Document and Entity Information
Document and Entity Information (USD $) | |
In Thousands, except Share data | 12 Months Ended
Dec. 31, 2009 |
Document and Entity Information | |
Document period end date | 2009-12-31 |
Amendment flag | false |
Entity registrant name | FRESENIUS MEDICAL CARE AG & Co. KGaA |
Entity current reporting status | Yes |
Entity voluntary filers | No |
Entity central index key | 0001333141 |
Document type | 20-F |
Current fiscal year end date | --12-31 |
Entity filer category | Large Accelerated Filer |
Entity well known seasoned issuer | Yes |
Entity common stock shares outstanding | 295,746,635 |
Entity public float | $15,719,810,835 |
Consolidated Statements of Inco
Consolidated Statements of Income (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Net revenue: | |||
Dialysis Care Revenue | $8,350,233 | $7,737,498 | $7,213,000 |
Dialysis Products Revenue | 2,897,244 | 2,874,825 | 2,507,314 |
Net revenue | 11,247,477 | 10,612,323 | 9,720,314 |
Costs of revenue: | |||
Dialysis Care Cost of Revenue | 5,945,724 | 5,547,615 | 5,130,287 |
Dialysis Products Cost of Revenue | 1,470,241 | 1,435,860 | 1,234,232 |
Cost of revenues | 7,415,965 | 6,983,475 | 6,364,519 |
Gross profit | 3,831,512 | 3,628,848 | 3,355,795 |
Operating expenses: | |||
Selling, general and administrative | 1,982,106 | 1,876,177 | 1,709,150 |
Research and development | 93,810 | 80,239 | 66,523 |
Operating income | 1,755,596 | 1,672,432 | 1,580,122 |
Other (income) expense: | |||
Interest income | (21,397) | (24,811) | (28,588) |
Interest expense | 321,360 | 361,553 | 399,635 |
Income before income taxes | 1,455,633 | 1,335,690 | 1,209,075 |
Income tax expense | 490,413 | 475,702 | 453,765 |
Net Income | 965,220 | 859,988 | 755,310 |
Less: Net Income attributable to Noncontrolling interests | 74,082 | 42,381 | 38,180 |
Net Income attributable to the Company | $891,138 | $817,607 | $717,130 |
Basic income per ordinary share | 2.99 | 2.75 | 2.43 |
Fully diluted income per ordinary share | 2.99 | 2.74 | 2.42 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Consolidated Statements of Comprehensive Income | |||
Net Income | $965,220 | $859,988 | $755,310 |
Gain (loss) related to cash flow hedges | 30,082 | (108,240) | (88,374) |
Actuarial gains (losses) on defined benefit pension plans | 9,708 | (28,551) | 35,729 |
Foreign currency translation | 82,545 | (168,336) | 146,308 |
Income tax (expense) benefit related to components of other comprehensive income | (18,971) | 55,692 | 21,891 |
Other comprehensive income (loss), net of tax | 103,364 | (249,435) | 115,554 |
Total Comprehensive income | 1,068,584 | 610,553 | 870,864 |
Comprehensive income attributable to Noncontrolling interests | 75,886 | 45,108 | 47,440 |
Comprehensive income attributable to the Company | $992,698 | $565,445 | $823,424 |
Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||
In Thousands | Dec. 31, 2009
| Dec. 31, 2008
|
Current assets: | ||
Cash and cash equivalents | $301,225 | $221,584 |
Trade accounts receivable less allowance for doubtful accounts of $266,449 in 2009 and $262,836 in 2008 | 2,285,909 | 2,176,316 |
Accounts receivable from related parties | 272,886 | 175,525 |
Inventories | 821,654 | 707,050 |
Prepaid expenses and other current assets | 729,306 | 607,399 |
Deferred tax asset, current | 316,820 | 324,123 |
Total current assets | 4,727,800 | 4,211,997 |
Property, plant and equipment, net | 2,419,570 | 2,236,078 |
Intangible assets | 859,195 | 846,496 |
Goodwill | 7,511,434 | 7,309,910 |
Deferred tax asset, non-current | 64,749 | 92,805 |
Other assets | 238,567 | 222,390 |
Assets | 15,821,315 | 14,919,676 |
Current liabilities: | ||
Accounts payable | 362,407 | 366,017 |
Accounts payable to related parties | 277,429 | 239,243 |
Accrued expenses and other current liabilities | 1,335,553 | 1,288,433 |
Short-term borrowings | 316,344 | 683,155 |
Short-term borrowings from related parties | 10,440 | 1,330 |
Current portion of long-term debt and capital lease obligations | 157,634 | 455,114 |
Income tax payable, current | 116,978 | 82,468 |
Deferred tax liability, current | 32,930 | 28,652 |
Total current liabilities | 2,609,715 | 3,144,412 |
Long-term debt and capital lease obligations, less current portion | 4,427,921 | 3,957,379 |
Other liabilities | 307,112 | 319,602 |
Pension liabilities | 147,327 | 136,755 |
Income tax payable, non-current | 215,921 | 171,747 |
Deferred tax liability, non-current | 427,530 | 426,299 |
Company-obligated mandatorily redeemable preferred securities of subsidiary Fresenius Medical Care Capital Trusts holding solely Company-guaranteed debentures of subsidiaries | 656,096 | 640,696 |
Total liabilities | 8,791,622 | 8,796,890 |
Company shareholders' equity: | ||
Preferred stock, no par value, 1.00 Euro nominal value, 12,356,880 shares authorized, 3,884,328 issued and outstanding | 4,343 | 4,240 |
Common stock, no par value, 1.00 Euro nominal value, 373,436,220 shares authorized, 295,746,635 issued and outstanding | 365,672 | 363,076 |
Additional paid-in capital | 3,389,111 | 3,293,918 |
Retained earnings | 3,111,530 | 2,452,332 |
Accumulated other comprehensive (loss) | (49,724) | (151,284) |
Total Company shareholders' equity | 6,820,932 | 5,962,282 |
Noncontrolling interests | 208,761 | 160,504 |
Total equity | 7,029,693 | 6,122,786 |
Total liabilities and equity | $15,821,315 | $14,919,676 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) (USD $) | ||
In Thousands, except Share data | Dec. 31, 2009
| Dec. 31, 2008
|
Consolidated Balance Sheets (Parentheticals) | ||
Trade accounts receivable allowance for doubtful accounts | $266,449 | $262,836 |
Preferred stock no par value (in Euros) | 1 | |
Preferred stock authorized | 12,356,880 | |
Preferred stock issued | 3,884,328 | |
Preferred stock outstanding | 3,884,328 | |
Common stock no par value (in Euros) | 1 | |
Common stock authorized | 373,436,220 | |
Common stock issued | 295,746,635 | |
Common stock outstanding | 295,746,635 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Operating Activities: | |||
Net Income | $965,220 | $859,988 | $755,310 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 457,085 | 415,671 | 363,330 |
Change in deferred taxes, net | 22,002 | 133,047 | 1,177 |
(Gain) Loss on sale of investments | (1,250) | (24,049) | 913 |
(Gain) Loss on sale of fixed assets | 1,308 | 2,985 | 2,703 |
Stock Option Compensation Expense | 33,746 | 31,879 | 24,208 |
Changes in assets and liabilities, net of amounts from businesses acquired: | |||
Trade accounts receivable, net | (41,994) | (241,967) | (62,735) |
Inventories, net | (88,933) | (94,112) | (72,825) |
Prepaid expenses, other current and non-current assets | (147,105) | (84,089) | (6,623) |
Accounts receivable, related parties | (144,224) | (32,747) | 56,538 |
Accounts payable, related parties | 138,506 | 64,999 | (78,803) |
Accounts payable, accrued expenses and other current and non-current liabilities | 71,092 | (17,040) | 113,960 |
Income tax payable | 73,164 | 1,833 | 102,421 |
Net cash provided by operating activities | 1,338,617 | 1,016,398 | 1,199,574 |
Investing Activities: | |||
Purchases of property, plant and equipment | (573,606) | (687,356) | (572,721) |
Proceeds from sale of property, plant and equipment | 11,730 | 13,846 | 29,668 |
Acquisitions and investments, net of cash acquired, and net purchases of intangible assets | (188,113) | (276,473) | (263,395) |
Proceeds from divestitures | 51,965 | 58,582 | 29,495 |
Net cash used in investing activities | (698,024) | (891,401) | (776,953) |
Financing Activities: | |||
Proceeds from short-term borrowings and other financial liabilities | 107,192 | 176,104 | 96,995 |
Repayments of short-term borrowings and other financial liabilities | (169,175) | (183,210) | (107,793) |
Proceeds from short-term borrowings from related parties | 18,830 | 168,641 | 43,554 |
Repayments of short-term borrowings from related parties | (118,422) | (169,573) | (46,071) |
Proceeds from long-term debt and capital lease obligations (net of debt issuance costs of $16,703 in 2007) | 709,540 | 458,951 | 516,762 |
Repayments of long-term debt and capital lease obligations | (566,241) | (135,492) | (486,513) |
Redemption of trust preferred securities | 0 | (678,379) | 0 |
(Decrease) increase of accounts receivable securitization program | (325,000) | 454,000 | (181,000) |
Proceeds from exercise of stock options | 72,394 | 43,887 | 46,934 |
Repurchase of preferred stock | 0 | 0 | (7,660) |
Payment of dividends | 231,940 | 252,395 | 188,407 |
Distributions to Noncontrolling interests | (68,004) | (38,592) | (27,469) |
Contributions from Noncontrolling interests | 12,699 | 0 | 0 |
Net cash used in financing activities | (558,127) | (156,058) | (340,668) |
Effect of exchange rate changes on cash and cash equivalents | (2,825) | 7,955 | 3,727 |
Cash and Cash Equivalents: | |||
Net (decrease) in cash and cash equivalents | 79,641 | (23,106) | 85,680 |
Cash and cash equivalents at beginning of period | 221,584 | 244,690 | 159,010 |
Cash and cash equivalents at end of period | $301,225 | $221,584 | $244,690 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity (USD $) | ||||||||||
In Thousands, except Share data | Total Company shareholders' equity [Member]
| Preferred Stock [Member]
| Preferred Stock, No par value [Member]
| Common Stock [Member]
| Common Stock, No par value [Member]
| Additional paid in capital [Member]
| Retained earnings [Member]
| Accumulated other comprehensive income (loss) [Member]
| Noncontrolling interests [Member]
| Total
|
Shares issued at Dec. 31, 2006 | 3,711,435 | 291,449,673 | ||||||||
Shareholders equity at Dec. 31, 2006 | $4,870,162 | $4,098 | $359,527 | $3,153,556 | $1,358,397 | ($5,416) | $75,158 | $4,945,320 | ||
Proceeds from exercise of options and related tax effects | 45,830 | 93 | 1,857 | 43,880 | 45,830 | |||||
Shares from exercise of options and related tax effects | 66,652 | 1,336,910 | ||||||||
Compensation expense related to stock options | 24,208 | 24,208 | 24,208 | |||||||
Dividends paid | (188,407) | (188,407) | (27,469) | (215,876) | ||||||
Purchase (sale) of Noncontrolling interests | 5,628 | 5,628 | ||||||||
Cash contributions from Noncontrolling interests | 5,057 | 5,057 | ||||||||
Comprehensive income (loss) | ||||||||||
Net Income | 717,130 | 717,130 | 38,180 | 755,310 | ||||||
Other comprehensive income (loss), net of tax | 106,294 | 106,294 | 9,260 | 115,554 | ||||||
Total Comprehensive income | 823,424 | 106,294 | 47,440 | 870,864 | ||||||
Shareholders equity at Dec. 31, 2007 | 5,575,217 | 4,191 | 361,384 | 3,221,644 | 1,887,120 | 100,878 | 105,814 | 5,681,031 | ||
Shares issued at Dec. 31, 2007 | 3,778,087 | 292,786,583 | ||||||||
Proceeds from exercise of options and related tax effects | 42,136 | 49 | 1,692 | 40,395 | 42,136 | |||||
Shares from exercise of options and related tax effects | 32,453 | 1,145,453 | ||||||||
Compensation expense related to stock options | 31,879 | 31,879 | 31,879 | |||||||
Dividends paid | (252,395) | (252,395) | (38,592) | (290,987) | ||||||
Purchase (sale) of Noncontrolling interests | 31,000 | 31,000 | ||||||||
Cash contributions from Noncontrolling interests | 17,174 | 17,174 | ||||||||
Comprehensive income (loss) | ||||||||||
Net Income | 817,607 | 817,607 | 42,381 | 859,988 | ||||||
Other comprehensive income (loss), net of tax | (252,162) | (252,162) | 2,727 | (249,435) | ||||||
Total Comprehensive income | 565,445 | (252,162) | 45,108 | 610,553 | ||||||
Shareholders equity at Dec. 31, 2008 | 5,962,282 | 4,240 | 363,076 | 3,293,918 | 2,452,332 | (151,284) | 160,504 | 6,122,786 | ||
Shares issued at Dec. 31, 2008 | 3,810,540 | 293,932,036 | ||||||||
Proceeds from exercise of options and related tax effects | 67,284 | 103 | 2,596 | 64,585 | 67,284 | |||||
Shares from exercise of options and related tax effects | 73,788 | 1,814,599 | ||||||||
Compensation expense related to stock options | 33,746 | 33,746 | 33,746 | |||||||
Dividends paid | (231,940) | (231,940) | (61,499) | (293,439) | ||||||
Purchase (sale) of Noncontrolling interests | (3,138) | (3,138) | 25,477 | 22,339 | ||||||
Cash contributions from Noncontrolling interests | 8,393 | 8,393 | ||||||||
Comprehensive income (loss) | ||||||||||
Net Income | 891,138 | 891,138 | 74,082 | 965,220 | ||||||
Other comprehensive income (loss), net of tax | 101,560 | 101,560 | 1,804 | 103,364 | ||||||
Total Comprehensive income | 992,698 | 101,560 | 75,886 | 1,068,584 | ||||||
Shareholders equity at Dec. 31, 2009 | $6,820,932 | $4,343 | $365,672 | $3,389,111 | $3,111,530 | ($49,724) | $208,761 | $7,029,693 | ||
Shares issued at Dec. 31, 2009 | 3,884,328 | 295,746,635 |
The Company and Basis of Presen
The Company and Basis of Presentation | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
The Company and Basis of Presentation | 1.The Company, Basis of Presentation and Summary of Significant Accounting Policies The Company Fresenius Medical Care AG Co. KGaA ("FMC-AG Co. KGaA" or the "Company," "we," "us" or "our" and together with its subsidiaries on a consolidated basis, as the context requires), a German partnership limited by shares (Kommanditgesellschaft auf Aktien), is the world's largest kidney dialysis company, operating in both the field of dialysis services and the field of dialysis products for the treatment of end-stage renal disease ("ESRD"). The Company's dialysis business is vertically integrated, providing dialysis treatment at dialysis clinics it owns or operates and supplying these clinics with a broad range of products. In addition, the Company sells dialysis products to other dialysis service providers. In the United States, the Company also performs clinical laboratory testing and provides inpatient dialysis services and other services under contract to hospitals. Basis of Presentation On July 1, 2009, the Financial Accounting Standards Board ("FASB") issued FASB Accounting Standards Codification ("ASC") 105, Generally Accepted Accounting Principles (originally issued as FASB Statement No. 168-FASB accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles). ASC 105 establishes the FASB ASC as the exclusive authoritative reference for nongovernmental United States generally accepted accounting principles ("U.S. GAAP") for use in financial statements issued for interim and annual periods ending after September 15, 2009, except for SEC rules and interpretive releases, which are also authoritative GAAP for SEC registrants. This divides nongovernmental U.S. GAAP into the authoritative ASC and guidance that is nonauthoritative. The contents of the ASC carry the same level of authority, eliminating the four-level GAAP hierarchy previously set forth in FASB Statement No. 162, which has been superseded by the ASC. The ASC supersedes or makes nonauthoritative all other existing non-grandfathered, non-SEC accounting literature and reporting standards not included in the ASC. The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP. The Company evaluated the financial statements for subsequent events through the date of the submission of this 20-F to the Securities and Exchange Commission. See Note 2. Income tax expense in the amount of $13,440 and $11,887 for the years ended December 31, 2008 and 2007, in the prior year's comparative consolidated financial statements has been reclassified to income attributable to noncontrolling interests to conform with the current year's presentation. Summary of Significant Accounting Policies a) Principles of Consolidation The consolidated financial statements include all companies in which the Company has legal or effective control. In addition, the Company consolidates variable interest entities ("VIEs") for which it is deemed the primary beneficiary. In accordance with current accounting principles, the Company also consolidates certain clinics that it manages. The equity method of accounting is used for investments in assoc |
Subsequent Event
Subsequent Event | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Subsequent Event | 2.Subsequent Event On January 20, 2010, the Company's wholly owned subsidiary, FMC Finance VI S.A ("Finance VI"), issued 250,000 ($353,300 at date of issuance) of senior unsecured notes (the "5.50% Senior Notes") with a coupon of 5.50% at an issue price of 98.6636%. The 5.50% Senior Notes have a yield to maturity of 5.75% and are due July 15, 2016. Finance VI may redeem the 5.50% Senior Notes at any time at 100% of principal plus accrued interest and a premium calculated pursuant to the terms of the indenture. The holders have a right to request that Finance IV repurchase the 5.50% Senior Notes at 101% of principal plus accrued interest upon the occurrence of a change of control followed by a decline in the rating of the 5.50% Senior Notes. Proceeds were used to repay short-term indebtedness and for general corporate purposes. The 5.50% Senior Notes are guaranteed on a senior basis jointly and severally by the Company, Fresenius Medical Care Holdings, Inc. and Fresenius Medical Care Deutschland GmbH. |
Acquisitions And Investments
Acquisitions And Investments | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Acquisitions and Investments | 3.Acquisitions RSI Acquisition On November 26, 2007, the Company completed the acquisition of all the common stock of Renal Solutions, Inc. ("RSI"), an Indiana corporation with principal offices in Warrendale, PA. The RSI acquisition agreement provided for total consideration of up to $203,666, consisting of $20,000 previously advanced to RSI in the form of a loan, $99,854 paid at closing, $60,000 paid in November, 2008, $3,572 receivable related to a working capital adjustment which was received in 2008, and up to $30,000 in milestone payments over a three year period contingent upon the achievement of certain performance criteria, of which $20,000 was paid in 2009. In 2007, the Company recorded a liability of $27,384 representing the net present value of the $30,000 milestone payments. At December 31, 2009, the net book value of the remaining liability was $9,488. The purchase price was allocated to goodwill ($159,386), intangible assets ($34,480) and other net assets ($9,800). RSI holds key patents and other intellectual property worldwide related to sorbent-based technology ("SORB"). SORB technology purifies potable water to dialysate quality and allows dialysis for up to 8 hours with only 6 liters of potable water through a process of dialysate regeneration and toxin adsorption. This regeneration capability significantly reduces the water volume requirement for a typical hemodialysis treatment and is an important step in advancing home hemodialysis and helping to create a potential platform for eventual development of a wearable kidney. |
Related Party Transactions
Related Party Transactions | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Related Party Transactions | 4.Related Party Transactions a)Service Agreements and Leases The Company is party to service agreements with Fresenius SE, the sole stockholder of its General Partner and its largest shareholder with approximately 36.0% ownership of the Company's voting shares, and certain affiliates of Fresenius SE that are not also subsidiaries of the Company to receive services, including, but not limited to: administrative services, management information services, employee benefit administration, insurance, IT services, tax services and treasury management services. Fees for these services are negotiated by the involved parties based on requested service volume and full absorption cost plus a 5% mark-up. For the years 2009, 2008, and 2007, amounts charged by Fresenius SE to the Company under the terms of these agreements are $68,234, $59,038, and $44,143, respectively. The Company also provides certain services to Fresenius SE and certain affiliates of Fresenius SE, including research and development, central purchasing, patent administration and warehousing. The fees for these services are negotiated on the same basis as the fees for services provided to the Company by Fresenius SE. The Company charged $13,540, $9,798, and $9,784 for services rendered to Fresenius SE in 2009, 2008, and 2007, respectively. Under operating lease agreements for real estate entered into with Fresenius SE, the Company paid Fresenius SE $23,109, $23,485, and $19,211 during 2009, 2008, and 2007, respectively. The majority of the leases expires in 2016 and contain renewal options. The Company's Articles of Association provide that the General Partner shall be reimbursed for any and all expenses in connection with management of the Company's business, including remuneration of the members of the General Partner's supervisory board and the General Partner's management board. The aggregate amount reimbursed to Management AG for 2009, 2008, and 2007 was $7,783, $9,230, and $10,348, respectively, for its management services during those years and included $84, $88, and $82 as compensation for their exposure to risk as General Partner for 2009, 2008, and 2007, respectively. The Company's Articles of Association set the annual compensation for assuming unlimited liability at 4% of the amount of the General Partner's invested capital (1,500). b)Products During the years ended December 31, 2009, 2008, and 2007, the Company sold products to Fresenius SE for $13,601, $36,704 and $34,133 respectively. During 2009, 2008, and 2007, the Company made purchases from Fresenius SE in the amount of $43,320, $45,084 and $52,280 respectively. In addition to the purchases noted above, the Company currently purchases heparin supplied by APP Inc., through a group purchasing organization ("GPO"). In September 2008, Fresenius Kabi AG, a wholly-owned subsidiary of Fresenius SE, acquired 100% of APP Inc. The Company has no direct supply agreement with APP Inc. and does not submit purchase orders directly to APP Inc. In the twelve-month periods ended December 31, 2009 and 2008, Fresenius Medical Care Holdings, Inc. ("FMCH") acquired approximately $31,300 and $19,564, respectively, of heparin from |
Inventories
Inventories | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Inventories Note | 5. Inventories As of December 31, 2009 and 2008, inventories consisted of the following: 2009 2008 Raw materials and purchased components $ 154,599 $ 145,756 Work in process 63,683 60,960 Finished goods 481,047 385,607 Health care supplies 122,325 114,727 Inventories $ 821,654 $ 707,050 During the first quarter, 2009, inventory adjustments led to an increase in value of inventory at January 1, 2009, of $23,327 and a corresponding reduction in costs of revenues sold during the three month period ending March 31, 2009. Under the terms of certain unconditional purchase agreements, the Company is obligated to purchase approximately $2,414,214 of materials, of which $407,889 is committed at December 31, 2009 for 2010. The terms of these agreements run 1 to 9 years. Inventories as of December 31, 2009 and 2008 include $34,788 and $35,143, respectively, of Erythropoietin ("EPO"), which is supplied by a single source supplier in the United States. In October 2006, the Company entered into a five-year exclusive sourcing and supply agreement with its EPO supplier. Revenues from EPO accounted for approximately 21%, 20%, and 21% of total dialysis care revenue in the North America segment for 2009, 2008, and 2007, respectively. Delays, stoppages, or interruptions in the supply of EPO could adversely affect the operating results of the Company. |
Property Plant And Equipment
Property Plant And Equipment | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Property Plant and Equipment | 6.Property, Plant and Equipment As of December 31, 2009 and 2008, property, plant and equipment consisted of the following: 2009 2008 Land and improvements $ 44,837 $ 40,156 Buildings and improvements 1,727,681 1,535,017 Machinery and equipment 2,630,925 2,352,344 Machinery, equipment and rental equipment under capitalized leases 29,557 22,718 Construction in progress 259,711 238,583 4,692,711 4,188,818 Accumulated depreciation (2,273,141) (1,952,740) Property, plant and equipment, net $ 2,419,570 $ 2,236,078 Depreciation expense for property, plant and equipment amounted to $396,860, $368,300, and $328,595 for the years ended December 31, 2009, 2008, and 2007, respectively. Included in property, plant and equipment as of December 31, 2009 and 2008 were $364,118 and $299,778, respectively, of peritoneal dialysis cycler machines which the Company leases to customers with end-stage renal disease on a month-to-month basis and hemodialysis machines which the Company leases to physicians under operating leases. Accumulated depreciation related to machinery, equipment and rental equipment under capital leases was $14,010 and $10,984 at December 31, 2009 and 2008, respectively. |
Intangible Assets
Intangible Assets | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Intangible Assets | 7.Intangible Assets and Goodwill As of December 31, 2009 and 2008, the carrying value and accumulated amortization of intangible assets other than goodwill consisted of the following: 2009 2008 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization Amortizable Intangible Assets Non-compete Agreements $ 224,579 $ (157,717) $ 218,245 $ (142,974) Technology 100,016 (18,109) 100,016 (11,490) License and distribution agreements 184,219 (59,677) 173,244 (41,336) Self-developed Software 31,230 (9,405) 8,656 (1,815) Other 277,468 (210,484) 261,816 (197,374) Construction in progress 67,113 - 49,886 - $ 884,625 $ (455,392) $ 811,863 $ (394,989) As of December 31, 2009 and 2008 the carrying value of non-amortizable intangible assets other than goodwill consisted of the following: 2009 2008 Carrying Carrying Amount Amount Non-amortizable Intangible Assets 1 Tradename $ 210,348 $ 210,156 Management contracts 219,614 219,466 1 1 $ 429,962 $ 429,622 Total Intangible Assets $ 859,195 $ 846,496 Amortization Expense 1 2007 $ 34,003 2008 $ 47,384 2009 $ 60,225 Estimated Amortization Expense 2010 $ 61,448 2011 $ 57,647 2012 $ 54,743 2013 $ 53,345 2014 $ 52,976 Intangible Assets: License and Distribution Agreements In July 2008, Fresenius Medical Care entered into two separate license and distribution agreements, one for the U.S. (with Galenica Ltd. and Luitpold Pharmaceuticals Inc.), the "U.S. Agreement," and one for certain countries in Europe and the Middle East (with Galenica AG and Vifor (International) AG), the "International Agreement," to market and distribute Galenica Ltd's and Luitpold Pharmaceuticals Inc.'s intravenous iron products, such as Venofer and Ferinject for dialysis treatment. In North America, the license agreement among our subsidiary, FUSA Manufacturing Inc. ("FMI"), Luitpold Pharmaceuticals Inc, American Regent, Inc. and Vifor (International), Inc. provides FMI with exclusive rights to manufacture and distribute Venofer to freestanding (non-hospital based) U.S. dialysis facilities. In addition, it grants FMI similar rights for Injectafer (ferric carboxymaltose), a proposed new intravenous iron medication currently under clinical study in the U.S. The U.S. license agreement has a term of ten years, includes FMI extension options, and requires payment by FMI over the ten year term of approximately $2,000,000, which the Company will expense as incurred (based upon the annual estimated units of sale of the licensed product), subject to certain early termination provisions. In addition to these payments, the Company will pay a total of approximately $47,000 over a four year period for the U.S Agreement of which $6,111 and $22,000 was paid in 2009 and 2008, respectively. The Company recorded a liability for the balance. The cost of the U.S. Agreement and related transaction costs of $5,957 will be amortized over their 10-year expected useful life (based upon the annual estimated units of sale of the licensed product). The Company paid $14,5 |
Accrued Expenses And Other Liab
Accrued Expenses And Other Liabilties | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Accrued Expenses and Other Liabilities | 8.Accrued Expenses and Other Current Liabilities As at December 31, 2009 and 2008 accrued expenses and other current liabilities consisted of the following: 2009 2008 Accrued salaries and wages $ 320,295 $ 301,923 Unapplied cash and receivable credits 192,626 205,187 Accrued insurance 169,866 125,713 Special charge for legal matters 115,000 115,000 Other 537,766 540,610 Total accrued expenses and other current liabilities $ 1,335,553 $ 1,288,433 In 2001, the Company recorded a $258,159 special charge to address legal matters relating to transactions pursuant to the Agreement and Plan of Reorganization dated as of February 4, 1996 by and between W.R. Grace Co. and Fresenius SE (the "Merger"), estimated liabilities and legal expenses arising in connection with the W.R. Grace Co. Chapter 11 proceedings (the "Grace Chapter 11 Proceedings") and the cost of resolving pending litigation and other disputes with certain commercial insurers. During the second quarter of 2003, the court supervising the Grace Chapter 11 Proceedings approved a definitive settlement agreement entered into among the Company, the committees representing the asbestos creditors and W.R. Grace Co. Under the settlement agreement, the Company will pay $115,000, without interest, upon plan confirmation (see Note 18). With the exception of the proposed $115,000 payment under the Settlement Agreement, all other matters included in the special charge have been resolved. The other item in the table above includes accruals for operating expenses, interest, withholding tax, value added tax, legal and compliance costs, physician compensation, commissions, short-term portion of pension liabilities, bonuses and rebates, derivatives and accrued rents. |
Short-Term Borrowings And Short
Short-Term Borrowings And Short-Term Borrowings from Related Parties | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Short-Term Borrowings and Short-Term Borrowings from Related Parties | 9. Short-Term Borrowings and Short-Term Borrowings from Related Parties As of December 31, 2009 and 2008, short-term borrowings and short-term borrowings from related parties consisted of the following: 2009 2008 Borrowings under lines of credit $ 95,720 $ 121,476 Accounts receivable facility 214,000 539,000 Other financial liabilities 6,624 22,679 Short-term borrowings and other financial liabilities 316,344 683,155 Short-term borrowings from related parties 10,440 1,330 Short-term borrowings, Other financial liabilities and Short-term borrowings from related parties 1.00 $ 326,784 $ 684,485 Short-term Borrowings and Other Financial Liabilities Lines of Credit Short-term borrowings of $95,720 and $121,476 at December 31, 2009 and 2008, respectively, represent amounts borrowed by the Company and certain of its subsidiaries under lines of credit with commercial banks. The average interest rates on these borrowings at December 31, 2009 and 2008 were 2.94% and 5.30%, respectively. Excluding amounts available under the 2006 Senior Credit Agreement (see Note 10 below), at December 31, 2009 and 2008, the Company had $208,952 and $226,221 available under other commercial bank agreements. In some instances, lines of credit are secured by assets of the Company's subsidiary that is party to the agreement or may require the Company's guarantee. In certain circumstances, the subsidiary may be required to meet certain covenants. Accounts Receivable Facility The Company has an asset securitization facility (the "A/R Facility") which is typically renewed in October of each year and was most recently renewed and increased from $550,000 to $650,000 on November 17, 2009. Under the AR Facility, certain receivables are sold to NMC Funding Corporation ("NMC Funding"), a wholly-owned subsidiary. NMC Funding then assigns percentage ownership interests in the accounts receivable to certain bank investors. Under the terms of the AR Facility, NMC Funding retains the right, at any time, to recall all the then outstanding transferred interests in the accounts receivable. Consequently, the receivables remain on the Company's Consolidated Balance Sheet and the proceeds from the transfer of percentage ownership interests are recorded as short-term borrowings. At December 31, 2009 there are outstanding short-term borrowings under the AR Facility of $214,000. NMC Funding pays interest to the bank investors, calculated based on the commercial paper rates for the particular tranches selected. The average interest rate during 2009 was 2.90%. Annual refinancing fees, which include legal costs and bank fees (if any), are amortized over the term of the facility. Other Financial Liabilities At December 31, 2009 and 2008, the Company had $6,624 and $22,679 of other financial liabilities which were mainly related to the 2008 Venofer transaction (see Note 7). Short-term Borrowings from related parties From time to time during each of the years presented, the Company received advances under the existing loan agreements with Fresenius SE for those years. During the year ended December 31, 2009, the Company received advances ranging f |
Long-term Debt And Capital Leas
Long-term Debt And Capital Lease Obligations | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Long-term Debt and Capital Lease Obligations | 10. Long-term Debt and Capital Lease Obligations As of December 31, 2009 and 2008, long-term debt and capital lease obligations consisted of the following: 2009 2008 2006 Senior Credit Agreement $ 3,522,040 $ 3,366,079 6 7/8% Senior Notes 493,344 492,456 Euro Notes 288,120 278,340 EIB Agreements 213,460 174,059 Capital lease obligations 17,600 13,394 Other 50,991 88,165 4,585,555 4,412,493 Less current maturities (157,634) (455,114) $ 4,427,921 $ 3,957,379 Senior Debt The Company's senior debt consists mainly of borrowings related to its 2006 Senior Credit Agreement, its 67/8% Senior Notes, its Euro Notes and borrowings under its European Investment Bank Agreements as follows: 2006 Senior Credit Agreement The Company, Fresenius Medical Care Holdings, and certain other subsidiaries of the Company that are borrowers and/or guarantors thereunder, including Fresenius Medical Care Deutschland GmbH, entered into a $4,600,000 syndicated credit facility (the "2006 Senior Credit Agreement") with Bank of America, N.A. ("BofA"); Deutsche Bank AG New York Branch; The Bank of Nova Scotia, Credit Suisse, Cayman Islands Branch; JPMorgan Chase Bank, National Association; and certain other lenders (collectively, the "Lenders") on March 31, 2006 which replaced its prior credit agreement. The 2006 Senior Credit Agreement consists of: a 5-year $1,000,000 revolving credit facility (of which up to $250,000 is available for letters of credit, up to $300,000 is available for borrowings in certain non-U.S. currencies, up to $150,000 is available as swing line loans in U.S. dollars, up to $250,000 is available as a competitive loan facility and up to $50,000 is available as swing line loans in certain non-U.S. currencies, the total of which cannot exceed $1,000,000) which will be due and payable on March 31, 2011.a 5-year term loan facility ("Term Loan A") of $1,850,000, also scheduled to mature on March 31, 2011. The 2006 Senior Credit Agreement requires 19 quarterly payments on Term Loan A of $30,000 each that permanently reduce the term loan facility which began June 30, 2006 and continue through December 31, 2010. The remaining amount outstanding is due on March 31, 2011. As a result of the voluntary repayment made in July 2007 from the proceeds of the issuance of the 6 7/8% Senior Notes (see "6 7/8% Senior Notes," below) which reduced the principal balance outstanding; the quarterly payments were reduced to $29,430 beginning with the payment for September 30, 2008.a 7-year term loan facility ("Term Loan B") of $1,750,000 scheduled to mature on March 31, 2013. The terms of the 2006 Senior Credit Agreement require 28 quarterly payments on Term Loan B that permanently reduce the term loan facility. The repayment began June 30, 2006. The first 24 quarterly payments are $4,375 and payments 25 through 28 are $411,250 with the final payment of the remaining balance due on March 31, 2013, subject to an early repayment requirement on March 1, 2011 if the Trust Preferred Securities due June 15, 2011 are not repaid or refinanced or their maturity is not extended prior to that date. As a result of the voluntary repa |
Employee Benefit Plans
Employee Benefit Plans | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Employee Benefit Plans | 11.Employee Benefit Plans General FMC-AG Co. KGaA recognizes pension costs and related pension liabilities for current and future benefits to qualified current and former employees of the Company. The Company's pension plans are structured differently according to the legal, economic and fiscal circumstances in each country. The Company currently has two types of plans, defined benefit and defined contribution plans. In general plan benefits in defined benefit plans are based on all or a portion of the employees' years of services and final salary. Plan benefits in defined contribution plans are determined by the amount of contribution by the employee and the employer, both of which may be limited by legislation, and the returns earned on the investment of those contributions. Upon retirement under defined benefit plans, the Company is required to pay defined benefits to former employees when the defined benefits become due. Defined benefit plans may be funded or unfunded. The Company has two major defined benefit plans, one funded plan in North America and an unfunded plan in Germany. Actuarial assumptions generally determine benefit obligations under defined benefit plans. The actuarial calculations require the use of estimates. The main factors used in the actuarial calculations affecting the level of the benefit obligations are: assumptions on life expectancy, the discount rate and future salary and benefit levels. Under the Company's funded plans, assets are set aside to meet future payment obligations. An estimated return on the plan assets is recognized as income in the respective period. Actuarial gains and losses are generated when there are variations in the actuarial assumptions and differences between the actual and the estimated return on plan assets for that year. The company's pension liability is impacted by these actuarial gains or losses. In the case of the Company's funded plan, the defined benefit obligation is offset against the fair value of plan assets. A pension liability is recognized in the balance sheet if the defined benefit obligation exceeds the fair value of plan assets. A pension asset is recognized (and reported under other assets in the balance sheet) if the fair value of plan assets exceeds the defined benefit obligation and if the Company has a right of reimbursement against the fund or a right to reduce future payments to the fund. Under defined contribution plans, the Company pays defined contributions during the employee's service life which satisfies all obligations of the Company to the employee. The Company has a defined contribution plan in North America. Defined Benefit Pension Plans During the first quarter of 2002, FMCH, the Company's North America subsidiary, curtailed its defined benefit and supplemental executive retirement plans. Under the curtailment amendment for substantially all employees eligible to participate in the plan, benefits have been frozen as of the curtailment date and no additional defined benefits for future services will be earned. The Company has retained all employee benefit obligations as of the curtailment date. Each year FMCH contributes at least the minimu |
Mandatorily Redeemable Trust Pr
Mandatorily Redeemable Trust Preferred Securities | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Mandatorily Redeemable Trust Preferred Securities | 12.Mandatorily Redeemable Trust Preferred Securities The Company issued Trust Preferred Securities through Fresenius Medical Care Capital Trusts, statutory trusts organized under the laws of the State of Delaware. FMC-AG Co. KGaA owns all of the common securities of these trusts. The sole asset of each trust is a senior subordinated note of FMC-AG Co. KGaA or a wholly-owned subsidiary of FMC-AG Co. KGaA. FMC-AG Co. KGaA, D-GmbH and FMCH have guaranteed payment and performance of the senior subordinated notes to the respective Fresenius Medical Care Capital Trusts. The Trust Preferred Securities are guaranteed by FMC-AG Co. KGaA through a series of undertakings by the Company, FMCH and D-GmbH. The Trust Preferred Securities entitle the holders to distributions at a fixed annual rate of the stated amount and are mandatorily redeemable after 10 years. Earlier redemption at the option of the holders may also occur upon a change of control followed by a rating decline or defined events of default including a failure to pay interest. Upon liquidation of the trusts, the holders of Trust Preferred Securities are entitled to a distribution equal to the stated amount. The Trust Preferred Securities do not hold voting rights in the trust except under limited circumstances. The indentures governing the notes held by the Fresenius Medical Care Capital Trusts contain affirmative and negative covenants with respect to the Company and its subsidiaries and other payment restrictions. Some of the covenants limit the Company's indebtedness and its investments, and require the Company to maintain certain ratios defined in the indentures. As of December 31, 2009, the Company is in compliance with all financial covenants under all Trust Preferred Securities agreements. The Trust Preferred Securities outstanding as of December 31, 2009 and 2008 are as follows: Mandatory Year Stated Interest Redemption Issued Amount Rate Date 2009 2008 Fresenius Medical Care Capital Trust IV 2001 $225,000 7 7/8% June 15, 2011 $ 224,451 $ 224,068 Fresenius Medical Care Capital Trust V 2001 300,000 7 3/8% June 15, 2011 431,645 416,628 $ 656,096 $ 640,696 The Company redeemed the securities issued by Trust II and Trust III which were due and paid on February 1, 2008, primarily with funds obtained under its existing credit facilities. |
Shareholders Equity
Shareholders Equity | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Shareholders' Equity | 13.Shareholders' Equity Capital Stock The General Partner has no equity interest in the Company and, therefore, does not participate in either the assets or the profits and losses of the Company. However, the General Partner is compensated for all outlays in connection with conducting the Company's business, including the remuneration of members of the management board and the supervisory board (see Note 4). The general meeting of a partnership limited by shares may approve Authorized Capital (genehmigtes Kapital). The resolution creating Authorized Capital requires the affirmative vote of a majority of three quarters of the capital represented at the vote and may authorize the management board to issue shares up to a stated amount for a period of up to five years. The nominal value of the Authorized Capital may not exceed half of the capital stock at the time of the authorization. In addition, the general meeting of a partnership limited by shares may create Conditional Capital (bedingtes Kapital) for the purpose of issuing (i)shares to holders of convertible bonds or other securities which grant a right to shares, (ii)shares as the consideration in a merger with another company, or (iii)shares offered to management or employees. In each case, the authorizing resolution requires the affirmative vote of a majority of three quarters of the capital represented at the vote. The nominal value of the Conditional Capital may not exceed half or, in the case of Conditional Capital created for the purpose of issuing shares to management and employees, 10% of the company's capital at the time of the resolution. All resolutions increasing the capital of a partnership limited by shares also require the consent of the General Partner for their effectiveness. Authorized Capital By resolution of the Extraordinary General Meeting ("EGM") of shareholders on August30, 2005, Management AG was authorized, with the approval of the supervisory board, to increase, on one or more occasions, the Company's share capital until August29, 2010 by a maximum amount of35,000 through issue of new ordinary shares against cash contributions, Authorized CapitalI. The General Partner is entitled, subject to the approval of the supervisory board, to decide on the exclusion of statutory pre-emption rights of the shareholders. However, such an exclusion of pre-emption rights will be permissible for fractional amounts. Additionally, the newly issued shares may be taken up by certain credit institutions determined by the General Partner if such credit institutions are obliged to offer the shares to the shareholders (indirect pre-emption rights). In addition, by resolution of the EGM of shareholders on August30, 2005, the General Partner was authorized, with the approval of the supervisory board, to increase, on one or more occasions, the share capital of the Company until August29, 2010 by a maximum amount of 25,000 through the issue of new ordinary shares against cash contributions or contributions in kind, Authorized CapitalII. The General Partner is entitled, subject to the approval of the supervisory board, to decide on an exclusion of statutory pre-emption rights o |
Earnings Per Share
Earnings Per Share | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Earnings Per Share | 14. Earnings Per Share The following table contains reconciliations of the numerators and denominators of the basic and diluted earnings per share computations for the years ending December 31: 2009 2008 2007 Numerators: Net income attributable to FMC-AG Co. KGaA $ 891,138 $ 817,607 $ 717,130 less: Dividend Preference on Preference shares 107 112 103 Income available to all class of shares $ 891,031 $ 817,495 $ 717,027 Denominators: Weighted average number of: Ordinary shares outstanding 294,418,795 293,233,477 291,929,141 Preference shares outstanding 3,842,586 3,795,248 3,739,470 Total weighted average shares outstanding 298,261,381 297,028,725 295,668,611 Potentially dilutive Ordinary shares - 777,848 1,079,683 Potentially dilutive Preference shares 66,314 98,060 127,324 Total weighted average Ordinary shares outstanding assuming dilution 294,418,795 294,011,325 293,008,824 Total weighted average Preference shares outstanding assuming dilution 3,908,900 3,893,308 3,866,794 Basic income per Ordinary share $ 2.99 $ 2.75 $ 2.43 Plus preference per Preference share 0.03 0.03 0.02 Basic income per Preference Share $ 3.02 $ 2.78 $ 2.45 Fully diluted income per Ordinary share $ 2.99 $ 2.74 $ 2.42 Plus preference per Preference share 0.03 0.03 0.02 Fully diluted income per Preference share $ 3.02 $ 2.77 $ 2.44 |
Stock Options
Stock Options | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Stock Options | 15. Stock Options In connection with its stock option program, the Company incurred compensation expense of $33,746, $31,879, and $24,208 for the years ending December 31, 2009, 2008, and 2007, respectively. There were no capitalized compensation costs in any of the three years presented. The Company also recorded a related deferred income tax of $9,740, $9,158, and $6,880 for the years ending December 31, 2009, 2008, and 2007, respectively. Stock Options and other Share-Based Plans At December 31, 2009, the Company has awards outstanding under various stock-based compensation plans. Incentive plan In 2009, Management Board members were eligible for performancerelated compensation that depended upon achievement of individual and common targets. The targets are based upon operating earnings (EBIT), net consolidated earnings (EAT) and its growth, as well as the development of cash flow, and are in part developed by a comparison with the previous year's figures, budgeted figures and actually achieved figures. Targets are divided into Group level targets and those to be achieved in individual regions. The bonus for fiscal year 2009 will, in principle, consist proportionately of a cash component and a share-based component which will be paid in cash. Upon meeting the annual targets, the cash component was or will be paid after the end of 2009. The share-based component is subject to a several year vesting period, although a shorter period may apply in special cases. The amount of cash payment relating to the share-based component will correspond to the share price of Fresenius Medical Care AG Co. KGaA ordinary shares upon exercise after the several year vesting period. The amount of the maximum achievable bonus for each of the members of the Management Board is capped. In 2006, Fresenius Medical Care Management AG adopted a three-year performance related compensation plan for fiscal years 2008, 2007 and 2006, for the members of its management board in the form of a variable bonus. A special bonus component (award) for some of the management board members consists in equal parts of cash payments and a share-based compensation based on development of the share price of Fresenius Medical Care AG Co. KGaA's ordinary shares. The amount of the award in each case depends on the achievement of certain performance targets. The targets are measured by reference to revenue growth, operating income, consolidated net income, and cash flow development. Annual targets have been achieved, the cash portion of the award has been paid after the end of the respective fiscal year. The share-based compensation portion of the award has been granted but subject to a three-year vesting period beginning after the respective fiscal year in which the target has been met and is amortized over the same three-year vesting period. The payment of the share-based compensation portion corresponds to the share price of Fresenius Medical Care AG Co. KGaA's ordinary shares on exercise, i.e. at the end of the vesting period, and is also made in cash. The share-based compensation is revalued each reporting period during the vesting period to reflect the market value of t |
Income Taxes
Income Taxes | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Income Taxes | 16.Income Taxes Income before income taxes is attributable to the following geographic locations: 2009 2008 2007 Germany $ 296,326 $ 372,174 $ 281,633 United States 904,083 773,089 724,839 Other 255,224 190,427 202,603 $ 1,455,633 $ 1,335,690 $ 1,209,075 Income tax expense (benefit) for the years ended December 31, 2009, 2008, and 2007, consisted of the following: 2009 2008 2007 Current: Germany $ 68,442 $ 62,609 $ 124,598 United States 318,589 198,763 272,032 Other 81,236 77,134 75,534 468,267 338,506 472,164 Deferred: Germany 5,041 43,593 (11,377) United States 22,498 105,152 3,483 Other (5,393) (11,549) (10,505) 22,146 137,196 (18,399) $ 490,413 $ 475,702 $ 453,765 In 2009 and 2008, the Company is subject to German federal corporation income tax at a base rate of 15% plus a solidarity surcharge of 5.5% on federal corporation taxes payable. In 2007, the Company was subject to German federal corporation income tax at a base rate of 25% plus a solidarity surcharge of 5.5% on federal corporation taxes payable. A reconciliation between the expected and actual income tax expense is shown below. The expected corporate income tax expense is computed by applying the German corporation tax rate (including the solidarity surcharge) and the effective trade tax rate on income before income taxes. The respective combined tax rates are 29.13%, 29.58% and 38.47% for the fiscal years ended December 31, 2009, 2008, and 2007. 2009 2008 2007 Expected corporate income tax expense $ 423,953 $ 395,097 $ 465,131 Tax free income (33,284) (49,309) (50,131) Foreign tax rate differential 96,237 93,877 (5,434) Non-deductible expenses 3,947 5,494 5,081 Taxes for prior years 6,663 21,371 41,868 Change in valuation allowance 8,950 4,168 3,627 Book income of consolidated partnership attributable to Noncontrolling interests (26,876) (13,440) (11,887) Change of German tax rate 0 0 (4,257) Other 10,823 18,444 9,767 Actual income tax expense $ 490,413 $ 475,702 $ 453,765 Effective tax rate 33.7% 35.6% 37.5% The tax effects of the temporary differences that give rise to deferred tax assets and liabilities at December 31, 2009 and 2008, are presented below: 2009 2008 Deferred tax assets: Accounts receivable, primarily due to allowance for doubtful accounts $ 37,571 $ 37,431 Inventory, primarily due to additional costs capitalized for tax purposes, and inventory reserve accounts 33,798 35,029 Plant, equipment, intangible assets and other non current assets, principally due to differences in depreciation and amortization 50,925 41,103 Accrued expenses and other liabilities for financial accounting purposes, not currently tax deductible 291,767 305,898 Net operating loss carryforwards, tax credit carryforwards and interest carryforwards 78,730 79,389 Derivatives 52,283 67,800 Stock-based compensation expense 22,981 17,405 Other 21,530 10,679 Total deferred tax assets $ 589,585 $ 594,734 Less: valuation allowan |
Operating Leases
Operating Leases | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Operating Leases | 17.Operating Leases The Company leases buildings and machinery and equipment under various lease agreements expiring on dates through 2034. Rental expense recorded for operating leases for the years ended December 31, 2009, 2008 and 2007 was $532,465, $497,875 and $461,490, respectively. Future minimum rental payments under noncancelable operating leases for the five years succeeding December 31, 2009 and thereafter are: 2010 $ 454,833 2011 403,366 2012 348,214 2013 298,414 2014 244,528 Thereafter 802,093 $ 2,551,448 |
Legal Proceedings
Legal Proceedings | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Legal Proceedings | 18. Legal Proceedings Legal Proceedings The Company 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 difficult to accurately predict and outcomes that are not consistent with the Company's view of the merits can occur. The Company 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 financial condition. Commercial Litigation The Company was originally formed as a result of a series of transactions it completed pursuant to the Agreement and Plan of Reorganization dated as of February 4, 1996, by and between W.R. Grace Co. and Fresenius SE (the "Merger"). At the time of the Merger, a W.R. Grace Co. subsidiary known as W.R. Grace Co.-Conn. had, and continues to have, significant liabilities arising out of product-liability related litigation (including asbestos-related actions), pre-Merger tax claims and other claims unrelated to National Medical Care, Inc. ("NMC"), which was W.R. Grace Co.'s dialysis business prior to the Merger. In connection with the Merger, W.R. Grace Co.-Conn. agreed to indemnify the Company, FMCH, and NMC against all liabilities of W.R. Grace Co., whether relating to events occurring before or after the Merger, other than liabilities arising from or relating to NMC's operations. W.R. Grace Co. and certain of its subsidiaries filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code (the "Grace Chapter 11 Proceedings") on April 2, 2001. Prior to and after the commencement of the Grace Chapter 11 Proceedings, class action complaints were filed against W.R. Grace Co. and FMCH by plaintiffs claiming to be creditors of W.R. Grace Co.-Conn., and by the asbestos creditors' committees on behalf of the W.R. Grace Co. bankruptcy estate in the Grace Chapter 11 Proceedings, alleging among other things that the Merger was a fraudulent conveyance, violated the uniform fraudulent transfer act and constituted a conspiracy. All such cases have been stayed and transferred to or are pending before the U.S. District Court as part of the Grace Chapter 11 Proceedings. In 2003, the Company reached agreement with the asbestos creditors' committees on behalf of the W.R. Grace Co. bankruptcy estate and W.R. Grace Co. in the matters pending in the Grace Chapter 11 Proceedings for the settlement of all fraudulent conveyance and tax claims against it and other claims related to the Company that arise out of the bankruptcy of W.R. Grace Co. Under the terms of the settlement agreement as amended (the "Settlement Agreement"), fraudulent conveyance and other claims raised on behalf of asbestos claimants will be dismissed with prejudice and the Company will receive protection against existing and potential future W.R. Grace Co. rel |
Financial Instruments
Financial Instruments | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Financial Instruments | 19.Financial Instruments As a global supplier of dialysis services and products in more than 115 countries throughout the world, the Company is faced with a concentration of credit risks due to the nature of the reimbursement systems which are often provided by the governments of the countries in which the Company operates. Changes in reimbursement rates or the scope of coverage could have a material adverse effect on the Company's business, financial condition and results of operations and thus on its capacity to generate cash flow. In the past the Company experienced and also expects in the future generally stable reimbursements for its dialysis services. This includes the balancing of unfavorable reimbursement changes in certain countries with favorable changes in other countries. Due to the fact that a large portion of the Company's reimbursement is provided by public health care organizations and private insurers, the Company expects that most of its accounts receivables will be collectable, albeit potentially slightly more slowly in the International segment in the immediate future, particularly in countries most severely affected by the current global financial crisis. Non-derivative Financial Instruments The following table presents the carrying amounts and fair values of the Company's non-derivative financial instruments at December 31, 2009, and December 31, 2008. 2009 2008 Carrying Fair Carrying Fair Amount Value Amount Value Non-derivatives Assets Cash and cash equivalents $ 301,225 $ 301,225 $ 221,584 $ 221,584 Receivables 2,558,795 2,558,795 2,351,841 2,351,841 Liabilities Accounts payable 639,836 639,836 605,260 605,260 Short-term borrowings 316,344 316,344 683,155 683,155 Short-term borrowings from related parties 10,440 10,440 1,330 1,330 Long term debt, excluding 2006 Senior Credit Agreement, Euro Notes and 6 7/8% Senior Notes 282,051 282,051 275,618 275,618 2006 Senior Credit Agreement 3,522,040 3,429,470 3,366,079 3,366,079 Trust Preferred Securities 656,096 688,026 640,696 626,241 Euro Notes 288,120 299,621 278,340 276,154 6 7/8% Senior Notes 493,344 498,750 492,456 465,625 The carrying amounts in the table are included in the consolidated balance sheet under the indicated captions. The significant methods and assumptions used in estimating the fair values of non-derivative financial instruments are as follows: Cash and cash equivalents are stated at nominal value which equals the fair value. Short-term financial instruments such as accounts receivable and accounts payable and short-term borrowings are valued at their carrying amounts, which are reasonable estimates of the fair value due to the relatively short period to maturity of these instruments. The fair values of the major long-term financial liabilities are calculated on the basis of market information. Instruments for which market quotes are available are measured using these quotes. The fair values of the other long-term financial liabilities are calculated at the present value of the respective future cash flows. To determi |
Other Comprehensive Income Loss
Other Comprehensive Income Loss | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Other Comprehensive Income (Loss) | 20. Other Comprehensive Income (Loss) The changes in the components of other comprehensive income (loss) for the years ended December 31, 2009, 2008, and 2007 are as follows: Year ended December 31, Year ended December 31, Year ended December 31, 2009 2008 2007 Tax Tax Tax Pretax Effect Net Pretax Effect Net Pretax Effect Net Other comprehensive income (loss) relating to cash flow hedges: Changes in fair value of cash flow hedges during the period $ 36,053 $ (16,419) $ 19,634 $ (107,316) $ 42,764 $ (64,552) $ (83,919) $ 32,961 $ (50,958) Reclassification adjustments (5,971) 1,375 (4,596) (924) 296 (628) (4,455) 1,360 (3,095) Total other comprehensive income (loss) relating to cash flow hedges: 30,082 (15,044) 15,038 (108,240) 43,060 (65,180) (88,374) 34,321 (54,053) Foreign-currency translation adjustment 82,545 - 82,545 (168,336) - (168,336) 146,308 - 146,308 Adjustments related to pension obligations 9,708 (3,927) 5,781 (28,551) 12,632 (15,919) 35,729 (12,430) 23,299 Other comprehensive income (loss) $ 122,335 $ (18,971) $ 103,364 $ (305,127) $ 55,692 $ (249,435) $ 93,663 $ 21,891 $ 115,554 |
Business Segment Information
Business Segment Information | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Business Segment Information | 21. Business Segment Information The Company has identified three business segments, North America, International, and Asia Pacific, which were determined based upon how the Company manages its businesses. All segments are primarily engaged in providing dialysis services and manufacturing and distributing products and equipment for the treatment of end-stage renal disease. In the U.S., the Company also engages in performing clinical laboratory testing and providing inpatient dialysis services, and other services under contract to hospitals. The Company has aggregated the International and Asia Pacific operating segments as "International." The segments are aggregated due to their similar economic characteristics. These characteristics include the same services provided and the same products sold, the same type patient population, similar methods of distribution of products and services and similar economic environments. Management evaluates each segment using a measure that reflects all of the segment's controllable revenues and expenses. Management believes that the most appropriate measure in this regard is operating income which measures the Company's source of earnings. Financing is a corporate function, which the Company's segments do not control. Therefore, the Company does not include interest expense relating to financing as a segment measure. Similarly, the Company does not allocate "corporate costs" which relate primarily to certain headquarters overhead charges, including accounting and finance, professional services, etc., because the Company believes that these costs are also not within the control of the individual segments. The Company also regards income taxes to be outside the segment's control. In addition, certain acquisitions and intangible assets are not allocated to a segment but are accounted for as "corporate." North America International Segment Total Corporate Total 2009 Net revenue $ 7,611,500 $ 3,635,373 $ 11,246,873 $ 604 $ 11,247,477 Inter - segment revenue 2,752 77,856 80,608 (80,608) - Revenue 7,614,252 3,713,229 11,327,481 (80,004) 11,247,477 Depreciation and amortization (264,785) (183,405) (448,190) (8,895) (457,085) Operating Income 1,249,769 636,665 1,886,434 (130,838) 1,755,596 Segment assets 11,202,999 4,253,058 15,456,057 365,258 15,821,315 Capital expenditures, acquisitions and investments (1) 422,537 338,000 760,537 1,182 761,719 2008 Net revenue $ 7,005,401 $ 3,606,270 $ 10,611,671 $ 652 $ 10,612,323 Inter - segment revenue 2,100 82,283 84,383 (84,383) - Revenue 7,007,501 3,688,553 10,696,054 (83,731) 10,612,323 Depreciation and amortization (238,300) (169,999) (408,299) (7,372) (415,671) Operating Income 1,168,173 616,034 1,784,207 (111,775) 1,672,432 Segment assets 10,960,264 3,557,247 14,517,511 402,165 14,919,676 Capital expenditures, acquisitions and investments (2) 497,612 358,930 856,542 107,287 963,829 2007 Net revenue $ 6,663,221 $ 3,057,030 $ 9,720,251 $ 63 $ 9,720,314 Inter - segment revenue 516 |
Supplementary Cash Flow Informa
Supplementary Cash Flow Information | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Supplementary Cash Flow Information | 22. Supplementary Cash Flow Information The following additional information is provided with respect to the consolidated statements of cash flows: 2009 2008 2007 Supplementary cash flow information : Cash paid for interest $ 332,731 $ 357,295 $ 407,882 Cash paid for income taxes(1) $ 425,945 $ 343,224 $ 349,058 Cash inflow for income taxes from stock option exercises $ 8,123 $ 7,132 $ 8,177 Supplemental disclosures of cash flow information : Details for acquisitions: Assets acquired $ (241,745) $ (129,711) $ (431,289) Liabilities assumed 20,574 9,858 47,779 Noncontrolling interests 35,448 (3,706) 13,040 Notes assumed in connection with acquisition 4,151 2,490 93,775 Cash paid (181,572) (121,069) (276,695) Less cash acquired 7,059 714 18,818 Net cash paid for acquisitions $ (174,513) $ (120,355) $ (257,877) (1) net of tax refund |
Supplemental Condensed Combinin
Supplemental Condensed Combining Information | |
12 Months Ended
Dec. 31, 2009 | |
Note to Consolidated Financial Statements | |
Supplemental Condensed Combining Information | 22.Supplemental Condensed Combining Information In February 1998 FMC Trust Finance S..r.l. Luxembourg, and in June 2001 FMC Trust Finance S..r.l. Luxembourg III, each of which is a wholly-owned subsidiary of FMC-AG Co. KGaA, issued senior subordinated debt securities, fully and unconditionally guaranteed, jointly and severally, on a senior subordinated basis, by FMC-AG Co. KGaA, D-GmbH and FMCH (D-GmbH and FMCH being the "Guarantor Subsidiaries"). The senior subordinated debt securities were issued to statutory trusts organized under the laws of the State of Delaware, which issued trust preferred securities that were guaranteed by the Company through a series of undertakings by the Company and the Guarantor Subsidiaries, and the Company acquired all of the common securities of these trusts. (See Note 12). In December 2004, the Company assumed the obligations of its wholly owned subsidiaries as the issuer of senior subordinated notes denominated in Deutschmark and euro held by Fresenius Medical Care Capital Trust III and Fresenius Medical Care Capital Trust V, respectively. FMC Trust Finance S..r.l. Luxembourg repaid $450 and DM300 aggregate principal amount of senior subordinated debt securities on February 1, 2008 in connection with the mandatory redemption on the same date of the related trust preferred securities issued by Fresenius Medical Care Capital Trust II and Fresenius Medical Care Capital Trust III. In addition, FMC Finance III S.A., a wholly-owned subsidiary of the Company, is the obligor on senior debt securities which are fully and unconditionally guaranteed, jointly and severally on a senior basis, by the Company and by the Guarantors (see Note 9). The following combining financial information for the Company is as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007, segregated between FMC Finance III S.A., the Company, D-GmbH, FMCH, and each of the Company's other businesses (the "Non-Guarantor Subsidiaries"). For purposes of the condensed combining information, the Company and the Guarantors carry their investments under the equity method. Other (income) expense includes income (loss) related to investments in consolidated subsidiaries recorded under the equity method for purposes of the condensed combining information. In addition, other (income) expense includes income and losses from profit and loss transfer agreements as well as dividends received. For the year ended December 31, 2009 Issuer Guarantors FMC Finance III FMC - AG Co. KGaA D-GmbH FMCH Non-Guarantor Subsidiaries Combining Adjustment Combined Total Net revenue $ - $ - $ 2,818,124 $ - $ 10,744,709 $ (2,315,356) $ 11,247,477 Cost of revenue - - 2,293,550 - 7,437,867 (2,315,452) 7,415,965 Gross profit - - 524,574 - 3,306,842 96 3,831,512 Operating expenses (income): Selling, general and administrative 28 87,774 173,215 (19,877) 1,753,586 (12,620) 1,982,106 Research and development - - 64,911 - 28,899 - 93,810 Operating (loss) income (28) (87,774) 286,448 19,877 1,524,357 12,7 |