % of total |
|---|---|---|---|---|---|---|
| Fresenius Medical Care | 339 | 145 | 86 | 253 | 134% | 76% |
| Fresenius Kabi | 32 | 34 | 31 | 1 | - 6% | 7% |
| Fresenius Helios | 21 | 23 | 17 | 4 | - 9% | 5% |
| Fresenius Vamed | 1 | 1 | 1 | 0 | 0% | 0% |
| Corporate / Other | 54 | 2 | 1 | 53 | -- | 12% |
| Total | 447 | 205 | 136 | 311 | 118% | 100% |
(MEB) and the Contingent Value Rights (CVR) relating to the acquisition of APP Pharmaceuticals. Both are non-cash items.
Net income attributable to Fresenius SE & Co. KGaA
Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds
was 4%. Current assets increased by 6% (9% in constant currency) to €6,808 million (Dec. 31, 2010: €6,435 million). Non-current assets were €16,764 million (Dec. 31, 20010: €17,142 million). In constant currency, the increase was 2%.
Total shareholders' equity decreased by 1% to €8,788 million (Dec. 31, 2010: €8,844 million). In constant currency, the increase was 4%. The equity ratio was 37.3% (Dec. 31, 2010: 37.5%).
Group debt remained almost unchanged (4% growth in constant currency) at €8,823 million (Dec. 31, 2010: €8,784 million). Net debt decreased by 1% to €7,929 million (Dec. 31, 2010: €8,015 million). In constant currency, net debt increased by 3%.
The net debt / EBITDA ratio improved to 2.52 as of March 31, 2011 (Dec. 31, 2010: 2.62).
With the change of legal form of Fresenius SE into an SE & Co. KGaA, the SE-Works Council was replaced by a European Works Council. The employee representatives in the
Supervisory Board of Fresenius SE & Co. KGaA were elected in the constitutive meeting of the European Works Council on May 5, 2011. These are now as follows:
The shareholder representatives in the Supervisory Board of Fresenius SE & Co. KGaA had been previously elected at the 2010 Annual General Meeting.
| € in millions | Q1 / 2011 | Q1 / 2010 | Change |
|---|---|---|---|
| Net income | 263 | 208 | 26% |
| Depreciation and amortization | 162 | 149 | 9% |
| Change in accruals for pensions | 7 | 6 | 17% |
| Cash fl ow | 432 | 363 | 19% |
| Change in working capital | -196 | 44 | -- |
| Changes in mark-to-market evaluation of the MEB and the CVR | 42 | 31 | 35% |
| Operating cash fl ow | 278 | 438 | - 37% |
| Property, plant and equipment | -150 | - 135 | - 11% |
| Proceeds from the sale of property, plant and equipment | 3 | 5 | - 40% |
| Cash fl ow before acquisitions and dividends | 131 | 308 | - 57% |
| Cash used for acquisitions / proceeds from disposals | -249 | - 66 | -- |
| Dividends | -15 | - 24 | - 38% |
| Free cash fl ow after acquisitions and dividends | -133 | 218 | - 161% |
| Cash provided by / used for fi nancing activities | 276 | 187 | -- |
| Effect of exchange rates on change in cash and cash equivalents | -18 | 16 | -- |
| Net change in cash and cash equivalents | 125 | 47 | 166% |
Fresenius Medical Care is the world's leading provider of services and products for patients with chronic kidney failure. As of March 31, 2011, Fresenius Medical Care was treating 216,942 patients in 2,769 dialysis clinics.
| US\$ in millions | Q1 / 2011 | Q1 / 2010 | Change |
|---|---|---|---|
| Sales | 3,036 | 2,882 | 5% |
| EBITDA | 581 | 550 | 6% |
| EBIT | 445 | 425 | 5% |
| Net income 1 | 221 | 211 | 5% |
| Employees | 78,985 | 77,442 (Dec 31, 2010) | 2% |
Fresenius Medical Care achieved sales growth of 5% to US\$3,036 million (Q1 2010: US\$2,882 million). Organic growth was 3%, acquisitions contributed a further 2%.
Sales in dialysis service increased by 5% to US\$2,285 million (Q1 2010: US\$2,171 million). Dialysis product sales grew by 6% to US\$751 million (Q1 2010: US\$711 million).
In North America, sales increased by 1% to US\$1,977 million (Q1 2010: US\$1,960 million). Dialysis services sales increased by 1% to US\$1,782 million. Average sales per treatment for U.S. clinics decreased to US\$348 in the fi rst quarter of 2011 compared to US\$355 for the corresponding quarter in 2010 as a result of the implementation of the new Medicare end-stage renal disease prospective payment system. Dialysis product sales were US\$195 million (Q1 2010: US\$200 million).
Sales outside North America ("International" segment) grew by 14% to US\$1,055 million (Q1 2010: US\$922 million). Sales in dialysis services increased by 23% to US\$503 million. Dialysis product sales increased by 8% to US\$552 million, mainly driven by higher sales of peritoneal dialysis products, dialyzers, bloodlines and products for acute care treatments.
EBIT increased by 5% to US\$445 million (Q1 2010: US\$425 million) resulting in an EBIT margin of 14.7% (Q1 2010: 14.8%).
In North America, the EBIT margin increased to 15.8% (Q1 2010: 15.7%). The favorable development of pharmaceutical costs, was largely offset by the effects of the implementation of the new Medicare end-stage renal disease prospective payment system in the U.S.
In the International segment, the EBIT margin was 16.2% (Q1 2010: 16.4%).
Net income 1 increased by 5% to US\$221 million (Q1 2010: US\$211 million).
On March 8, 2011, Fresenius Medical Care announced the acquisition of all assets of Hema Metrics LLC related to its Crit-Line® system. Based on its strong dialysis product business and sales organization, Fresenius Medical Care intends to establish this technology as the standard of care for fl uid and anemia management in the North American market.
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 also is a leading provider of medical devices and transfusion technology products.
| € in millions | Q1 / 2011 | Q1 / 2010 | Change |
|---|---|---|---|
| Sales | 960 | 800 | 20% |
| EBITDA | 234 | 180 | 30% |
| EBIT | 197 | 145 | 36% |
| Net income 1 | 87 | 46 | 89% |
| Employees | 23,369 | 22,851 (Dec 31, 2010) | 2% |
Fresenius Kabi had a very successful start into 2011. Strong sales and earnings growth was mainly driven by continued high demand in North America. Product launches as well as continued supply constraints in the injectable drug market which had expanded in March 2010 had a positive effect. Moreover, Fresenius Kabi achieved excellent organic sales growth of 10% outside of North America.
Sales increased by 20% to €960 million (Q1 2010: €800 million). Organic growth was excellent and increased by 16%. Acquisitions contributed 1%. Currency translation had a positive effect of 3%, mainly attributable to the strength of the currencies in China, Brazil and Australia against the Euro.
In Europe, sales grew by 10% to €449 million (Q1 2010: €409 million), driven by strong organic growth of 8%. In North America, sales increased by 42% to €254 million (Q1 2010: €179 million). Organic sales growth was an exceptional 39%. In Asia-Pacifi c, Fresenius Kabi achieved sales growth of 22% to €156 million (Q1 2010: €128 million), driven by organic sales growth of 16%. Sales in Latin America and Africa increased by 20% to €101 million (Q1 2010: €84 million) with organic sales growth contributing 13%.
EBIT grew by 36% to €197 million (Q1 2010: €145 million). The EBIT margin improved signifi cantly to 20.5% (Q1 2010: 18.1%), driven by the strong development in North America.
Net interest improved to -€68 million (Q1 2010: -€74 million).
Net income 1 increased by 89% to €87 million (Q1 2010: €46 million).
Fresenius Kabi's operating cash fl ow was €67 million (Q1 2010: €74 million). The cash fl ow margin was 7.0% (Q1 2010: 9.3%). Cash fl ow before acquisitions and dividends was €22 million (Q1 2010: €42 million).
Special items relating to the acquisition of APP Pharmaceuticals are included in the segment "Corporate / Other".
Fresenius Helios is one of the largest private hospital operators in Germany. The HELIOS Kliniken Group owns 63 hospitals, including fi ve maximum care hospitals in Berlin-Buch, Erfurt, Krefeld, Schwerin and Wuppertal. HELIOS treats more than 2 million patients per year, thereof ~600,000 inpatients, and operates a total of more than 18,500 beds.
| € in millions | Q1 / 2011 | Q1 / 2010 | Change |
|---|---|---|---|
| Sales | 648 | 608 | 7% |
| EBITDA | 79 | 72 | 10% |
| EBIT | 58 | 52 | 12% |
| Net income 1 | 33 | 28 | 18% |
| Employees | 33,783 | 33,321 (Dec 31, 2010) | 1% |
Sales increased by 7% to €648 million (Q1 2010: €608 million). Organic sales growth was 5%, mainly driven by an increase in hospital admissions. Acquisitions contributed 2% to overall sales growth, due to the consolidation of St. Marienberg hospital in Helmstedt / Lower Saxony with 267 beds.
EBIT grew by 12% to €58 million (Q1 2010: €52 million). The EBIT margin improved to 9.0% (Q1 2010: 8.6%).
The established clinics increased sales by 5% to €639 million. EBIT improved by 12% to €58 million. The EBIT margin was at 9.1%.
Net income 1 increased by 18% to €33 million (Q1 2010: €28 million).
In the fi rst quarter of 2011, Fresenius Helios announced the acquisition of the municipal hospital in Rottweil, southwestern Germany. The 264-bed acute care clinic has approximately 600 employees and generated sales of approximately €31 million in 2009. The acquisition has been already approved by the German anti-trust authorities. Helios expects to close the transaction in the third quarter of 2011.
Fresenius Vamed offers engineering and services for hospitals and other health care facilities.
| € in millions | Q1 / 2011 | Q1 / 2010 | Change |
|---|---|---|---|
| Sales | 140 | 156 | - 10% |
| EBITDA | 7 | 9 | - 22% |
| EBIT | 5 | 7 | - 29% |
| Net income 1 | 4 | 6 | - 33% |
| Employees | 3,157 | 3,110 (Dec 31, 2010) | 2% |
Fresenius Vamed's sales reached € 140 million (Q1 2010: € 156 million). Sales in the project business were € 84 million (Q1 2010: € 102 million). Prior year sales included a substantial medical supply contract with the Ukraine. Sales in the service business increased by 4% to € 56 million (Q1 2010: € 54 million).
Fresenius Vamed achieved an EBIT of € 5 million (Q1 2010: € 7 million). The EBIT margin was 3.6%. Net income 1 was € 4 million (Q1 2010: € 6 million).
As of March 31, 2011, order backlog increased by 5% to a new all-time high of € 842 million (Dec. 31, 2010: € 801 million), driven by strong order intake of € 127 million (Q1 2010: € 260 million). Order intake includes a € 67 million project to build a private health care facility in the Ukraine and a € 29 million medical equipment contract for the National Cancer Institute in Malaysia.
As of March 31, 2011, Fresenius Group increased the number of its employees by 2% to 140,111 (Dec. 31, 2010: 137,552).
| Number of employees | Mar 31, 2011 | Dec 31, 2010 | Change |
|---|---|---|---|
| Fresenius Medical Care | 78,985 | 77,442 | 2% |
| Fresenius Kabi | 23,369 | 22,851 | 2% |
| Fresenius Helios | 33,783 | 33,321 | 1% |
| Fresenius Vamed | 3,157 | 3,110 | 2% |
| Corporate / Other | 817 | 828 | - 1% |
| Total | 140,111 | 137,552 | 2% |
We place great importance on research and development at Fresenius, where we develop products and therapies for severely and chronically ill patients. High quality is crucial for providing patients with optimal care, improving their quality of life, and thus increasing their life expectancy. As an integral part of our corporate strategy, research and development also serves to secure the Company's economic growth and success.
| Total | 63 | 58 | 11% |
|---|---|---|---|
| Corporate / Other | 6 | 7 | - 14% |
| Fresenius Vamed | 0 | 0 | |
| Fresenius Helios | — | — | -- |
| Fresenius Kabi | 38 | 33 | 15% |
| Fresenius Medical Care | 19 | 17 | 12% |
| € in millions | Q1 / 2011 | Q1 / 2010 | Change |
Fresenius focuses its R & D efforts on its core competencies in the following areas:
The R & D activities of Fresenius Medical Care are aimed at translating new in-sights into novel or improved developments and bring them to market as quickly as possible, and thus make an important contribution toward rendering the treatment of patients increasingly comfortable, safe, and individualized. On this basis, we continue to expand our global leadership in the dialysis market.
In the fi rst quarter of 2011, Fresenius Medical Care expanded its activities in its key areas of strategic development.
Fresenius Kabi's R & D activities concentrate on products for the treatment and care of critically and chronically ill patients. We develop products that help to support medical advancements in acute and post-acute are and improve the patient's quality of life. At the same time, we want to make high-quality treatments available to patients worldwide.
Our R & D strategy is aligned with this focus:
A key focus of our R & D work is to expand global distribution of our product portfolio. We are constantly working on dossiers for the registration of our products for all the world's major markets.
Fresenius Biotech develops and commercializes innovative therapies with immunotherapeutic products. Two products are currently being marketed: fi rstly, ATG-Fresenius S in
transplantation medicine and, secondly, the trifunctional antibody Removab for the treatment of cancer patients with malignant ascites.
Fresenius Biotech sales increased by 16% to € 7.3 million in the fi rst quarter of 2011 (Q1 2010: € 6.3 million). The immunosuppressive agent ATG contributed € 6.5 million and the trifunctional antibody Removab (catumaxomab) € 0.8 million to sales.
In March 2011, Fresenius Biotech received Paul-Ehrlich-Institut approval to use a polyclonal antibody in stem cell transplantations. As a result, ATG-Fresenius S now can be used in the indication "prophylaxis of graft-versus-host disease (GVHD) for unrelated stem cell transplant donors in adults".
In addition, reimbursement negotiations for Removab in Italy were successfully concluded.
In the fi rst quarter of 2011, Fresenius Biotech's EBIT was - € 7 million (Q1 2010: - € 8 million).
Compared to the presentation in the 2010 annual report, there have been no material changes in Fresenius' overall opportunities and risk situation. 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 37 to 41 in the Notes of this report.
There were no signifi cant changes in the Group position or environment sector since the end of the fi rst quarter of 2011.
For 2011, Fresenius Group now expects sales growth of 7% to 8% and net income 1 growth of 12% to 16%, both in constant currency. Previously, the company expected sales growth of ≥ 7% and net income growth of 8% to 12%, both in constant currency.
The net debt / EBITDA ratio is expected to stay in the range of 2.5 to 3.0.
Based on the strong fi nancial results in the fi rst quarter of 2011 and the elimination of the "transition adjustment" imposed on dialysis facilities (as part of the new Medicare end-stage renal disease prospective payment system) in the U.S., the company raises its outlook for the full year 2011. Fresenius Medical Care now projects sales of more than US\$ 13 billion. Previously, the company expected sales between US\$12.8 billion and US\$ 13.0 billion. Net income 2 is now expected between US\$1,070 million and US\$1,090 million. Previously, Fresenius Medical Care expected net income between US\$ 1,035 million and US\$ 1,055 million.
Fresenius Kabi raises its outlook for 2011 and forecasts organic sales growth of > 5%. Previously, organic sales growth of approximately 5% was expected. Furthermore, Fresenius Kabi expects an EBIT margin of 19% to 20% with net income 3 surpassing 2010 earnings. Previously, an EBIT margin of > 19% was projected.
Net income attributable to Fresenius SE & Co. KGaA; adjusted for the effects of mark-to-market accounting of the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) related to the acquisition of APP Pharmaceuticals. Both are non-cash items. Net income attributable to Fresenius Medical Care AG & Co. KGaA
Net income attributable to Fresenius Kabi AG
Fresenius Helios fully confi rms its outlook for 2011. The company expects organic sales growth of 3% to 5%. EBIT is projected to increase to € 250 million to € 260 million; the company expects to achieve the upper half of this range.
Fresenius Vamed fully confi rms its 2011 outlook and expects to achieve both sales and EBIT growth between 5% and 10%.
For 2011, Fresenius Biotech expects an EBIT of about - € 30 million.
The Group plans to invest approximately 5% 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 expected expansion. We expect
that the percentage increase in the number of employees will be in the mid-single digits in 2011.
Our R & D activities will continue to play a key role in securing the Group's long-term growth through innovations and new therapies.
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 the improvement of treatment concepts. We are concentrating our R & D activities on products and therapies for the treatment of patients with chronic kidney failure. Another focus is infusion and nutrition therapies and the development of generic IV drugs. In Biotechnology research, we will be focusing on the further clinical development of the antibody Removab.
| Previous guidance | New guidance | |
|---|---|---|
| Sales, growth (in constant currency) | ≥ 7% | 7% – 8% |
| Net income 1 , growth (in constant currency) |
8% – 12% | 12% – 16% |
Net income attributable to Fresenius SE & Co. KGaA, adjusted for the effects of the mark-to-market accounting of the Mandatory Exchangeable Bonds and the Contingent Value Rights relating to the acquisition of APP Pharmaceuticals. Both are non-cash items.
| Previous guidance | New guidance | ||
|---|---|---|---|
| Fresenius Medical Care | Sales | US\$ 12.8 bn – US\$ 13.0 bn | > US\$ 13.0 bn |
| Net income 1 | US\$ 1,035 m – US\$ 1,055 m | US\$ 1,070 m −US\$ 1,090 m | |
| Fresenius Kabi | Sales, growth (organic) | ~ 5% | > 5% |
| EBIT-margin | > 19% | 19% – 20% | |
| Fresenius Helios | Sales, growth (organic) | 3% – 5% | confi rmed |
| EBIT | € 250 m – € 260 m | upper half of range | |
| Fresenius Vamed | Sales, growth | 5% – 10% | confi rmed |
| EBIT, growth | 5% – 10% | confi rmed | |
| Fresenius Biotech | EBIT | ~ - € 30 m | confi rmed |
Net income attributable to Fresenius Medical Care AG & Co. KGaA
| € in millions | Q1 / 2011 | Q1 / 2010 |
|---|---|---|
| Sales | 3,962 | 3,643 |
| Cost of sales | - 2,635 | - 2,470 |
| Gross profi t | 1,327 | 1,173 |
| Selling, general and administrative expenses | - 689 | - 615 |
| Research and development expenses | - 63 | - 57 |
| Operating income (EBIT) | 575 | 501 |
| Net interest | - 135 | - 143 |
| Other fi nancial result | - 62 | - 51 |
| Financial result | - 197 | - 194 |
| Income before income taxes | 378 | 307 |
| Income taxes | - 115 | - 99 |
| Net income | 263 | 208 |
| Less noncontrolling interest | 135 | 120 |
| Net income attributable to Fresenius SE & Co. KGaA | 128 | 88 |
| Earnings per ordinary share in € | 0.79 | 0.54 |
| Fully diluted earnings per ordinary share in € | 0.78 | 0.54 |
| Earnings per preference share in € | n/a | 0.54 |
| Fully diluted earnings per preference share in € | n/a | 0.54 |
| € in millions | Q1 / 2011 | Q1 / 2010 |
|---|---|---|
| Net income | 263 | 208 |
| Other comprehensive income (loss) | ||
| Foreign currency translation | - 353 | 341 |
| Cash flow hedges | 34 | - 35 |
| Actuarial gains / losses on defined benefit pension plans | 6 | - 2 |
| Income taxes related to components of other comprehensive income (loss) | - 6 | 4 |
| Other comprehensive income (loss) | - 319 | 308 |
| Total comprehensive income (loss) | - 56 | 516 |
| Comprehensive income (loss) attributable to noncontrolling interest subject to put provisions | - 5 | 15 |
| Comprehensive income (loss) attributable to noncontrolling interest not subject to put provisions | - 44 | 257 |
| Comprehensive income (loss) attributable to Fresenius SE & Co. KGaA | - 7 | 244 |
| € in millions | March 31, 2011 | Dec. 31, 2010 |
|---|---|---|
| Cash and cash equivalents | 894 | 769 |
| Trade accounts receivable, less allowance for doubtful accounts | 3,031 | 2,935 |
| Accounts receivable from and loans to related parties | 8 | 15 |
| Inventories | 1,489 | 1,411 |
| Other current assets | 1,010 | 925 |
| Deferred taxes | 376 | 380 |
| I. Total current assets | 6,808 | 6,435 |
| Property, plant and equipment | 3,850 | 3,954 |
| Goodwill | 11,052 | 11,464 |
| Other intangible assets | 935 | 984 |
| Other non-current assets | 806 | 628 |
| Deferred taxes | 121 | 112 |
| II. Total non-current assets | 16,764 | 17,142 |
| Total assets | 23,572 | 23,577 |
| Trade accounts payable | 624 | 691 |
| Short-term accounts payable to related parties | 1 | 2 |
| Short-term accrued expenses and other short-term liabilities | 2,867 | 2,731 |
| Short-term debt | 260 | 606 |
| Short-term loans from related parties | 2 | 2 |
| Current portion of long-term debt and capital lease obligations | 398 | 420 |
| Mandatory Exchangeable Bonds | 554 | 554 |
| Trust preferred securities of Fresenius Medical Care Capital Trusts | 458 | 468 |
| Short-term accruals for income taxes | 182 | 163 |
| Deferred taxes | 82 | 74 |
| A. Total short-term liabilities | 5,428 | 5,711 |
| Long-term debt and capital lease obligations, less current portion | 4,633 | 4,919 |
| Senior Notes | 3,072 | 2,369 |
| Long-term accrued expenses and other long-term liabilities | 397 | 458 |
| Pension liabilities | 386 | 383 |
| Long-term accruals for income taxes | 163 | 196 |
| Deferred taxes | 501 | 488 |
| B. Total long-term liabilities | 9,152 | 8,813 |
| I. Total liabilities | 14,580 | 14,524 |
| II. Noncontrolling interest subject to put provisions | 204 | 209 |
| A. Noncontrolling interest not subject to put provisions | 3,824 | 3,879 |
| Subscribed capital | 162 | 162 |
| Capital reserve | 2,091 | 2,085 |
| Other reserves | 2,811 | 2,683 |
| Accumulated other comprehensive income (loss) | - 100 | 35 |
| B. Total Fresenius SE & Co. KGaA shareholders' equity | 4,964 | 4,965 |
| III. Total shareholders' equity | 8,788 | 8,844 |
| Total liabilities and shareholders' equity | 23,572 | 23,577 |
| € in millions | Q1 / 2011 | Q1 / 2010 |
|---|---|---|
| Operating activities | ||
| Net income | 263 | 208 |
| Adjustments to reconcile net income to cash and cash equivalents provided by operating activities |
||
| Depreciation and amortization | 162 | 149 |
| Change in deferred taxes | 15 | - 11 |
| Gain on sale of fixed assets | - 2 | – |
| Changes in assets and liabilities, net of amounts from businesses acquired or disposed of |
||
| Trade accounts receivable, net | - 180 | - 55 |
| Inventories | - 118 | - 73 |
| Other current and non-current assets | 28 | 7 |
| Accounts receivable from / payable to related parties | 7 | 9 |
| Trade accounts payable, accrued expenses and other short-term and long-term liabilities |
110 | 177 |
| Accruals for income taxes | - 7 | 27 |
| Net cash provided by operating activities | 278 | 438 |
| Investing activities | ||
| Purchase of property, plant and equipment | - 150 | - 135 |
| Proceeds from sales of property, plant and equipment | 3 | 5 |
| Acquisitions and investments, net of cash acquired and net purchases of intangible assets |
- 253 | - 68 |
| Proceeds from divestitures | 4 | 2 |
| Net cash used in investing activities | - 396 | - 196 |
| Financing activities | ||
| Proceeds from short-term loans | 73 | 81 |
| Repayments of short-term loans | - 53 | - 27 |
| 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 | 120 | 127 |
| Repayments of long-term debt and capital lease obligations | - 252 | - 457 |
| Proceeds from the issuance of Senior Notes | 756 | 243 |
| Changes of accounts receivable securitization program | - 373 | - 155 |
| Proceeds from the exercise of stock options | 4 | 16 |
| Dividends paid | - 15 | - 24 |
| Change in noncontrolling interest | – | - 2 |
| Exchange rate effect due to corporate financing | 1 | - 13 |
| Net cash used in / provided by fi nancing activities | 261 | - 211 |
| Effect of exchange rate changes on cash and cash equivalents | - 18 | 16 |
| Net increase in cash and cash equivalents | 125 | 47 |
| Cash and cash equivalents at the beginning of the reporting period | 769 | 420 |
| Cash and cash equivalents at the end of the reporting period | 894 | 467 |
| Ordinary shares | Preference shares | Subscribed Capital | ||||
|---|---|---|---|---|---|---|
| Number of shares in thousand |
Amount € in thousands |
Number of shares in thousand |
Amount € in thousands |
Amount € in thousands |
Amount € in millions |
|
| As of December 31, 2009 | 80,658 | 80,658 | 80,658 | 80,658 | 161,316 | 161 |
| Proceeds from the exercise of stock options | ||||||
| Compensation expense related to stock options | ||||||
| Dividends paid | ||||||
| Purchase of noncontrolling interest not subject to put provisions |
||||||
| Change in fair value of noncontrolling interest subject to put provisions |
||||||
| Comprehensive income (loss) | ||||||
| Net income | ||||||
| Other comprehensive income (loss) | ||||||
| Cash flow hedges | ||||||
| Foreign currency translation | ||||||
| Adjustments relating to pension obligations |
||||||
| Comprehensive income (loss) | ||||||
| As of March 31, 2010 | 80,658 | 80,658 | 80,658 | 80,658 | 161,316 | 161 |
| As of December 31, 2010 | 81,225 | 81,225 | 81,225 | 81,225 | 162,450 | 162 |
| Conversion of the preference shares into ordinary shares | 81,225 | 81,225 | - 81,225 | - 81,225 | 0 | 0 |
| Proceeds from the exercise of stock options | ||||||
| Compensation expense related to stock options | ||||||
| Dividends paid | ||||||
| Sale of noncontrolling interest not subject to put provisions |
||||||
| Change in fair value of noncontrolling interest subject to put provisions |
||||||
| Comprehensive income (loss) | ||||||
| Net income | ||||||
| Other comprehensive income (loss) | ||||||
| Cash flow hedges | ||||||
| Foreign currency translation | ||||||
| Adjustments relating to pension obligations |
||||||
| Comprehensive income (loss) | ||||||
| As of March 31, 2011 | 162,450 | 162,450 | 0 | 0 | 162,450 | 162 |
| Reserves | ||||||
|---|---|---|---|---|---|---|
| Capital reserve € in millions |
Other reserves € in millions |
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, 2009 | 2,035 | 2,183 | - 145 | 4,234 | 3,257 | 7,491 |
| Proceeds from the exercise of stock options | 4 | 4 | 12 | 16 | ||
| Compensation expense related to stock options | 5 | 5 | 3 | 8 | ||
| Dividends paid | 0 | - 7 | - 7 | |||
| Purchase of noncontrolling interest not subject to put provisions |
0 | 3 | 3 | |||
| Change in fair value of noncontrolling interest subject to put provisions |
– | – | – | – | ||
| Comprehensive income (loss) | ||||||
| Net income | 88 | 88 | 116 | 204 | ||
| Other comprehensive income (loss) | ||||||
| Cash flow hedges | - 25 | - 25 | 0 | - 25 | ||
| Foreign currency translation | 182 | 182 | 141 | 323 | ||
| Adjustments relating to pension obligations |
- 1 | - 1 | 0 | - 1 | ||
| Comprehensive income (loss) | 88 | 156 | 244 | 257 | 501 | |
| As of March 31, 2010 | 2,044 | 2,271 | 11 | 4,487 | 3,525 | 8,012 |
| As of December 31, 2010 | 2,085 | 2,683 | 35 | 4,965 | 3,879 | 8,844 |
| Conversion of the preference shares into ordinary shares | 0 | 0 | 0 | |||
| Proceeds from the exercise of stock options | 2 | 2 | 2 | 4 | ||
| Compensation expense related to stock options | 5 | 5 | 3 | 8 | ||
| Dividends paid | 0 | - 9 | - 9 | |||
| Sale of noncontrolling interest not subject to put provisions |
0 | - 5 | - 5 | |||
| Change in fair value of noncontrolling interest subject to put provisions |
- 1 | - 1 | - 2 | - 3 | ||
| Comprehensive income (loss) | ||||||
| Net income | 128 | 128 | 128 | 256 | ||
| Other comprehensive income (loss) | ||||||
| Cash flow hedges | 23 | 23 | 0 | 23 | ||
| Foreign currency translation | - 162 | - 162 | - 172 | - 334 | ||
| Adjustments relating to pension obligations |
4 | 4 | 0 | 4 | ||
| Comprehensive income (loss) | 128 | - 135 | - 7 | - 44 | - 51 | |
| As of March 31, 2011 | 2,091 | 2,811 | - 100 | 4,964 | 3,824 | 8,788 |
| Fresenius Medical Care | Fresenius Kabi | Fresenius Helios | Fresenius Vamed | Corporate / Other 2 | Fresenius Group | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| by business segment, € in millions | 2011 | 2010 | Change | 2011 | 2010 | Change | 2011 | 2010 | Change | 2011 | 2010 | Change | 2011 | 2010 | Change | 2011 | 2010 | Change |
| Sales | 2,220 | 2,084 | 7% | 960 | 800 | 20% | 648 | 608 | 7% | 140 | 156 | - 10% | - 6 | - 5 | - 20% | 3,962 | 3,643 | 9% |
| thereof contribution to consolidated sales |
2,219 | 2,084 | 6% | 949 | 790 | 20% | 648 | 608 | 7% | 140 | 156 | - 10% | 6 | 5 | 20% | 3,962 | 3,643 | 9% |
| thereof intercompany sales | 1 | – | -- | 11 | 10 | 10% | 0 | 0 | – | 0 | - 12 | - 10 | - 20% | 0 | 0 | |||
| contribution to consolidated sales | 56% | 57% | 24% | 22% | 16% | 17% | 4% | 4% | 0% | 0% | 100% | 100% | ||||||
| EBITDA | 425 | 397 | 7% | 234 | 180 | 30% | 79 | 72 | 10% | 7 | 9 | - 22% | - 8 | - 8 | 0% | 737 | 650 | 13% |
| Depreciation and amortization | 100 | 90 | 11% | 37 | 35 | 6% | 21 | 20 | 5% | 2 | 2 | 0% | 2 | 2 | 0% | 162 | 149 | 9% |
| EBIT | 325 | 307 | 6% | 197 | 145 | 36% | 58 | 52 | 12% | 5 | 7 | - 29% | - 10 | - 10 | 0% | 575 | 501 | 15% |
| Net interest | - 52 | - 49 | - 6% | - 68 | - 74 | 8% | - 13 | - 13 | 0% | – | 1 | -- | - 2 | - 8 | 75% | - 135 | - 143 | 6% |
| Income taxes | - 91 | - 92 | 1% | - 37 | - 21 | - 76% | - 8 | - 8 | 0% | - 1 | - 2 | 50% | 22 | 24 | - 8% | - 115 | - 99 | - 16% |
| Net income attributable to Fresenius SE & Co. KGaA |
161 | 153 | 5% | 87 | 46 | 89% | 33 | 28 | 18% | 4 | 6 | - 33% | - 157 | - 145 | - 8% | 128 | 88 | 45% |
| Operating cash fl ow | 128 | 252 | - 49% | 67 | 74 | - 9% | 68 | 36 | 89% | 26 | 89 | - 71% | - 11 | - 13 | 15% | 278 | 438 | - 37% |
| Cash fl ow before acquisitions and dividends |
45 | 181 | - 75% | 22 | 42 | - 48% | 51 | 14 | -- | 25 | 88 | - 72% | - 12 | - 17 | 29% | 131 | 308 | - 57% |
| Total assets 1 | 12,750 | 12,793 | 0% | 6,657 | 6,860 | - 3% | 3,274 | 3,270 | 0% | 605 | 549 | 10% | 286 | 105 | 172% | 23,572 | 23,577 | 0% |
| Debt 1 | 4,503 | 4,400 | 2% | 4,103 | 4,298 | - 5% | 1,053 | 1,096 | - 4% | 23 | 16 | 44% | - 859 | - 1,026 | 16% | 8,823 | 8,784 | 0% |
| Capital expenditure, gross | 86 | 77 | 12% | 31 | 21 | 48% | 17 | 23 | - 26% | 1 | 1 | 0% | 1 | 2 | - 50% | 136 | 124 | 10% |
| Acquisitions, gross / investments | 253 | 68 | -- | 1 | 13 | - 92% | 4 | – | -- | 0 | – | -- | 53 | 0 | 311 | 81 | -- | |
| Research and development expenses | 19 | 17 | 12% | 38 | 33 | 15% | – | – | -- | 0 | 0 | 6 | 7 | - 14% | 63 | 57 | 11% | |
| (per capita on balance sheet date) 1 Employees |
78,985 | 77,442 | 2% | 23,369 | 22,851 | 2% | 33,783 | 33,321 | 1% | 3,157 | 3,110 | 2% | 817 | 828 | - 1% | 140,111 | 137,552 | 2% |
| Key fi gures | ||||||||||||||||||
| EBITDA margin | 19.1% | 19.1% | 24.4% | 22.5% | 12.2% | 11.8% | 5.0% | 5.8% | 18.6% | 17.8% | ||||||||
| EBIT margin | 14.7% | 14.8% | 20.5% | 18.1% | 9.0% | 8.6% | 3.6% | 4.5% | 14.5% | 13.8% | ||||||||
| Depreciation and amortization in % of sales |
4.5% | 4.3% | 3.9% | 4.4% | 3.2% | 3.3% | 1.4% | 1.3% | 4.1% | 4.1% | ||||||||
| Operating cash flow in % of sales | 5.8% | 12.1% | 7.0% | 9.3% | 10.5% | 5.9% | 18.6% | 57.1% | 7.0% | 12.0% | ||||||||
| ROOA 1 | 12.2% | 12.5% | 12.6% | 11.9% | 7.9% | 7.8% | 18.3% | 22.2% | 11.6% | 11.6% | ||||||||
FRESENIUS SE & CO. KGAA CONSOLIDATED SEGMENT REPORTING FIRST QUARTER (UNAUDITED)
1 2010: December 31 2 Including special items from the acquisition of APP Pharmaceuticals, Inc.
The consolidated segment reporting is an integral part of the notes.
Fresenius is a worldwide operating health care group with products and services for dialysis, the hospital and the medical care of patients at home. Further areas of activity are hospi tal operations as well as engineering and services for hospitals and other health care facilities. In addition to the activities of the parent company Fresenius SE & Co. KGaA, Bad Homburg v. d. Höhe, the operating activities were split into the following legally-independent business segments (subgroups) as of March 31, 2011:
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 "–".
On May 12, 2010, Fresenius SE's Annual General Meeting approved the change of Fresenius SE's legal form into a partnership limited by shares (Kommanditgesellschaft auf Aktien, KGaA) with the name Fresenius SE & Co. KGaA in combination with the conversion of all non-voting preference shares into voting ordinary shares. The change of legal form as well as the conversion of shares was also approved by the preference shareholders through a special resolution.
Upon registration with the commercial register of the local court in Bad Homburg v. d. Höhe, the change of legal form into Fresenius SE & Co. KGaA became effective on January 28, 2011. According to the resolution passed, the holders of preference shares received one ordinary share of Fresenius SE & Co. KGaA for each preference share held in Fresenius SE; the ordinary shareholders received one ordinary share of
Fresenius SE & Co. KGaA for each ordinary share held in Fresenius SE. The notional proportion of each non-par value share in the subscribed capital as well as the subscribed capital itself remained unchanged. The change of Fresenius SE's legal form into a KGaA neither led to the liquidation of the Company nor to the formation of a new legal entity. The legal and commercial identity of the Company was preserved.
The legal form of the KGaA enables Fresenius to achieve the benefi ts of a single share class while maintaining the control position of the Else Kröner- Fresenius- Stiftung which held approximately 58% of the ordinary shares in Fresenius SE prior to the change. The European company Fresenius Management SE, a wholly-owned subsidiary of the Else Kröner-Fresenius- Stiftung, is the general partner (Komplemen tä rin) of Fresenius SE & Co. KGaA. Concerning the personnel composition, the Management Board of Fresenius Management SE is identical to the previous Fresenius SE Management Board and has taken over the management of Fresenius SE & Co. KGaA. The Else Kröner- Fresenius- Stiftung's right to provide the general partner is tied to the holding of more than 10% of the subscribed capital in Fresenius SE & Co. KGaA.
In addition to the existing Conditional Capitals, three Authorized Capitals were created with the articles of association that were determined by the Annual General Meeting. These can be used as an alternative source of shares for Fresenius SE & Co. KGaA's three stock option plans.
The effects of the change of legal form are described in the respective notes.
The registration of the change of legal form with the commercial register was fi nally cleared following a court settlement of pending disputes initiated by minority shareholders.
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, 2010.
The condensed consolidated fi nancial statements and management report for the fi rst quarter ended March 31, 2011 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, 2010, published in the 2010 Annual Report.
Except for the reported acquisitions (see note 2, Acquisitions 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, 2011 include all adjustments that, in the opinion of the Management Board, are of a normal and recurring nature, 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, 2011 are not necessarily indicative of the results of operations for the fi scal year 2011.
Certain items in the consolidated fi nancial statements for the fi rst quarter of 2010 and for the year 2010 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 the 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, 2011 in conformity with U.S. GAAP in force for interim periods on January 1, 2011.
In the fi rst quarter of 2011, the Fresenius Group did not apply any new standards relevant for its business for the fi rst time.
The Fresenius Group made acquisitions and investments of € 311 million and € 81 million in the fi rst quarter of 2011 and 2010, respectively. Of this amount, € 253 million was paid in cash and € 58 million was assumed obligations in the fi rst quarter of 2011.
In the fi rst quarter of 2011, Fresenius Medical Care spent € 253 million on acquisitions, that consisted of the following:
During the fi rst quarter of 2011, Fresenius Medical Care loaned € 207 million to Renal Advantage Partners LLC, the parent company of Renal Advantage, Inc., a provider of dialysis services, which included a conversion right for a minority equity interest in Renal Advantage Partners LLC. The conversion right was exercised and became effective May 1, 2011. This amount is classifi ed within other non-current assets in the consolidated statement of fi nancial position. Additionally, Fresenius Medical Care has entered into agreements to provide renal products and pharmaceutical supplies as well as other services to Renal Advantage Partners LLC and Liberty Dialysis, Inc. Further spending on acquisitions related mainly to the purchase of dialysis clinics.
In January 2011, Fresenius Medical Care announced the signing of a purchase agreement to acquire International Dialysis Centers (IDC), Euromedic International's dialysis service business for € 485 million. IDC currently treats over 8,200 hemodialysis patients predominantly in Central and Eastern Europe and operates a total of 70 clinics in 9 countries. Closing is subject to necessary regulatory approvals by the relevant anti-trust authorities and is expected to occur in the second quarter of 2011.
Fresenius Helios spent € 4 million on acquisitions, mainly for an additional purchase price payment for the HELIOS St. Marienberg Klinik Helmstedt GmbH, Germany, in the fi rst quarter of 2011.
In the fi rst quarter of 2011, in the segment Corporate / Other, the remaining shares of HELIOS Kliniken GmbH, Germany, were acquired for a purchase price of € 54 million.
Net income attributable to Fresenius SE & Co. KGaA for the fi rst quarter of 2011 in the amount of € 128 million includes several special items relating to the acquisition of APP Pharmaceuticals, Inc. (APP) in 2008. These special items in a total amount of - € 42 million (before tax: - € 62 million) are described in note 4, Other fi nancial result. Net income attributable to Fresenius SE & Co. KGaA before special items was € 170 million (Q1 2010: € 119 million).
Sales by activity were as follows:
| Sales | 3,962 | 3,643 |
|---|---|---|
| Other sales | – | – |
| Sales from long-term production contracts | 86 | 103 |
| Sales of products and related goods | 1,486 | 1,298 |
| Sales of services | 2,390 | 2,242 |
| € in millions | Q1 / 2011 | Q1 / 2010 |
The item other fi nancial result includes the following special expenses and income with regard to the acquisition of APP and its fi nancing:
The Contingent Value Rights (CVR) awarded to the APP shareholders were traded on the NASDAQ Stock Exchange in the United States. Following a request to the U.S. Securities and Exchange Commission, in the fi rst quarter of 2011, the
CVR were deregistered and delisted from the NASDAQ due to the expiration of the underlying agreement and became valueless. As a result, an income of € 5 million was recognized in the fi rst quarter of 2011 (Q1 2010: income of € 18 million resulting from the valuation of the liability).
Due to their contractual defi nition, the issued Mandatory Exchangeable Bonds (MEB) include derivative fi nancial instruments that have to be measured at fair value. This measurement resulted in an expense (before tax) of € 67 million in the fi rst quarter of 2011 (Q1 2010: expense before tax of € 69 million).
For the tax year 1997, Fresenius Medical Care recognized an impairment of one of its subsidiaries which the German tax authorities disallowed in 2003 at the conclusion of their audit for the years 1996 and 1997. Fresenius Medical Care has fi led a complaint with the appropriate German court to challenge the tax authorities' decision. In January 2011, Fresenius Medical Care reached an agreement with the tax authorities, estimated to be slightly more favorable than the tax benefi t recognized previously. The additional benefi t is expected to be recognized in 2011.
Furthermore, during the fi rst quarter of 2011, 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 2010 Annual Report.
The following table shows the earnings per ordinary and preference share including and excluding the dilutive effect from stock options issued:
| Q1 / 2011 | Q1 / 2010 | |
|---|---|---|
| Numerators, € in millions | ||
| Net income attributable to Fresenius SE Co. KGaA |
128 | 88 |
| less effect from dilution due to Fresenius Medical Care shares |
– | – |
| Income available to all classes of shares |
128 | 88 |
| Denominators in number of shares | ||
| Weighted-average number of ordinary shares outstanding |
162,450,090 | 80,657,688 |
| Weighted-average number of preference shares outstanding |
0 | 80,657,688 |
| Weighted-average number of shares outstanding of all classes |
162,450,090 | 161,315,376 |
| Potentially dilutive ordinary shares |
1,583,405 | 577,285 |
| Potentially dilutive preference shares |
0 | 577,285 |
| Weighted-average number of ordinary shares outstanding assuming dilution |
164,033,495 | 81,234,973 |
| Weighted-average number of preference shares outstanding assuming dilution |
0 | 81,234,973 |
| Weighted-average number of shares outstanding of all classes assuming dilution |
164,033,495 | 162,469,946 |
| Basic earnings per ordinary share in € |
0.79 | 0.54 |
| Preference per preference share in € 1 | n/a | 0.00 |
| Basic earnings per preference share in € |
n/a | 0.54 |
| Fully diluted earnings per ordinary share in € |
0.78 | 0.54 |
| Preference per preference share in € 1 | n/a | 0.00 |
| Fully diluted earnings per preference share in € |
n/a | 0.54 |
1 Until December 31, 2010
Due to the conversion of the preference into ordinary shares in combination with the change of legal form, the dilutive effects are only calculated on ordinary shares as of the fi scal year 2011.
As of March 31, 2011 and December 31, 2010, cash and cash equivalents were as follows:
| € in millions | March 31, 2011 | Dec. 31, 2010 |
|---|---|---|
| Cash | 750 | 650 |
| Time deposits and securities (with a maturity of up to 90 days) |
144 | 119 |
| Total cash and cash equivalents | 894 | 769 |
As of March 31, 2011 and December 31, 2010, earmarked funds of € 145 million and € 65 million, respectively, were included in cash and cash equivalents.
As of March 31, 2011 and December 31, 2010, trade accounts receivable were as follows:
| € in millions | March 31, 2011 | Dec. 31, 2010 |
|---|---|---|
| Trade accounts receivable | 3,347 | 3,252 |
| less allowance for doubtful accounts | 316 | 317 |
| Trade accounts receivable, net | 3,031 | 2,935 |
As of March 31, 2011 and December 31, 2010, inventories consisted of the following:
| € in millions | March 31, 2011 | Dec. 31, 2010 |
|---|---|---|
| Raw materials and purchased components |
347 | 350 |
| Work in process | 265 | 255 |
| Finished goods | 940 | 874 |
| less reserves | 63 | 68 |
| Inventories, net | 1,489 | 1,411 |
The investments and long-term loans comprised investments in an amount of € 194 million as of March 31, 2011 (December 31, 2010: € 190 million), that were accounted for under
the equity method. In the fi rst quarter of 2011, income of € 6 million (Q1 2010: € 1 million) resulting from this valuation was included in general and administrative expenses in the consolidated statement of income. Furthermore, other noncurrent assets include € 207 million which Fresenius Medical Care loaned to Renal Advantage Partners LLC.
As of March 31, 2011 and December 31, 2010, intangible assets, split into amortizable and non-amortizable intangible assets, consisted of the following:
| March 31, 2011 | Dec. 31, 2010 | |||||
|---|---|---|---|---|---|---|
| € in millions | Acquisition cost |
Accumulated amortization |
Carrying amount |
Acquisition cost |
Accumulated amortization |
Carrying amount |
| Patents, product and distribution rights | 591 | 144 | 447 | 617 | 139 | 478 |
| Technology | 80 | 19 | 61 | 83 | 19 | 64 |
| Non-compete agreements | 174 | 121 | 53 | 184 | 125 | 59 |
| Other | 482 | 277 | 205 | 484 | 278 | 206 |
| Total | 1,327 | 561 | 766 | 1,368 | 561 | 807 |
| March 31, 2011 | Dec. 31, 2010 | |||||
|---|---|---|---|---|---|---|
| € in millions | Acquisition cost |
Accumulated amortization |
Carrying amount |
Acquisition cost |
Accumulated amortization |
Carrying amount |
| Tradenames | 163 | 0 | 163 | 173 | 0 | 173 |
| Management contracts | 6 | 0 | 6 | 4 | 0 | 4 |
| Goodwill | 11,052 | 0 | 11,052 | 11,464 | 0 | 11,464 |
| Total | 11,221 | 0 | 11,221 | 11,641 | 0 | 11,641 |
In the second quarter of 2010, administrative services agreements of Fresenius Medical Care in an amount of US\$215 million (€ 162 million) were reclassifi ed from the category management contracts to goodwill due to a change in New York
state regulations that allowed Fresenius Medical Care, beginning in April 2010, to directly own the managed facilities in that state.
Estimated regular amortization expenses of intangible assets for the next fi ve years are shown in the following table:
| € in millions | Q2 – 4 / 2011 | 2012 | 2013 | 2014 | 2015 | Q1 / 2016 |
|---|---|---|---|---|---|---|
| Estimated amortization expenses | 71 | 92 | 87 | 81 | 73 | 17 |
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, 2010 | 5,214 | 3,466 | 1,626 | 44 | 6 | 10,356 |
| Additions | 324 | 30 | 1 | 4 | 0 | 359 |
| Reclassifi cations | 162 | 0 | 0 | 0 | 0 | 162 |
| Foreign currency translation | 392 | 195 | 0 | 0 | 0 | 587 |
| Carrying amount as of December 31, 2010 | 6,092 | 3,691 | 1,627 | 48 | 6 | 11,464 |
| Additions | 13 | – | 73 | 0 | 0 | 86 |
| Foreign currency translation | - 335 | - 163 | 0 | 0 | 0 | - 498 |
| Carrying amount as of March 31, 2011 | 5,770 | 3,528 | 1,700 | 48 | 6 | 11,052 |
As of March 31, 2011 and December 31, 2010, the carrying amounts of the other non-amortizable intangible assets were € 154 million and € 161 million, respectively, for Fresenius Medical Care as well as € 15 million and € 16 million, respectively, for Fresenius Kabi.
The Fresenius Group had short-term debt of € 260 million and € 606 million at March 31, 2011 and December 31, 2010, respectively. As of March 31, 2011, this debt consisted of borrowings by certain subsidiaries of the Fresenius Group under lines of credit with commercial banks.
As of March 31, 2011 and December 31, 2010, long-term debt and capital lease obligations consisted of the following:
| € in millions | March 31, 2011 | Dec. 31, 2010 |
|---|---|---|
| Fresenius Medical Care 2006 Senior Credit Agreement | 1,998 | 2,211 |
| 2008 Senior Credit Agreement | 1,405 | 1,484 |
| Euro Notes | 800 | 800 |
| European Investment Bank Agreements | 524 | 531 |
| Capital lease obligations | 51 | 54 |
| Other | 253 | 259 |
| Subtotal | 5,031 | 5,339 |
| less current portion | 398 | 420 |
| Long-term debt and capital lease obligations, less current portion | 4,633 | 4,919 |
Fresenius Medical Care AG & Co. KGaA (FMC-AG & Co. KGaA) and several of its subsidiaries entered into a US\$ 4.6 billion syndicated credit facility ( Fresenius Medical Care 2006 Senior Credit Agreement) with several banks and institutional investors on March 31, 2006 which replaced a prior credit agreement.
Since entering into the 2006 Senior Credit Agreement, amendments and voluntary prepayments have been made which have resulted in a change of the total amount available under this facility.
The following tables show the available and outstanding amounts under the Fresenius Medical Care 2006 Senior Credit Agreement at March 31, 2011 and December 31, 2010:
| March 31, 2011 | |||||||
|---|---|---|---|---|---|---|---|
| Balance outstanding | |||||||
| US\$ in millions | € in millions | US\$ in millions | € in millions | ||||
| 1,200 | 845 | 0 | 0 | ||||
| 1,305 | 919 | 1,305 | 919 | ||||
| 1,534 | 1,079 | 1,534 | 1,079 | ||||
| 4,039 | 2,843 | 2,839 | 1,998 | ||||
| Maximum amount available |
| Dec. 31, 2010 | ||||
|---|---|---|---|---|
| Maximum amount available | Balance outstanding | |||
| US\$ in millions | € in millions | US\$ in millions | € in millions | |
| Revolving Credit | 1,200 | 898 | 81 | 61 |
| Term Loan A | 1,335 | 999 | 1,335 | 999 |
| Term Loan B | 1,538 | 1,151 | 1,538 | 1,151 |
| Total | 4,073 | 3,048 | 2,954 | 2,211 |
In addition, at March 31, 2011 and December 31, 2010, US\$ 99 million and US\$ 122 million, respectively, were utilized as letters of credit which were not included as part of the balances outstanding at those dates.
As of March 31, 2011, FMC-AG & Co. KGaA and its subsidiaries were in com pliance with all covenants under the Fresenius Medical Care 2006 Senior Credit Agreement.
On August 20, 2008, in connection with the acquisition of APP Pharmaceuticals, Inc., the Fresenius Group entered into a syndicated credit agreement (2008 Senior Credit Agreement) in an original amount of US\$ 2.45 billion.
Since entering into the 2008 Senior Credit Agreement, amendments and voluntary prepayments have been made which have resulted in a change of the total amount available under this facility.
The following tables show the available and outstanding amounts under the 2008 Senior Credit Agreement at March 31, 2011 and December 31, 2010:
| March 31, 2011 | ||||||
|---|---|---|---|---|---|---|
| Maximum amount available | Balance outstanding | |||||
| € in millions | € in millions | |||||
| Revolving Credit Facilities | US\$ 550 million | 387 | US\$ 0 million | 0 | ||
| Term Loan A | US\$ 782 million | 551 | US\$ 782 million | 551 | ||
| Term Loan D (in US\$) | US\$ 984 million | 692 | US\$ 984 million | 692 | ||
| Term Loan D (in €) | € 162 million | 162 | € 162 million | 162 | ||
| Total | 1,792 | 1,405 |
| Dec. 31, 2010 | |||||
|---|---|---|---|---|---|
| Maximum amount available | Balance outstanding | ||||
| € in millions | € in millions | ||||
| Revolving Credit Facilities | US\$ 550 million | 411 | US\$ 0 million | 0 | |
| Term Loan A | US\$ 782 million | 586 | US\$ 782 million | 586 | |
| Term Loan C (in US\$) | US\$ 984 million | 736 | US\$ 984 million | 736 | |
| Term Loan C (in €) | € 162 million | 162 | € 162 million | 162 | |
| Total | 1,895 | 1,484 |
In March 2011, the 2008 Senior Credit Agreement was amended to refi nance Term Loan C. As a result, the tranches of Term Loan C were replaced in full by Term Loan D tranches with lower interest rates.
As of March 31, 2011, the Fresenius Group was in compliance with all covenants under the 2008 Senior Credit Agreement.
As of March 31, 2011 and December 31, 2010, Euro Notes (Schuldscheindarlehen) of the Fresenius Group consisted of the following:
| Book value / nominal value € in millions |
||||
|---|---|---|---|---|
| Maturity | Interest rate | March 31, 2011 | Dec. 31, 2010 | |
| Fresenius Finance B.V. 2008 / 2012 | April 2, 2012 | 5.59% | 62 | 62 |
| Fresenius Finance B.V. 2008 / 2012 | April 2, 2012 | variable | 138 | 138 |
| Fresenius Finance B.V. 2007 / 2012 | July 2, 2012 | 5.51% | 26 | 26 |
| Fresenius Finance B.V. 2007 / 2012 | July 2, 2012 | variable | 74 | 74 |
| 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 |
| FMC-AG & Co. KGaA 2009 / 2012 | Oct. 27, 2012 | 7.41% | 36 | 36 |
| FMC-AG & Co. KGaA 2009 / 2012 | Oct. 27, 2012 | variable | 119 | 119 |
| FMC-AG & Co. KGaA 2009 / 2014 | Oct. 27, 2014 | 8.38% | 15 | 15 |
| FMC-AG & Co. KGaA 2009 / 2014 | Oct. 27, 2014 | variable | 30 | 30 |
| Euro Notes | 800 | 800 |
The following table shows the amounts outstanding under the European Investment Bank (EIB) facilities as of March 31, 2011 and December 31, 2010:
| Maximum amount available € in millions |
Book value € in millions |
||||
|---|---|---|---|---|---|
| Maturity | March 31, 2011 | Dec. 31, 2010 | March 31, 2011 | Dec. 31, 2010 | |
| Fresenius SE & Co. KGaA | 2013 | 196 | 196 | 196 | 196 |
| Fresenius Medical Care AG & Co. KGaA | 2013 / 2014 | 2711 | 271 1 | 2561 | 263 1 |
| HELIOS Kliniken GmbH | 2019 | 72 | 72 | 72 | 72 |
| Loans from EIB | 539 | 539 | 524 | 531 |
Difference due to foreign currency translation
The majority of the loans are denominated in euros. The U.S. dollar denominated borrowings of FMC-AG & Co. KGaA amount to US\$ 165 million (€ 116 million).
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. As of March 31, 2011, the additional fi nancial cushion resulting from unutilized credit facilities was approximately € 2 billion.
As of March 31, 2011 and December 31, 2010, Senior Notes of the Fresenius Group consisted of the following:
| Book value € in millions |
|||||
|---|---|---|---|---|---|
| Notional amount | Maturity | Interest rate | March 31, 2011 | Dec. 31, 2010 | |
| Fresenius Finance B.V. 2006 / 2013 | € 500 million | Jan. 31, 2013 | 5.00% | 500 | 500 |
| Fresenius Finance B.V. 2006 / 2016 | € 650 million | Jan. 31, 2016 | 5.50% | 635 | 635 |
| Fresenius US Finance II, Inc. 2009 / 2015 | € 275 million | July 15, 2015 | 8 3⁄4% | 262 | 261 |
| Fresenius US Finance II, Inc. 2009 / 2015 | US\$ 500 million | July 15, 2015 | 9.00% | 336 | 356 |
| FMC Finance III S.A. 2007 / 2017 | US\$ 500 million | July 15, 2017 | 6 7 ⁄8% |
348 | 370 |
| FMC Finance VI S.A. 2010 / 2016 | € 250 million | July 15, 2016 | 5.50% | 247 | 247 |
| FMC Finance VII S.A. 2011 / 2021 | € 300 million | Feb. 15, 2021 | 5.25% | 291 | 0 |
| Fresenius Medical Care US Finance, Inc. 2011 / 2021 | US\$ 650 million | Feb. 15, 2021 | 5.75% | 453 | 0 |
| Senior Notes | 3,072 | 2,369 |
On February 3, 2011, Fresenius Medical Care US Finance, Inc. and FMC Finance VII S.A. issued unsecured Senior Notes of US\$ 650 million and € 300 million, respectively. The Senior Notes are due in 2021. Net proceeds were or will be used to repay indebtedness, for acquisitions and for general corporate purposes.
The Senior Notes of Fresenius Medical Care US Finance, Inc. and FMC Finance VII S.A. (wholly-owned subsidiaries of FMC-AG & Co. KGaA) are guaranteed on a senior basis jointly and severally by FMC-AG & Co. KGaA, Fresenius Medical Care Holdings, Inc. and Fresenius Medical Care Deutschland GmbH.
As of March 31, 2011, the Fresenius Group was in compliance with all of its covenants.
At March 31, 2011, the pension liability of the Fresenius Group was € 398 million. The current portion of the pension liability in an amount of € 12 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 € 386 million is recorded as pension liability.
Contributions to Fresenius Group's pension fund were € 1 million in the fi rst quarter of 2011. The Fresenius Group expects approximately € 5 million contributions to the pension fund during 2011.
Defi ned benefi t pension plans' net periodic benefi t costs of € 11 million were comprised of the following components:
| € in millions | Q1 / 2011 | Q1 / 2010 |
|---|---|---|
| Service cost | 5 | 4 |
| Interest cost | 9 | 9 |
| Expected return on plan assets | - 4 | - 4 |
| Amortization of unrealized actuarial losses, net |
1 | 1 |
| Amortization of prior service costs | – | – |
| Amortization of transition obligations | – | – |
| Settlement loss | – | – |
| Net periodic benefi t cost | 11 | 10 |
As of March 31, 2011 and December 31, 2010, the Fresenius Group's potential obligations under noncontrolling interest subject to put options were € 204 million and € 209 million, respectively, of which, at March 31, 2011, € 68 million were exercisable.
As of March 31, 2011 and December 31, 2010, noncontrolling interest not subject to put provisions in the Group was as follows:
| € in millions | March 31, 2011 |
Dec. 31, 2010 |
|---|---|---|
| Noncontrolling interest not subject to put provisions in Fresenius Medical Care AG & Co. KGaA |
3,518 | 3,574 |
| Noncontrolling interest not subject to put provisions in HELIOS Kliniken GmbH |
0 | 4 |
| Noncontrolling interest not subject to put provisions in VAMED AG |
24 | 23 |
| Noncontrolling interest not subject to put provisions in the business segments |
||
| Fresenius Medical Care | 108 | 110 |
| Fresenius Kabi | 49 | 46 |
| Fresenius Helios | 123 | 119 |
| Fresenius Vamed | 2 | 3 |
| Total noncontrolling interest not subject to put provisions |
3,824 | 3,879 |
In the fi rst quarter of 2011, noncontrolling interest not subject to put provisions decreased by € 55 million to € 3,824 million. The change resulted from the noncontrolling interest not subject to put provisions in profi t of € 128 million, less dividend payments of € 9 million as well as a reduction of noncontrolling interest not subject to put provisions in stock options, currency effects and fi rst-time consolidations in a total amount of € 174 million.
As a result of Fresenius SE's change of legal form to Fresenius SE & Co. KGaA and its registration with the commercial register on January 28, 2011, all bearer preference shares were converted into bearer ordinary shares.
Consequently, at March 31, 2011, the subscribed capital of Fresenius SE & Co. KGaA consisted of 162,450,090 bearer ordinary shares. The shares are issued as non-par value shares. The proportionate amount of the subscribed capital is € 1.00 per share.
During the fi rst quarter of 2011, 73,698 stock options were exercised. With the issuance of the corresponding shares after the Annual General Meeting, the subscribed capital will increase by 73,698 ordinary shares. These shares are entitled to dividends beginning fi scal year 2011.
Corresponding to the stock option plans, the Conditional Capital of Fresenius SE & Co. KGaA is divided into Conditional Capital I, Conditional Capital II and Conditional Capital III. 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 1998, 2003 and 2008 (see note 21, Stock options).
After the registration of the change of legal form with the commercial register on January 28, 2011, the Conditional Capitals in the articles of association of Fresenius SE & Co. KGaA correspond in their scope to the Conditional Capitals of the former Fresenius SE, adjusted for stock options that have been exercised in the interim.
Due to the conversion of all preference shares into ordinary shares, the Conditional Capital was amended to the effect that only subscription rights for bearer ordinary shares are granted.
The following table shows the development of the Conditional Capital:
| in € | Ordinary shares | Preference shares | Total |
|---|---|---|---|
| Conditional Capital I Fresenius AG Stock Option Plan 1998 | 495,255 | 495,255 | 990,510 |
| Conditional Capital II Fresenius AG Stock Option Plan 2003 | 1,743,159 | 1,743,159 | 3,486,318 |
| Conditional Capital III Fresenius SE Stock Option Plan 2008 | 3,100,000 | 3,100,000 | 6,200,000 |
| Total Conditional Capital as of January 1, 2011 | 5,338,414 | 5,338,414 | 10,676,828 |
| Conversion of the preference shares into ordinary shares in combination with the change of legal form |
5,337,526 | - 5,337,526 | 0 |
| Fresenius AG Stock Option Plan 1998 – options exercised | - 4,767 | 0 | - 4,767 |
| Fresenius AG Stock Option Plan 2003 – options exercised | - 68,043 | - 888 | - 68,931 |
| Total Conditional Capital as of March 31, 2011 | 10,603,130 | 0 | 10,603,130 |
At the Annual General Meeting on May 12, 2010, the articles of association of Fresenius SE & Co. KGaA were adopted with the following Authorized Capitals. Authorized Capitals I and II correspond in their scope to the Authorized Capitals of the former Fresenius SE. The Authorized Capitals I and II remain unchanged except that in the future, only ordinary shares will be issued. The Authorized Capitals III, IV and V are solely to be used as an alternative source of ordinary shares for the stock option plans of 1998, 2003 and 2008 (see note 21, Stock options) as far as these plans are not fi lled from Conditional Capitals I, II and III. The Conditional Capitals themselves have been adjusted to refl ect the issuance of ordinary shares.
In accordance with the articles of association of Fresenius SE & Co. KGaA, the general partner Fresenius Management SE is authorized, with the approval of the Supervisory Board, until May 7, 2014,
In addition, pursuant to the articles of association of Fresenius SE & Co. KGaA, the general partner is authorized, with the approval of the Supervisory Board, until May 11, 2015,
The shareholders' subscription right is excluded for Authorized Capital III, IV and V.
The resolved changes to the Authorized Capital became effective after registration of the new articles of association with the commercial register on January 28, 2011.
Two shareholder complaints (Anfechtungsklagen) were lodged against the resolutions of the Annual General Meeting held on May 8, 2009 creating the Authorized Capitals I and II. The Frankfurt Regional Court (Landgericht) has decided in favor of one complaint through judgment dated February 2, 2010, the other complaint was rejected. On February 15, 2011, the Higher Regional Court (Oberlandesgericht) of Frankfurt am Main confi rmed the validity of the resolutions creating the Authorized Capitals I and II.
The clearance procedure (Freigabeverfahren) pursuant to Section 246a of the German Stock Corporation Act (AktG), initiated by Fresenius SE in order to secure Authorized Capital I and II already entered in the commercial register, was decided by the Higher Regional Court (Oberlandesgericht) of Frankfurt am Main in favor of Fresenius SE on March 30, 2010. Through this, the entry of the Authorized Capital I and II into the commercial register had already been fi nal and conclusive.
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 2011, the general partner and the Supervisory Board of Fresenius SE & Co. KGaA will propose a dividend of € 0.86 per bearer ordinary share to the Annual General Meeting, i. e. a total dividend payment of € 140 million.
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 healthcare services and products. The outcome of litigation and other legal matters is always diffi cult to accurately predict 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 2010 Annual Report. In the following, only the changes during the fi rst quarter ended March 31, 2011 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 2010 Annual Report; defi ned terms or abbreviations having the same meaning as in the 2010 Annual Report.
In January and February 2011, the U.S. Bankruptcy Court entered orders confi rming the joint plan of reorganization. These confi rmation orders are pending before the U.S. District Court.
The District Court denied Baxter's request to overturn the jury verdict and Baxter has appealed the verdict and resulting judgment to the United States Court of Appeals for the Federal Circuit.
On February 15, 2011, a qui tam relator's complaint under the False Claims Act against Fresenius Medical Care Holdings, Inc. (FMCH) was unsealed by order of the United States District Court for the District of Massachusetts and served by the relator. The United States has not intervened in the case United States ex rel. John Doe v. Fresenius Medical Care Holdings, Inc., 2009 Civ. 10179 (D. Mass.). The relator's complaint, which was fi rst fi led under seal in February 2009, alleges that FMCH seeks and receives reimbursement from government payers for serum ferritin and hepatitis B laboratory tests that are medically unnecessary. On March 6, 2011, the United States Attorney for the District of Massachusetts issued a Civil Investigative Demand seeking the production of documents related to the same laboratory tests that are the subject of the relator's complaint. FMCH will cooperate fully in responding to the additional Civil Investigative Demand, and will vigorously contest the relator's complaint.
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.
The signifi cant methods and assumptions used to estimate the fair values of fi nancial instruments 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 receivables and payables 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 of these instruments.
The fair values of the 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 fair value of Fresenius Medical Care's loan to Renal Advantage Partners LLC is based on signifi cant unobservable inputs of comparable instruments. The fair values of the noncontrolling interest subject to put provisions are determined using signifi cant unobservable inputs.
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.
The carrying amounts of derivatives embedded in the Mandatory Exchangeable Bonds (MEB) and the Contingent Value Rights (CVR) correspond with their fair values. The embedded derivatives have to be measured at fair value, which is estimated based on a Black-Scholes model. The CVR were traded on the stock exchange in the United States and were
therefore valued with the current stock exchange price until December 31, 2010. In the fi rst quarter of 2011, the CVR were deregistered and delisted from the NASDAQ due to the expiration of the underlying agreement and became valueless.
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 following table presents the carrying amounts and fair values of Fresenius Group's fi nancial instruments as of March 31, 2011 and December 31, 2010, respectively:
| March 31, 2011 | Dec. 31, 2010 | |||
|---|---|---|---|---|
| € in millions | Carrying amount | Fair value | Carrying amount | Fair value |
| Cash and cash equivalents | 894 | 894 | 769 | 769 |
| Assets recognized at carrying amount | 3,246 | 3,251 | 2,950 | 2,950 |
| Liabilities recognized at carrying amount | 10,001 | 10,208 | 10,031 | 10,259 |
| Liabilities recognized at fair value | 192 | 192 | 133 | 133 |
| Noncontrolling interest subject to put provisions recognized at fair value | 204 | 204 | 209 | 209 |
| Derivatives for hedging purposes | - 15 | - 15 | - 225 | - 225 |
Derivative and non-derivative fi nancial instruments recognized at fair value are classifi ed according to the three-tier fair value hierarchy. For the fair value measurement of derivatives for hedging purposes, signifi cant other observable inputs are used. Therefore, they are classifi ed as Level 2 in accordance with the defi ned fair value hierarchy levels. The derivatives embedded in the MEB are also classifi ed as Level 2. Until December 31, 2010, the valuation of the CVR was based on the current stock exchange price, they were
therefore classifi ed as Level 1. The liabilities recognized at fair value consisted of embedded derivatives and the CVR and were consequently classifi ed in their entirety as the lower hierarchy Level 2. As of March 31, 2011, the liabilities recognized at fair value are comprised only of derivatives embedded in the MEB due to the expiration of the CVR. The valuation of the noncontrolling interests subject to put provisions is determined using signifi cant unobservable inputs, they are therefore classifi ed as Level 3.
| March 31, 2011 | Dec. 31, 2010 | ||||
|---|---|---|---|---|---|
| € in millions | Assets | Liabilities | Assets | Liabilities | |
| Interest rate contracts (current) | 0 | 34 | – | 43 | |
| Interest rate contracts (non-current) | 2 | 58 | 1 | 115 | |
| Foreign exchange contracts (current) | 66 | 7 | 8 | 49 | |
| Foreign exchange contracts (non-current) | 1 | 1 | 5 | 2 | |
| Derivatives designated as hedging instruments 1 | 69 | 100 | 14 | 209 | |
| Interest rate contracts (current) | 0 | 1 | 0 | 2 | |
| Foreign exchange contracts (current) 1 | 32 | 13 | 10 | 34 | |
| Foreign exchange contracts (non-current) 1 | 5 | 8 | 1 | 7 | |
| Derivatives embedded in the MEB (current) | 0 | 176 | 0 | 111 | |
| Derivatives not designated as hedging instruments | 37 | 198 | 11 | 154 |
Derivatives designated as hedging instruments and foreign exchange contracts not designated as hedging instruments 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 concluded to hedge economic business transactions and not for speculative purposes.
Derivatives for hedging purposes as well as derivatives embedded in the MEB were recognized at gross value within other assets in an amount of € 106 million and other liabilities in an amount of € 297 million.
The current portion of interest rate contracts and foreign exchange contracts indicated as assets in the previous 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 derivatives embedded in the MEB are recognized within other short-term liabilities.
| Q1 / 2011 | |||||
|---|---|---|---|---|---|
| € 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 | 28 | - 1 | 1 | ||
| Foreign exchange contracts | 4 | - 1 | 0 | ||
| Derivatives in cash fl ow hedging relationships 1 | 32 | - 2 | 1 | ||
| Foreign exchange contracts | 17 | ||||
| Derivatives in fair value hedging relationships | 17 | ||||
| Derivatives designated as hedging instruments | 32 | - 2 | 18 | ||
The amount of gain or loss recognized in the consolidated statement of income solely relates to the ineffective portion.
| Q1 / 2010 | |||||
|---|---|---|---|---|---|
| € 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 | - 18 | - 2 | – | ||
| Foreign exchange contracts | - 21 | - 2 | – | ||
| Derivatives in cash fl ow hedging relationships 1 | - 39 | - 4 | – | ||
| Foreign exchange contracts | - 20 | ||||
| Derivatives in fair value hedging relationships | - 20 | ||||
| Derivatives designated as hedging instruments | - 39 | - 4 | - 20 | ||
1 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 / 2011 | Q1 / 2010 | |
| Interest rate contracts | 1 | 0 | |
| Foreign exchange contracts | 44 | - 56 | |
| Derivatives embedded in the MEB | - 65 | - 67 | |
| Derivatives not designated as hedging instruments | - 20 | - 123 |
Losses 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 gains from the underlying transactions in the corresponding amount.
The Fresenius Group expects to recognize a net amount of € 1 million 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 € 73 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. The position other fi nancial result in the consolidated statement of income includes gains and losses from the valuation of the derivatives embedded in the MEB (see note 4, Other fi nancial result).
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, trust preferred securities and commercial papers and enters into mainly long-term credit agreements and euro notes (Schuldscheindarlehen) 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 concluded 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 implemented.
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, 2011, the notional amounts of foreign exchange contracts totaled € 2,919 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 values of cash fl ow hedges and fair value hedges were € 44 million and € 15 million, respectively.
As of March 31, 2011, the Fresenius Group was party to foreign exchange contracts with a maximum maturity of 56 months.
The Fresenius Group enters into interest rate swaps and, on a small scale, into interest rate options in order to hedge against interest rate exposures arising from long-term borrowings at variable rates by swapping them into fi xed rates.
The Fresenius Group enters into interest rate swaps that are mainly designated as cash fl ow hedges with a notional volume of US\$ 3,025 million (€ 2,129 million) and € 406 million as well as a fair value of - US\$ 110 million and - € 14 million, respectively, which expire between 2011 and 2016.
The Fresenius Group has a solid fi nancial profi le. As of March 31, 2011, the equity ratio was 37.3% and the debt ratio (debt / total assets) was 37.4%. As of March 31, 2011, the net debt / EBITDA ratio was 2.5.
The aims of the capital management and further information can be found in the consolidated fi nancial statements in the 2010 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 | stable | positive |
The consolidated segment reporting shown on page 23 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 organ iza tional and reporting structures (Management Approach) at March 31, 2011.
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 dialysis products and dialysis care for the life-saving treatment of patients with chronic kidney failure. Fresenius Medical Care treats 216,942 patients in its 2,769 own dialysis clinics.
Fresenius Kabi is a globally active company, providing infusion therapies, intravenously administered generic drugs, clinical nutrition and the related medical devices. The products are used for the therapy and care of critically and chronically ill patients in and outside the hospital. In Europe, Fresenius Kabi is the market leader in infusion therapies and clinical nutrition, in the U.S., the company is a leading provider of intravenously administered generic drugs.
Fresenius Helios is one of the largest private hospital operators in Germany.
Fresenius Vamed provides engineering and services for hospitals and other health care facilities internationally.
The segment Corporate / Other mainly comprises the holding functions of Fresenius SE & Co. KGaA as well as Fresenius Netcare GmbH, which provides services in the fi eld of information technology as well as Fresenius Biotech, which does not fulfi ll the characteristics of a reportable segment. In addition, the segment Corporate / Other includes intersegment consolidation adjustments as well as special items in connection with the fair value measurement of the Mandatory Exchangeable Bonds and the Contingent Value Rights.
Explanations regarding the notes on the business segments can be found in the consolidated fi nancial statements in the 2010 Annual Report.
| € in millions | Q1 / 2011 | Q1 / 2010 |
|---|---|---|
| Total EBIT of reporting segments | 585 | 511 |
| General corporate expenses Corporate / Other (EBIT) |
- 10 | - 10 |
| Group EBIT | 575 | 501 |
| Net interest | - 135 | - 143 |
| Other fi nancial result | - 62 | - 51 |
| Income before income taxes | 378 | 307 |
| € in millions | March 31, 2011 |
Dec. 31, 2010 |
|---|---|---|
| Short-term debt | 260 | 606 |
| Short-term loans from related parties | 2 | 2 |
| Current portion of long-term debt and capital lease obligations |
398 | 420 |
| Trust preferred securities of Fresenius Medical Care Capital Trusts (current) |
458 | 468 |
| Long-term debt and capital lease obligations, less current portion |
4,633 | 4,919 |
| Senior Notes | 3,072 | 2,369 |
| Debt | 8,823 | 8,784 |
| less cash and cash equivalents | 894 | 769 |
| Net debt | 7,929 | 8,015 |
According to the defi nitions in the underlying agreements, the MEB are and the CVR were not categorized as debt.
On March 31, 2011, Fresenius SE & Co. KGaA had three stock option plans in place: the Fresenius AG stock option based plan of 1998 (1998 Plan), the Fresenius AG Stock Option Plan 2003 (2003 Plan) which is based on convertible bonds and the stock option based Fresenius SE Stock Option Plan 2008 (2008 Plan). Currently, stock options can only be granted under the 2008 Plan.
Upon registration of Fresenius SE's change of legal form to Fresenius SE & Co. KGaA with the commercial register on January 28, 2011, adaptations of the three stock option plans were required. Due to the conversion of all preference shares into ordinary shares in combination with the change of legal form, all previously issued subscription rights under the respective stock option plan are to be satisfi ed, in case of exercise, with ordinary shares. Furthermore, the benefi ciaries under the 2008 Plan are exclusively granted subscription rights for ordi nary shares. With regard to the eligible benefi ciaries, the members of Fresenius Management SE's Management Board replace the previous members of the Fresenius SE Management Board for future stock option grants. With regard to the 2008 Plan, the Supervisory Board of Fresenius Management SE determines the grants for the Management Board members of that company. All other plan participants will be determined by the Management Board of Fresenius Management SE. In addition, due to the discontinuation of the preference shares, the success target of the 2003 Plan was adjusted to the effect, that it is deemed to be achieved if and when the sum of the following price increases amounts to at least 25%:
Whereas the number of stock options remained unchanged, in the future, the exercise price of the stock options corresponds to the stock exchange price of the ordinary share without considering the stock exchange price of the preference share.
During the fi rst quarter of 2011, 73,698 stock options were exercised. The corresponding ordinary shares will be issued after the Annual General Meeting. Fresenius SE & Co. KGaA received cash of € 2 million from the exercise of the stock options.
Under the 1998 Plan, 129,685 stock options were outstanding and exercisable at March 31, 2011. No options were held by the members of the Fresenius Management SE Management Board. 1,886,795 convertible bonds were outstanding under the 2003 Plan, of which 1,608,417 were exercisable. The members of the Fresenius Management SE Management Board held 397,170 convertible bonds. Out of 3,181,236 outstanding stock options issued under the 2008 Plan, 559,860 were held by the members of the Fresenius Management SE Management Board.
At March 31, 2011, 1,738,102 options for ordinary shares were outstanding and exercisable. As of March 31, 2011, total unrecognized compensation costs related to non-vested options granted under the 2003 Plan and the 2008 Plan were € 15 million. These costs are expected to be recognized over a weighted-average period of 1.8 years.
During the fi rst quarter of 2011, 45,155 stock options for ordinary shares and 751 stock options for preference shares were exercised. Fresenius Medical Care AG & Co. KGaA received cash of € 1 million upon exercise of these stock options and € 0.1 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 Universitätsklinikum Carl Gustav Carus Dresden and a member of the supervisory boards of the Universitätsklinika Aachen, Rostock and Magdeburg. The Fresenius Group maintains business relations with these clinics in the ordinary course and under customary conditions.
Prof. Dr. h. c. Roland Berger, a member of the Supervisory Board of Fresenius SE & Co. KGaA, is a partner and was the chairman of the supervisory board of Roland Berger Strategy Consultants until August 1, 2010. In the fi rst quarter of 2011, no services were rendered to the Fresenius Group by this company.
Klaus-Peter Müller, a member of the Supervisory Board 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. In the fi rst quarter of 2011, the Fresenius Group paid € 0.5 million for services in connection with the issuance of Senior Notes by FMC Finance VII S.A.
Dr. Gerhard Rupprecht, a member of the Supervisory Board of Fresenius SE & Co. KGaA, was a member of the management board of Allianz SE until December 31, 2010 and the chairman of the management board of Allianz Deutschland AG until June 30, 2010. Dr. Franceso De Meo, a member of the Management Board of the general partner of Fresenius SE & Co. KGaA, is a member of the supervisory board of Allianz Private Krankenversicherungs-AG. In the fi rst quarter of 2011, the Fresenius Group paid € 0.8 million for insurance premiums to Allianz.
Dr. Dieter Schenk, deputy chairman of the Supervisory Board of Fresenius SE until January 28, 2011, member of the Supervisory Board of Fresenius Management SE since March 11, 2010 and deputy chairman of the Supervisory Board of Fresenius Management SE since May 12, 2010, is a partner in the law fi rm Noerr LLP that provides legal services to the Fresenius Group. In the fi rst quarter of 2011, the Fresenius Group paid this law fi rm € 1 thousand for services rendered.
There have been no signifi cant changes in the Fresenius Group's operating environment following the end of the fi rst quarter of 2011. 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 2011.
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 / Corporate Governance / Declaration of Compliance, respectively.
| Annual General Meeting, Frankfurt am Main, Germany | May 13, 2011 |
|---|---|
| Payment of dividend 1 | May 16, 2011 |
| Report on 1st half 2011 Conference call Live webcast |
August 2, 2011 |
| Report on 1st – 3rd quarters 2011 Conference call Live webcast |
November 2, 2011 |
Subject to the prior approval by the AGM
| Ordinary share | |
|---|---|
| Securities identifi cation no. | 578 560 |
| Ticker symbol | FRE |
| ISIN | DE0005785604 |
| Bloomberg symbol | FRE GR |
| Reuters symbol | FREG.de |
| Main trading location | Frankfurt / Xetra |
Corporate Headquarters Else-Kröner-Straße 1 Bad Homburg v. d. H.
Germany
Contact for shareholders Investor Relations Telephone: ++ 49 61 72 6 08-26 37 Telefax: ++ 49 61 72 6 08-24 88 e-mail: [email protected]
Corporate Communications Telephone: ++ 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), Rainer Baule, Dr. Francesco De Meo, Dr. Jürgen Götz, Dr. Ben Lipps, 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 2010 Annual Report and the SEC fi lings of Fresenius Medical Care AG & Co. KGaA and Fresenius Kabi Pharmaceuticals Holding, Inc. – the actual results could differ materially from the results currently expected.
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