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TABLE OF CONTENTS
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of October 2018
FRESENIUS MEDICAL CARE AG & Co. KGaA
(Translation of registrant's name into English)
Else-Kröner Strasse 1
61346 Bad Homburg
Germany
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ý Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o No ý
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82 .
FRESENIUS MEDICAL CARE AG & Co. KGaA
Interim Report of Financial Condition and Results of Operations for the three and nine months ended September 30, 2018 and 2017
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FRESENIUS MEDICAL CARE AG & Co. KGaA
Management's discussion and analysis
You should read the following discussion and analysis of the results of operations of Fresenius Medical Care AG & Co. KGaA ("FMC-AG & Co. KGaA," or the "Company") and its subsidiaries in conjunction with our unaudited consolidated financial statements and related notes contained elsewhere in this report and our disclosures and discussions in our consolidated financial statements for the year ended December 31, 2017 prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), using the euro as our reporting currency. At September 30, 2018, there were no IFRS or International Financial Reporting Interpretation Committee ("IFRIC") interpretations as endorsed by the European Union relevant for interim reporting that differed from IFRS as issued by the IASB.
In this report, "FMC-AG & Co. KGaA," or the "Company," "we," "us" or "our" refers to the Company or the Company and its subsidiaries on a consolidated basis, as the context requires. The term "North America Segment" refers to our North America operating segment, the term "EMEA Segment" refers to the Europe, Middle East and Africa operating segment, the term "Asia-Pacific Segment" refers to our Asia-Pacific operating segment, and the term "Latin America Segment" refers to our Latin America operating segment. The term "Corporate" includes certain headquarters' overhead charges, including accounting and finance, centrally managed production, asset management, quality management, procurement and research and development. The abbreviation "M" is used to denote the presentation of amounts in millions. The term "Constant Currency" or at "Constant Exchange Rates" means that we have translated local currency revenue, operating income, net income attributable to shareholders of FMC-AG & Co. KGaA and other items for the current reporting period into euro using the prior year exchange rates to provide a comparable analysis without effect from exchange rate fluctuations on translation, as described below under "Financial condition and results of operations --II. Discussion of measures -- NonIFRS measures Constant currency information."
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). When used in this report, the words "outlook," "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions are generally intended to identify forward looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated, and future events and actual results, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking statements contained elsewhere in this report. We have based these forward-looking statements on current estimates and assumptions made to the best of our knowledge. By their nature, such forward-looking statements involve risks, uncertainties, assumptions and other factors which could cause actual results, including our financial condition and profitability, to differ materially, positively or negatively, relative to the results expressly or implicitly described in or suggested by these statements. Moreover, forward-looking estimates or predictions derived from third parties' studies or information may prove to be inaccurate. Consequently, we cannot give any assurance regarding the future accuracy of the opinions set forth in this report or the actual occurrence of the projected developments described herein. In addition, even if our future results meet the expectations expressed here, those results may not be indicative of our performance in future periods.
These risks, uncertainties, assumptions, and other factors, including associated costs, could cause actual results to differ from our projected results and include, among others, the following:
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FRESENIUS MEDICAL CARE AG & Co. KGaA
Act and competition laws in various countries such as China, Brazil and throughout Europe, as well as the EU Medical Device Directive, the EU General Data Protection Regulation, the two invoice policy and the Tendering and Bidding Law in China and other related local legislation, such as any applicable anti-money laundering laws, as well as other comparable statutory and regulatory regimes in many of the countries where we supply health care services and/or products;
Important factors that could contribute to such differences are noted in "Financial condition and results of operations I. Overview" below, in note 12 of the notes to consolidated financial statements (unaudited) included in this report, in note 22 of the notes to consolidated financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2017, as well as under "Risk Factors," "Business overview," "Operating and financial review and prospects," and elsewhere in that report.
Our business is also subject to other risks and uncertainties that we describe from time to time in our public filings. Developments in any of these areas could cause our results to differ materially from the results that we or others have projected or may project.
Our reported financial condition and results of operations are sensitive to accounting methods, assumptions and estimates that are the basis of our financial statements. The actual accounting policies, the judgments made in the selection and application of these policies as well as the sensitivities of reported results to changes in accounting policies, assumptions and estimates are factors to be considered along with our financial statements and the discussion under "Results of operations, financial position and net assets" below.
As a result of the implementation of IFRS 15, Revenue from Contracts with Customers ("IFRS 15") and IFRS 9, Financial Instruments ("IFRS 9"), the Company has updated its accounting policies accordingly. Please refer to note 1 of the notes to consolidated financial statements (unaudited) included in this report for further details on the updated policies. Excluding the policy updates for IFRS 15 and IFRS 9, there have been no significant changes during the nine months ended September 30, 2018 to the items disclosed within the critical accounting policies and estimates in notes 1 and 2 to the consolidated financial statements in our annual report on Form 20-F for the year ended December 31, 2017 in accordance with IFRS as issued by the IASB.
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FRESENIUS MEDICAL CARE AG & Co. KGaA
Rounding adjustments applied to individual numbers and percentages shown in this and other reports may result in these figures differing immaterially from their absolute values.
Financial condition and results of operations
I. Overview
We are the world's largest kidney dialysis company, based on publicly reported sales and number of patients treated. We provide dialysis care and related services to persons who suffer from end stage renal disease ("ESRD") as well as other health care services. We develop and manufacture a wide variety of health care products, which includes both dialysis and non-dialysis products. Our dialysis products include dialysis machines, water treatment systems and disposable products while our non-dialysis products include acute cardiopulmonary and apheresis products. We sell our health care products to customers in around 150 countries and we also use them in our own health care service operations. Our dialysis business is therefore vertically integrated. We describe certain other health care services that we provide in our North America Segment and our Asia-Pacific Segment as "Care Coordination." Care Coordination currently includes, but is not limited to, coordinated delivery of pharmacy services, vascular, cardiovascular and endovascular specialty services as well as ambulatory surgery center services, physician nephrology and cardiology services, health plan services, urgent care services and ambulant treatment services. Until June 28, 2018, Care Coordination also included the coordinated delivery of emergency, intensivist and hospitalist physician services as well as transitional care which we refer to as "hospital related physician services" (see note 2 (b) of the notes to the consolidated financial statements (unaudited) included in this report). All of these Care Coordination services together with dialysis care and related services represent our health care services. We estimated the volume of the global dialysis market was approximately €70 billion in 2017. Due to the complexity and evolving nature of Care Coordination services, we are currently unable to estimate the global volume of this market. Dialysis patient growth results from factors such as the aging population and increased life expectancies; shortage of donor organs for kidney transplants; increasing incidence of kidney disease and better treatment of and survival of patients with diabetes, hypertension and other illnesses, which frequently lead to the onset of chronic kidney disease; improvements in treatment quality, new pharmaceuticals and product technologies, which prolong patient life; and improving standards of living in developing countries, which make life-saving dialysis treatment available. We are also engaged in different areas of health care research.
As a global company delivering health care services and products, we face the challenge of addressing the needs of a wide variety of stakeholders, such as patients, customers, payors, regulators and legislators in many different economic environments and health care systems. In general, government-funded programs (in some countries in coordination with private insurers) pay for certain health care items and services provided to their citizens. Not all health care systems provide for dialysis treatment. Therefore, the reimbursement systems and ancillary services utilization environment in various countries significantly influence our business.
Premium assistance programs
On August 18, 2016, the Centers for Medicare and Medicaid Services ("CMS") issued a request for information ("RFI") seeking public comment on concerns about providers' steering patients inappropriately to individual plans offered on the Patient Protection and Affordable Care Act individual health insurance market. Fresenius Medical Care Holdings, Inc. ("FMCH") and other dialysis providers, commercial insurers and other industry participants responded to the RFI, and in that response, we reported that we do not engage in such steering. On December 14, 2016, CMS published an Interim Final Rule ("IFR") titled "Medicare Program; Conditions for Coverage for End-Stage Renal Disease Facilities-Third Party Payment" that would amend the Conditions for Coverage for dialysis providers, like FMCH. The IFR would have effectively enabled insurers to reject premium payments made by patients who received grants for individual market coverage from the American Kidney Fund ("AKF") and, therefore, could have resulted in those patients losing their individual market health insurance coverage. The loss of individual market coverage for these patients would have had a material and adverse impact on our operating results. On January 25, 2017, a federal district court in Texas, responsible for litigation initiated by a patient advocacy group and dialysis providers including FMCH, preliminarily enjoined CMS from implementing the IFR ( Dialysis Patient Citizens v. Burwell (E.D. Texas, Sherman Div.) ). The preliminary injunction was based on CMS' failure to follow appropriate notice-and-comment procedures in adopting the IFR. The injunction remains in place and the court retains jurisdiction over the dispute. On June 22, 2017, CMS requested a stay of proceedings in the litigation pending further rulemaking concerning the IFR. CMS stated, in support of its request that it expects to publish a Notice of Proposed Rulemaking in the Federal Register and otherwise pursue a notice-and-comment process in the fall of 2017 which has not been published to date. Plaintiffs in the litigation, including FMCH, consented to the stay, which was granted by the court.
The operation of charitable assistance programs like that of the AKF is also receiving increased attention by state insurance regulators and state legislatures. The result may be a regulatory framework that differs from state to state.
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FRESENIUS MEDICAL CARE AG & Co. KGaA
Even in the absence of the IFR or similar administrative actions, insurers are likely to continue efforts to thwart charitable premium assistance to our patients for individual market plans and other insurance coverages. If successful, these efforts would have a material adverse impact on our operating results.
On January 3, 2017, FMCH received a subpoena from the United States Attorney for the District of Massachusetts inquiring into our interactions and relationships with AKF, including our charitable contributions to the Fund and the Fund's financial assistance to patients for insurance premiums. FMCH is cooperating with the investigation.
For further information on these and other legal proceedings, please see note 12 of the notes to consolidated financial statements (unaudited) found elsewhere in this report.
U.S. ballot initiatives and other legislation
Further federal or state legislation or regulations may be enacted in the future through a public referendum process that could substantially modify or reduce the amounts paid for services and products offered by us and our subsidiaries and/or implement new or alternative operating models and payment models that could present more risk to our healthcare service operations. If successful, ballot initiatives introduced at the state level in the United States can force a vote of all state citizens to directly adopt or reject proposed new legislation. These ballot initiatives require a material commitment of resources by us to participate in public discourse regarding the proposed new legislation underlying the initiatives, which if passed, could further regulate clinic staffing requirements, state inspection requirements and margins on commercial business. In 2018, there were preliminary efforts in three states in the U.S. to place dialysis-related ballot initiatives in upcoming public referendums. Two such initiatives did not progress to placement on the ballot, and one in the State of California has been placed on the ballot and will be voted on in the general election in November. Also in California, legislation impacting the dialysis industry was passed by the California legislature but was then vetoed by the California Governor. State regulation at this level would introduce an unprecedented level of oversight and additional expense at the clinic level which could have a material adverse effect on our business in the impacted states. While there is uncertainty regarding the passage and scope of these ballot initiatives, if some form of restrictive dialysis-related legislation passes at the state level, such action could have a material adverse impact on our business. It is also possible that statutes may be adopted or regulations may be promulgated in the future that impose additional eligibility requirements for participation in the federal and state healthcare programs. Such new legislation or regulations could, depending upon the detail of the provisions, have positive or adverse effects, possibly material, on our businesses and results of operations.
Significant U.S. reimbursement developments
The majority of health care services we provide are paid for by governmental institutions. For the nine months ended September 30, 2018, approximately 33% of our consolidated revenue is attributable to U.S. federally-funded health care benefit programs, such as Medicare and Medicaid reimbursement, under which reimbursement rates are set by CMS. Legislative changes could affect Medicare reimbursement rates for a significant portion of the services we provide. To date, the stability of reimbursement in the U.S. has been affected by (i) the implementation of the ESRD prospective payment system ("ESRD PPS") in January 2011, (ii) the U.S. federal government across the board spending cuts in payments to Medicare providers commonly referred to as "U.S. Sequestration," (iii) the reduction to the ESRD PPS rate to account for the decline in utilization of certain drugs and biologicals associated with dialysis pursuant to the American Taxpayer Relief Act of 2012 ("ATRA") as subsequently modified under the Protecting Access to Medicare Act of 2014 ("PAMA") and (iv) CMS's 2017 final rule on the Physician Fee Schedule, which partially corrected reimbursement for certain procedures that were materially undervalued in 2016. Please see the detailed discussions on these and further legislative developments below:
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FRESENIUS MEDICAL CARE AG & Co. KGaA
ESRD PPS, which were subsequently modified by PAMA. These reductions reduced our market basket inflation adjustment by 1.25% in 2016 and 2017, and will reduce our inflation adjustment by 1% in 2018.
Presently, there is considerable uncertainty regarding possible future changes in health care regulation, including the regulation of reimbursement for dialysis services. See "Risk factors - We operate in a highly regulated industry such that the potential for legislative reform provides uncertainty and potential threats to our operating models and results" which is included in our Annual Report on Form 20-F for the year ended December 31, 2017.
In a final rule published on November 6, 2015, CMS provided for implementation of the PAMA oral-only provision. CMS clarified that once any non-oral ESRD-related drug in a category previously considered oral only is approved by the U.S. Food and Drug Administration ("FDA"), such category of drugs will cease to be considered oral only. However, for at least two years, CMS will pay for both oral and non-oral versions of the drug using a "transitional drug add-on payment adjustment," based on the average sales price plus 6% (4.3% after giving effect to the U.S. Sequestration) or some other mechanism set in accordance with Section 1847A of the Social Security Act. During this transition period, CMS will not pay outlier payments for these drugs, but the agency will collect data reflecting utilization of both the oral and injectable or intravenous forms of the drugs, as well as payment patterns, in order to help determine how to appropriately adjust the ESRD PPS payment rate as these drugs are included in the payment bundle. At the end of this transition period, CMS will incorporate payment for the oral and non-oral versions of the drug in the ESRD PPS payment rates, utilizing a public rulemaking process.
On February 7, 2017, Amgen, Inc. announced that the FDA had approved Parsabiv, an intravenous calcimimetic for the treatment of secondary hyperparathyroidism in adult patients with chronic kidney disease on dialysis. Effective January 1, 2018, CMS implemented the transitional drug add-on payment adjustment and applied it to calcimimetics. CMS adjusted the ESRD PPS rate to reflect the addition of the calcimimetics to the ESRD PPS payment bundle ("PAMA oral-only provision"). Under PAMA, CMS will collect and review intravenous and oral calcimimetics utilization data and payment patterns during the transition period and adjust the ESRD PPS payment rate at the end of the transition period based on CMS's findings.
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FRESENIUS MEDICAL CARE AG & Co. KGaA
The introduction of Parsabiv also impacts how some payors, other than Medicare, arrange for the provision of calcimimetics for their patients. While some patients continue to receive calcimimetics from their pharmacies as a pharmacy benefit, other patients receive calcimimetics from their dialysis providers as a medical benefit. While we anticipate receiving additional reimbursement from payors when these drugs are provided by our clinics, this type of transition from an oral-only drug has not occurred previously and the reimbursement landscape for non-Medicare payors is still being developed.
If we are unable to secure and maintain appropriate reimbursement arrangements for calcimimetics when provided by our dialysis clinics, we could experience a material adverse effect on our business, results of operations and financial condition.
Participation in new Medicare payment arrangements
Under CMS's Comprehensive ESRD Care Model (the "Model"), dialysis providers and physicians can form entities known as ESRD Seamless Care Organizations, or "ESCOs," as part of a new payment and care delivery model that seeks to deliver better health outcomes for ESRD patients while lowering CMS' costs. Following our initial participation in six ESCOs, we are presently participating in the Model through 24 ESCOs formed at our dialysis facilities. ESCOs that achieve the program's minimum quality thresholds and generate reductions in CMS' cost of care above certain thresholds for the ESRD patients covered by the ESCO will receive a share of the cost savings, which is adjusted based on the ESCO's performance on certain quality metrics. ESCOs that include dialysis chains with more than 200 facilities are required to share in the risk of cost increases and to reimburse CMS a share of any such increases if actual costs rise above set thresholds. As of January 1, 2018, the existing twenty-four ESCOs expanded by adding new physician practice partners and dialysis facilities, growing the number of patients participating from approximately 26,000 in 2017 to approximately 42,000 (as of September 30, 2018).
In November 2017, we announced the results from the first performance year from our ESCOs. The results, which cover the period from October 2015 through December 2016, show improved health outcomes for patients receiving coordinated care through the ESCOs. This success was validated by an independent report, which showed a nearly 9 percent decrease in hospitalization rates for these patients during the same time. As a result, the Company's ESCOs together generated more than $43 M in gross savings, an average 5.47% reduction in expenditures per patient, with all six of its first-year ESCOs exceeding the shared savings benchmark. Final performance year settlement reports have not yet been provided by CMS to finalize ESCO performance results for 2017.
Bundled Payment for Care Improvement ("BPCI") is a CMS pilot initiative, extended through September 30, 2018, with bundled payments for the individual services furnished to Medicare beneficiaries during a single episode of illness or course of treatment, including acute inpatient hospital services, physician services, and post-acute services. We commenced participation in several markets under the BPCI in April 2015 through our majority-owned subsidiary, Sound Inpatient Physicians, Inc ("Sound"). On June 28, 2018, we divested our controlling interest in Sound. See note 2 (b) of the notes to consolidated financial statements (unaudited) included in this report. Under the BPCI, we had the ability to receive additional payments if we were able to deliver quality care at a cost that was lower than certain established benchmarks, but also had the risk of incurring financial penalties if we were unsuccessful in doing so.
As of January 1, 2019, we will no longer be providing any Medicare Advantage ESRD Chronic Conditions Special Needs Plan ("MA-CSNP") products.
We have also entered into sub-capitation and other risk-based and value-based arrangements with certain payors to provide care to Medicare Advantage ESRD patients. Under these arrangements, a baseline per patient per month amount is established. If we provide complete care for less than the baseline, we retain the difference. If the cost of complete care exceeds the baseline, we owe the payor the difference.
Company structure
Our operating segments are the North America Segment, the EMEA Segment, the Asia-Pacific Segment and the Latin America Segment. The operating segments are determined based upon how we manage our businesses with geographical responsibilities. All segments are primarily engaged in providing health care services and the distribution of products and equipment for the treatment of ESRD and other extracorporeal therapies. Management evaluates each segment using measures that reflect all of the segment's controllable revenues and expenses. With respect to the performance of business operations, management believes that the most appropriate IFRS measures are revenue, operating income and operating income margin. We do not include income taxes as we believe this is outside the segments' control. Financing is a corporate function which our segments do not control. Therefore, we do not include interest expense relating to financing as a segment measurement. Similarly, we do not allocate certain costs which relate primarily to certain headquarters' overhead charges, including accounting and finance, because
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FRESENIUS MEDICAL CARE AG & Co. KGaA
we believe that these costs are also not within the control of the individual segments. Production of products, production asset management, quality management and procurement related to production are centrally managed at Corporate. Global research and development is also centrally managed at Corporate. These corporate activities do not fulfill the definition of a segment according to IFRS 8. Products are transferred to the segments at cost; therefore no internal profit is generated. The associated internal revenue for the product transfers and their elimination are recorded as corporate activities (see note 14 of the notes to consolidated financial statements (unaudited) found elsewhere in this report). Capital expenditures for production are based on the expected demand of the segments and consolidated profitability considerations. In addition, certain revenues, investments and intangible assets, as well as any related expenses, are not allocated to a segment but accounted for as Corporate. Accordingly, all of these items are excluded from our analysis of segment results and are discussed below in the discussion of our consolidated results of operations.
II. Discussion of measures
Certain of the following key performance indicators and other financial information as well as discussions and analyses set out in this report include measures that are not defined by IFRS ("Non-IFRS Measure"). We believe this information, along with comparable IFRS measurements, is useful to our investors as it provides a basis for assessing our performance, payment obligations related to performance-based compensation as well as our compliance with financial covenants. Non-IFRS financial measures should not be viewed or interpreted as a substitute for financial information presented in accordance with IFRS.
Delivered EBIT (Non-IFRS Measure)
As a result of the significance of noncontrolling interest holders in our operations, we believe a measure that is meaningful to investors is operating income less noncontrolling interests ("Delivered EBIT"). Delivered EBIT approximates the operating income attributable to the shareholders of FMC-AG & Co. KGaA. As such, we believe that operating income, or EBIT, is the closest comparable IFRS measure.
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Below is a table showing the reconciliation of operating income to Delivered EBIT on a consolidated basis and for our reporting segments:
Delivered EBIT reconciliation
|
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| | | | | | | | | | | | | |
in € M |
|||||||||||||
|
Three months ended
September 30 |
Nine months ended
September 30 |
|||||||||||
| | | | | | | | | | | | | |
|
2018 | 2017 | 2018 |
2017
|
|||||||||
| | | | | | | | | | | | | |
Total |
|||||||||||||
Operating income (EBIT) |
527 | 609 | 2,425 | 1,843 | |||||||||
less noncontrolling interests |
(64) | (62) | (176) | (199) | |||||||||
| | | | | | | | | | | | | |
Delivered EBIT |
463 | 547 | 2,249 | 1,644 | |||||||||
North America |
|
|
|
|
|||||||||
Operating income (EBIT) |
525 | 483 | 2,173 | 1,478 | |||||||||
less noncontrolling interests |
(61) | (59) | (167) | (192) | |||||||||
| | | | | | | | | | | | | |
Delivered EBIT |
464 | 424 | 2,006 | 1,286 | |||||||||
Dialysis |
|
|
|
|
|||||||||
Operating income (EBIT) |
489 | 437 | 1,255 | 1,424 | |||||||||
less noncontrolling interests |
(55) | (51) | (152) | (169) | |||||||||
| | | | | | | | | | | | | |
Delivered EBIT |
434 | 386 | 1,103 | 1,255 | |||||||||
Care Coordination |
|
|
|
|
|||||||||
Operating income (EBIT) |
36 | 46 | 918 | 54 | |||||||||
less noncontrolling interests |
(6) | (8) | (15) | (23) | |||||||||
| | | | | | | | | | | | | |
Delivered EBIT |
30 | 38 | 903 | 31 | |||||||||
EMEA |
|
|
|
|
|||||||||
Operating income (EBIT) |
88 | 106 | 302 | 333 | |||||||||
less noncontrolling interests |
(2) | (1) | (3) | (2) | |||||||||
| | | | | | | | | | | | | |
Delivered EBIT |
86 | 105 | 299 | 331 | |||||||||
Asia-Pacific |
|
|
|
|
|||||||||
Operating income (EBIT) |
66 | 77 | 218 | 237 | |||||||||
less noncontrolling interests |
(1) | (2) | (6) | (5) | |||||||||
| | | | | | | | | | | | | |
Delivered EBIT |
65 | 75 | 212 | 232 | |||||||||
Dialysis |
|
|
|
|
|||||||||
Operating income (EBIT) |
57 | 68 | 197 | 222 | |||||||||
less noncontrolling interests |
0 | (2) | (4) | (5) | |||||||||
| | | | | | | | | | | | | |
Delivered EBIT |
57 | 66 | 193 | 217 | |||||||||
Care Coordination |
|
|
|
|
|||||||||
Operating income (EBIT) |
9 | 9 | 21 | 15 | |||||||||
less noncontrolling interests |
(1) | 0 | (2) | 0 | |||||||||
| | | | | | | | | | | | | |
Delivered EBIT |
8 | 9 | 19 | 15 | |||||||||
Latin America |
|
|
|
|
|||||||||
Operating income (EBIT) |
(1) | 18 | 24 | 45 | |||||||||
less noncontrolling interests |
0 | 0 | 0 | 0 | |||||||||
| | | | | | | | | | | | | |
Delivered EBIT |
(1) | 18 | 24 | 45 | |||||||||
| | | | | | | | | | | | | |
Net cash provided by (used in) operating activities in % of revenue (Non-IFRS Measure)
Our consolidated statement of cash flows indicates how we generated and used cash and cash equivalents. In conjunction with our other primary financial statements, it provides information that helps us evaluate changes to our net assets and our financial structure (including liquidity and solvency). Net cash provided by (used in) operating activities is applied to assess whether a business can generate the cash required to make the necessary replacement and expansion of investments. This indicator is impacted by the profitability of our business and the development of
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FRESENIUS MEDICAL CARE AG & Co. KGaA
working capital, mainly receivables. Net cash provided by (used in) operating activities in percent of revenue shows the percentage of our revenue that is available in terms of financial resources. It is an indicator of our operating financial strength.
Free cash flow in % of revenue (Non-IFRS Measure)
Free cash flow (net cash provided by (used in) operating activities after capital expenditures, before acquisitions and investments) refers to the cash flow we have at our disposal. This indicator shows the percentage of revenue available for acquisitions and investments, dividends to shareholders, reducing debt financing or for repurchasing shares.
The following table shows the significant cash flow key performance indicators for the nine months ended 2018 and 2017 and reconciles free cash flow and free cash flow in percent of revenue to Net cash provided by (used in) operating activities and Net cash provided by (used in) operating activities in percent of revenue, respectively:
Net leverage ratio (Non-IFRS Measure)
The Net Leverage Ratio is a key performance indicator used for internal management. To determine the Net Leverage Ratio, debt less cash and cash equivalents (net debt) is compared to EBITDA (earnings before interest, taxes, depreciation and amortization) (adjusted for acquisitions and divestitures made for the last twelve months with a purchase price above a €50 M threshold as defined in our Amended 2012 Credit Agreement and non-cash charges). The ratio is an indicator of the length of time the Company needs to service the net debt out of its own resources. We believe that the Net Leverage Ratio provides more reliable information about the extent to which we are able to meet our payment obligations rather than considering only the absolute amount of our debt. We have a strong market position in a growing, global and mainly non-cyclical market. Furthermore, most of our customers have a high credit rating as the dialysis industry is characterized by stable and sustained cash flows. We believe this enables us to work with a relatively large share of debt capital compared with companies in other industries. The following table shows the reconciliation of Net Leverage Ratio as of September 30, 2018 and December 31, 2017.
(1) Including adjustments for acquisitions and divestitures made for the last twelve months with a purchase price above a €50 M threshold as defined in the Amended 2012 Credit
Agreement.
(2) Last 12 months.
(3) 2018 excluding the gain related to divestitures of Care Coordination activities (see note 2 (b) of the notes to the consolidated financial statements (unaudited) included in this
report).
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FRESENIUS MEDICAL CARE AG & Co. KGaA
Return on invested capital ("ROIC") (Non-IFRS Measure)
ROIC is the ratio of operating income, for the last twelve months, after tax ("net operating profit after tax" or "NOPAT") to the average invested capital of the last five quarter closing dates and expresses how efficiently we allocate the capital under our control or how well we employ our capital with regard to a specific investment project. The following table shows the reconciliation of average invested capital to total assets, which we believe to be the most directly comparable IFRS financial measure, and how ROIC is calculated:
Reconciliation of Average Invested Capital and ROIC
|
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| | | | | | | | | | |
in € M, except where otherwise specified | ||||||||||
2018 |
|
September 30, 2018 |
|
June 30, 2018 (2) |
|
March 31, 2018 (2) |
|
December 31, 2017 (2) |
|
September 30, 2017 (2) |
| | | | | | | | | | |
Total assets |
|
25,587 |
|
25,045 |
|
23,091 |
|
22,930 |
|
23,043 |
Plus: Cumulative goodwill amortization | 407 | 405 | 385 | 395 | 400 | |||||
Minus: Cash and cash equivalents | (1,754) | (1,657) | (800) | (931) | (681) | |||||
Minus: Loans to related parties | (112) | (118) | (109) | (92) | (146) | |||||
Minus: Deferred tax assets | (328) | (334) | (325) | (315) | (333) | |||||
Minus: Accounts payable | (611) | (559) | (496) | (577) | (505) | |||||
Minus: Accounts payable to related parties | (194) | (183) | (236) | (147) | (224) | |||||
Minus: Provisions and other current liabilities (1) | (2,748) | (2,689) | (2,406) | (2,565) | (2,533) | |||||
Minus: Income tax payable | (209) | (330) | (239) | (194) | (251) | |||||
| | | | | | | | | | |
Invested capital | 20,038 | 19,580 | 18,865 | 18,504 | 18,770 | |||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Average invested capital as of September 30, 2018 | 19,151 | |||||||||
Operating income (2), (3) | 2,851 | |||||||||
Income tax expense (2), (3), (4) | (639) | |||||||||
| | | | | | | | | | |
NOPAT (3) | 2,212 | |||||||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
ROIC in % |
|
11.5% |
|
|
|
|
|
|
|
|
2017 |
December 31,
2017 |
September 30,
2017 (2) |
June 30,
2017 (2) |
March 31,
2017 (2) |
December 31,
2016 (2) |
|||||
| | | | | | | | | | |
Total assets |
24,025 | 24,156 | 24,617 | 26,016 | 25,825 | |||||
Plus: Cumulative goodwill amortization |
394 | 400 | 413 | 439 | 444 | |||||
Minus: Cash and cash equivalents |
(978) | (729) | (721) | (678) | (716) | |||||
Minus: Loans to related parties |
(92) | (146) | (169) | (220) | (220) | |||||
Minus: Deferred tax assets |
(315) | (334) | (308) | (311) | (292) | |||||
Minus: Accounts payable |
(590) | (518) | (484) | (505) | (584) | |||||
Minus: Accounts payable to related parties |
(147) | (224) | (216) | (271) | (264) | |||||
Minus: Provisions and other current liabilities (1) |
(2,791) | (2,763) | (2,822) | (2,791) | (2,866) | |||||
Minus: Income tax payable |
(194) | (251) | (234) | (277) | (242) | |||||
| | | | | | | | | | |
Invested capital |
19,312 | 19,591 | 20,076 | 21,402 | 21,085 | |||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Average invested capital as of December 31, 2017 |
20,293 |
|||||||||
Operating income (2) |
2,372 | |||||||||
Income tax expense (2), (4), (5) |
(617) | |||||||||
| | | | | | | | | | |
NOPAT |
1,755 | |||||||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
ROIC in % |
8.6% |
|||||||||
| | | | | | | | | | |
(1) Including non-current provisions, non-current labor expenses and variable payments outstanding for acquisitions and excluding pension liabilities and noncontrolling interests subject to put
provisions.
(2) Including adjustments for acquisitions and divestitures made for the last twelve months with a purchase price above a € 50 M threshold as defined in the Amended
2012 Credit Agreement.
(3) Last 12 months.
(4) Adjusted for noncontrolling partnership interests.
(5) Includes the remeasurement of deferred tax balances as a result of U.S. tax reform ("U.S. Tax Reform") of approximately €236 M.
10
FRESENIUS MEDICAL CARE AG & Co. KGaA
EBITDA (Non-IFRS)
EBITDA is the basis for determining compliance with certain covenants contained in our Amended 2012 Credit Agreement or may be relevant in other major financing arrangements. You should not consider EBITDA to be an alternative to net earnings determined in accordance with IFRS or to cash flow from operations, investing activities or financing activities. In addition, not all funds depicted by EBITDA are available for management's discretionary use. For example, a substantial portion of such funds are subject to contractual restrictions and functional requirements to fund debt service, capital expenditures and other commitments from time to time as described in more detail elsewhere in this report. EBITDA, as calculated, may not be comparable to similarly titled measures reported by other companies, particularly since our calculation of EBITDA includes adjustments provided in our Amended 2012 Credit Agreement. A reconciliation of EBITDA to cash flow provided by (used in) operating activities, which we believe to be the most directly comparable IFRS financial measure, is calculated as follows:
Constant currency information
Some key performance indicators and other financial measures used in this report such as changes in revenue, operating income and net income attributable to shareholders of FMC-AG & Co. KGaA include the impact of translating local currencies to our reporting currency for financial reporting purposes. We calculate these Non-IFRS financial measures at constant exchange rates in our filings to show changes in our revenue, operating income, net income attributable to shareholders of FMC-AG & Co. KGaA and other items without giving effect to period-to-period currency fluctuations. Under IFRS, amounts received in local (non-euro) currency are translated into euro at the average exchange rate for the period presented. Once we translate the local currency for the constant currency, we then calculate the change, as a percentage, of the current period calculated using the prior period exchange rates versus the prior period. This resulting percentage is a Non-IFRS Measure referring to a change as a percentage at constant currency. These currency-adjusted financial measures are identifiable by the designated terms "Constant Exchange Rates" or "Constant Currency."
We believe that the measures at Constant Currency (Non-IFRS Measure) are useful to investors, lenders and other creditors because such information enables them to gauge the impact of currency fluctuations on our revenue, operating income, net income attributable to shareholders of FMC-AG & Co. KGaA and other items from period to period. However, we limit our use of Constant Currency period-over-period changes to a measure for the impact of currency fluctuations on the translation of local currency into euro. We do not evaluate our results and performance without considering both Constant Currency period-over-period changes in Non-IFRS revenue, operating income, net income attributable to shareholders of FMC-AG & Co. KGaA and other items and changes in revenue, operating income, net income attributable to shareholders of FMC-AG & Co. KGaA and other items prepared in accordance with IFRS. We caution the readers of this report to follow a similar approach by considering data on Constant Currency period-over-period changes only in addition to, and not as a substitute for or superior to, changes in revenue, operating income, net income attributable to shareholders of FMC-AG & Co. KGaA and other items prepared in accordance with IFRS. We present the growth rate derived from IFRS measures next to the growth rate derived from Non-IFRS measures such as revenue, operating income, net income attributable to shareholders of FMC-AG & Co. KGaA and other items. As the reconciliation is inherent in the disclosure, we believe that a separate reconciliation would not provide any additional benefit.
11
FRESENIUS MEDICAL CARE AG & Co. KGaA
Business metrics for Care Coordination
The measures for the North America Segment and the Asia-Pacific Segment discussed below include prior programs in which we participated and current and future programs that we will be participating in and will be reflected in the discussion of our business. Currently, in our North America Segment, sub-capitation, BPCI (until June 28, 2018 see note 2 of the notes to the consolidated financial statements (unaudited) included in this report), ESCO programs, MA-CSNPs and other shared savings programs are included within the Member Months and Medical Cost Under Management calculations below. In the future, other programs may be included in the metrics below. Note that due to the timing required by CMS to review the BPCI and ESCO program data that we provide, estimates have been used in order to report these metrics in a timely manner. The Asia-Pacific Segment Care Coordination metric currently used for discussion purposes is patient encounters. These metrics may be developed further in future periods. These metrics are neither IFRS measures nor non-IFRS measures, and are therefore not accompanied by or reconciled to IFRS measures.
Member months under medical cost management
In our North America Segment, member months under medical cost management is calculated by multiplying the number of members included in value-based reimbursement programs, such as Medicare Advantage plans or other value-based programs in the U.S., by the corresponding number of months these members participate in those programs ("Member Months"). In the aforementioned programs, we assume the risk of generating savings. The financial results are recorded in earnings as our performance is determined. The membership offerings within Care Coordination are sub-capitation arrangements, MA-CSNPs, ESCO and BPCI (until June 28, 2018 see note 2 of the notes to the consolidated financial statements (unaudited) included in this report) programs as well as other shared savings programs. An increase in patient membership may indicate future earnings or losses as our performance is determined through these managed care programs.
Medical cost under management
In our North America Segment, medical cost under management represents the management of medical costs associated with our patient membership in value-based programs. For ESCO, BPCI (until June 28, 2018 see note 2 of the notes to the consolidated financial statements (unaudited) included in this report) and other shared savings programs, this is calculated by multiplying the Member Months in each program by the benchmark of expected medical costs per member per month. The sub-capitation and MA-CSNPs calculation multiplies the premium per member of the program per month by the number of Member Months associated with the plan, as noted above.
Care coordination patient encounters
Care Coordination patient encounters represents the total patient encounters and procedures conducted by certain of our Care Coordination activities and, we believe, is an indicator of the revenue generated. Care Coordination patient encounters in the North America Segment is the sum of all encounters and procedures completed during the period by Sound until June 28, 2018 (see note 2 of the notes to the consolidated financial statements (unaudited) included in this report), MedSpring Urgent Care Centers, Azura Vascular Care, and National Cardiovascular Partners, the trade name of Laurus Healthcare L.P., as well as patients in our Fresenius Medical Care Rx Bone Mineral Metabolism ("Rx BMM") program. Care Coordination patient encounters in the Asia-Pacific Segment is the sum of all encounters for the following services: ambulant treatment services in day care hospitals, comprehensive and specialized health check-ups, inpatient and outpatient services, vascular access and other chronic treatment services.
III. Results of operations, financial position and net assets
The following sections summarize our results of operations, financial position and net assets as well as key performance indicators by reporting segment, as well as Corporate, for the periods indicated. We prepared the information using a management approach, consistent with the manner in which management internally disaggregates financial information to assist in making internal operating decisions and evaluating management performance.
12
FRESENIUS MEDICAL CARE AG & Co. KGaA
Results of operations
Segment data (including Corporate)
|
|||||||||||||
| | | | | | | | | | | | | |
in € M | |||||||||||||
For the three months
ended September 30, |
For the nine months
ended September 30, |
||||||||||||
| | | | | | | | | | | | | |
2018 | 2017 | 2018 |
2017
|
||||||||||
| | | | | | | | | | | | | |
Total revenue | |||||||||||||
North America |
2,843 | 3,115 | 8,589 | 9,715 | |||||||||
EMEA |
620 | 632 | 1,908 | 1,888 | |||||||||
Asia-Pacific |
421 | 411 | 1,235 | 1,206 | |||||||||
Latin America |
171 | 175 | 505 | 535 | |||||||||
Corporate |
3 | 3 | 10 | 11 | |||||||||
| | | | | | | | | | | | | |
Total |
4,058 | 4,336 | 12,247 | 13,355 | |||||||||
| | | | | | | | | | | | | |
Operating income |
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
525 | 483 | 2,173 | 1,478 | |||||||||
EMEA |
88 | 106 | 302 | 333 | |||||||||
Asia-Pacific |
66 | 77 | 218 | 237 | |||||||||
Latin America |
(1) | 18 | 24 | 45 | |||||||||
Corporate |
(151) | (75) | (292) | (250) | |||||||||
| | | | | | | | | | | | | |
Total |
527 | 609 | 2,425 | 1,843 | |||||||||
| | | | | | | | | | | | | |
Interest income |
|
|
10 |
|
|
12 |
|
|
30 |
|
|
35 |
|
Interest expense | (84) | (98) | (269) | (309) | |||||||||
Income tax expense | (104) | (152) | (453) | (484) | |||||||||
| | | | | | | | | | | | | |
Net Income | 349 | 371 | 1,733 | 1,085 | |||||||||
Less: Net Income attributable to noncontrolling interests |
|
|
(64) |
|
|
(62) |
|
|
(176) |
|
|
(199) |
|
| | | | | | | | | | | | | |
Net Income attributable to shareholders of FMC-AG & Co. KGaA | 285 | 309 | 1,557 | 886 | |||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Revenue and operating income generated in countries outside the eurozone are subject to currency fluctuations. The three and nine months ended September 30, 2018 and 2017 were negatively impacted by the development of the euro against the U.S. dollar. For the respective three- and nine-months periods ended September 30, 2018, approximately 70% and 70% of revenue and approximately 100% and 90% of operating income were generated in U.S. dollars.
13
FRESENIUS MEDICAL CARE AG & Co. KGaA
Three months ended September 30, 2018 compared to three months ended September 30, 2017
Consolidated financials
(1) For further information on Constant Exchange Rates, see " II. Discussion of Measures Non-IFRS Measures Constant currency
information" above.
(2) For further information on Delivered EBIT, including a reconciliation of Delivered EBIT to Operating Income on a consolidated basis and for each of our operating segments, see
" II. Discussion of Measures Non-IFRS Measures Delivered EBIT" above.
Health care services revenue decreased by 8% with virtually no foreign currency translation effects. The decrease was driven by decreases attributable to prior year activities associated with Sound as well as effect of closed or sold clinics (9%), the inclusion of implicit price concessions related to the implementation of IFRS 15 ("Implementation of IFRS 15") (3%) and a decrease in dialysis days (1%), partially offset by growth in same market treatments (3%), increases in organic revenue per treatment (1%) and contributions from acquisitions (1%). For further information on the Implementation of IFRS 15, see note 1 of the notes to the consolidated financial statements (unaudited) included in this report.
Dialysis treatments increased by 3% as a result of growth in same market treatments (3%) and contributions from acquisitions (2%), partially offset by a decrease in dialysis days (1%) and the effect of closed or sold clinics (1%).
At September 30, 2018, we owned, operated or managed (excluding those managed but not consolidated in the U.S.) 3,872 dialysis clinics compared to 3,714 dialysis clinics at September 30, 2017. During the three months ended September 30, 2018, we acquired 22 dialysis clinics, opened 54 dialysis clinics and combined or closed 19 clinics. The number of patients treated in dialysis clinics that we own, operate or manage (excluding patients of dialysis clinics managed but not consolidated in the U.S.) increased by 4% to 329,085 at September 30, 2018 from 317,792 at September 30, 2017.
Health care product revenue remained stable including a 1% negative impact from foreign currency translation. At Constant Exchange Rates, health care product revenue increased by 1%. Dialysis product revenue remained stable including a 2% negative impact from foreign currency translation. At Constant Exchange Rates, dialysis product revenue increased by 2% driven by higher sales of renal pharmaceuticals and products for acute care treatments, partially offset by lower sales of chronic hemodialysis products. Non-dialysis product revenue decreased by 7% to €18 M from €19 M with no foreign currency translation effects. The non-dialysis product revenue decrease was due to slightly lower sales volumes.
The decrease period over period in the gross profit margin was 1.6 percentage points. Foreign currency translation effects represented a 0.1 percentage point increase in the current period. At Constant Exchange Rates, the decrease primarily reflects reduced margins in our four operating segments. The decrease in the North America Segment is primarily due to the Implementation of IFRS 15, lower earnings related to ESCO's largely as a result of a higher prior-year revenue contribution due to the initial recognition of revenue from previous periods for the new 2017 ESCO's as well as other smaller cost increases, partially offset by the prior year impact from cost effects net of
14
FRESENIUS MEDICAL CARE AG & Co. KGaA
anticipated recoveries from natural disasters ("Natural Disasters"), favorable pricing for certain pharmaceuticals due to delays for rebasing of reimbursement, and lower personnel expense. The decrease in the EMEA Segment was largely due to unfavorable foreign currency transaction effects, higher personnel expense in certain countries, an unfavorable mix effect from acquisitions with lower margins, and the impact from one less dialysis day. The decrease in the Latin America Segment was driven by the impact from hyperinflation in Argentina. The decrease in the Asia-Pacific Segment was primarily due to an unfavorable impact from business growth due to lower average sales prices, as well as unfavorable foreign currency transaction effects.
The decrease period over period in the selling, general and administrative ("SG&A") expenses as a percentage of revenue was 0.2 percentage points. Foreign currency translation effects represented a 0.1 percentage point positive impact in the current period. At Constant Exchange Rates, the decrease was primarily driven by a decrease in the North America Segment, partially offset by increases at Corporate, the Latin America Segment, the Asia-Pacific Segment and the EMEA Segment. The decrease in the North America Segment was largely due to the Implementation of IFRS 15, the positive impact from income attributable to a consent agreement on certain pharmaceuticals, and lower personnel expense, partially offset by contributions to the opposition to the ballot initiatives in the U.S. ("U.S. Ballot Initiatives"). The increase at Corporate was driven by a 2018 accrual for an FCPA related charge ("2018 FCPA Related Charge"). See note 12 of the notes to the consolidated financial statements (unaudited) included in this report. The increase in the Latin America Segment was primarily due to the impact from hyperinflation in Argentina, unfavorable foreign currency transaction effects, and higher bad debt expense. The increase in the Asia-Pacific Segment was largely driven by unfavorable foreign currency transaction effects. The increase in the EMEA Segment was due to the favorable prior year impact from a legal settlement, higher bad debt expense, and increased personnel costs in certain countries, partially offset by favorable foreign currency transaction effects.
Research and development expenses decreased by 7% to €26 M from €28 M. Period over period, as a percentage of revenue, research and development expenses remained stable.
Income from equity method investees increased by 35% to €18 M from €13 M. The increase was primarily driven by higher income from Vifor Fresenius Medical Care Renal Pharma Ltd., an entity in which we have ownership of 45%, mainly due to increased sales of renal pharmaceuticals.
The decrease period over period in the operating income margin was 1.0 percentage points. Foreign currency translation effects represented a 1.0 percentage point increase in the current period. At Constant Exchange Rates, the decrease in the current period was largely driven by the decrease in the gross profit margin, as discussed above.
Delivered EBIT decreased by 15% including an 8% positive impact from foreign currency translation. At Constant Exchange Rates, Delivered EBIT decreased by 23% largely driven by lower operating income.
Net interest expense decreased by 14% to €74 M from €86 M, with virtually no foreign currency translation effects. The decrease was primarily due to a decreased debt level as well as interest income from the investment of the Sound proceeds.
Income tax expense decreased by 32% to €104 M from €152 M. The effective tax rate decreased to 22.9% from 29.0% for the same period of 2017 largely driven by the U.S. Tax Reform and the gain related to divestitures of Care Coordination activities, partially offset by non-tax deductible expenses, mainly related to the 2018 FCPA Related Charge and U.S. Ballot Initiatives.
Net income attributable to noncontrolling interests increased by 4% to €64 M from €62 M, including a 1% negative impact resulting from foreign currency translation. At Constant Exchange Rates, net income attributable to noncontrolling interests increased by 3%.
Net income attributable to shareholders of FMC-AG & Co. KGaA decreased by 8% to €285 M from €309 M including a 9% positive impact resulting from foreign currency translation. At Constant Exchange Rates, net income attributable to shareholders of FMC-AG & Co. KGaA decreased by 17% due to the combined effects of the items discussed above.
Basic earnings per share decreased by 8%, including a 9% positive impact resulting from foreign currency translation. At Constant Exchange Rates, basic earnings per share decreased by 17%. The average weighted number of shares outstanding for the period was approximately 306.5 M in 2018 (306.6 M in 2017).
We employed 112,134 people (full-time equivalents) as of September 30, 2018 compared to 113,648 as of September 30, 2017, a decrease of 1%, primarily due the divestiture of Sound.
15
FRESENIUS MEDICAL CARE AG & Co. KGaA
Consolidated operating performance on a comparable basis and adjusted
Management believes that there are certain distinct transactions or events for which the operating results should be adjusted to enhance transparency and comparability. We believe the following results (adjusted to exclude these items) should be analyzed in connection with the results presented above. For the three months ended September 30, 2018 and 2017, we have identified the following transactions that, when excluded from the results disclosed above, may provide a reader with further useful information in assessing our performance:
The following table reconciles the key indicators for the consolidated financial statements in accordance with IFRS to the adjusted key indicators as described. Included within the reconciliation are comparable basis line items which provide the effect of exclusions which result in the recasting of the line items for comparability year over year. While
16
FRESENIUS MEDICAL CARE AG & Co. KGaA
we believe these adjustments provide additional clarity to the discussion of our operating results, the following table should only be viewed as a supplement to our results disclosed in accordance with IFRS above.
(1) For further information on Constant Exchange Rates, see " II. Discussion of Measures Non-IFRS Measures Constant currency
information" above.
(2) Attributable to shareholders of FMC AG & Co. KGaA
17
FRESENIUS MEDICAL CARE AG & Co. KGaA
The following discussions pertain to the North America Segment, the EMEA Segment, the Asia-Pacific Segment and the Latin America Segment and the measures we use to manage these segments.
North America Segment
Key indicators and business metrics for the North America Segment
|
||||||||||||
| | | | | | | | | | | | |
in € M, except where otherwise specified |
||||||||||||
|
Change in %
|
|||||||||||
| | | | | | | | | | | | |
|
For the three months ended
|
As Reported |
Constant
|
|||||||||
| | | | | | | | | | | | |
|
2018 | 2017 | ||||||||||
| | | | | | | | | | | | |
Total North America Segment |
||||||||||||
Revenue |
2,843 | 3,115 | (9%) | (11%) | ||||||||
Health care services |
2,628 | 2,904 | (10%) | (11%) | ||||||||
Health care products |
215 | 211 | 2% | 1% | ||||||||
Operating income |
525 | 483 | 9% | 2% | ||||||||
Operating income margin in % |
18.5% | 15.5% | ||||||||||
Delivered EBIT (2) |
464 | 424 | 9% | 2% | ||||||||
Dialysis |
|
|
|
|
||||||||
Revenue |
2,543 | 2,410 | 5% | 4% | ||||||||
Number of dialysis treatments |
7,733,405 | 7,528,893 | 3% | |||||||||
Same market treatment growth in % |
2.5% | 2.4% | ||||||||||
Operating income |
489 | 437 | 12% | 12% | ||||||||
Operating income margin in % |
19.2% | 18.1% | ||||||||||
Delivered EBIT (2) |
434 | 386 | 12% | 12% | ||||||||
Care Coordination |
|
|
|
|
||||||||
Revenue |
300 | 705 | (57%) | (61%) | ||||||||
Operating income |
36 | 46 | (21%) | (93%) | ||||||||
Operating income margin in % |
12.1% | 6.6% | ||||||||||
Delivered EBIT (2) |
30 | 38 | (20%) | (107%) | ||||||||
Member Months Under Medical Cost Management (3),(4) |
149,161 | 145,109 | 3% | |||||||||
Medical Cost Under Management (3),(4) |
866 | 950 | (9%) | (14%) | ||||||||
Care Coordination Patient Encounters (3),(4) |
235,491 | 1,786,534 | (87%) | |||||||||
| | | | | | | | | | | | |
(1) For further information on Constant Exchange Rates, see " II. Discussion of Measures Non-IFRS Measures Constant currency
information" above.
(2) For further information on Delivered EBIT, including a reconciliation of Delivered EBIT to Operating Income on a consolidated basis and for each of our operating segments, see
" II. Discussion of Measures Non-IFRS Measures Delivered EBIT" above.
(3) For further information on these metrics, please refer to the discussion above of our Care Coordination measures under "Business Metrics for Care Coordination"
(4) The metrics may be understated due to a physician mapping issue related to the BPCI program within a CMS system which has not yet been resolved. Additionally, data presented for the BPCI and ESCO
metrics are subject to finalization by CMS, which may result in changes from previously reported metrics.
Revenue
Dialysis revenue increased by 5% including a 1% positive impact resulting from foreign currency translation. At Constant Exchange Rates, dialysis revenue increased by 4%. Dialysis revenue is comprised of dialysis care revenue and health care product revenue.
Dialysis care revenue increased by 6% to €2,328 M from €2,199 M, including a 1% positive impact resulting from foreign currency translation. At Constant Exchange Rates, dialysis care revenue increased by 5% mainly due to increases in organic revenue per treatment (5%), growth in same market treatments (3%), and contributions from acquisitions (1%), partially offset by the Implementation of IFRS 15 (3%) and a decrease in dialysis days (1%).
18
FRESENIUS MEDICAL CARE AG & Co. KGaA
Dialysis treatments increased by 3% largely due to growth in same market treatments (3%) and contributions from acquisitions (1%), partially offset by a decrease in dialysis days (1%). At September 30, 2018, 201,220 patients (3% increase from September 30, 2017) were being treated in the 2,486 dialysis clinics that we own or operate in the North America Segment, compared to 195,027 patients treated in 2,363 dialysis clinics at September 30, 2017.
In the U.S., the average revenue per treatment, restated for the Implementation of IFRS 15, increased to $356 (€302 at Constant Exchange Rates) from $341 (€289). The development was mainly attributable to the implementation of the PAMA oral-only provision, partially offset by lower revenue from commercial payors and higher implicit price concessions.
Cost per treatment in the U.S., restated for the Implementation of IFRS 15 and adjusted for the impact from Natural Disaster Costs, increased to $290 (€246 at Constant Exchange Rates) from $271 (€230). This development was largely a result of the implementation of the PAMA oral-only provision, increased property and other occupancy related costs as well as the impact from one less dialysis day.
Health care product revenue increased by 2% including a 1% positive impact resulting from foreign currency translation. At Constant Exchange Rates, health care product revenue increased by 1% due to higher sales of renal pharmaceuticals and peritoneal dialysis products, partially offset by lower sales of chronic hemodialysis products.
Operating income margin
The increase period over period in the dialysis operating income margin was 1.1 percentage points. Foreign currency translation effects represented a 0.2 percentage point decrease in the current period. At Constant Exchange Rates, the increase was driven by the positive impact from income attributable to a consent agreement on certain pharmaceuticals, lower personnel expense, the prior year impact from Natural Disasters, and the Implementation of IFRS 15, partially offset by the impact from U.S. Ballot Initiatives, the implementation of the PAMA oral-only provision, and other smaller cost increases.
Delivered EBIT
Dialysis Delivered EBIT increased by 12%, with no foreign currency translation effects. The increase was mainly as a result of increased operating income.
Revenue
Care Coordination revenue decreased by 57%, including a 4% positive impact resulting from foreign currency translation. At Constant Exchange Rates, Care Coordination revenue decreased by 61% driven by decreases attributable to prior year activities associated with Sound (33%), a decrease in organic revenue growth due to the implementation of the PAMA oral-only provision which moved certain pharmaceuticals into the bundled rate (26%) and the Implementation of IFRS 15 (3%), partially offset by contributions from acquisitions (1%).
Operating income margin
The increase period over period in the Care Coordination operating income margin was 5.5 percentage points. Foreign currency translation effects represented an 11.0 percentage point increase in the current period which was driven by the use of the euro average exchange rates from the nine-months ended September 30, 2018 being applied to the operating income in U.S. dollar less the reported operating income for the six-months ended June 30, 2018 to arrive at the single quarter impact for September 30, 2018 (including the impact from the change in exchange rates during the quarter operating income for the six-months ended June 30, 2018). The same calculation was made based on respective previous years exchange rates. The U.S. dollar appreciated from the end of June 2018 to end of September 2018 but depreciated from the end of June 2017 to end of September 2017. Therefore the effect on the percentage increase was distortive and was further heightened by the divestiture of Care Coordination activities in 2018. The decrease at Constant Exchange Rates was mainly due to lower earnings related to ESCO's largely as a result of a higher prior-year revenue contribution due to the initial recognition of revenue from previous periods for the new 2017 ESCO's as well as the impact from the divestiture of Care Coordination activities in 2018, partially offset by a positive impact from pharmacy services driven by favorable pricing for certain pharmaceuticals due to delays for rebasing of reimbursement, the implementation of the PAMA oral-only provision as the historical dispensation of calcimimetics through pharmacy services had low margins as a result of higher costs for external services, and lower bad debt expense.
19
FRESENIUS MEDICAL CARE AG & Co. KGaA
Delivered EBIT
Care Coordination Delivered EBIT decreased by 20% including an 87% positive impact resulting from foreign currency translation. At Constant Exchange Rates, Care Coordination delivered EBIT decreased by 107% mainly as the result of decreased operating income coupled with decreased income attributable to noncontrolling interests.
Care Coordination business metrics
Member months under medical cost management remained stable primarily due to the expansion of our existing ESCOs through the addition of new physician practice partners and dialysis facilities, offset by the divestment of our controlling interest in Sound on June 28, 2018 and, as a result, the conclusion of our participation in BPCI. See note 2 (b) of the notes to consolidated financial statements (unaudited) included in this report) and note 4 to the table "Key indicators and business metrics for the North America Segment," above.
Care Coordination's medical cost under management decreased by 9%, including a 5% positive impact from foreign currency translation in the current period. At Constant Exchange Rates, Care Coordination's medical cost under management decreased by 14% due to the divestment of our controlling interest in Sound on June 28, 2018 (see note 2 (b) of the notes to consolidated financial statements (unaudited) included in this report) and, as a result, the conclusion of our participation in BPCI. This decrease was partially offset by our expansion of our existing ESCOs through the addition of new physician practice partners and dialysis facilities. See note 4 to the table "Key indicators and business metrics for the North America Segment," above.
The decrease in patient encounters was primarily driven by decreased encounters for hospital related physician services as a result of our divesting our controlling interest in Sound on June 28, 2018. See note 2 (b) of the notes to consolidated financial statements (unaudited) included in this report) and note 4 to the table "Key indicators and business metrics for the North America Segment," above.
North America Segment operating performance on a comparable basis and adjusted
Management believes that there are certain distinct transactions or events for which the operating results should be adjusted to enhance transparency and comparability. We believe the following results (adjusted to exclude these items) should be analyzed in connection with the results presented above. For the three months ended September 30, 2018 and 2017, we have identified the following transactions that, when excluded from the results disclosed above, may provide a reader with further useful information in assessing our performance:
The following table reconciles the key indicators for the North America Segment in accordance with IFRS to the adjusted key indicators as described. Included within the reconciliation are comparable basis line items which provide the effect of exclusions which result in the recasting of the line items for comparability year over year. While we
20
FRESENIUS MEDICAL CARE AG & Co. KGaA
believe these adjustments provide additional clarity to the discussion of our operating results, the following table should only be viewed as a supplement to our results disclosed in accordance with IFRS above.
(1) For further information on Constant Exchange Rates, see " II. Discussion of Measures NonIFRS Measures Constant currency
information" above.
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FRESENIUS MEDICAL CARE AG & Co. KGaA
EMEA Segment
Key indicators for the EMEA Segment
|
||||||||||||
| | | | | | | | | | | | |
in € M, except where otherwise specified | ||||||||||||
Change in %
|
||||||||||||
| | | | | | | | | | | | |
|
|
|
For the three months ended September 30 |
|
|
As Reported |
|
|
Constant Currency (1) |
|||
| | | | | | | | | | | | |
2018 | 2017 | |||||||||||
| | | | | | | | | | | | |
Revenue | 620 | 632 | (2%) | 1% | ||||||||
Health care services |
314 | 311 | 1% | 4% | ||||||||
Health care products |
306 | 321 | (5%) | (3%) | ||||||||
Number of dialysis treatments | 2,455,783 | 2,375,370 | 3% | |||||||||
Same market treatment growth in % | 3.3% | 2.7% | ||||||||||
Operating income | 88 | 106 | (18%) | (16%) | ||||||||
Operating income margin in % | 14.1% | 16.8% | ||||||||||
Delivered EBIT (2) | 86 | 105 | (18%) | (17%) | ||||||||
| | | | | | | | | | | | |
(1) For further information on Constant Exchange Rates, see " II. Discussion of Measures NonIFRS Measures Constant currency
information" above.
(2) For further information on Delivered EBIT, including a reconciliation of Delivered EBIT to Operating Income on a consolidated basis and for each of our operating segments, see
" II. Discussion of Measures NonIFRS Measures Delivered EBIT" above.
Revenue
Health care service revenue increased by 1%, including a 3% negative impact resulting from foreign currency translation. At Constant Exchange Rates, health care service revenue increased by 4% as a result of growth in same market treatments (3%) and contributions from acquisitions (3%), partially offset by the effect of closed or sold clinics (1%) and a decrease in dialysis days (1%).
Dialysis treatments increased by 3% mainly due to growth in same market treatments (3%) and contributions from acquisitions (2%), partially offset by the effect of closed or sold clinics (1%) and a decrease in dialysis days (1%). As of September 30, 2018, we had 64,539 patients (4% increase from September 30, 2017) being treated at the 769 dialysis clinics that we own, operate or manage in the EMEA Segment compared to 61,983 patients treated at 732 clinics at September 30, 2017.
Health care product revenue decreased by 5%, including a 2% negative impact resulting from foreign currency translation. At Constant Exchange Rates, health care product revenue decreased by 3%. Dialysis product revenue decreased by 5%, including a 3% negative impact resulting from foreign currency translation. At Constant Exchange Rates, the decrease of 2% in dialysis product revenue was due to lower sales of dialyzers, partially offset by higher sales of machines, products for acute care treatments and increased sales of renal pharmaceuticals. Non-Dialysis product revenue decreased by 7% to €18 M from €19 M with virtually no impact from foreign currency translation effects. The non-dialysis product revenue decrease was due to slightly lower sales volumes.
Operating income margin
The decrease period over period in the operating income margin was 2.7 percentage points. Foreign currency translation effects represented a 0.2 percentage point increase in the operating income margin. At Constant Exchange Rates, operating income margin decreased mainly due to the favorable prior year impact from a legal settlement, higher personnel costs in certain countries, the impact from one less dialysis day, unfavorable foreign currency transaction effects and higher bad debt expense partially driven by the economic situation in emerging markets.
Delivered EBIT
Delivered EBIT decreased by 18%, including a 1% negative impact resulting from foreign currency translation. At Constant Exchange Rates, the Delivered EBIT decreased by 17% primarily due to decreased operating income.
22
FRESENIUS MEDICAL CARE AG & Co. KGaA
Asia-Pacific Segment
Key indicators for the Asia-Pacific Segment
|
||||||||||||
| | | | | | | | | | | | |
|
||||||||||||
|
Change in %
|
|||||||||||
| | | | | | | | | | | | |
|
For the three months ended
|
As
|
Constant
|
|||||||||
| | | | | | | | | | | | |
|
2018 | 2017 | ||||||||||
| | | | | | | | | | | | |
Total Asia-Pacific Segment |
||||||||||||
Revenue |
421 | 411 | 3% | 4% | ||||||||
Health care services |
194 | 194 | 1% | 1% | ||||||||
Health care products |
227 | 217 | 4% | 6% | ||||||||
Operating income |
66 | 77 | (14%) | (14%) | ||||||||
Operating income margin in % |
15.7% | 18.8% | ||||||||||
Delivered EBIT (2) |
65 | 75 | (14%) | (14%) | ||||||||
Dialysis |
|
|
|
|
||||||||
Revenue |
367 | 359 | 2% | 3% | ||||||||
Number of dialysis treatments |
1,096,803 | 1,076,929 | 2% | |||||||||
Same market treatment growth in % |
6.2% | 2.4% | ||||||||||
Operating income |
57 | 68 | (15%) | (16%) | ||||||||
Operating income margin in % |
15.7% | 18.9% | ||||||||||
Delivered EBIT (2) |
57 | 66 | (15%) | (16%) | ||||||||
Care Coordination |
|
|
|
|
||||||||
Revenue |
54 | 52 | 4% | 7% | ||||||||
Operating income |
9 | 9 | (5%) | 0% | ||||||||
Operating income margin in % |
16.2% | 17.7% | ||||||||||
Delivered EBIT (2) |
8 | 9 | (5%) | 0% | ||||||||
Care Coordination Patient Encounters (3) |
270,931 | 229,318 | 18% | |||||||||
| | | | | | | | | | | | |
(1) For further information on Constant Exchange Rates, see " II. Discussion of Measures NonIFRS Measures Constant currency
information" above.
(2) For further information on Delivered EBIT, including a reconciliation of Delivered EBIT to Operating Income on a consolidated basis and for each of our operating segments, see
" II. Discussion of Measures NonIFRS Measures
Delivered EBIT" above.
(3) For further information on patient encounters, please refer to the discussion above of our Care Coordination measures under "Business Metrics for Care Coordination"
Revenue
Dialysis revenue increased by 2% including a 1% negative impact resulting from foreign currency translation. At Constant Exchange Rates, dialysis revenue increased by 3%. Dialysis revenue is comprised of dialysis care revenue and health care product revenue.
Dialysis care revenue decreased by 1% to €140 M from €142 M, with virtually no impact from foreign currency translation effects. The decrease was as a result of the effect of closed or sold clinics (6%) and a decrease in dialysis days (1%), partially offset by growth in same market treatments (6%).
Dialysis treatments increased by 2% mainly due to growth in same market treatments (6%), partially offset by the effect of closed or sold clinics (4%). As of September 30, 2018, we had 31,152 patients (3% increase from September 30, 2017) being treated at the 390 dialysis clinics that we own, operate or manage in the Asia-Pacific Segment compared to 30,151 patients treated at 389 clinics at September 30, 2017.
Health care product revenue increased by 4% including a 2% negative impact resulting from foreign currency translation. At Constant Exchange Rates, health care product revenue increased by 6% as a result of increased sales of chronic hemodialysis products and products for acute care treatments.
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FRESENIUS MEDICAL CARE AG & Co. KGaA
Operating income margin
The decrease period over period in the operating income margin was 3.2 percentage points. Foreign currency translation effects represented a 0.3 percentage point increase in the operating income margin. At Constant Exchange Rates, the operating income margin decreased due to unfavorable foreign currency transaction effects and an unfavorable impact from business growth due to lower average sales prices.
Delivered EBIT
Delivered EBIT decreased by 15%, including a 1% positive impact resulting from foreign currency translation. At Constant Exchange Rates, Delivered EBIT decreased by 16% mainly due to decreased operating income.
Revenue
Care Coordination revenue increased by 4%, including a 3% negative impact resulting from foreign currency translation. At Constant Exchange Rates, Care Coordination revenue increased by 7% driven by organic revenue growth (5%) and contributions from acquisitions (2%).
Operating income margin
The decrease period over period in the Care Coordination operating income margin was 1.5 percentage points. Foreign currency translation effects represented a 0.4 percentage point decrease in the operating income margin. At Constant Exchange Rates, the operating income margin decrease was driven by a change in cost allocations between dialysis and Care Coordination.
Delivered EBIT
Care Coordination Delivered EBIT decreased by 5%, including a 5% negative impact resulting from foreign currency translation. At Constant Exchange Rates, Care Coordination Delivered EBIT remained stable.
Care Coordination business metrics
The patient encounters increased due to increased encounters for comprehensive and specialized health check-ups as well as ambulant treatment services, inpatient and outpatient services, vascular access and other chronic treatment services.
Latin America Segment
Key indicators for the Latin America Segment
|
||||||||||||
| | | | | | | | | | | | |
in € M, except where otherwise specified |
||||||||||||
|
Change in %
|
|||||||||||
| | | | | | | | | | | | |
|
For the three months ended
|
As
|
Constant
|
|||||||||
| | | | | | | | | | | | |
|
2018 | 2017 | ||||||||||
| | | | | | | | | | | | |
Revenue |
171 | 175 | (2%) | 27% | ||||||||
Health care services |
122 | 123 | (1%) | 34% | ||||||||
Health care products |
49 | 52 | (5%) | 9% | ||||||||
Number of dialysis treatments |
1,271,583 | 1,224,086 | 4% | |||||||||
Same market treatment growth in % |
1.4% | (0.2%) | ||||||||||
Operating income |
(1) | 18 | not applicable | not applicable | ||||||||
Operating income margin in % |
(0.9%) | 10.2% | ||||||||||
Delivered EBIT (2) |
(1) | 18 | not applicable | not applicable | ||||||||
| | | | | | | | | | | | |
(1) For further information on Constant Exchange Rates, see " II. Discussion of Measures NonIFRS Measures Constant currency
information" above.
(2) For further information on Delivered EBIT, including a reconciliation of Delivered EBIT to Operating Income on a consolidated basis and for each of our operating segments, see " II.
Discussion of Measures NonIFRS Measures Delivered EBIT" above.
24
FRESENIUS MEDICAL CARE AG & Co. KGaA
Revenue
Health care service revenue decreased by 1%, including a 35% negative impact resulting from foreign currency translation. At Constant Exchange Rates, health care service revenue increased by 34% as a result of increases in organic revenue per treatment largely driven by hyperinflation in Argentina (33%), contributions from acquisitions (1%) and growth in same market treatments (1%), partially offset by closed or sold clinics (1%).
Dialysis treatments increased by 4% mainly due to contributions from acquisitions (3%) and growth in same market treatments (1%). As of September 30, 2018, we had 32,174 patients (a 5% increase from September 30, 2017) being treated at the 227 dialysis clinics that we own, operate or manage in the Latin America Segment compared to 30,631 patients treated at 230 clinics at September 30, 2017.
Health care product revenue decreased by 5%, including a 14% negative impact resulting from foreign currency translation. At Constant Exchange Rates, health care product revenue increased by 9% driven by higher sales of machines and products for acute care treatments.
Operating income margin
The decrease period over period in the operating income margin was 11.1 percentage points. Foreign currency translation effects represented a 2.9 percentage point increase in the operating income margin. At Constant Exchange Rates, the operating income margin decreased mainly due to the impact from hyperinflation in Argentina, unfavorable foreign currency transaction effects and higher bad debt expense.
Delivered EBIT
Delivered EBIT decreased to a loss of €1 M for the three months ended September 30, 2018 from € 18 M for the three months ended September 30, 2017 largely due to decreased operating income.
Nine months ended September 30, 2018 compared to nine months ended September 30, 2017
Consolidated financials
(1) For further information on Constant Exchange Rates, see " II. Discussion of Measures NonIFRS Measures Constant currency
information" above.
(2) For further information on Delivered EBIT, including a reconciliation of Delivered EBIT to Operating Income on a consolidated basis and for each of our operating segments, see " II.
Discussion of Measures NonIFRS MeasuresDelivered EBIT" above.
Health care services revenue decreased by 10%, including a 7% negative impact from foreign currency translation. At Constant Exchange Rates, health care services revenue decreased by 3% driven by the Implementation of IFRS 15 (4%), the effect of closed or sold clinics (3%) and the prior year revenue impact from the recognition of
25
FRESENIUS MEDICAL CARE AG & Co. KGaA
revenue related to the agreement with the United States Departments of Veterans Affairs and Justice for reimbursement for services performed during the period of January 2009 through February 15, 2011 ("VA Agreement") (1%), partially offset by growth in same market treatments (3%) and contributions from acquisitions (2%). For further information on the Implementation of IFRS 15, see note 1 of the notes to the consolidated financial statements (unaudited) included in this report.
Dialysis treatments increased by 3% as a result of growth in same market treatments (3%) and contributions from acquisitions (1%), partially offset by the effect of closed or sold clinics (1%).
Health care product revenue remained stable including a 5% negative impact from foreign currency translation. At Constant Exchange Rates, health care product revenue increased by 5%. Dialysis product revenue remained stable, including a 5% negative impact from foreign currency translation. At Constant Exchange Rates, dialysis product revenues increased by 5% due to higher sales of chronic hemodialysis products, renal pharmaceuticals, products for acute care treatments and peritoneal dialysis products. Non-dialysis product revenue decreased by 7% to €56 M from €60 M with virtually no foreign currency translation effects. The non-dialysis product revenue decrease was due to slightly lower sales volumes.
The decrease period over period in the gross profit margin was 3.0 percentage points. Foreign currency translation effects represented a 0.3 percentage point increase in the current period. The decrease primarily reflects decreases in the North America Segment, the EMEA Segment and the Asia-Pacific Segment. The decrease in the North America Segment gross profit margin was primarily due to the Implementation of IFRS 15, the prior year impact of the VA Agreement, the prior year impact driven by the initial recognition in the calendar year 2017 of earnings (including earnings from prior periods) from the BPCI initiative, lower revenue per treatment from commercial payors, higher implicit price concessions and other small cost increases, partially offset by favorable pricing for certain pharmaceuticals due to delays for rebasing of reimbursement, lower personnel expense and decreased costs for health care supplies. The decrease in the EMEA Segment was driven by unfavorable foreign currency transaction effects, higher personnel costs in certain countries and an unfavorable impact from acquisitions. The decrease in the Asia-Pacific Segment was driven by unfavorable foreign currency transaction effects, an unfavorable impact from business growth due to lower average sales prices and an unfavorable mix effect from acquisitions with lower margins.
The decrease period over period in the selling, general and administrative ("SG&A") expenses as a percentage of revenue was 2.3 percentage points with virtually no foreign currency translation effects in the current period. The decrease was primarily driven by a decrease in the North America Segment, partially offset by unfavorable impacts from Corporate and the Latin America Segment. The decrease in the North America Segment was mainly due to the Implementation of IFRS 15, the positive impact from income attributable to a consent agreement on certain pharmaceuticals, the prior year change in fair value of subsidiary share based compensation and lower personnel expense, partially offset by the impact from U.S. Ballot Initiatives and the prior year impact of the VA Agreement. The unfavorable impact from Corporate was primarily driven by the 2018 FCPA Related Charge. The increase in the Latin America Segment was primarily driven by the impact from hyperinflation in Argentina, unfavorable foreign currency transaction effects and higher bad debt expense.
Research and development expenses remained stable at €95 M. The increase period over period, as a percentage of revenue, was 0.1 percentage points.
Income from equity method investees increased by 3% to €52 M from €51 M. The increase was driven by higher income from Vifor Fresenius Medical Care Renal Pharma Ltd., an entity in which we have ownership of 45%, mainly due to increased sales of renal pharmaceuticals, partially offset by increased costs to support the launch and development of new projects as well as the first consolidation, after the purchase of additional shares, of a Care Coordination investment previously consolidated at equity.
The increase period over period in the operating income margin was 6.0 percentage points. Foreign currency translation effects represented a 0.2 percentage point increase in the current period. The increase was largely driven by the gain related to divestitures of Care Coordination activities of approximately €830 M, decreases in SG&A, as a percentage of revenue, partially offset by decreased gross profit margin.
Delivered EBIT increased by 37% including an 8% negative impact from foreign currency translation. At Constant Exchange Rates, the increase of 45% was primarily due to increased operating income largely driven by the gain related to divestitures of Care Coordination activities of approximately €830 M.
Net interest expense decreased by 13% to €239 M from €274 M including a 5% positive impact resulting from foreign currency translation. At Constant Exchange Rates, net interest expense decreased by 8% largely due to the
26
FRESENIUS MEDICAL CARE AG & Co. KGaA
replacement of interest bearing senior notes repaid in 2017 and 2018 by debt instruments at lower interest rates, a decreased debt level as well as interest income from the investment of the Sound proceeds.
Income tax expense decreased by 6% to €453 M from €484 M. The effective tax rate decreased to 20.7% from 30.8% for the same period of 2017 largely driven by the gain related to divestitures of Care Coordination activities and the U.S. Tax Reform, partially offset by non-tax deductible expenses primarily related to the 2018 FCPA Related Charges and U.S. Ballot Initiatives.
Net income attributable to noncontrolling interests decreased by 12% to €176 M from €199 M. Foreign currency translation effects represented a 7% positive impact. At Constant Exchange Rates, net income attributable to noncontrolling interests decreased by 5% largely due to lower performance in entities in which we have less than 100% ownership in the US.
Net income attributable to shareholders of FMC-AG & Co. KGaA increased by 76% to €1,557 M from €886 M, including a 10% negative impact resulting from foreign currency translation. At Constant Exchange Rates, the increase of 86% was driven by the combined effects of the items discussed above.
Basic earnings per share increased by 76%. Foreign currency translation effects represented a 10% negative impact on the increase. At Constant Exchange Rates, basic earnings per share increased by 86% primarily due to the increase in net income attributable to shareholders of FMC-AG & Co. KGaA described above. The average weighted number of shares outstanding for the period was approximately 306.4 M in 2018 (306.4 M in 2017).
Consolidated operating performance on a comparable basis and adjusted
Management believes that there are certain distinct transactions or events for which the operating results should be adjusted to enhance transparency and comparability. We believe the following results (adjusted to exclude these items) should be analyzed in connection with the results presented above. For the nine months ended September 30, 2018 and 2017, we have identified the following transactions that, when excluded from the results disclosed above, may provide a reader with further useful information in assessing our performance:
The following table reconciles the key indicators for the consolidated financial statements in accordance with IFRS to the adjusted key indicators as described. Included within the reconciliation are comparable basis line items which provide the effect of exclusions which result in the recasting of the line items for comparability year over year. While
27
FRESENIUS MEDICAL CARE AG & Co. KGaA
we believe these adjustments provide additional clarity to the discussion of our operating results, the following table should only be viewed as a supplement to our results disclosed in accordance with IFRS above.
(1) For further information on Constant Exchange Rates, see " II. Discussion of Measures Non-IFRS Measures Constant currency information"
above.
(2) Attributable to shareholders of FMC AG & Co. KGaA
28
FRESENIUS MEDICAL CARE AG & Co. KGaA
The following discussions pertain to the North America Segment, the EMEA Segment, the Asia-Pacific Segment and the Latin America Segment and the measures we use to manage these segments.
North America Segment
Key indicators and business metrics for North America Segment | ||||||||||||
| | | | | | | | | | | | |
in € M, except where otherwise specified | ||||||||||||
Change in %
|
||||||||||||
| | | | | | | | | | | | |
|
|
|
For the nine months ended September |
|
|
As Reported |
|
|
Constant Currency (1) |
|||
| | | | | | | | | | | | |
2018 | 2017 | |||||||||||
| | | | | | | | | | | | |
Total North America Segment | ||||||||||||
Revenue | 8,589 | 9,715 | (12%) | (5%) | ||||||||
Health care services |
7,979 | 9,086 | (12%) | (6%) | ||||||||
Health care products |
610 | 629 | (3%) | 4% | ||||||||
Operating income | 2,173 | 1,478 | 47% | 57% | ||||||||
Operating income margin in % | 25.3% | 15.2% | ||||||||||
Delivered EBIT (2) | 2,006 | 1,286 | 56% | 66% | ||||||||
Dialysis |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue | 7,244 | 7,621 | (5%) | 2% | ||||||||
Number of dialysis treatments | 22,867,793 | 22,188,996 | 3% | |||||||||
Same market treatment growth in % | 2.4% | 2.6% | ||||||||||
Operating income | 1,255 | 1,424 | (12%) | (6%) | ||||||||
Operating income margin in % | 17.3% | 18.7% | ||||||||||
Delivered EBIT (2) | 1,103 | 1,255 | (12%) | (7%) | ||||||||
Care Coordination |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue | 1,345 | 2,094 | (36%) | (31%) | ||||||||
Operating income | 918 | 54 | Not applicable | Not applicable | ||||||||
Operating income margin in % | 68.3% | 2.6% | ||||||||||
Delivered EBIT (2) | 903 | 31 | Not applicable | Not applicable | ||||||||
Member Months Under Medical Cost Management (3),(4) | 486,786 | 433,243 | 12% | |||||||||
Medical Cost Under Management (3),(4) | 3,299 | 2,948 | 12% | 20% | ||||||||
Care Coordination Patient Encounters (3),(4) | 4,149,516 | 5,069,546 | (18%) | |||||||||
| | | | | | | | | | | | |
(1) For further information on Constant Exchange Rates, see " II. Discussion of Measures Non IFRS Measures Constant currency information" above.
(2) For further information on Delivered EBIT, including a reconciliation of Delivered EBIT to Operating Income on a consolidated basis and for each of our operating segments, see " II.
Discussion of MeasuresNonIFRS MeasuresDelivered EBIT" above.
(3) For further information on these metrics, please refer to the discussion above of our Care Coordination measures under "Business metrics for Care Coordination."
(4) The metrics may be understated due to a physician mapping issue related to the BPCI program within a CMS system which has not yet been resolved. Additionally, data presented for the BPCI and ESCO
metrics are subject to finalization by CMS, which may result in changes from previously reported metrics.
Revenue
Dialysis revenue decreased by 5% including a 7% negative impact resulting from foreign currency translation. At Constant Exchange Rates, dialysis revenue increased by 2%. Dialysis revenue is comprised of dialysis care revenue and health care product revenue.
Dialysis care revenue decreased by 5% to €6,634 M from €6,992 M. Foreign currency translation represented a 7% negative impact in the current period. At Constant Exchange Rates, dialysis care revenue increased by 2% mainly due to increases in organic revenue per treatment (4%), growth in same market treatments (2%) and contributions from acquisitions (1%), partially offset by the negative effects of the Implementation of IFRS 15 (3%), the prior year impact from the VA Agreement (1%) and a decrease in dialysis days (1%).
29
FRESENIUS MEDICAL CARE AG & Co. KGaA
Dialysis treatments increased by 3% primarily due to same market treatment growth (2%) and contributions from acquisitions (1%).
In the U.S., the average revenue per treatment, restated for the Implementation of IFRS 15, increased to $353 (€317 at Constant Exchange Rates) from $346 (€311). Excluding the 2017 impact from the VA Agreement, the average revenue per treatment increased to $353 (€317 at Constant Exchange Rates) from $341 (€306). The development was mainly attributable to the implementation of the PAMA oral-only provision, partially offset by lower revenue from commercial payors and higher implicit price concessions.
Cost per treatment in the U.S., restated for the Implementation of IFRS 15 and the impact from Natural Disaster Costs, increased to $289 (€260 at Constant Exchange Rates) from $273 (€245). This development was largely a result of the implementation of the PAMA oral-only provision as well as increased property and other occupancy related costs, partially offset by lower costs for health care supplies.
Health care product revenue decreased by 3%, including a 7% negative impact from foreign currency translation effects. At Constant Exchange Rates, health care product revenue increased by 4% driven by higher sales of renal pharmaceuticals and peritoneal dialysis products, partially offset by lower sales of chronic hemodialysis products.
Operating income margin
The decrease period over period in the dialysis operating income margin was 1.4 percentage points. Foreign currency translation effects represented a 0.1 percentage point increase in the current period. The decrease was largely driven by the prior year impact of the VA Agreement, the implementation of the PAMA oral-only provision, lower revenue per treatment from commercial payors, higher implicit price concessions, the impact from U.S. Ballot Initiatives and other smaller cost increases, partially offset by decreased personnel expense, the Implementation of IFRS 15 and the positive impact from income attributable to a consent agreement on certain pharmaceuticals.
Delivered EBIT
Dialysis Delivered EBIT decreased by 12%, including a 5% negative impact resulting from foreign currency translation. At Constant Exchange Rates, dialysis Delivered EBIT decreased by 7% mainly as the result of decreased operating income, partially offset by lower income attributable to noncontrolling interests driven by lower performance in entities in which we have less than 100% ownership.
Revenue
Care Coordination revenue decreased by 36% including a 5% negative impact from foreign currency translation. At Constant Exchange Rates, Care Coordination revenue decreased by 31% largely driven by decreases in organic revenue growth due to the implementation of the PAMA oral-only provision which moved certain pharmaceuticals into the bundled rate (22%), the Implementation of IFRS 15 (6%) and decreases attributable to prior year activities associated with Sound (4%), partially offset by contributions from acquisitions (1%).
Operating income margin
The increase period over period in the Care Coordination operating income margin was 65.7 percentage points. Foreign currency translation effects represented a 0.5 percentage point increase in the current period. The increase was mainly driven by the gain related to divestitures of Care Coordination activities, a favorable impact from pharmacy services driven by favorable pricing for certain pharmaceuticals due to delays for rebasing of reimbursement, the implementation of the PAMA oral-only provision (as the historical dispensation of calcimimetics through pharmacy services had low margins as a result of higher costs for external services), and the prior year change in fair value of subsidiary stock based compensation, partially offset by lower earnings from BPCI.
Delivered EBIT
Care Coordination Delivered EBIT increased to €903 M from €31 M mainly a result of increased operating income largely driven by the gain related to divestitures of Care Coordination activities of approximately €830 M.
Care Coordination business metrics
The increase in member months under medical cost management was primarily attributable to the expansion of our existing ESCOs through the addition of new physician practice partners and dialysis facilities, partially offset by the
30
FRESENIUS MEDICAL CARE AG & Co. KGaA
divestment of our controlling interest in Sound on June 28, 2018 and, as a result, the conclusion of our participation in BPCI. See note 2 (b) of the notes to consolidated financial statements (unaudited) included in this report) and note 4 to the table "Key indicators and business metrics for the North America Segment," above.
Care Coordination's medical cost under management increased by 12%, including an 8% negative impact from foreign currency translation in the current period. At Constant Exchange Rates, Care Coordination's medical cost under management increased by 20% primarily attributable to the expansion of our existing ESCOs through the addition of new physician practice partners and dialysis facilities, partially offset by the divestment of our controlling interest in Sound on June 28, 2018 and, as a result, the conclusion of our participation in BPCI. See note 2 (b) of the notes to consolidated financial statements (unaudited) included in this report) and note 4 to the table "Key indicators and business metrics for the North America Segment," above.
The decrease in patient encounters was primarily driven by decreased encounters for hospital related physician services as a result of our divesting our controlling interest in Sound on June 28, 2018. See note 2 (b) of the notes to consolidated financial statements (unaudited) included in this report) and note 4 to the table "Key indicators and business metrics for the North America Segment," above.
North America Segment operating performance on a comparable basis and adjusted
Management believes that there are certain distinct transactions or events for which the operating results should be adjusted to enhance transparency and comparability. We believe the following results (adjusted to exclude these items) should be analyzed in connection with the results presented above. For the nine months ended September 30, 2018 and 2017, we have identified the following transactions that, when excluded from the results disclosed above, may provide a reader with further useful information in assessing our performance:
The following table reconciles the key indicators for the North America Segment in accordance with IFRS to the adjusted key indicators as described. Included within the reconciliation are comparable basis line items which provide the effect of exclusions which result in the recasting of the line items for comparability year over year. While we
31
FRESENIUS MEDICAL CARE AG & Co. KGaA
believe these adjustments provide additional clarity to the discussion of our operating results, the following table should only be viewed as a supplement to our results disclosed in accordance with IFRS above.
(1) For further information on Constant Exchange Rates, see " II. Discussion of Measures Non IFRS Measures Constant currency information" above.
32
FRESENIUS MEDICAL CARE AG & Co. KGaA
EMEA Segment
Key indicators for EMEA Segment
|
||||||||||||
| | | | | | | | | | | | |
in € M, except where otherwise specified |
||||||||||||
|
Change in %
|
|||||||||||
| | | | | | | | | | | | |
|
For the nine months ended
|
As
|
Constant
|
|||||||||
| | | | | | | | | | | | |
|
2018 | 2017 | ||||||||||
| | | | | | | | | | | | |
Revenue |
1,908 | 1,888 | 1% | 4% | ||||||||
Health care services |
943 | 925 | 2% | 5% | ||||||||
Health care products |
965 | 963 | 0% | 3% | ||||||||
Number of dialysis treatments |
7,250,376 | 6,969,487 | 4% | |||||||||
Same market treatment growth in % |
2.9% | 3.3% | ||||||||||
Operating income |
302 | 333 | (10%) | (9%) | ||||||||
Operating income margin in % |
15.8% | 17.7% | ||||||||||
Delivered EBIT (2) |
299 | 331 | (10%) | (9%) | ||||||||
| | | | | | | | | | | | |
(1) For further information on Constant Exchange Rates, see " II. Discussion of Measures Non IFRS Measures Constant currency information"
above.
(2) For further information on Delivered EBIT, including a reconciliation of Delivered EBIT to Operating Income on a consolidated basis and for each of our operating segments, see " II.
Discussion of Measures NonIFRS Measures Delivered EBIT" above.
Revenue
Health care service revenue increased by 2%, including a 3% negative impact resulting from foreign currency translation. At Constant Exchange Rates, health care service revenue increased by 5% as a result of growth in same market treatments (3%) and contributions from acquisitions (2%).
Dialysis treatments increased by 4% mainly due to growth in same market treatments (3%) and contributions from acquisitions (1%).
Health care product revenue remained stable, including a 3% negative impact resulting from foreign currency translation. At Constant Exchange Rates, health care product revenue increased by 3%. Dialysis product revenue increased by 1%, including a 2% negative impact resulting from foreign currency translation. At Constant Exchange Rates, the increase of 3% in dialysis product revenue was due to higher sales of machines, products for acute care treatments, renal pharmaceuticals, hemodialysis solutions and concentrates as well as bloodlines, partially offset by lower sales of dialyzers. Non-Dialysis product revenue decreased by 7% to €56 M from €60 M with virtually no impact from foreign currency translation effects. The non-dialysis product revenue decrease was due to slightly lower sales volumes.
Operating income margin
The decrease period over period in the operating income margin was 1.9 percentage points. Foreign currency translation effects represented a 0.3 percentage point increase in the operating income margin. The decrease was mainly due to higher personnel costs in certain countries, the favorable prior year impact from a legal settlement, higher bad debt expense and unfavorable foreign currency transaction effects.
Delivered EBIT
Delivered EBIT decreased by 10%, including a 1% negative impact resulting from foreign currency translation. At Constant Exchange Rates, Delivered EBIT decreased by 9% primarily due to decreased operating income.
33
FRESENIUS MEDICAL CARE AG & Co. KGaA
Asia-Pacific Segment
Key indicators for Asia-Pacific Segment
|
||||||||||||
| | | | | | | | | | | | |
in € M, except where otherwise specified |
||||||||||||
|
Change in %
|
|||||||||||
| | | | | | | | | | | | |
|
For the nine months ended
|
As Reported |
Constant
|
|||||||||
| | | | | | | | | | | | |
|
2018 | 2017 | ||||||||||
| | | | | | | | | | | | |
Total Asia-Pacific Segment |
||||||||||||
Revenue |
1,235 | 1,206 | 2% | 8% | ||||||||
Health care services |
569 | 553 | 3% | 9% | ||||||||
Health care products |
666 | 653 | 2% | 7% | ||||||||
Operating income |
218 | 237 | (8%) | (5%) | ||||||||
Operating income margin in % |
17.7% | 19.7% | ||||||||||
Delivered EBIT (2) |
212 | 232 | (8%) | (6%) | ||||||||
Dialysis |
||||||||||||
Revenue |
1,087 | 1,095 | (1%) | 4% | ||||||||
Number of dialysis treatments |
3,239,862 | 3,188,080 | 2% | |||||||||
Same market treatment growth in % |
5.8% | 3.6% | ||||||||||
Operating income |
197 | 222 | (11%) | (9%) | ||||||||
Operating income margin in % |
18.2% | 20.3% | ||||||||||
Delivered EBIT (2) |
193 | 217 | (11%) | (9%) | ||||||||
Care Coordination |
||||||||||||
Revenue |
148 | 111 | 33% | 42% | ||||||||
Operating income |
21 | 15 | 36% | 46% | ||||||||
Operating income margin in % |
14.0% | 13.7% | ||||||||||
Delivered EBIT (2) |
19 | 15 | 31% | 40% | ||||||||
Care Coordination Patient Encounters (3) |
705,583 | 494,538 | 43% | |||||||||
| | | | | | | | | | | | |
(1) For further information on Constant Exchange Rates, see " II. Discussion of Measures NonIFRS Measures Constant currency information" above.
(2) For further information on Delivered EBIT, including a reconciliation of Delivered EBIT to Operating Income on a consolidated basis and for each of our operating segments, see " II.
Discussion of Measures NonIFRS Measures Delivered EBIT" above.
(3) For further information on patient encounters, please refer to the discussion above of our Care Coordination measures under "Business Metrics for Care Coordination."
Revenue
Dialysis revenue decreased by 1% including a 5% negative impact resulting from foreign currency translation. At Constant Exchange Rates, dialysis revenue increased by 4%. Dialysis revenue is comprised of dialysis care revenue and health care product revenue.
Dialysis care service revenue decreased by 5% to €421 M from €442 M, including a 5% negative impact resulting from foreign currency translation. At Constant Exchange Rates, dialysis care service revenue remained stable.
Dialysis treatments increased by 2% mainly due to growth in same market treatments (6%), partially offset by the effect of closed or sold clinics (4%).
Health care product revenue increased by 2% including a 5% negative impact resulting from foreign currency translation. At Constant Exchange Rates, health care product revenue increased by 7% as a result of increased sales of chronic hemodialysis products and products for acute care treatments.
Operating income margin
The decrease period over period in the operating income margin was 2.1 percentage points. Foreign currency translation effects represented a 0.4 percentage point increase in the operating income margin. At Constant Exchange Rates, the operating income margin decreased due to unfavorable impacts from foreign currency transaction effects as well as an unfavorable impact from business growth due to lower average sales prices.
34
FRESENIUS MEDICAL CARE AG & Co. KGaA
Delivered EBIT
Delivered EBIT decreased by 11%, including a 2% negative impact resulting from foreign currency translation. At Constant Exchange Rates, Delivered EBIT decreased by 9% mainly due to decreased operating income.
Revenue
Care Coordination revenue increased by 33%, including a 9% negative impact resulting from foreign currency translation. At Constant Exchange Rates, Care Coordination revenue increased by 42% driven by contributions from acquisitions (31%) and organic revenue growth (11%).
Operating income margin
The increase period over period in the Care Coordination operating income margin was 0.3 percentage points. Foreign currency translation effects represented a 0.1 percentage point decrease in the operating income margin. The increase was driven by a favorable impact from acquisitions.
Delivered EBIT
Care Coordination Delivered EBIT increased by 31%, including a 9% negative impact resulting from foreign currency translation. At Constant Exchange Rates, Care Coordination Delivered EBIT increased by 40% mainly as the result of increased operating income.
Care Coordination business metrics
The patient encounters increased due to increased encounters for comprehensive and specialized health check-ups as well as ambulant treatment services, inpatient and outpatient services, vascular access and other chronic treatment services.
Latin America Segment
Key indicators for Latin America Segment
|
||||||||||||
| | | | | | | | | | | | |
in € M, except where otherwise specified |
||||||||||||
|
Change in %
|
|||||||||||
| | | | | | | | | | | | |
|
For the nine months ended
|
As
|
Constant
|
|||||||||
| | | | | | | | | | | | |
|
2018 | 2017 | ||||||||||
| | | | | | | | | | | | |
Revenue |
505 | 535 | (6%) | 18% | ||||||||
Health care services |
361 | 386 | (7%) | 21% | ||||||||
Health care products |
144 | 149 | (3%) | 12% | ||||||||
Number of dialysis treatments |
3,764,542 | 3,614,334 | 4% | |||||||||
Same market treatment growth in % |
1.3% | 0.9% | ||||||||||
Operating income |
24 | 45 | (47%) | (56%) | ||||||||
Operating income margin in % |
4.7% | 8.4% | ||||||||||
Delivered EBIT (2) |
24 | 45 | (47%) | (56%) | ||||||||
| | | | | | | | | | | | |
(1) For further information on Constant Exchange Rates, see " II. Discussion of Measures NonIFRS Measures Constant
currency information" above.
(2) For further information on Delivered EBIT, including a reconciliation of Delivered EBIT to Operating Income on a consolidated basis and for each of our operating segments, see
" II. Discussion of Measures Non-IFRS Measures Delivered EBIT" above.
Revenue
Health care service revenue decreased by 7%, including a 28% negative impact resulting from foreign currency translation. At Constant Exchange Rates, health care service revenue increased by 21% as a result of increases in organic revenue per treatment largely driven by hyperinflation in Argentina (18%), contributions from acquisitions (2%) and growth in same market treatments (1%).
35
FRESENIUS MEDICAL CARE AG & Co. KGaA
Dialysis treatments increased by 4% mainly due to contributions from acquisitions (3%) and growth in same market treatments (1%).
Health care product revenue decreased by 3%, including a 15% negative impact resulting from foreign currency translation. At Constant Exchange Rates, health care product revenue increased by 12% driven by higher sales of machines, products for acute care treatments and peritoneal dialysis products, partially offset by lower sales of dialyzers.
Operating income margin
The decrease period over period in the operating income margin was 3.7 percentage points, including a positive foreign currency translation effect of 1.6 percentage points in the current period. The decrease was mainly due to the impact from hyperinflation in Argentina, unfavorable foreign currency transaction effects and higher bad debt expense.
Delivered EBIT
Delivered EBIT decreased by 47%, including a 9% positive impact resulting from foreign currency translation. At Constant Exchange Rates, Delivered EBIT decreased by 56% due to decreased operating income at Constant Currency.
Financial position
Our primary sources of liquidity are typically cash provided by operating activities, cash provided by short-term debt from third parties and related parties, issuances of long-term debt (including the issuance of bonds under a newly established debt issuance program) and equity securities as well as divestitures. We require this capital primarily to finance working capital needs, fund acquisitions and clinics in which we have ownership of less than 100%, develop free-standing renal dialysis clinics and other health care facilities, purchase equipment for existing or new renal dialysis clinics and production sites, repay debt, pay dividends and repurchase shares (see "Net cash provided by (used in) investing activities" and "Net cash provided by (used in) financing activities" below).
In our long-term financial planning, we focus primarily on the Net Leverage Ratio, a Non-IFRS Measure, see " II. Discussion of Measures Non-IFRS Measures Net leverage ratio (Non-IFRS Measure)" above. At September 30, 2018 and December 31, 2017, the Net Leverage Ratio was 2.0 and 2.1, respectively.
At September 30, 2018, we had cash and cash equivalents of €1,754 M compared to €978 M at December 31, 2017.
Free cash flow (Net cash provided by (used in) operating activities, after capital expenditures, before acquisitions and investments) amounted to €518 M and €1,050 M for the nine months ended September 30, 2018 and September 30, 2017, respectively. Free cash flow is a Non-IFRS measure. For a reconciliation to Net cash provided by (used in) operating activities, the most directly comparable IFRS measure, see " II. Discussion of measures Non-IFRS measures Cash flow measures" above. Free cash flow in percent of revenue was 4.2% and 7.9% for the nine months ended 2018 and 2017, respectively.
Net cash provided by (used in) operating activities
In the first nine months of 2018, net cash provided by operating activities was €1,220 M as compared to net cash provided by operating activities of €1,664 M in the first nine months of 2017. Net cash provided by (used in) operating activities in percent of revenue decreased to 10% for the first nine months of 2018 as compared to 12% for 2017. Cash provided by (used in) operating activities is impacted by the profitability of our business, the development of our working capital, principally inventories, receivables and cash outflows that occur due to a number of specific items as discussed below. The decrease in net cash provided by operating activities was largely driven by the impact from the 2017 payment related to the VA Agreement, increased accounts receivable from Medicare related to the implementation of the PAMA oral-only provision which moved certain pharmaceuticals into the bundled rate, increased inventory levels and the impact from a discretionary contribution of €42 M to pension plan assets in the United States, partially offset by lower income tax payments.
The profitability of our business depends significantly on reimbursement rates. Approximately 80% of our revenue is generated by providing health care services, a major portion of which is reimbursed by either public health care organizations or private insurers. For the nine months ended September 30, 2018, approximately 33% of our consolidated revenue was attributable to U.S. federal health care benefit programs, such as Medicare and Medicaid
36
FRESENIUS MEDICAL CARE AG & Co. KGaA
reimbursement. Legislative changes could affect Medicare reimbursement rates for a significant portion of the services we provide as well as the scope of Medicare coverage. A decrease in reimbursement rates or the scope of coverage could have a material adverse effect on our business, financial condition and results of operations and thus on our capacity to generate cash flow. See "I. Overview," above.
We intend to continue to address our current cash and financing requirements using cash provided by operating activities, our existing and future credit agreements, issuances under the commercial paper program (see note 7 of the notes to the consolidated financial statements (unaudited) included in this report) as well as the utilization of the Accounts Receivable Facility. In addition, when funds are required for acquisitions or to meet other needs, we expect to successfully complete long-term financing arrangements, such as the issuance of bonds. We aim to preserve financial resources with a minimum of €500 M of committed and unutilized credit facilities.
Net cash provided by (used in) operating activities depends on the collection of accounts receivable. Commercial customers and governments generally have different payment cycles. Lengthening their payment cycles could have a material adverse effect on our capacity to generate cash flow. In addition, we could face difficulties in enforcing and collecting accounts receivable under some countries' legal systems and due to the economic conditions in some countries. Accounts receivable balances, net of valuation allowances, represented Days Sales Outstanding ("DSO") of 77 days at September 30, 2018, an increase as compared to 75 days at December 31, 2017.
DSO by segment is calculated by dividing the segment's accounts and other receivable and contract liabilities, converted to euro using the average exchange rate for the period presented, less any sales or value added tax included in the receivables, by the average daily sales for the last twelve months of that segment, converted to euro using the average exchange rate for the period. Receivables and sales are adjusted for amounts related to acquisitions and divestitures made within the reporting period with a purchase price above a €50 M threshold as defined in the Amended 2012 Credit Agreement. DSO amounts reported in the prior year have been adjusted to conform to the current year's presentation. The development of DSO by reporting segment is shown in the table below:
DSO by reporting segment
|
||||||
| | | | | | |
|
September 30,
2018 |
December 31,
2017 |
||||
| | | | | | |
|
|
|
|
|
|
|
North America Segment |
60 | 59 | ||||
EMEA Segment |
100 |
102 |
||||
Asia-Pacific Segment |
127 |
123 |
||||
Latin America Segment |
125 |
127 |
||||
FMC-AG & Co. KGaA average days sales outstanding |
77 |
75 |
||||
|
||||||
| | | | | | |
The DSO increase in the North America Segment was largely due to increased accounts receivable from Medicare related to the implementation of the PAMA oral-only provision which moved certain pharmaceuticals into the bundled rate as well as a build-up of annually settled receivables, partially offset by a decrease due to the divestment of Sound which carried a higher than average DSO. The Asia-Pacific Segment's DSO increase primarily reflects delays in payment collections in China. The decreases in both the Latin America Segment and the EMEA Segment reflect periodic fluctuations in payment of public health care organizations in certain countries.
Due to the fact that a large portion of our reimbursement is provided by public health care organizations and private insurers, we expect that most of our accounts receivable will be collectible.
Net cash provided by (used in) investing activities
In the first nine months of 2018, net cash provided by investing activities was €301 M as compared to net cash used in investing activities of €1,011 M in the comparable period of 2017. The following table shows our capital expenditures
37
FRESENIUS MEDICAL CARE AG & Co. KGaA
for property, plant and equipment, net of proceeds from sales of property, plant and equipment as well as acquisitions, investments and purchases of intangible assets for first nine months of 2018 and 2017:
The majority of our capital expenditures were used for maintaining existing clinics, equipping new clinics, maintenance and expansion of production facilities (primarily in France, the North America Segment and Germany), capitalization of machines provided to our customers and for Care Coordination as well as capitalization of certain development costs. Capital expenditures increased to approximately 6% of total revenue in the first nine months of 2018 as compared to 5% the same period in 2017.
The investments in the nine months of 2018 were primarily driven by debt securities and an equity investment in Humacyte, a medical research, discovery and development company, to gain a 19% fully diluted ownership stake as well as a related exclusive global distribution right to Humacyte's bioengineered human acellular vessels within the North America Segment. The remaining investments in the North America Segment, the EMEA Segment and the Latin America Segment were largely acquisitions of dialysis clinics as well as license agreements and distribution rights in the North America Segment. In the first nine months of 2018, we received €1,811 M from divestitures mainly related to the divestment of Sound on June 28, 2018 (see note 2 of the notes to the consolidated financial statements (unaudited) in this report) as well as the sale of debt securities in the amount of €149 M. The investments in the first nine months of 2017 were mainly driven by acquisitions of dialysis clinics in the North America Segment and a Care Coordination acquisition in the Asia-Pacific Segment. Additionally, in the first nine months of 2017, we received €31 M from divestitures mainly related to the sale of a provider of outsourced clinical services in the North America Segment as well as for debt securities in the amount of €9 M.
We anticipate capital expenditures of €0.9 to €1.0 billion and expect to make acquisitions of approximately €400 to €500 M in 2018. See "Outlook" below.
Net cash provided by (used in) financing activities
In the nine months of 2018 and 2017, net cash used in financing activities was €734 M and €555 M, respectively.
In the nine months of 2018, cash was mainly used in the repayments of long-term debt and capital lease obligations including the repayment of Bonds due in September 2018, the payment of dividends, a reduction in the accounts receivable facility, distributions to noncontrolling interests and repayments of short-term debt, partially offset by proceeds from short-term debt (including drawings under the Commercial Paper Program) as well as long-term debt and capital lease obligations through an issuance under the newly established debt issuance program. In the nine months of 2017, cash was mainly used in the repayments of long-term debt and capital lease obligations including the repayment of Bonds due in July 2017 and partial repayment of a USD term loan under the Amended 2012 Credit Agreement, distributions to noncontrolling interests and the payment of dividends, partially offset by proceeds from long-term debt and capital lease obligations including the issuance of a euro term loan under the Amended 2012 Credit Agreement as well as proceeds from short-term debt including draws under the commercial paper program.
On May 23, 2018, we paid a dividend with respect to 2017 of €1.06 (for 2016 paid in 2017 €0.96). The total dividend payment was €325 M as compared to €294 M in the prior year.
38
FRESENIUS MEDICAL CARE AG & Co. KGaA
Total assets as of September 30, 2018 increased by 7% to €25.6 billion from €24.0 billion as compared to December 31, 2017, including a 2% positive impact resulting from foreign currency translation. At Constant Exchange Rates, total assets increased by 5% to €25.2 billion from €24.0 billion.
Current assets as a percent of total assets increased to 29% at September 30, 2018 as compared to 27% at December 31, 2017. The equity ratio, the ratio of our equity divided by total liabilities and shareholders' equity, increased to 48% at September 30, 2018 as compared to 45% at December 31, 2017. ROIC increased to 11.5% at September 30, 2018 as compared to 8.6% at December 31, 2017.
Report on post-balance sheet date events
No significant activities have taken place subsequent to the balance sheet date September 30, 2018 that have a material impact on the key figures and earnings presented. Currently, there are no other significant changes in our structure, management, legal form or personnel.
Below is a table showing our growth outlook for 2018. The outlook for 2018 is based on exchange rates prevailing at the beginning of 2018. We have presented our outlook at Constant Currency without a reconciliation to IFRS in reliance on Item 10(e)(1)(i)(B) or SEC Regulation S-K. Any such reconciliation would require actual exchange rates for the full year 2018. Any attempt to predict such rates would be purely speculative
The basis for the outlook below was adjusted for Sound's revenue, operating income and net income for the second half of 2017, in the amount of €559 M, €84 M and €38 M, respectively, to conform to the Sound business included for 2018 prior to the divestiture on June 28, 2018.
Outlook 2018 |
Outlook 2018
(at Constant Currency) (1) |
|
| | |
|
|
|
Revenue (2), (3) |
Growth 2-3% | |
Operating income (3), (4) |
Growth 5 - 6% |
|
Delivered EBIT (3), (4) |
Growth 6 - 7% | |
Net income growth at Constant Currency (3),(4),(5) |
11 - 12% | |
Net income growth at Constant Currency (3),(4),(5),(6) |
2 - 3% | |
Basic earnings per share growth at Constant Currency (3) |
based on development of net income | |
Capital expenditures (3) |
€0.9 - €1.0 BN | |
Acquisitions and investments (7) |
€400 - €500 M | |
Net cash provided by (used in) operating activities in % of revenue (3) |
> 10% | |
Free cash flow in % of revenue (3) |
> 4% | |
Net leverage ratio (3) |
< 2.5 | |
ROIC (3) |
³ 8.0% | |
Dividend per share |
based on development of net income | |
Employees (8) |
> 113,000 | |
Research and development expenses |
€130 - €140 M | |
| | |
(1) Excluding the effects from the acquisition of NxStage Medical, Inc., the (gain) loss related to divestitures of Care Coordination activities, U.S. Ballot Initiatives and the 2018 FCPA
Related Charge
(2) Basis 2017 adjusted for impacts from IFRS 15 implementation of €486 M
(3) Key performance indicator used for internal management. See Item 5. "Operating and financial review and prospects - I. Performance management system" in the annual report on
Form 20-F for the year ended December 31, 2017.
(4) Excluding the (gain) loss related to divestitures of Care Coordination activities.
(5) Net income attributable to shareholders of FMC-AG & Co. KGaA.
(6) Excluding the 2017 impacts from the VA Agreement, Natural Disaster Costs, FCPA related charge, as well as the impacts from the U.S. tax reform.
(7) Excluding investments into securities.
(8) Full-time equivalents.
Recently Issued Accounting Standards
Refer to note 1 of the notes to the consolidated financial statements (unaudited) in this report for information regarding recently issued accounting standards.
39
FRESENIUS MEDICAL CARE AG & Co. KGaA
Consolidated statements of income
(unaudited)
See accompanying notes to unaudited consolidated financial statements.
40
FRESENIUS MEDICAL CARE AG & Co. KGaA
Consolidated statements of comprehensive income
(unaudited)
Consolidated statements of comprehensive income | ||||||||||
| | | | | | | | | | |
in € THOUS | ||||||||||
Note |
For the three months
ended September 30, |
For the nine months
ended September 30, |
||||||||
| | | | | | | | | | |
2018 | 2017 | 2018 | 2017 | |||||||
| | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
Net income | 348,562 | 370,939 | 1,733,430 | 1,085,737 | ||||||
| | | | | | | | | | |
Other comprehensive income (loss): | ||||||||||
Components that may be reclassified subsequently to profit or loss: | ||||||||||
Gain (loss) related to foreign currency translation | 36,946 | (334,486) | 166,191 | (1,096,035) | ||||||
Gain (loss) related to cash flow hedges (1) | 13 | 5,964 | 4,840 | 18,984 | 23,012 | |||||
Income tax (expense) benefit related to components of other comprehensive income that may be reclassified | (1,668) | (1,284) | (5,382) | (7,003) | ||||||
| | | | | | | | | | |
Other comprehensive income (loss), net of tax | 41,242 | (330,930) | 179,793 | (1,080,026) | ||||||
| | | | | | | | | | |
Total comprehensive income | 389,804 | 40,009 | 1,913,223 | 5,711 | ||||||
Comprehensive income attributable to noncontrolling interests |
|
|
|
69,695 |
|
30,188 |
|
208,429 |
|
90,694 |
| | | | | | | | | | |
Comprehensive income attributable to shareholders of FMC-AG & Co. KGaA |
|
|
|
320,109 |
|
9,821 |
|
1,704,794 |
|
(84,983) |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
(1) Including cost of hedging in the amount of €(424) and €(976) for the three and nine months ended September 30, 2018.
See accompanying notes to unaudited consolidated financial statements.
41
FRESENIUS MEDICAL CARE AG & Co. KGaA
Consolidated balance sheets | |||||||||
| | | | | | | | | |
in € THOUS, except share data | |||||||||
|
|
Note |
|
|
September 30, 2018 |
|
|
December 31, 2017 |
|
| | | | | | | | | |
(unaudited) | (audited) | ||||||||
Assets | |||||||||
Cash and cash equivalents | 4 | 1,754,052 | 978,109 | ||||||
Trade accounts and other receivables | 5 | 3,361,748 | 3,389,326 | ||||||
Accounts receivable from related parties | 3 | 125,176 | 111,643 | ||||||
Inventories | 6 | 1,453,747 | 1,290,779 | ||||||
Other current assets | 838,926 | 604,450 | |||||||
| | | | | | | | | |
Total current assets | 7,533,649 | 6,374,307 | |||||||
Property, plant and equipment |
|
|
|
|
3,725,043 |
|
|
3,491,771 |
|
Intangible assets | 672,085 | 683,058 | |||||||
Goodwill | 11,983,016 | 12,103,921 | |||||||
Deferred taxes | 328,477 | 315,168 | |||||||
Investment in equity method investees | 14 | 630,079 | 647,009 | ||||||
Other non-current assets | 714,737 | 409,894 | |||||||
| | | | | | | | | |
Total non-current assets | 18,053,437 | 17,650,821 | |||||||
| | | | | | | | | |
Total assets | 25,587,086 | 24,025,128 | |||||||
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable | 610,775 | 590,493 | |||||||
Accounts payable to related parties | 3 | 194,108 | 147,349 | ||||||
Current provisions and other current liabilities | 2,834,418 | 2,843,760 | |||||||
Short-term debt | 7 | 1,209,708 | 760,279 | ||||||
Short-term debt from related parties | 7 | 23,400 | 9,000 | ||||||
Current portion of long-term debt and capital lease obligations | 8 | 1,096,425 | 883,535 | ||||||
Income tax payable | 82,648 | 65,477 | |||||||
| | | | | | | | | |
Total current liabilities | 6,051,482 | 5,299,893 | |||||||
Long-term debt and capital lease obligations, less current portion |
|
8 |
|
|
5,040,521 |
|
|
5,794,872 |
|
Non-current provisions and other non-current liabilities | 914,587 | 975,645 | |||||||
Pension liabilities | 517,407 | 530,559 | |||||||
Income tax payable | 126,443 | 128,433 | |||||||
Deferred taxes | 590,802 | 467,540 | |||||||
| | | | | | | | | |
Total non-current liabilities | 7,189,760 | 7,897,049 | |||||||
| | | | | | | | | |
Total liabilities | 13,241,242 | 13,196,942 | |||||||
Shareholders' equity: |
|
|
|
|
|
|
|
|
|
Ordinary shares, no par value, €1.00 nominal value, 385,913,972 shares authorized, 308,936,407 issued and 306,845,456 outstanding as of September 30, 2018 and 385,913,972 shares authorized, 308,111,000 issued and 306,451,049 outstanding as of December 31, 2017 | 308,936 | 308,111 | |||||||
Treasury stock, at cost | (146,152) | (108,931) | |||||||
Additional paid-in capital | 3,982,156 | 3,969,245 | |||||||
Retained earnings | 8,409,476 | 7,137,255 | |||||||
Accumulated other comprehensive income (loss) | (1,337,934) | (1,485,578) | |||||||
| | | | | | | | | |
Total FMC-AG & Co. KGaA shareholders' equity | 11,216,482 | 9,820,102 | |||||||
Noncontrolling interests | 1,129,362 | 1,008,084 | |||||||
| | | | | | | | | |
Total equity | 12,345,844 | 10,828,186 | |||||||
| | | | | | | | | |
Total liabilities and equity | 25,587,086 | 24,025,128 | |||||||
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
See accompanying notes to unaudited consolidated financial statements.
42
FRESENIUS MEDICAL CARE AG & Co. KGaA
Consolidated statements of cash flows
(unaudited)
Consolidated statements of cash flows | |||||||||
| | | | | | | | | |
in € THOUS | |||||||||
For the nine months ended
September 30, |
|||||||||
| | | | | | | | | |
Note | 2018 |
2017
|
|||||||
| | | | | | | | | |
Operating activities | |||||||||
Net income |
1,733,430 | 1,085,737 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||||
Depreciation and amortization |
14 | 534,017 | 553,764 | ||||||
Change in deferred taxes, net |
68,916 | (46,115) | |||||||
(Gain) loss on sale of fixed assets, investments and divestitures |
(835,604) | 4,370 | |||||||
Compensation expense related to share-based plans |
9,613 | 42,213 | |||||||
Investments in equity method investees, net |
(8,815) | (42,917) | |||||||
Changes in assets and liabilities, net of amounts from businesses acquired: |
|||||||||
Trade accounts and other receivables |
(238,607) | (100,576) | |||||||
Inventories |
(156,665) | (71,270) | |||||||
Other current and non-current assets |
(91,873) | 23,343 | |||||||
Accounts receivable from related parties |
(14,217) | 69,777 | |||||||
Accounts payable to related parties |
44,740 | (31,635) | |||||||
Accounts payable, provisions and other current and non-current liabilities |
395,029 | 430,427 | |||||||
Paid interest |
(269,382) | (299,726) | |||||||
Received interest |
28,980 | 28,127 | |||||||
Income tax payable |
430,646 | 516,609 | |||||||
Paid income taxes |
(409,921) | (498,332) | |||||||
| | | | | | | | | |
Net cash provided by (used in) operating activities |
1,220,287 | 1,663,796 | |||||||
| | | | | | | | | |
Investing activities | |||||||||
Purchases of property, plant and equipment |
(731,959) | (632,330) | |||||||
Proceeds from sale of property, plant and equipment |
29,475 | 18,346 | |||||||
Acquisitions and investments, net of cash acquired, and purchases of intangible assets |
15 | (808,253) | (427,872) | ||||||
Proceeds from divestitures |
15 | 1,811,240 | 30,746 | ||||||
| | | | | | | | | |
Net cash provided by (used in) investing activities |
300,503 | (1,011,110) | |||||||
| | | | | | | | | |
Financing activities | |||||||||
Proceeds from short-term debt |
625,549 | 437,160 | |||||||
Repayments of short-term debt |
(174,517) | (60,601) | |||||||
Proceeds from short-term debt from related parties |
52,146 | 116,079 | |||||||
Repayments of short-term debt from related parties |
(37,746) | (116,079) | |||||||
Proceeds from long-term debt and capital lease obligations |
610,316 | 583,994 | |||||||
Repayments of long-term debt and capital lease obligations |
(1,032,980) | (995,351) | |||||||
Increase (decrease) of accounts receivable securitization program |
(295,595) | 22,442 | |||||||
Proceeds from exercise of stock options |
44,443 | 39,100 | |||||||
Purchase of Treasury Stock |
(37,221) | - | |||||||
Dividends paid |
(324,838) | (293,973) | |||||||
Distributions to noncontrolling interests |
(194,283) | (320,676) | |||||||
Contributions from noncontrolling interests |
30,554 | 32,875 | |||||||
| | | | | | | | | |
Net cash provided by (used in) financing activities |
(734,172) | (555,030) | |||||||
| | | | | | | | | |
Effect of exchange rate changes on cash and cash equivalents | (10,675) | (77,298) | |||||||
Cash and cash equivalents: | |||||||||
Net increase (decrease) in cash and cash equivalents |
775,943 | 20,358 | |||||||
Cash and cash equivalents at beginning of period |
978,109 | 708,882 | |||||||
| | | | | | | | | |
Cash and cash equivalents at end of period |
4 | 1,754,052 | 729,240 | ||||||
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
See accompanying notes to unaudited consolidated financial statements.
43
FRESENIUS MEDICAL CARE AG & Co. KGaA
Consolidated statement of shareholders´ equity
For the nine months ended September 30, 2018 and 2017 (unaudited)
Consolidated statements of shareholders´ equity | |||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
in € THOUS, except share data | |||||||||||||||||||||||||||||||||||||||
Ordinary shares | Treasury stock |
Accumulated
other comprehensive income (loss) |
|||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note |
Number of
shares |
No par
value |
Number of
shares |
Amount |
Additional
paid in capital |
Retained
earnings |
Foreign
currency translation |
Cash flow
hedges |
Pensions |
Total
FMC-AG & Co. KGaA shareholders' equity |
Noncontrolling
interests |
Total
equity |
|||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2016 | 307,221,791 | 307,222 | (999,951) | (50,993) | 3,960,115 | 6,085,876 | (26,019) | (38,107) | (260,437) | 9,977,657 | 1,073,475 | 11,051,132 | |||||||||||||||||||||||||||
Proceeds from exercise of options and related tax effects | 739,692 | 739 | - | - | 37,491 | - | - | - | - | 38,230 | - | 38,230 | |||||||||||||||||||||||||||
Compensation expense related to stock options | - | - | - | - | 13,257 | - | - | - | - | 13,257 | - | 13,257 | |||||||||||||||||||||||||||
Dividends paid | - | - | - | - | - | (293,973) | - | - | - | (293,973) | - | (293,973) | |||||||||||||||||||||||||||
Purchase/ sale of noncontrolling interests | - | - | - | - | (63,586) | - | - | - | - | (63,586) | 29,500 | (34,086) | |||||||||||||||||||||||||||
Contributions from/ to noncontrolling interests | - | - | - | - | - | - | - | - | - | - | (190,365) | (190,365) | |||||||||||||||||||||||||||
Noncontrolling interests subject to put provisions | 13 | - | - | - | - | - | 83,115 | - | - | - | 83,115 | - | 83,115 | ||||||||||||||||||||||||||
Net Income |
- | - | - | - | - | 886,136 | - | - | - | 886,136 | 199,601 | 1,085,737 | |||||||||||||||||||||||||||
Other comprehensive income (loss) related to: |
|||||||||||||||||||||||||||||||||||||||
Foreign currency translation |
- | - | - | - | - | - | (1,000,829) | 97 | 13,604 | (987,128) | (108,907) | (1,096,035) | |||||||||||||||||||||||||||
Cash flow hedges, net of related tax effects |
- | - | - | - | - | - | - | 16,009 | - | 16,009 | - | 16,009 | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Comprehensive income | - | - | - | - | - | - | - | - | - | (84,983) | 90,694 | 5,711 | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at September 30, 2017 | 307,961,483 | 307,961 | (999,951) | (50,993) | 3,947,277 | 6,761,154 | (1,026,848) | (22,001) | (246,833) | 9,669,717 | 1,003,304 | 10,673,021 | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2017 |
|
|
|
|
308,111,000 |
|
|
308,111 |
|
|
(1,659,951) |
|
|
(108,931) |
|
|
3,969,245 |
|
|
7,137,255 |
|
|
(1,203,904) |
|
|
(18,336) |
|
|
(263,338) |
|
|
9,820,102 |
|
|
1,008,084 |
|
|
10,828,186 |
|
Adjustment due to initial application of IFRS 9 |
|
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(5,076) |
|
|
- |
|
|
- |
|
|
- |
|
|
(5,076) |
|
|
- |
|
|
(5,076) |
|
Adjusted balance at December 31, 2017 | 308,111,000 | 308,111 | (1,659,951) | (108,931) | 3,969,245 | 7,132,179 | (1,203,904) | (18,336) | (263,338) | 9,815,026 | 1,008,084 | 10,823,110 | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Proceeds from exercise of options and related tax effects |
|
|
|
|
825,407 |
|
|
825 |
|
|
- |
|
|
- |
|
|
45,153 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
45,978 |
|
|
- |
|
|
45,978 |
|
Compensation expense related to stock options | - | - | - | - | 5,626 | - | - | - | - | 5,626 | - | 5,626 | |||||||||||||||||||||||||||
Purchase of treasury stock | 2d | - | - | (431,000) | (37,221) | - | - | - | - | - | (37,221) | - | (37,221) | ||||||||||||||||||||||||||
Dividends paid | - | - | - | - | - | (324,838) | - | - | - | (324,838) | - | (324,838) | |||||||||||||||||||||||||||
Purchase/ sale of noncontrolling interests | - | - | - | - | (37,868) | - | - | - | - | (37,868) | 55,927 | 18,059 | |||||||||||||||||||||||||||
Contributions from/ to noncontrolling interests | - | - | - | - | - | - | - | - | - | - | (143,078) | (143,078) | |||||||||||||||||||||||||||
Noncontrolling interests subject to put provisions | 13 | - | - | - | - | - | 44,985 | - | - | - | 44,985 | - | 44,985 | ||||||||||||||||||||||||||
Net Income |
- | - | - | - | - | 1,557,150 | - | - | - | 1,557,150 | 176,280 | 1,733,430 | |||||||||||||||||||||||||||
Other comprehensive income (loss) related to: |
|||||||||||||||||||||||||||||||||||||||
Foreign currency translation |
- | - | - | - | - | - | 139,409 | (13) | (5,354) | 134,042 | 32,149 | 166,191 | |||||||||||||||||||||||||||
Cash flow hedges, net of related tax effects |
- | - | - | - | - | - | - | 13,602 | - | 13,602 | - | 13,602 | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Comprehensive income | - | - | - | - | - | - | - | - | - | 1,704,794 | 208,429 | 1,913,223 | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at September 30, 2018 | 308,936,407 | 308,936 | (2,090,951) | (146,152) | 3,982,156 | 8,409,476 | (1,064,495) | (4,747) | (268,692) | 11,216,482 | 1,129,362 | 12,345,844 | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See accompanying notes to unaudited consolidated financial statements.
44
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
1. The Company and basis of presentation
The Company
Fresenius Medical Care AG & Co. KGaA ("FMC-AG & Co. KGaA" or the "Company"), a German partnership limited by shares (Kommanditgesellschaft auf Aktien) registered in the commercial registry of Hof an der Saale under HRB 4019, with its business address at Else-Kröner-Str. 1, 61352 Bad Homburg v. d. Höhe, is the world's largest kidney dialysis company, based on publicly reported sales and number of patients treated. The Company provides dialysis treatment and related dialysis care services to persons who suffer from end-stage renal disease ("ESRD"), as well as other health care services. The Company also develops and manufactures a wide variety of health care products, which includes dialysis and non-dialysis products. The Company's dialysis products include hemodialysis machines, peritoneal cyclers, dialyzers, peritoneal solutions, hemodialysis concentrates, solutions and granulates, bloodlines, renal pharmaceuticals and systems for water treatment. The Company's non-dialysis products include acute cardiopulmonary and apheresis products. The Company supplies dialysis clinics it owns, operates or manages with a broad range of products and also sells dialysis products to other dialysis service providers. The Company describes certain of its other health care services as "Care Coordination." Care Coordination currently includes, but is not limited to, the coordinated delivery of pharmacy services, vascular, cardiovascular and endovascular specialty services as well as ambulatory surgery center services, physician nephrology and cardiology services, health plan services, urgent care services and ambulant treatment services. Until June 28, 2018, Care Coordination also included the coordinated delivery of emergency, intensivist and hospitalist physician services as well as transitional care which the Company refers to as "hospital related physician services." All of these Care Coordination services together with dialysis care and related services represent the Company's health care services.
In these unaudited consolidated financial statements, "FMC-AG & Co. KGaA," or the "Company" refers to the Company or the Company and its subsidiaries on a consolidated basis, as the context requires. "Fresenius SE" and "Fresenius SE & Co. KGaA" refer to Fresenius SE & Co. KGaA, a German partnership limited by shares resulting from the change of legal form of Fresenius SE (effective as of January 2011), a European Company (Societas Europaea) previously called Fresenius AG, a German stock corporation. "Management AG" and the "General Partner" refer to Fresenius Medical Care Management AG which is FMC-AG & Co. KGaA's general partner and is wholly owned by Fresenius SE. "Management Board" refers to the members of the management board of Management AG and, except as otherwise specified, "Supervisory Board" refers to the supervisory board of FMC-AG & Co. KGaA. The term "North America Segment" refers to the North America operating segment, the term "EMEA Segment" refers to the Europe, Middle East and Africa operating segment, the term "Asia-Pacific Segment" refers to the Asia-Pacific operating segment, and the term "Latin America Segment" refers to the Latin America operating segment. For further discussion of the Company's operating segments, see note 14.
Basis of presentation
The consolidated financial statements and other financial information included in the Company's quarterly reports on Form 6-K and its Annual Report on Form 20-F for 2017 were prepared solely in accordance with IFRS as issued by the International Accounting Standards Board ("IASB"), using the euro as the Company's reporting currency. At September 30, 2018, there were no IFRS or International Financial Reporting Interpretation Committee ("IFRIC") interpretations as endorsed by the European Union relevant for interim reporting that differed from IFRS as issued by the IASB. As such, the accompanying condensed interim report complies with the requirements of International Accounting Standard ("IAS") 34, Interim Financial Reporting as well as with the rules concerning interim reporting as issued by the IASB.
The consolidated financial statements at September 30, 2018 and for the three and nine-months periods ended September 30, 2018 and 2017 contained in this report are unaudited and should be read in conjunction with the consolidated financial statements contained in the Company's 2017 Annual Report on Form 20-F. The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. Such financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments are of a normal recurring nature.
45
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
Starting on July 1, 2018, the Company's subsidiaries applied IAS 29, Financial Reporting in Hyperinflationary Economies, due to the inflation in Argentina. Pursuant to IAS 29, the Company recorded a loss on its net monetary position of €11,910 for the nine months ended September 30, 2018. While IAS 29 requires that comparative financial statements be restated in the current measuring unit as of the reporting date, the Company's presentation currency is not hyperinflationary and therefore IAS 21, The Effects of Changes in Foreign Exchange Rates, requires the comparative amounts to be disclosed as current year amounts in the prior year financial statements. The Company did not restate the prior year statement of comprehensive income and consolidated balance sheet, but recorded €19,190 as an adjustment to equity as of December 31, 2017. The Company calculated the loss and the adjustment to prior year equity with the use of the Consumer Price Index (Índice de precios al consumidor) as published by the Argentine Statistics and Census Institute for the first nine months of 2018, which lists the level at 165 index points, a 32% increase since January 1, 2018.
As a result of the implementation of IFRS 15, Revenue from Contracts with Customers and IFRS 9, Financial Instruments, the Company has updated its accounting policies accordingly. Please refer to "Recently implemented accounting pronouncements" below for further details on the updated policies. Excluding the policy updates for IFRS 15 and IFRS 9, the accounting policies applied in the accompanying consolidated financial statements are the same as those applied in the consolidated financial statements as of December 31, 2017.
Finance lease receivables in the amount of €58,336 in the prior years' comparative consolidated financial statements have been reclassified from other currents assets to trade accounts and other receivables to conform to the current year's presentation.
The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results of operations for the year ending December 31, 2018.
Recently implemented accounting pronouncements
The Company has prepared its consolidated financial statements at September 30, 2018 in conformity with IFRS in force for the interim periods on January 1, 2018. In the first quarter of 2018, the Company applied the following new standards relevant for its business for the first time:
IFRS 15
The Company adopted IFRS 15, Revenue from Contracts with Customers, as issued in May 2014, with the effective date of January 1, 2018. While this standard applies to nearly all contracts with customers, the main exceptions are leases, financial instruments and insurance contracts. In accordance with the transition provisions in IFRS 15 the new rules were only adopted for those contracts that are not completed contracts as of January 1, 2018 following the cumulative effect method with no restatement of the comparative periods presented.
The major changes in the Company's accounting policies resulting from the implementation of IFRS 15 are summarized below:
Health care services
For services performed for patients where the collection of the billed amount or a portion of the billed amount cannot be determined at the time services are performed, the Company concludes that the consideration is variable ("implicit price concession") and records the difference between the billed amount and the amount estimated to be collectible as a reduction to health care services revenue, whereas prior to the adoption of IFRS 15 it was recorded as part of selling, general and administrative expenses as an allowance for doubtful accounts. Implicit price concessions include such items as amounts due from patients without adequate insurance coverage and patient co-payment and deductible amounts due from patients with health care coverage. The Company determines implicit price concessions primarily upon past collection history.
46
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
IFRS 15 requires the consideration of implicit price concessions when determining the transaction price which, through adoption, resulted in the implicit price concessions directly reducing revenue in the amount of €87,327 and €392,163 for the three and nine months ended September 30, 2018, respectively. Prior to the adoption of IFRS 15, implicit price concessions were included as part of selling, general and administrative expenses as an allowance for doubtful accounts in the amount of €116,938 and €386,640 for the three and nine months ended September 30, 2017, respectively. There is no effect on net income as the implicit price concessions are merely presented in different lines within the consolidated statements of income.
Revenue from insurance contracts will be disclosed as part of "Other revenue" separately from "Revenue from contracts with customers" in the notes to the consolidated financial statements.
Health care products
In the health care product business, major revenues are generated from the sale of dialysis machines and water treatment systems, disposable products and maintenance agreements for the Company´s health care products. Prior to the adoption of IFRS 15 revenues were recorded upon transfer of title to the customer, either at the time of shipment, upon receipt or upon any other terms that clearly define passage of title. With the adoption of IFRS 15, revenues from the sale of dialysis machines and water treatment systems are typically recognized upon installation and provision of the necessary technical instructions as only thereafter does the customer obtain control of the medical device.
A portion of dialysis product revenues is generated from arrangements which give the customer, typically a health care provider, the right to use dialysis machines. IFRS 15 specifically excludes leases from the scope of the revenue standard. As a result, the transaction price is allocated in accordance with IFRS 15, and revenue is recognized separately for the lease and the non-lease components of the contract in accordance with IAS 17.
Revenue from lease contracts will be disclosed as part of "Other revenue" separately from "Revenue from contracts with customers" in the notes to the consolidated financial statements.
As of September 30, 2018 there is an immaterial amount of contract assets and contract liabilities resulting from the implementation of IFRS 15. Contract assets are shown in the consolidated balance sheet in line item "Trade accounts and other receivables" and contract liabilities are shown in line item "Current provisions and other current liabilities".
IFRS 9
The Company has adopted IFRS 9, Financial instruments with the effective date of January 1, 2018. IFRS 9 was issued in July 2014 and mainly replaced IAS 39, Financial instruments: recognition and measurement. Additionally, the Company has adopted the related amendments to IFRS 7, Financial instruments: disclosures.
The major changes in the Company's accounting policies resulting from the implementation of IFRS 9 are summarised below:
Classification and measurement of financial assets and financial liabilities
IFRS 9 defined the following three categories for financial assets: measured at amortized cost, measured at fair value through other comprehensive income ("FVOCI") and measured at fair value through profit or loss ("FVPL"). The classification depends on the business model that the financial assets are managed in and the contractual terms of the cash flows of the financial assets. IFRS 9 eliminated the following categories that were applicable for the Company under IAS 39: loans and receivables and available for sale financial assets.
The requirements for the classification and measurement of financial liabilities have not changed significantly. Consequently, the implementation of IFRS 9 does not have a material impact on the Company's accounting policies for financial liabilities.
47
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
Impairment of financial assets
IFRS 9 replaces the incurred loss model under IAS 39 with an expected credit loss approach. This means that generally all impacted financial assets will carry a loss allowance based on their expected credit losses. Expected credit losses are a probability-weighted estimate of credit losses over the contractual life of the financial assets. This model comprises a three stage approach. Upon recognition, the Company shall recognize losses that are expected within the next 12 months. If credit risk deteriorates significantly, from that time, impairment losses shall amount to lifetime expected losses. When assessing for significant increases in credit risk, the Company shall compare the risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial instrument at the date of initial recognition. The Company should consider reasonable and supportable information including historic loss rates, present developments such as liquidity issues and information about future economic conditions, to ensure foreseeable changes in the customer-specific or macroeconomic environment are considered.
In case of objective evidence of impairment there is an assignment to stage 3. The assignment of a financial asset to stage 3 should rely on qualitative knowledge on the customers' unfavorable financial position (for example bankruptcy, lawsuits with private or public payers), or quantitative criteria, based on an individual maturity analysis. When a counterpart defaults, all financial assets against this counterpart are considered impaired. The definition of default is mainly based on payment practices specific to individual regions and businesses.
The Company recognizes a loss allowance for expected credit losses on financial assets measured at amortized cost, contract assets and lease receivables as well as in investments in debt securities measured at fair value through other comprehensive income. The financial assets mainly comprise trade accounts receivables and cash and cash equivalents. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective instrument. Financial assets whose expected credit loss is not assessed individually are grouped on the basis of geographical regions and the impairment is generally assessed on the basis of macroeconomic indicators such as credit default swaps.
For trade accounts receivable, the Company uses the simplified method which requires recognizing lifetime expected credit losses. Expected credit losses on cash and cash equivalents are measured according to the general method which is based on 12-month expected credit losses. Due to the short maturity term of the financial instruments this corresponds with the lifetime expected loss.
Based on the external credit ratings of the counterparties the Company considers that its cash and cash equivalents have a low credit risk.
Hedge accounting
The Company implemented the IFRS 9 hedge accounting model. The new model allows for improved alignment of hedge accounting with risk management strategies and objectives. The Company applies cash flow hedge accounting mainly for the purpose of hedging forecasted transactions relating to inventory purchases and sales. To hedge the resulting foreign currency exposure, the Company generally enters into foreign exchange forward contracts. With the application of IFRS 9, only the effective fair value changes of the spot component of these contracts will be designated as hedging instruments and accounted for in other comprehensive income (loss) ("OCI"). Forward points are recognized and accumulated in a separate component within OCI. Under IAS 39, the fair value changes of both the spot and forward component were designated as hedging instrument, and recognized in accumulated OCI ("AOCI"). Under IAS 39 accumulated amounts related to cash flow hedges were reclassified to profit or loss in the same period as the hedged forecasted transaction affected profit or loss. Under IFRS 9, accumulated amounts in OCI for cash flow hedges of foreign exchange risk in relation to hedged forecasted product purchases from third party are directly included in the initial cost of the asset when it is recognized.
Recent accounting pronouncements not yet adopted
48
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
IFRS 16
In January 2016, the IASB issued IFRS 16, Leases, which supersedes the current standard on lease-accounting, IAS 17, as well as the interpretations IFRIC 4, SIC-15 and SIC-27. IFRS 16 significantly changes lessee accounting. For all leases, a lessee is required to recognize a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Depreciation of the right-of-use asset and interest on the lease liability must be recognized in the income statement for every lease contract. Therefore, straight-line rental expenses will no longer be shown. The lessor accounting requirements in IAS 17 are substantially carried forward. The standard is effective for fiscal years beginning on or after January 1, 2019. Earlier application is permitted for entities that have also adopted IFRS 15, Revenue from Contracts with Customers. The Company decided that IFRS 16 will not be adopted early. The Company expects a balance sheet extension due to the on balance sheet recognition of right of use assets and liabilities for agreed lease payment obligations, currently classified as operating leases, resulting in particular from leased clinics and buildings. Based on a first impact analysis as of December 31, 2015 using certain assumptions and simplifications, the Company expects a financial debt increase of approximately €4,000,000. Referring to the consolidated statement of income, the Company expects an operating income improvement due to the split of rent expenses in depreciation and interest expenses, by having unchanged cash outflows. The Company also expects that its net leverage ratio (net debt as compared to Earnings before Interest, Taxes, Depreciation and Amortization, "EBITDA"), adjusted for acquisitions and divestitures made during the last twelve months with a purchase price above a €50,000 threshold as defined in the Amended 2012 Credit Agreement and non-cash charges) will increase by about 0.5. The impact on the Company will depend on the contract portfolio at the effective date, as well as the transition method. Based on a first impact analysis, the Company will apply the modified retrospective method. Except for the transition method, the Company is currently evaluating the accounting policy options of IFRS 16.
IFRS 17
In May 2017, the IASB issued IFRS 17, Insurance Contracts. IFRS 17 establishes principles for the recognition, measurement, presentation and disclosure related to the issuance of insurance contracts. IFRS 17 replaces IFRS 4, Insurance Contracts, which was brought in as an interim standard in 2004. IFRS 4 permitted the use of national accounting standards for the accounting of insurance contracts under IFRS. As a result of the varied application for insurance contracts there was a lack of comparability among peer groups. IFRS 17 eliminates this diversity in practice by requiring all insurance contracts to be accounted for using current values. The frequent updates to the insurance values are expected to provide more useful information to users of financial statements. IFRS 17 is effective for fiscal years beginning on or after January 1, 2021. Earlier adoption is permitted for entities that have also adopted IFRS 9, Financial Instruments and IFRS 15, Revenue from Contracts with Customers. The Company is evaluating the impact of IFRS 17 on the consolidated financial statements.
In the Company's view, all other pronouncements issued by the IASB do not have a material impact on the consolidated financial statements.
49
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
2. Notes to the consolidated statements of income
a) Revenue
The Company has recognized the following revenue in the consolidated statement of income for the three and nine months ended September 30, 2018:
Revenue | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
in € THOUS | |||||||||||||||||||
For the three months ended
September 30, 2018 |
For the nine months ended
September 30, 2018 |
||||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
|
|
|
Revenue from contracts with customers |
|
|
Other revenue |
|
|
Total |
|
|
Revenue from contracts with customers |
|
|
Other revenue |
|
|
Total |
|
| | | | | | | | | | | | | | | | | | | |
Health care services | 3,199,364 | 58,767 | 3,258,131 | 9,689,671 | 162,062 | 9,851,733 | |||||||||||||
Dialysis services |
2,904,363 | - | 2,904,363 | 8,359,200 | - | 8,359,200 | |||||||||||||
Care Coordination |
295,001 | 58,767 | 353,768 | 1,330,471 | 162,062 | 1,492,533 | |||||||||||||
Health care products |
|
|
774,106 |
|
|
25,615 |
|
|
799,721 |
|
|
2,324,406 |
|
|
71,047 |
|
|
2,395,453 |
|
Dialysis products |
756,759 | 25,615 | 782,374 | 2,269,019 | 71,047 | 2,340,066 | |||||||||||||
Non-dialysis products |
17,347 | - | 17,347 | 55,387 | - | 55,387 | |||||||||||||
| | | | | | | | | | | | | | | | | | | |
Total | 3,973,470 | 84,382 | 4,057,852 | 12,014,077 | 233,109 | 12,247,186 | |||||||||||||
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
b) (Gain) loss related to divestitures of Care Coordination activities
On April 20, 2018, the Company signed a definitive agreement to divest its controlling interest in Sound Inpatient Physicians, Inc. ("Sound") to an investment consortium led by Summit Partners, L.P., ("Summit Consortium"). Upon receipt of the required regulatory approvals under the Hart-Scott-Rodino Antitrust Improvements Acts of 1976, as amended, and the satisfaction of customary closing conditions, the divestiture was consummated on June 28, 2018. The total transaction proceeds were $1,925,210 (€1,662,100). The pre-tax gain related to divestitures for Care Coordination activities was €829,860, which primarily related to this divestiture, the effect of the six month impact from the increase in valuation of Sound's share based payment program, incentive compensation expense and other costs caused by the divestment of Sound.
Sound was included in Care Coordination within the North America Segment. The Company's history with Sound, prior to divestment, includes the following milestones:
c) Research and development expenses
Research and development expenses of €95,287 for the nine months ended September 30, 2018 (for the nine months ended September 30, 2017: €94,927) include expenditure for research and non-capitalizable development costs as well as depreciation and amortization expenses of €249 related to capitalized development costs (for the nine months ended September 30, 2017: €351).
50
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
d) Earnings per share
The following table contains reconciliations of the numerators and denominators of the basic and fully diluted earnings per share computations for 2018 and 2017:
Share buy-back program
On the basis of the authorization granted by the Company's Annual General Meeting on May 12, 2016 to conduct a share buy-back program, the Company repurchased 431,000 shares between May 28, and June 8, 2018, for an average weighted stock price of €86.37.
As of September 30, 2018, the Company holds 2,090,951 treasury shares. These shares will be used solely to either reduce the registered share capital of the Company by cancellation of the acquired shares, or to fulfill employee participation programs of the Company.
51
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
The following tabular disclosure provides the number of shares acquired in the context of the share buy-back programs as well as the repurchased treasury stock:
(1) The value of shares repurchased in 2013, 2017 and 2018 is inclusive of fees (net of taxes) paid in the amount of approximately €81, €12 and €8, respectively, for services rendered.
3. Related party transactions
Fresenius SE is the Company's largest shareholder and owns 30.8% of the Company's outstanding shares, excluding treasury shares held by the Company, at September 30, 2018. The Company has entered into certain arrangements for services, leases and products with Fresenius SE or its subsidiaries and with certain of the Company's equity method investees as described in item a) below. The Company's terms related to the receivables or payables for these services, leases and products are generally consistent with the normal terms of the Company's ordinary course of business transactions with unrelated parties and the Company believes that these arrangements reflect fair market terms. The Company utilizes various methods to verify the commercial reasonableness of its related party arrangements. Financing arrangements as described in item b) below have agreed upon terms which are determined at the time such financing transactions occur and reflect market rates at the time of the transaction. The relationship between the Company and its key management personnel who are considered to be related parties is described in item c) below. Our related party transactions are settled through Fresenius SE's cash management system where appropriate.
a) Service agreements, lease agreements and products
The Company is party to service agreements with Fresenius SE and certain of its affiliates (collectively the "Fresenius SE Companies") to receive services, including, but not limited to: administrative services, management information services, employee benefit administration, insurance, information technology services, tax services and treasury management services. The Company also provides central purchasing services to the Fresenius SE Companies. These related party agreements generally have a duration of 1 to 5 years and are renegotiated on an as needed basis when the agreement comes due. The Company provides administrative services to one of its equity method investees.
52
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
The Company is a party to real estate operating lease agreements with the Fresenius SE Companies, which mainly include leases for the Company's corporate headquarters in Bad Homburg, Germany and production sites in Schweinfurt and St. Wendel, Germany. The majority of the leases expire at the end of 2026.
In addition to the above mentioned service and lease agreements, the Company sold products to the Fresenius SE Companies and made purchases from the Fresenius SE Companies and equity method investees. In addition, Fresenius Medical Care Holdings, Inc. ("FMCH") purchases heparin supplied by Fresenius Kabi USA, Inc. ("Kabi USA"), through an independent group purchasing organization ("GPO"). Kabi USA is an indirect, wholly-owned subsidiary of Fresenius SE. The Company has no direct supply agreement with Kabi USA and does not submit purchase orders directly to Kabi USA. FMCH acquires heparin from Kabi USA, through the GPO contract, which was negotiated by the GPO at arm's length on behalf of all members of the GPO.
The Company entered into an agreement with a Fresenius SE company for the manufacturing of infusion bags. In order to establish the new production line, the Company purchased machinery from the Fresenius SE company in the amount of €3,429 during the nine months ended September 30, 2018.
In December 2010, the Company and Galenica Ltd. (now known as Vifor Pharma Ltd.) formed the renal pharmaceutical company Vifor Fresenius Medical Care Renal Pharma Ltd., ("VFMCRP"), an equity method investee of which the Company owns 45%. The Company has entered into exclusive supply agreements to purchase certain pharmaceuticals from VFMCRP.
Below is a summary, including the Company's receivables from and payables to the indicated parties resulting from the above described transactions with related parties.
(1) In addition to the above shown accounts payable, accrued expenses for service agreements with related parties amounted to €3,443 and €6,397 at September 30,
2018 and December 31, 2017, respectively.
b) Financing
The Company receives short-term financing from and provides short-term financing to Fresenius SE. The Company also utilizes Fresenius SE's cash management system for the settlement of certain intercompany receivables and
53
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
payables with its subsidiaries and other related parties. As of September 30, 2018 and December 31, 2017, the Company had accounts receivable from Fresenius SE related to short-term financing in the amount of €110,746 and €91,026, respectively. As of September 30, 2018 and December 31, 2017, the Company had accounts payable to Fresenius SE related to short-term financing in the amount of €78,990 and €76,159, respectively. The interest rates for these cash management arrangements are set on a daily basis and are based on the then-prevailing overnight reference rate, with a floor of zero, for the respective currencies.
On August 19, 2009, the Company borrowed €1,500 from the General Partner on an unsecured basis at 1.335%. The loan repayment has been extended periodically and is currently due August 22, 2019 with an interest rate of 0.825%. On November 28, 2013, the Company borrowed an additional €1,500 with an interest rate of 1.875% from the General Partner. The loan repayment has been extended periodically and is currently due on November 23, 2018 with an interest rate of 1.100%.
At September 30, 2018 and December 31, 2017, a subsidiary of Fresenius SE held unsecured bonds issued by the Company in the amount of €6,000 and €6,000, respectively. The bonds were issued in 2011 and 2012, mature in 2021 and 2019, respectively, and each has a coupon rate of 5.25% with interest payable semiannually.
At September 30, 2018 and December 31, 2017, the Company borrowed from Fresenius SE in the amount of €20,400 on an unsecured basis at an interest rate of 0.825% and €6,000 on an unsecured basis at an interest rate of 0.825%, respectively. For further information on this loan agreement, see note 7.
c) Key management personnel
Due to the Company's legal form of a German partnership limited by shares, the General Partner holds a key management position within the Company. In addition, as key management personnel, members of the Management Board and the Supervisory Board, as well as their close relatives, are considered related parties.
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 members of the Management Board. The aggregate amount reimbursed to the General Partner was €15,295 and €15,995, respectively, for its management services during the nine months ended September 30, 2018 and 2017. As of September 30, 2018 and December 31, 2017, the Company had accounts receivable from the General Partner in the amount of €801 and €246, respectively. As of September 30, 2018 and December 31, 2017, the Company had accounts payable to the General Partner in the amount of €33,483 and €23,020, respectively.
4. Cash and cash equivalents
As of September 30, 2018 and December 31, 2017, cash and cash equivalents are as follows:
The cash and cash equivalents disclosed in the table above, and respectively in the consolidated statements of cash flows, include at September 30, 2018 an amount of €444 (December 31, 2017: €53,694) from collateral requirements towards an insurance company in North America that are not available for use.
54
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
5. Trade accounts and other receivables
As of September 30, 2018, the allowance on trade accounts and other receivables, contains an impact from the implementation of IFRS 9. This results in an increase in the allowance which amounts to €3,490.
Due to the implementation of IFRS 15 the implicit price concessions in North America are getting deducted from the trade accounts and other receivables and are no longer part of the corresponding allowance. This isolated impact of €361,949 as of September 30, 2018 was recorded against trade accounts receivable and the allowance.
As of September 30, 2018 and December 31, 2017, trade accounts and other receivables are as follows:
The other receivables include finance lease receivables.
All trade accounts and other receivables are due within one year. A small portion of the trade account receivables are subject to factoring agreements.
Trade accounts receivables and finance lease receivables with a term of more than one year in the amount of €88,994 (December 31, 2017: €90,344) are included in the balance sheet item "Other non-current assets". For these trade accounts receivables and finance leases the implementation of IFRS 9 results in an increase of the allowance, which amounts to €278.
6. Inventories
At September 30, 2018 and December 31, 2017, inventories consisted of the following:
Inventories | |||||||
| | | | | | | |
in € THOUS | |||||||
September 30,
2018 |
December 31,
2017 |
||||||
| | | | | | | |
Finished goods | 751,877 | 672,851 | |||||
Health care supplies | 387,567 | 343,351 | |||||
Raw materials and purchased components | 220,595 | 193,295 | |||||
Work in process | 93,708 | 81,282 | |||||
| | | | | | | |
Inventories | 1,453,747 | 1,290,779 | |||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
55
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
7. Short-term debt and short-term debt from related parties
At September 30, 2018 and December 31, 2017, short-term debt and short-term debt from related parties consisted of the following:
The Company and certain consolidated entities operate a multi-currency notional pooling cash management system. The Company met the conditions to offset balances within this cash pool for reporting purposes. At September 30, 2018 and December 31, 2017, cash and borrowings under lines of credit in the amount of €138,391 and €318,654 were offset under this cash management system.
Commercial paper program
The Company maintains a commercial paper program under which short-term notes of up to €1,000,000 can be issued. At September 30, 2018 and December 31, 2017, the outstanding commercial paper amounted to €1,000,000 and €680,000, respectively.
Other
At September 30, 2018 and December 31, 2017, the Company had €378 and €1,080 of other debt outstanding related to fixed payments outstanding for acquisitions.
Short-term debt from related parties
The Company is party to an unsecured loan agreement with Fresenius SE under which the Company or FMCH may request and receive one or more short-term advances up to an aggregate amount of $400,000 until maturity on July 31, 2022. For further information on short-term debt from related parties, see note 3 b).
56
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
8. Long-term debt and capital lease obligations
As of September 30, 2018 and December 31, 2017, long-term debt and capital lease obligations consisted of the following:
Amended 2012 Credit Agreement
The following table shows the available and outstanding amounts under the Amended 2012 Credit Agreement at September 30, 2018 and December 31, 2017:
Amended 2012 Credit Agreement - Maximum amount available and balance outstanding | |||||||||||||
| | | | | | | | | | | | | |
in THOUS | |||||||||||||
Maximum amount available
September 30, 2018 |
Balance outstanding
September 30, 2018 (1) |
||||||||||||
| | | | | | | | | | | | | |
Revolving credit USD | $ | 900,000 | € | 777,471 | $ | - | € | - | |||||
Revolving credit EUR | € | 600,000 | € | 600,000 | € | - | € | - | |||||
USD term loan 5-year | $ | 1,380,000 | € | 1,192,122 | $ | 1,380,000 | € | 1,192,122 | |||||
EUR term loan 5-year | € | 322,000 | € | 322,000 | € | 322,000 | € | 322,000 | |||||
EUR term loan 3-year | € | 400,000 | € | 400,000 | € | 400,000 | € | 400,000 | |||||
| | | | | | | | | | | | | |
€ | 3,291,593 | € | 1,914,122 | ||||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
|
Maximum amount available
December 31, 2017 |
Balance outstanding
December 31, 2017 (1) |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | |
Revolving credit USD | $ | 900,000 | € | 750,438 | $ | 70,000 | € | 58,367 | |||||
Revolving credit EUR | € | 600,000 | € | 600,000 | € | - | € | - | |||||
USD term loan 5-year | $ | 1,470,000 | € | 1,225,715 | $ | 1,470,000 | € | 1,225,715 | |||||
EUR term loan 5-year | € | 343,000 | € | 343,000 | € | 343,000 | € | 343,000 | |||||
EUR term loan 3-year | € | 400,000 | € | 400,000 | € | 400,000 | € | 400,000 | |||||
| | | | | | | | | | | | | |
€ | 3,319,153 | € | 2,027,082 | ||||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
(1) Amounts shown are excluding debt issuance costs.
At September 30, 2018 and December 31, 2017, the Company had letters of credit outstanding in the amount of $1,690 and $1,690 (€1,460 and €1,409), respectively, under the USD revolving credit facility, which are not included above as part of the balance outstanding at those dates, but which reduce available borrowings under the applicable revolving credit facility.
57
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
Accounts Receivable Facility
The following table shows the available and outstanding amounts under the Accounts Receivable Facility at September 30, 2018 and at December 31, 2017:
Accounts Receivable Facility - Maximum amount available and balance outstanding | |||||||||||||
| | | | | | | | | | | | | |
in THOUS | |||||||||||||
|
Maximum amount available
September 30, 2018 (1) |
Balance outstanding
September 30, 2018 (2) |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | |
Accounts Receivable Facility | $ | 800,000 | € | 691,085 | $ | - | € | - | |||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
|
Maximum amount available
December 31, 2017 (1) |
Balance outstanding
December 31, 2017 (2) |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | |
Accounts Receivable Facility | $ | 800,000 | € | 667,056 | $ | 353,000 | € | 294,338 | |||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
(1) Subject to availability of sufficient accounts receivable meeting funding criteria.
(2) Amounts shown are excluding debt issuance costs.
The Company also had letters of credit outstanding under the Accounts Receivable Facility in the amount of $26,631 and $71,244 (€23,005 and €59,404) at September 30, 2018 and December 31, 2017, respectively. These letters of credit are not included above as part of the balance outstanding at September 30, 2018 and December 31, 2017; however, they reduce available borrowings under the Accounts Receivable Facility.
9. Supplementary information on capital management
As of September 30, 2018 and December 31, 2017 the total equity in percent of total assets was 48.3% and 45.1%, respectively, and the debt in percent of total assets was 28.8% and 31.0%, respectively.
Further information on the Company's capital management is available in the Annual Report on Form 20-F as of December 31, 2017.
The Company's financing structure and business model are reflected in the investment grade ratings. The Company is covered by the three leading rating agencies, Moody's, Standard & Poor's and Fitch.
Rating
(1)
|
||||||
| | | | | | |
|
||||||
|
Standard & Poor´s | Moody´s |
Fitch
|
|||
| | | | | | |
|
||||||
|
||||||
Corporate Credit Rating |
BBB- | Baa3 | BBB- | |||
Outlook |
positive |
stable |
stable |
|||
| | | | | | |
(1) A rating is not a recommendation to buy, sell or hold securities of the Company, and may be subject to suspension, change or withdrawal at any time by the assigning rating agency.
10 Share-based plans
On July 30, 2018 under the FMC-AG & Co. KGaA Long-Term Incentive Plan 2016, the Company awarded 614,971 performance shares, including 62,678 performance shares granted to members of the Management Board. The total fair value is €49,536, including a fair value of €5,049 to members of the Management Board. The fair value will be amortized over the four-year vesting period. The fair value per performance share at the grant date was €80.55.
58
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
11. Employee benefit plans
The Company currently has five principal pension plans, one for German employees, three for French employees and the other covering employees in the United States, the last of which was curtailed in 2002. Plan benefits are generally based on years of service and final salary. As there is no legal requirement in Germany to fund defined benefit plans, the Company's pension obligations in Germany are unfunded. Each year FMCH contributes to the plan covering United States employees at least the minimum required by the Employee Retirement Income Security Act of 1974, as amended. In 2018, FMCH did not have a minimum funding requirement. For the first nine months of 2018, the Company voluntarily provided €42,630 to the defined benefit plan. For the remaining period of 2018, the Company expects further voluntarily contributions of €1,620.
The following table provides the calculations of net periodic benefit cost for the three and nine months ended September 30, 2018 and 2017, respectively.
12. Commitments and contingencies
The Company is routinely involved in claims, lawsuits, regulatory and tax audits, investigations and other legal matters arising, for the most part, in the ordinary course of its business of providing health care services and products. Legal matters that the Company currently deems to be material or noteworthy are described below. For the matters described below in which the Company believes a loss is both reasonably possible and estimable, an estimate of the loss or range of loss exposure is provided. For the other matters described below, the Company believes that the loss probability is remote and/or the loss or range of possible losses cannot be reasonably estimated at this time. The outcome of litigation and other legal matters is always difficult to predict accurately 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.
On February 15, 2011, a whistleblower (relator) action under the False Claims Act against FMCH was unsealed by order of the United States District Court for the District of Massachusetts and served by the relator. United States ex rel. Chris Drennen v. Fresenius Medical Care Holdings, Inc. , 2009 Civ. 10179 (D. Mass.). The relator's complaint, which was first filed under seal in February 2009, alleged that FMCH sought and received reimbursement from government payors for serum ferritin and multiple forms of hepatitis B laboratory tests that were medically unnecessary or not properly ordered by a physician. Discovery on the relator's complaint closed in May 2015. Although the United States initially declined to intervene in the case, the government subsequently changed position. On April 3, 2017, the court allowed the government to intervene with respect only to certain hepatitis B surface antigen tests performed prior to 2011, when Medicare reimbursement rules for such tests changed. The court has subsequently rejected government requests to conduct new discovery and to add counts to its complaint-in-intervention that would expand upon the relator's complaint, but has allowed FMCH to take discovery against the government as if the government had intervened at the outset.
Beginning in 2012, the Company received certain communications alleging conduct in countries outside the U.S. that might violate the Foreign Corrupt Practices Act ("FCPA") or other anti-bribery laws. Since that time, the Company's
59
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
Supervisory Board, through its Audit and Corporate Governance Committee, has conducted investigations with the assistance of independent counsel. In a continuing dialogue, the Company voluntarily advised the Securities and Exchange Commission ("SEC") and the U.S. Department of Justice ("DOJ") about these investigations, while the SEC and DOJ (collectively the "government" or "government agencies") have conducted their own investigations, in which the Company has cooperated.
In the course of this dialogue, the Company identified and reported to the government, and has taken remedial actions including employee disciplinary actions with respect to, conduct that has resulted in the government agencies' seeking monetary penalties or other sanctions against the Company under the FCPA or other anti-bribery laws. Such conduct or its remediation may impact adversely the Company's ability to conduct business in certain jurisdictions.
The Company has substantially concluded its investigations and undertaken discussions toward a possible settlement with the government agencies that would avoid litigation over government demands related to certain identified conduct. These discussions are continuing and have not yet achieved an agreement; failure to reach agreement and consequent litigation with either or both government agencies remains possible. The discussions have revolved around possible bribery and corruption questions principally related to certain conduct in the Company's products business in a number of countries.
The Company recorded a charge of €200,000 in the fourth quarter of 2017. The charge encompassed an estimate of the government agencies claims for profit disgorgement, as well as accruals for fines or penalties, certain legal expenses and other related costs or asset impairments. The Company increased the provision by €75,000 to reflect an understanding with the government agencies on the financial aspects of a potential settlement and an update of legal costs to continue with these discussions. Following this increase, which takes into account incurred and anticipated legal expenses, impairments and other costs, the provision totals €243,000 as of September 30, 2018. However, significant non-financial matters are still under discussion with the government and must be resolved to the Company's satisfaction for a settlement to occur.
The Company continues to implement enhancements to its anti-corruption compliance program, including internal controls related to compliance with international anti-bribery laws. The Company continues to be fully committed to FCPA and other anti-bribery law compliance.
Personal injury litigation involving the Company's acid concentrate product, labeled as Granuflo® or Naturalyte®, first arose in 2012 and was substantially resolved by settlement agreed in principle in February 2016 and consummated in November 2017, as previously disclosed. Remaining individual personal injury cases do not present material risk and discussion of them is therefore discontinued.
The Company's affected insurers agreed to the settlement of the acid concentrate personal injury litigation and funded $220,000 of the settlement fund under a reciprocal reservation of rights encompassing certain coverage issues raised by insurers and the Company's claims for indemnification of defense costs. The Company accrued a net expense of $60,000 in connection with the settlement, including legal fees and other anticipated costs.
Following entry into the settlement, the Company's insurers in the AIG group and the Company each initiated litigation against the other relating to the AIG group's coverage obligations under applicable policies. In the coverage litigation, the AIG group seeks to be indemnified by the Company for a portion of its $220,000 outlay; the Company seeks to confirm the AIG group's $220,000 funding obligation, to recover defense costs already incurred by the Company, and to compel the AIG group to honor defense and indemnification obligations, if any, required for resolution of cases not participating in the settlement. As a result of decisions on issues of venue, the coverage litigation is proceeding in the New York state trial court for Manhattan. ( National Union Fire Insurance v. Fresenius Medical Care , 2016 Index No. 653108 (Supreme Court of New York for New York County)).
Four institutional plaintiffs filed complaints against FMCH or its affiliates under state deceptive practices statutes resting on certain background allegations common to the GranuFlo®/NaturaLyte® personal injury litigation, but seeking as remedy the repayment of sums paid to FMCH attributable to the GranuFlo®/NaturaLyte® products. These cases implicate different legal standards, theories of liability and forms of potential recovery from those in the personal injury litigation and their claims were not extinguished by the personal injury litigation settlement described above. The four plaintiffs are the Attorneys General for the States of Kentucky, Louisiana and Mississippi and the
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FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
commercial insurance company Blue Cross Blue Shield of Louisiana in its private capacity. State of Mississippi ex rel. Hood, v. Fresenius Medical Care Holdings, Inc., No. 14-cv-152 (Chancery Court, DeSoto County); State of Louisiana ex re. Caldwell and Louisiana Health Service & Indemnity Company v. Fresenius Medical Care Airline , 2016 Civ. 11035 (U.S.D.C. D. Mass.); Commonwealth of Kentucky ex rel. Beshear v. Fresenius Medical Care Holdings, Inc. et al ., No. 16-CI-00946 (Circuit Court, Franklin County). A jury trial has been scheduled to begin in the Kentucky (Beshear) case on January 22, 2019.
The Company is not a party to a substantial adverse jury verdict and punitive damage award entered in Denver on June 27, 2018 against DaVita Healthcare Partners, Inc. ("DaVita"), involving DaVita's own clinical management of the Company's acid concentrate product. See, White v. DaVita Healthcare Partners, Inc., 2015 Civ. 02106 (U.S.D.C. Colorado).
In August 2014, FMCH received a subpoena from the United States Attorney for the District of Maryland inquiring into FMCH's contractual arrangements with hospitals and physicians involving contracts relating to the management of in-patient acute dialysis services. FMCH is cooperating in the investigation.
In July 2015, the Attorney General for Hawaii issued a civil complaint under the Hawaii False Claims Act alleging a conspiracy pursuant to which certain Liberty Dialysis subsidiaries of FMCH overbilled Hawaii Medicaid for Liberty's Epogen® administrations to Hawaii Medicaid patients during the period from 2006 through 2010, prior to the time of FMCH's acquisition of Liberty. Hawaii v. Liberty Dialysis Hawaii, LLC et al. , Case No. 15-1-1357-07 (Hawaii 1 st Circuit). The State alleges that Liberty acted unlawfully by relying on incorrect and unauthorized billing guidance provided to Liberty by Xerox State Healthcare LLC, which acted as Hawaii's contracted administrator for its Medicaid program reimbursement operations during the relevant period. The amount of the overpayment claimed by the State is approximately $8,000, but the State seeks civil remedies, interest, fines, and penalties against Liberty and FMCH under the Hawaii False Claims Act substantially in excess of the overpayment. After prevailing on motions by Xerox to preclude it from doing so, FMCH is pursuing third-party claims for contribution and indemnification against Xerox. The State's False Claims Act complaint was filed after Liberty initiated an administrative action challenging the State's recoupment of alleged overpayments from sums currently owed to Liberty. The civil litigation and administrative action are proceeding in parallel. Trial in the civil litigation is scheduled for April 2019.
On August 31 and November 25, 2015, respectively, FMCH received subpoenas under the False Claims Act from the United States Attorneys for the District of Colorado and the Eastern District of New York inquiring into FMCH's participation in and management of dialysis facility joint ventures in which physicians are partners. On March 20, 2017, FMCH received a subpoena in the Western District of Tennessee inquiring into certain of the operations of dialysis facility joint ventures with the University of Tennessee Medical Group, including joint ventures in which FMCH's interests were divested to Satellite Dialysis in connection with FMCH's acquisition of Liberty Dialysis in 2012. FMCH has cooperated in these investigations.
On September 26, 2018, the US Attorney for the Eastern District of New York declined to intervene on the qui tam complaint filed under seal in 2014 that gave rise to this investigation. CKD Project LLC v. Fresenius Medical Care , 2014 Civ. 6646 (E.D.N.Y. November 12, 2014). The court then unsealed the complaint, allowing the relator to serve and proceed on his own, but the complaint has not been served. FMCH understands that the US Attorney for Western District of Tennessee is no longer pursuing its investigation of FMCH. The District of Colorado investigation continues.
Beginning October 6, 2015, the United States Attorney for the Eastern District of New York (the "Brooklyn USAO") and the Office of Inspector General of the United States Department of Health and Human Services ("OIG") have investigated, through subpoenas issued under the False Claims Act, utilization and invoicing by the Company's subsidiary Azura Vascular Care for a period beginning after the Company's acquisition of American Access Care LLC ("AAC") in October 2011. The Company has cooperated in the government's inquiry. Allegations against AAC arising in districts in Connecticut, Florida and Rhode Island relating to utilization and invoicing were settled in 2015.
On October 22, 2018, the United States Attorney for the Southern District of New York (the "Manhattan USAO") announced a False Claims Act settlement for up to $18,400 with Vascular Access Centers LP, a competitor of AAC and Azura. Simultaneously, related documents were unsealed, including the 2012 qui tam (whistleblower) complaint that gave rise to the investigation. Levine v. Vascular Access Centers, 2012 Civ. 5103 (S.D.N.Y.). That qui tam complaint names as defendants, among others in the dialysis industry, certain affiliates of the Company. At the
61
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
present time, the Manhattan USAO has not intervened as against non-settling defendants and the relationship, if any, between the Brooklyn USAO investigation of Azura begun in 2015 and the Manhattan USAO's Levine settlement is unclear.
On June 30, 2016, FMCH received a subpoena from the United States Attorney for the Northern District of Texas (Dallas) seeking information under the False Claims Act about the use and management of pharmaceuticals including Velphoro® as well as FMCH's interactions with DaVita. The investigation encompasses DaVita, Amgen, Sanofi, and other pharmaceutical manufacturers and includes inquiries into whether certain compensation transfers between manufacturers and pharmacy vendors constituted unlawful kickbacks. The Company understands that this investigation is substantively independent of the $63,700 settlement by DaVita Rx announced on December 14, 2017 in the matter styled United States ex rel. Gallian v. DaVita Rx , 2016 Civ. 0943 (N.D. Tex.). FMCH is cooperating in the investigation.
On November 18, 2016, FMCH received a subpoena under the False Claims Act from the United States Attorney for the Eastern District of New York (Brooklyn) seeking documents and information relating to the operations of Shiel Medical Laboratory, Inc., which FMCH acquired in October 2013. In the course of cooperating in the investigation and preparing to respond to the subpoena, FMCH identified falsifications and misrepresentations in documents submitted by a Shiel salesperson that relate to the integrity of certain invoices submitted by Shiel for laboratory testing for patients in long term care facilities. On February 21, 2017, FMCH terminated the employee and notified the United States Attorney of the termination and its circumstances. The terminated employee's conduct is expected to result in demands for the Company to refund overpayments and to pay related penalties under applicable laws, but the monetary value of such payment demands cannot yet be reasonably estimated.
On December 12, 2017, the Company sold to Quest Diagnostics certain Shiel operations that are the subject of this Brooklyn subpoena, including the misconduct reported to the United States Attorney. Under the sale agreement, the Company retains responsibility for the Brooklyn investigation and its outcome. The Company continues to cooperate in the ongoing investigation.
On December 14, 2016, the Center for Medicare & Medicaid Services ("CMS"), which administers the federal Medicare program, published an Interim Final Rule ("IFR") titled "Medicare Program; Conditions for Coverage for End-Stage Renal Disease Facilities-Third Party Payment." The IFR would have amended the Conditions for Coverage for dialysis providers, like FMCH and would have effectively enabled insurers to reject premium payments made by or on behalf of patients who received grants for individual market coverage from the American Kidney Fund ("AKF" or "the Fund"). The IFR could thus have resulted in those patients losing individual insurance market coverage. The loss of coverage for these patients would have had a material and adverse impact on the operating results of FMCH.
On January 25, 2017, a federal district court in Texas responsible for litigation initiated by a patient advocacy group and dialysis providers including FMCH preliminarily enjoined CMS from implementing the IFR. Dialysis Patient Citizens v. Burwell , 2017 Civ. 0016 (E.D. Texas, Sherman Div.). The preliminary injunction was based on CMS' failure to follow appropriate notice-and-comment procedures in adopting the IFR. The injunction remains in place and the court retains jurisdiction over the dispute.
On June 22, 2017, CMS requested a stay of proceedings in the litigation pending further rulemaking concerning the IFR. CMS stated, in support of its request, that it expects to publish a Notice of Proposed Rulemaking in the Federal Register and otherwise pursue a notice-and-comment process. Plaintiffs in the litigation, including FMCH, consented to the stay, which was granted by the court on June 27, 2017.
On January 3, 2017, the Company received a subpoena from the United States Attorney for the District of Massachusetts under the False Claims Act inquiring into the Company's interactions and relationships with the AKF, including the Company's charitable contributions to the Fund and the Fund's financial assistance to patients for insurance premiums. FMCH is cooperating in the investigation, which is part of a broader investigation into charitable contributions in the medical industry. The Company believes that the investigation revolves around conduct alleged to be unlawful in United Healthcare v. American Renal Associates, 2018 Civ. 10622 (D. Mass.), but believes that such unlawful conduct was not undertaken by the Company. On July 2, 2018, American Renal Associates announced that it had reached a settlement in principle of the United Healthcare litigation. The Company lacks information necessary to assess how the American Renal Associates settlement may impact the United States Attorney's investigation.
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FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
In early May 2017, the United States Attorney for the Middle District of Tennessee (Nashville) issued identical subpoenas to FMCH and two subsidiaries under the False Claims Act concerning the Company's retail pharmaceutical business. The investigation is exploring allegations related to improper inducements to dialysis patients to fill oral prescriptions through FMCH's pharmacy service, improper billing for returned pharmacy products and other allegations similar to those underlying the $63,700 settlement by DaVita Rx in Texas announced on December 14, 2017. United States ex rel. Gallian , 2016 Civ. 0943 (N.D. Tex.). FMCH is cooperating in the investigation.
The Company received a subpoena dated December 11, 2017 from the United States Attorney for the Eastern District of California (Sacramento) requesting information under the False Claims Act concerning Spectra Laboratories, the Company's affiliate engaged in laboratory testing for dialysis patients. The inquiry related to allegations that certain services or materials provided by Spectra to its outpatient dialysis facility customers constitute unlawful kickbacks. The Company cooperated in the investigation. On August 7, 2018, the United States Attorney declined to intervene on a qui tam complaint, which had been filed by an affiliate of industry competitor Ascend Laboratory and caused the investigation to be initiated. On September 4, the competitor/relator dismissed the complaint. Laboratory Research, LLC v. Spectra Laboratories, Inc., 2017 Civ. 1185 (E.D. Cal., June 7, 2017). No settlement discussions occurred and the Company gave no consideration for the dismissal.
From time to time, the Company is a party to or may be threatened with other litigation or arbitration, claims or assessments arising in the ordinary course of its business. Management regularly analyzes current information including, as applicable, the Company's defenses and insurance coverage and, as necessary, provides accruals for probable liabilities for the eventual disposition of these matters.
The Company, like other healthcare providers, insurance plans and suppliers, conducts its operations under intense government regulation and scrutiny. It must comply with regulations which relate to or govern the safety and efficacy of medical products and supplies, the marketing and distribution of such products, the operation of manufacturing facilities, laboratories, dialysis clinics and other health care facilities, and environmental and occupational health and safety. With respect to its development, manufacture, marketing and distribution of medical products, if such compliance is not maintained, the Company could be subject to significant adverse regulatory actions by the U.S. Food and Drug Administration ("FDA") and comparable regulatory authorities outside the U.S. These regulatory actions could include warning letters or other enforcement notices from the FDA, and/or comparable foreign regulatory authority which may require the Company to expend significant time and resources in order to implement appropriate corrective actions. If the Company does not address matters raised in warning letters or other enforcement notices to the satisfaction of the FDA and/or comparable regulatory authorities outside the U.S., these regulatory authorities could take additional actions, including product recalls, injunctions against the distribution of products or operation of manufacturing plants, civil penalties, seizures of the Company's products and/or criminal prosecution. FMCH is currently engaged in remediation efforts with respect to one pending FDA warning letter. The Company must also comply with the laws of the United States, including the federal Anti-Kickback Statute, the federal False Claims Act, the federal Stark Law, the federal Civil Monetary Penalties Law and the federal Foreign Corrupt Practices Act as well as other federal and state fraud and abuse laws. Applicable laws or regulations may be amended, or enforcement agencies or courts may make interpretations that differ from the Company's interpretations or the manner in which it conducts its business. Enforcement has become a high priority for the federal government and some states. In addition, the provisions of the False Claims Act authorizing payment of a portion of any recovery to the party bringing the suit encourage private plaintiffs to commence whistleblower actions. By virtue of this regulatory environment, the Company's business activities and practices are subject to extensive review by regulatory authorities and private parties, and continuing audits, subpoenas, other inquiries, claims and litigation relating to the Company's compliance with applicable laws and regulations. The Company may not always be aware that an inquiry or action has begun, particularly in the case of whistleblower actions, which are initially filed under court seal.
The Company operates many facilities and handles the personal data ("PD") of its patients and beneficiaries throughout the United States and other parts of the world, and engages with other business associates to help it carry out its health care activities. In such a decentralized system, it is often difficult to maintain the desired level of oversight and control over the thousands of individuals employed by many affiliated companies and its business associates. On occasion, the Company or its business associates may experience a breach under the Health Insurance Portability and Accountability Act Privacy Rule and Security Rules, the EU's General Data Protection Regulation and or other similar laws ("Data Protection Laws") when there has been impermissible use, access, or disclosure of unsecured PD or when the Company or its business associates neglect to implement the required
63
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
administrative, technical and physical safeguards of its electronic systems and devices, or a data breach that results in impermissible use, access or disclosure of personal identifying information of its employees, patients and beneficiaries. On those occasions, the Company must comply with applicable breach notification requirements.
The Company relies upon its management structure, regulatory and legal resources, and the effective operation of its compliance program to direct, manage and monitor the activities of its employees. On occasion, the Company may identify instances where employees or other agents deliberately, recklessly or inadvertently contravene the Company's policies or violate applicable law. The actions of such persons may subject the Company and its subsidiaries to liability under the Anti-Kickback Statute, the Stark Law, the False Claims Act, Data Protection Laws, the Health Information Technology for Economic and Clinical Health Act and the Foreign Corrupt Practices Act, among other laws and comparable state laws or laws of other countries.
Physicians, hospitals and other participants in the healthcare industry are also subject to a large number of lawsuits alleging professional negligence, malpractice, product liability, worker's compensation or related claims, many of which involve large claims and significant defense costs. The Company has been and is currently subject to these suits due to the nature of its business and expects that those types of lawsuits may continue. Although the Company maintains insurance at a level which it believes to be prudent, it cannot assure that the coverage limits will be adequate or that insurance will cover all asserted claims. A successful claim against the Company or any of its subsidiaries in excess of insurance coverage could have a material adverse effect upon it and the results of its operations. Any claims, regardless of their merit or eventual outcome, could have a material adverse effect on the Company's reputation and business.
The Company has also had claims asserted against it and has had lawsuits filed against it relating to alleged patent infringements or businesses that it has acquired or divested. These claims and suits relate both to operation of the businesses and to the acquisition and divestiture transactions. The Company has, when appropriate, asserted its own claims, and claims for indemnification. A successful claim against the Company or any of its subsidiaries could have a material adverse effect upon its business, financial condition, and the results of its operations. Any claims, regardless of their merit or eventual outcome, could have a material adverse effect on the Company's reputation and business.
In Germany, the tax audits for the years 2006 through 2009 have been substantially completed. The German tax authorities have indicated a re-qualification of dividends received in connection with intercompany mandatorily redeemable preferred shares into fully taxable interest payments for these and subsequent years until 2013 and the disallowance of certain other tax deductions. The Company has defended its position and will avail itself of appropriate remedies. An adverse determination with respect to fully taxable interest payments related to intercompany mandatorily redeemable preferred shares and the disallowance of certain other tax deductions could have a material adverse effect on the Company's financial condition and results of operations.
The Company is also subject to ongoing and future tax audits in the U.S., Germany and other jurisdictions in the ordinary course of business. Tax authorities routinely pursue adjustments to the Company's tax returns and disallowances of claimed tax deductions. When appropriate, the Company defends these adjustments and disallowances and asserts its own claims. A successful tax related claim against the Company or any of its subsidiaries could have a material adverse effect upon its business, financial condition and results of operations. Any claims, regardless of their merit or eventual outcome, could have a material adverse effect on the Company's reputation and business.
Other than those individual contingent liabilities mentioned above, the current estimated amount of the Company's other known individual contingent liabilities is immaterial.
13. Financial instruments
Transition from IAS 39 to IFRS 9
The Company applied IFRS 9 using the modified retrospective method. Comparative periods have not been restated. Differences in the carrying amounts of financial instruments resulting from the adoption of IFRS 9 are recognized in
64
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
retained earnings as at January 1, 2018. Information presented for 2017 does not reflect the requirements of IFRS 9 and consequently is not comparable to the information presented for 2018 under IFRS 9.
At the date of initial application, the Company determined the business model within which a financial asset is held. Further, certain equity investments have been designated at FVOCI. See note 1. Changes to the hedge accounting policy are applied prospectively. The existing hedging relationships designated under IAS 39 at December 31, 2017 met the criteria for hedge accounting under IFRS 9 as well and are regarded as continuing hedging relationships.
65
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
The following table shows the measurement categories under IAS 39 at December 31, 2017 and the new classification of financial assets under IFRS 9 at January 1, 2018:
(1) Included in Other current assets or Other non-current assets in the consolidated balance sheets.
Financial liabilities measured at amortized cost under IAS 39 are also classified as measured at amortized cost under IFRS 9, with no change to the carrying amounts of the liabilities. This is also applicable for financial liabilities measured at FVPL under IAS 39 and IFRS 9 (see note 1) as well as financial liabilities not assigned to a category under IAS 39 and not classified under IFRS 9.
The transition to IFRS 9 had an impact on retained earnings at January 1, 2018 in the amount of €5,076. This impact results from the recognition of expected credit losses under IFRS 9. For further details on Trade accounts and other receivables, see note 5.
66
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
Financial instruments in accordance with IFRS 9
The following tables show the carrying amounts and fair values of the Company's financial instruments at September 30, 2018 and December 31, 2017:
(1) Highly liquid short-term investments are categorized in level 2 of the fair value hierarchy. Other cash and cash equivalents is not
categorized.
67
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
(1) Highly liquid short-term investments are categorized in level 2 of the fair value hierarchy. Other cash and cash equivalents is not categorized.
Derivative and non-derivative financial instruments are categorised in the following three-tier fair value hierarchy that reflects the significance of the inputs in making the measurements. Level 1 is defined as observable inputs, such as quoted prices in active markets. Level 2 is defined as inputs other than quoted prices in active markets that are directly or indirectly observable. Level 3 is defined as unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions. Fair value information is not provided for financial instruments, if the carrying amount is a reasonable estimate of fair value due to the relatively short period of maturity
68
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
of these instruments. Transfers between levels of the fair value hierarchy have not occurred as of September 30, 2018 and December 31, 2017. The Company accounts for possible transfers at the end of the reporting period.
Derivative financial instruments
In order to manage the risk of currency exchange rate fluctuations and interest rate fluctuations, the Company enters into various hedging transactions by means of derivative instruments with highly rated financial institutions. The Company primarily enters into foreign exchange forward contracts and interest rate swaps. Derivative contracts that do not qualify for hedge accounting are utilized for economic purposes. The Company does not use financial instruments for trading purposes. Additionally the Company purchased share options in connection with the issuance of the Convertible Bonds. Any change in the Company's share price above the conversion price would be offset by a corresponding value change in the share options.
Non-derivative financial instruments
The significant methods and assumptions used for the classification and measurement of non-derivative financial instruments are as follows:
The Company assessed its business models and the cash flow characteristics of its financial assets. The vast majority of the non-derivative financial assets are held in order to collect the contractual cash flows. The contractual terms of the financial assets allow the conclusion that the cash flows represent payment of principle and interest only. Trade accounts and other receivables, Accounts receivable from related parties and Other financial assets are consequently measured at amortized cost.
Cash and cash equivalents are comprised of cash funds and other short-term investments. Cash funds are measured at amortized cost. Short-term investments are highly liquid and readily convertible to known amounts of cash. Short-term investments are measured at FVPL. This risk of changes in fair value is insignificant.
Equity investments are not held for trading. At initial recognition the Company elected, on an instrument-by-instrument basis, to represent subsequent changes in the fair value of individual investments in OCI. If equity instruments are quoted in an active market, the fair value is based on price quotations at the period-end-date.
The smaller part of debt securities are quoted in an active market and do not give rise to cash flows that are solely payments of principle and interest. Consequently these securities are measured at FVPL. The majority of debt securities are held within a business model whose objective is achieving both contractual cash flows and sell the securities. The standard coupon bonds give rise on specified dates to cash flows that are solely payments of principal and interest on the outstanding principal amount. Subsequently these financial assets have been classified as FVOCI.
Long-term debt is recognized at its carrying amount. The fair values of major long-term debt are calculated on the basis of market information. Liabilities for which market quotes are available are measured using these quotes. The fair values of the other long-term debt are calculated at the present value of the respective future cash flows. To determine these present values, the prevailing interest rates and credit spreads for the Company as of the balance sheet date are used.
Variable payments outstanding for acquisitions are recognized at their fair value. The estimation of the individual fair values is based on the key inputs of the arrangement that determine the future contingent payment as well as the Company's expectation of these factors. The Company assesses the likelihood and timing of achieving the relevant objectives. The underlying assumptions are reviewed regularly.
Noncontrolling interests subject to put provisions are recognized at their fair value. The methodology the Company uses to estimate the fair values assumes the greater of net book value or a multiple of earnings, based on historical earnings, development stage of the underlying business and other factors. Additionally, there are put provisions that are valued by an external valuation firm. The external valuation estimates the fair values using a combination of discounted cash flows and a multiple of earnings and/or revenue. When applicable, the obligations are discounted at a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the liability. The estimated fair values of the noncontrolling interests subject to these put provisions can also fluctuate, and the discounted cash flows as well as the implicit multiple of earnings and/or revenue at which these noncontrolling interest obligations may ultimately be settled could vary significantly from the Company's current estimates depending upon market conditions.
69
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
Following is a roll forward of variable payments outstanding for acquisitions and noncontrolling interests subject to put provisions at September 30, 2018 and December 31, 2017:
14. Segment and corporate information
The Company's operating segments are the North America Segment, the EMEA Segment, the Asia-Pacific Segment and the Latin America Segment. The operating segments are determined based upon how the Company manages its businesses with geographical responsibilities. All segments are primarily engaged in providing health care services and the distribution of products and equipment for the treatment of ESRD and other extracorporeal therapies.
Management evaluates each segment using measures that reflect all of the segment's controllable revenues and expenses. With respect to the performance of business operations, management believes that the most appropriate measures are revenue, operating income and operating income margin. The Company does not include income taxes as it believes this is outside the segments' control. 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 measurement. Similarly, the Company does not allocate certain costs, which relate primarily to certain headquarters' overhead charges, including accounting and finance, because the Company believes that these costs are also not within the control of the individual segments. Production of products, production asset management, quality management and procurement related to production are centrally managed at Corporate. The Company's global research and development is also centrally managed at Corporate. These corporate activities do not fulfill the definition of a segment according to IFRS 8. Products are transferred to the segments at cost; therefore no internal profit is generated. The associated internal revenue for the product transfers and their elimination are recorded as corporate activities. Capital expenditures for production are based on the expected demand of the segments and consolidated profitability considerations. In addition, certain revenues, investments and intangible assets, as well as any related expenses, are not allocated to a segment but are accounted for as Corporate.
70
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
Information pertaining to the Company's segment and Corporate activities for the three and nine months ended September 30, 2018 and 2017 is set forth below:
71
FRESENIUS MEDICAL CARE AG & Co. KGaA
Notes to consolidated financial statements
(unaudited)
(in THOUS, except share and per share data)
15. Supplementary cash flow information
The following additional information is provided with respect to net cash provided by (used in) investing activities:
Acquisitions of the last twelve months decreased net income (net income attributable to shareholders of FMC-AG & Co. KGaA) for the nine months ended September 30, 2018 by €68.
16. Events occurring after the balance sheet date
No significant activities have taken place subsequent to the balance sheet date September 30, 2018 that have a material impact on the key figures and earnings presented. Currently, there are no other significant changes in the Company's structure, management, legal form or personnel.
72
Quantitative and qualitative disclosures about market risk
The information in note 13 of the notes to consolidated financial statements (unaudited), presented elsewhere in this report is incorporated by this reference.
73
The Company is a "foreign private issuer" within the meaning of Rule 3b-4(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As such, the Company is not required to file quarterly reports with the Securities and Exchange Commission and is required to provide an evaluation of the effectiveness of its disclosure controls and procedures, to disclose significant changes in its internal control over financial reporting and to provide certifications of its Chief Executive Officer and Chief Financial Officer under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 only in its Annual Report on Form 20-F. The Company furnishes quarterly financial information to the Securities and Exchange Commission (the "Commission") and such certifications under cover of Form 6-K on a voluntary basis and pursuant to the provisions of the Company's pooling agreement entered into for the benefit of the public holders of our shares. In connection with such voluntary reporting, the Company's management, including the Chief Executive Officer and the Chief Financial Officer of the Company's General Partner, has conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report, of the type contemplated by Securities Exchange Act Rule 13a-15. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded in connection with the furnishing of this report, that the Company's disclosure controls and procedures are designed to ensure that the information the Company is required to disclose in the reports filed or furnished under the Act is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms and are effective to ensure that the information the Company is required to disclose in its reports is accumulated and communicated to the General Partner's Management Board, including the General Partner's Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. During the past fiscal quarter, there have been no significant changes in internal controls, or in factors that could significantly affect internal controls.
The Company has substantially concluded its investigations into allegations of conduct outside the U.S. that may violate the U.S. Foreign Corrupt Practices Act or other anti-bribery laws and has undertaken discussions toward a possible settlement with the government agencies that would avoid litigation over government demands related to certain identified conduct. These discussions are continuing and have not yet achieved an agreement; failure to reach agreement and consequent litigation with either or both government agencies remains possible, see note 12 of the notes to the consolidated financial statements (unaudited) presented elsewhere in this Report. The Company continues to implement enhancements to its anti-corruption compliance program, including internal controls related to compliance with international anti-bribery laws.
74
The information in note 12 of the notes to consolidated financial statements (unaudited), presented elsewhere in this report is incorporated by this reference.
75
Exhibit No.
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2.24 | Final Terms dated July 9, 2018 for EUR 500,000,000 Fixed Rate Euro-Denominated Bonds due 2025 | |
31.1 |
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Certification of Chief Executive Officer and Chairman of the Management Board of the Company's General Partner Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 |
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Certification of Chief Financial Officer and member of the Management Board of the Company's General Partner Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 |
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Certification of Chief Executive Officer and Chairman of the Management Board of the Company's General Partner and Chief Financial Officer and member of the Management Board of the Company's General Partner Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (this exhibit accompanies this report as required by the Sarbanes-Oxley Act of 2002 and is not to be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended). |
101 |
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The following financial statements as of and for the three- and nine-months periods ended September 30, 2018 from FMC-AG & Co. KGaA's Report on Form 6-K for the month of October 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Shareholders' Equity and (vi) Notes to Consolidated Financial Statements. |
76
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
DATE: October 30, 2018
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FRESENIUS MEDICAL CARE AG & Co. KGaA
a partnership limited by shares, represented by: |
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FRESENIUS MEDICAL CARE MANAGEMENT AG,
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By: /s/ RICE POWELL
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Name:Rice Powell |
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Title: | Chief Executive Officer and | ||
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Chairman of the Management Board of the General Partner | |||
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By: /s/ MICHAEL BROSNAN
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Name:Michael Brosnan |
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Title: | Chief Financial Officer and | ||
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member of the Management Board of the
General Partner |
77
MiFID II Product Governance Solely for the purposes of each manufacturers product approval process, the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is eligible counterparties,and professional clients and retail clients, each as defined in Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments, as amended ( MiFID II ); (ii) all channels for distribution to eligible counterparties and professional clients are appropriate; and (iii) the following channels for distribution of the Notes to retail clients are appropriate - investment advice, portfolio management and non-advised sales. Any person subsequently offering, selling or recommending the Notes (each a Distributor ) should take into consideration the manufacturers target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturers target market assessment) and determining appropriate distribution channels. The targeted investors are expected to have (1) at least informed knowledge and/or experience with financial products, (2) the ability to bear losses resulting from interest rate changes and no capital loss bearing capacity if held to maturity, (3) a medium risk profile, (4) a return profile preservation, growth and/or income as investment objective and (5) a long term investment horizon.
The Final Terms of Notes will be displayed on the website of the Luxembourg Stock Exchange (www.bourse.lu).
July 9, 2018
9. Juli 2018
FINAL TERMS
ENDGÜLTIGE BEDINGUNGEN
Fresenius Medical Care AG & Co. KGaA
EUR 500,000,000 Fixed Rate Euro-Denominated Bonds due 2025
EUR 500.000.000 Festverzinsliche auf Euro lautende Schuldverschreibungen fällig 2025
Series: 1, Tranche 1
Seriennummer: 1, Tranche 1
issued pursuant to the
begeben aufgrund des
EUR 10,000,000,000
Debt Issuance Program
Dated June 29, 2018
vom 29. Juni 2018
of
der
Fresenius Medical Care AG & Co. KGaA
Issue Price: 99.704 %
Ausgabepreis: 99,704 %
Issue Date: July 11, 2018
Begebungstag : 11. Juli 2018
These are the Final Terms of an issue of Notes under the EUR 10,000,000,000 Debt Issuance Program of Fresenius Medical Care AG & Co. KGaA (the Program ). These Final Terms have been prepared for the purpose of Article 5 (4) of the Directive 2003/71/EC of the European Parliament and of the Council of November 4, 2003, as amended, and must be read in conjunction with the Base Prospectus dated June 29, 2018 (the Prospectus ). Full information on Fresenius Medical Care AG & Co. KGaA and the offer of the Notes is only available on the basis of the combination of the Prospectus and these Final Terms. The Prospectus and any supplement thereto are available for viewing in electronic form on the website of the Luxembourg Stock Exchange ( www.bourse.lu ) and on the website of Fresenius
Medical Care ( www.freseniusmedicalcare.com ) and copies may be obtained free of charge from Fresenius Medical Care AG & Co. KGaA, Else-Kröner-Str. 1, 61352 Bad Homburg vor der Höhe, Germany. A summary of the individual issue of the Notes is annexed to these Final Terms.
Diese Endgültigen Bedingungen enthalten Angaben zur Emission von Schuldverschreibungen unter dem EUR 10.000.000.000 Debt Issuance Programm der Fresenius Medical Care AG & Co. KGaA (das Programm ). Diese Endgültigen Bedingungen wurden für die Zwecke des Artikels 5 Absatz 4 der Richtlinie 2003/71/EG des Europäischen Parlaments und des Rates vom 4. November 2003, in der geänderten Fassung, abgefasst und sind in Verbindung mit dem Basisprospekt vom 29. Juni 2018 (der Prospekt ) zu lesen. Vollständige Informationen über Fresenius Medical Care AG & Co. KGaA und das Angebot der Schuldverschreibungen sind nur verfügbar, wenn die Endgültigen Bedingungen und der Prospekt zusammengenommen werden. Der Prospekt sowie jeder Nachtrag können in elektronischer Form auf der Internetseite der Luxemburger Börse (www.bourse.lu) und der Internetseite von Fresenius Medical Care (www.freseniusmedicalcare.de) eingesehen werden. Kostenlose Kopien sind erhältlich unter Fresenius Medical Care AG & Co. KGaA, Else-Kröner-Str. 1, 61352 Bad Homburg vor der Höhe, Deutschland. Eine Zusammenfassung der einzelnen Emission der Schuldverschreibungen ist diesen Endgültigen Bedingungen beigefügt.
Part I.: TERMS AND CONDITIONS
Teil I: EMISSIONSBEDINGUNGEN
The Terms and Conditions applicable to the Notes (the Conditions ) and the English language translation thereof, are as set out below.
Die für die Schuldverschreibungen geltenden Emissionsbedingungen (die Bedingungen ) sowie die englischsprachige Übersetzung sind wie nachfolgend aufgeführt.
TERMS AND CONDITIONS |
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EMISSIONSBEDINGUNGEN |
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§ 1 |
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§ 1 |
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(CURRENCY, DENOMINATION, FORM) |
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(WÄHRUNG, STÜCKELUNG, FORM) |
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(1) Currency; Denomination. |
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(1) Währung; Stückelung. |
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This series of Notes (the Notes ) of Fresenius Medical Care AG & Co. KGaA (also referred to as the Issuer ) is being issued in euro (the Specified Currency ) in the aggregate principal amount (subject to § 1(3)) of EUR 500,000,000 (in words: euro five hundred million) in the denomination of EUR 1,000 (the Specified Denomination ). |
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Diese Serie von Schuldverschreibungen (die Schuldverschreibungen ) der Fresenius Medical Care AG & Co. KGaA (auch als die Emittentin bezeichnet) wird in Euro (die Festgelegte Währung ) im Gesamtnennbetrag (vorbehaltlich § 1(3)) von EUR 500.000.000 (in Worten: Euro fünf hundert Millionen) in einer Stückelung von EUR 1.000 (die Festgelegte Stückelung ) begeben. |
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(2) Form. |
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(2) Form. |
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The Notes are being issued in bearer form. |
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Die Schuldverschreibungen lauten auf den Inhaber. |
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(3) Temporary Global Note Exchange. |
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(3) Vorläufige Globalurkunde Austausch. |
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(a) The Notes are initially represented by a temporary global note (the Temporary |
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(a) Die Schuldverschreibungen sind anfänglich durch eine vorläufige |
Global Note ) without coupons. The Temporary Global Note will be exchangeable for Notes in Specified Denominations represented by a permanent global note (the Permanent Global Note and together with the Temporary Global Note, the Global Notes ) without coupons. The details of such exchange shall be entered in the records of the ICSDs (as defined below). The Global Notes shall each be signed manually by authorized signatories of the Issuer and shall each be authenticated by or on behalf of the Fiscal Agent. Definitive Notes and interest coupons will not be issued. |
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Globalurkunde (die vorläufige Globalurkunde ) ohne Zinsscheine verbrieft. Die vorläufige Globalurkunde wird gegen Schuldverschreibungen in den Festgelegten Stückelungen, die durch eine Dauerglobalurkunde (die Dauerglobalurkunde und zusammen mit der vorläufigen Globalurkunde, die Globalurkunden ) ohne Zinsscheine verbrieft sind, ausgetauscht. Die Einzelheiten eines solchen Austausches werden in die Aufzeichnungen der ICSDs (wie nachstehend definiert) aufgenommen. Die Globalurkunden tragen jeweils die eigenhändigen Unterschriften ordnungsgemäß bevollmächtigter Vertreter der Emittentin und sind jeweils von der Emissionsstelle oder in deren Namen mit einer Kontrollunterschrift versehen. Einzelurkunden und Zinsscheine werden nicht ausgegeben. |
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(b) The Temporary Global Note shall be exchanged for the Permanent Global Note on a date (the Exchange Date ) not earlier than 40 days after the date of issue of the Notes. Such exchange shall only be made upon delivery of certifications to the effect that the beneficial owner or owners of the Notes is not a U.S. person (other than certain financial institutions or certain persons holding Notes through such financial institutions). Payment of interest on Notes represented by a Temporary Global Note will be made only after delivery of such certifications. A separate certification shall be required in respect of each such payment of interest. Any such certification received on or after the 40th day after the date of issue of the Notes will be treated as a request to exchange the Temporary Global Note pursuant to subparagraph (b) of this § 1(3). Any Notes delivered in exchange for the Temporary Global Note shall be delivered only outside of the United States (as defined in § 1(6)). |
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(b) Die vorläufige Globalurkunde wird an einem Tag (der Austauschtag ) gegen die Dauerglobalurkunde ausgetauscht, der nicht weniger als 40 Tage nach dem Tag der Begebung der Schuldverschreibungen liegt. Ein solcher Austausch darf nur nach Vorlage von Bescheinigungen erfolgen, wonach der oder die wirtschaftlichen Eigentümer der Schuldverschreibungen keine U.S.- Personen sind (ausgenommen bestimmte Finanzinstitute oder bestimmte Personen, die Schuldverschreibungen über solche Finanzinstitute halten). Solange die Schuldverschreibungen durch eine vorläufige Globalurkunde verbrieft sind, werden Zinszahlungen erst nach Vorlage dieser Bescheinigungen vorgenommen. Eine gesonderte Bescheinigung ist für jede solche Zinszahlung erforderlich. Jede Bescheinigung, die am oder nach dem 40. Tag nach dem Tag der Begebung der Schuldverschreibungen eingeht, wird als ein Ersuchen behandelt werden, diese vorläufige Globalurkunde gemäß Absatz (b) dieses § 1(3) auszutauschen. Schuldverschreibungen, die im Austausch für die vorläufige |
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Globalurkunde geliefert werden, dürfen nur außerhalb der Vereinigten Staaten (wie in § 1(6) definiert) geliefert werden. |
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(4) Clearing System. |
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(4) Clearingsystem. |
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Each Global Note will be kept in custody by or on behalf of the Clearing System until all obligations of the Issuer under the Notes have been satisfied. Clearing System means each of the following: Clearstream Banking S.A. Luxembourg ( CBL ) and Euroclear Bank SA/NV Brussels as operator of the Euroclear System ( Euroclear ) and any successor in such capacity. International Central Securities Depositary or ICSD means each of CBL and Euroclear (together, the ICSDs ). |
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Die Globalurkunde wird solange von einem oder im Namen eines Clearingsystems verwahrt, bis sämtliche Verbindlichkeiten der Emittentin aus den Schuldverschreibungen erfüllt sind. Clearingsystem bedeutet jeweils folgendes: Clearstream Banking S.A., Luxemburg ( CBL ) und Euroclear Bank SA/NV Brüssel, als Betreiberin des Euroclear Systems ( Euroclear ) sowie jeder Funktionsnachfolger. International Central Securities Depositary oder ICSD bezeichnet jeweils CBL und Euroclear (zusammen die ICSDs ). |
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The Notes are issued in new global note ( NGN ) form and are kept in custody by a common safekeeper on behalf of both ICSDs. |
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Die Schuldverschreibungen werden in Form einer New Global Note ( NGN ) ausgegeben und von einer gemeinsamen Verwahrstelle im Namen beider ICSDs verwahrt. |
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The principal amount of Notes represented by the Global Note shall be the aggregate amount from time to time entered in the records of both ICSDs. The records of the ICSDs (which expression means the records that each ICSD holds for its customers which reflect the amount of such customers interest in the Notes) shall be conclusive evidence of the principal amount of Notes represented by the Global Note and, for these purposes, a statement issued by an ICSD stating the principal amount of Notes so represented at any time shall be conclusive evidence of the records of the relevant ICSD at that time. |
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Der Nennbetrag der durch die Globalurkunde verbrieften Schuldverschreibungen entspricht dem jeweils in den Registern beider ICSDs eingetragenen Gesamtbetrag. Die Register der ICSDs (unter denen man die Register versteht, die jeder ICSD für seine Kunden über den Betrag ihres Anteils an den Schuldverschreibungen führt) sind schlüssiger Nachweis über den Nennbetrag der durch die Globalurkunde verbrieften Schuldverschreibungen und eine zu diesen Zwecken von einem ICSD jeweils ausgestellte Bestätigung mit dem Nennbetrag der so verbrieften Schuldverschreibungen ist zu jedem Zeitpunkt ein schlüssiger Nachweis über den Inhalt des Registers des jeweiligen ICSD. |
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On any redemption or payment of interest being made in respect of, or purchase and cancellation of, any of the Notes represented by the Global Note the Issuer shall procure that details of any redemption, payment or purchase and cancellation (as the case may be) in respect of the Global Note shall be entered pro rata in the records of the ICSDs and, upon any such entry being made, the principal amount of the Notes recorded in the records of |
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Bei Rückzahlung oder Zinszahlung bezüglich der durch die Globalurkunde verbrieften Schuldverschreibungen bzw. bei Kauf und Entwertung der durch die Globalurkunde verbrieften Schuldverschreibungen stellt die Emittentin sicher, dass die Einzelheiten über jede Rückzahlung und Zahlung bzw. Kauf und Löschung bezüglich der Globalurkunden pro rata in die Unterlagen der ICSDs eingetragen werden, und nach dieser Eintragung vom |
the ICSDs and represented by the Global Note shall be reduced by the aggregate principal amount of the Notes so redeemed or purchased and cancelled. |
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Nennbetrag der in die Register der ICSDs aufgenommenen und durch die Globalurkunde verbrieften Schuldschreibungen der Gesamtnennbetrag der zurückgezahlten bzw. gekauften und entwerteten Schuldverschreibungen abgezogen wird. |
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On an exchange of a portion only of the Notes represented by a Temporary Global Note, the Issuer shall procure that details of such exchange shall be entered pro rata in the records of the ICSDs. |
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Bei Austausch nur eines Teils von Schuldverschreibungen, die durch eine vorläufige Globalurkunde verbrieft sind, wird die Emittentin sicherstellen, dass die Einzelheiten dieses Austauschs pro rata in die Register der ICSDs aufgenommen werden. |
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(5) Holder of Notes. |
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(5) Gläubiger von Schuldverschreibungen. |
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Holder means any holder of a proportionate co-ownership or other beneficial interest or right in the Notes. |
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Gläubiger bedeutet jeder Inhaber eines Miteigentumsanteils oder anderen vergleichbaren Rechts an den Schuldverschreibungen. |
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(6) United States. |
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(6) Vereinigte Staaten. |
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For the purposes of these Terms and Conditions, United States means the United States of America (including the States thereof and the District of Columbia) and its territories and possessions (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and Northern Mariana Islands). |
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Für die Zwecke dieser Emissionsbedingungen bezeichnet Vereinigte Staaten die Vereinigten Staaten von Amerika (einschließlich deren Bundesstaaten und des District of Columbia) sowie deren Territorien und Besitztümer (einschließlich Puerto Rico, der U.S. Virgin Islands, Guam, American Samoa, Wake Island und Northern Mariana Islands). |
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§ 2 |
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§ 2 |
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(STATUS, NEGATIVE PLEDGE AND GUARANTEE) |
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(STATUS, NEGATIVVERPFLICHTUNG UND GARANTIE) |
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(1) Status. |
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(1) Status. |
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The obligations under the Notes constitute unsecured and unsubordinated obligations of the Issuer ranking pari passu among themselves and pari passu with all other present or future unsecured and unsubordinated obligations of the Issuer, unless such obligations are accorded priority under mandatory provisions of statutory law. |
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Die Schuldverschreibungen begründen nicht besicherte und nicht nachrangige Verbindlichkeiten der Emittentin, die untereinander und mit allen anderen gegenwärtigen und künftigen nicht besicherten und nicht nachrangigen Verbindlichkeiten der Emittentin gleichrangig sind, soweit diesen Verbindlichkeiten nicht durch zwingende gesetzliche Bestimmungen ein Vorrang eingeräumt wird. |
(2) Negative Pledge. |
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(2) Negativverpflichtung. |
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So long as any of the Notes remain outstanding, but only up to the time all amounts of principal and interest have been placed at the disposal of the Fiscal Agent, the Issuer undertakes (i) not to grant or permit to subsist any mortgage, land charge, lien or any other security right in rem ( dingliches Sicherungsrecht ) (the Security Interest ) over any or all of its present or future assets, as security for any present or future Capital Market Indebtedness and (ii) to procure, to the extent legally possible, that none of its Subsidiaries will grant or permit to subsist any Security Interest over any or all of its present or future assets, as security for any present or future Capital Market Indebtedness, without at the same time having the Holders share equally and rateably in such Security Interest. This undertaking shall not apply with respect to any Security Interest which (i) is provided over any of the Issuers claims or claims of any of its Subsidiaries against any affiliated companies within the meaning of sections 15 et seqq. of the German Stock Corporation Act ( Aktiengesetz ) or any third party, which claims exist now or arise at any time in the future, as a result of the passing on of the proceeds from the sale by the issuer of any securities, provided that any such security serves to secure obligations under such securities issued by the Issuer or by any of its Subsidiaries, (ii) is existing on assets at the time of the acquisition thereof by the Issuer or by any of its Subsidiaries or is existing over assets of a newly acquired company which becomes a member of the Fresenius Medical Care Group, (iii) is existing on the issue date of the Notes, (iv) secures a Capital Market Indebtedness existing at the time of acquisition that becomes an obligation of the Issuer or of any company within the Fresenius Medical Care Group as a consequence of such acquisition, provided that such Capital Market Indebtedness was not created in contemplation of such acquisition (v) is mandatory pursuant to applicable laws or required as a prerequisite for obtaining any governmental approvals, (vi) is provided in connection with any issuance of asset backed securities by the Issuer or by any of its |
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Die Emittentin verpflichtet sich, solange Schuldverschreibungen ausstehen, jedoch nur bis zu dem Zeitpunkt, an dem alle Beträge an Kapital und Zinsen der Emissionsstelle zur Verfügung gestellt worden sind, (i) keine Grundpfandrechte, Pfandrechte oder sonstigen dinglichen Sicherungsrechte (ein Sicherungsrecht ) an gegenwärtigen oder zukünftigen Teilen ihres Vermögens oder ihres Vermögens insgesamt zur Sicherung der gegenwärtigen oder zukünftigen Kapitalmarktverbindlichkeiten zu bestellen oder fortbestehen zu lassen, und (ii) soweit rechtlich möglich, zu veranlassen, dass keine ihrer Tochtergesellschaften Sicherungsrechte an gegenwärtigen oder zukünftigen Teilen ihres Vermögens oder ihres Vermögens insgesamt zur Sicherung der gegenwärtigen oder zukünftigen Kapitalmarktverbindlichkeiten bestellt oder fortbestehen lässt, ohne jeweils die Gläubiger zur gleichen Zeit auf gleiche Weise und anteilig an diesen Sicherungsrechten teilhaben zu lassen. Diese Verpflichtung gilt nicht in Bezug auf Sicherungsrechte, die (i) an gegenwärtigen oder zukünftigen Ansprüchen der Emittentin oder Ansprüchen einer ihrer Tochtergesellschaften gegen verbundene Unternehmen im Sinne der §§ 15 ff. Aktiengesetz oder gegen Dritte aufgrund von einer Übertragung von Erlösen aus dem Verkauf von Wertpapieren bestehen, soweit diese Sicherheiten zur Sicherung von Verpflichtungen aus diesen durch die Emittentin oder durch eine ihrer Tochtergesellschaften ausgegebenen Wertpapieren dienen, (ii) zur Sicherung von Vermögensgegenständen bestellt sind, die bereits zum Zeitpunkt ihres Erwerbs durch die Emittentin oder durch eine ihrer Tochtergesellschaften bestanden, oder am Vermögen einer neu erworbenen Gesellschaft bestehen, die Mitglied des Fresenius Medical Care-Konzerns wird, (iii) zum Ausgabetag der Schuldverschreibungen bestehen, (iv) eine im Zeitpunkt einer Akquisition bestehende Kapitalmarktverbindlichkeit besichern, die infolge der Akquisition eine Verpflichtung der Emittentin oder einer Gesellschaft des |
Subsidiaries, (vii) is provided in respect of any issuance of asset backed securities made by a special purpose vehicle where the Issuer or any of its Subsidiaries is the originator of the underlying assets, (viii) is provided in connection with the renewal, extension or replacement of any security pursuant to foregoing (i) through (vii) and, (ix) secures Capital Market Indebtedness the principal amount of which (when aggregated with the principal amount of any other Capital Market Indebtedness which has the benefit of a security other than any permitted under the subparagraphs (i) to (viii) above) does not exceed EUR 100,000,000 (or its equivalent in other currencies at any time). |
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Fresenius Medical Care-Konzerns wird, sofern diese Kapitalmarktverbindlichkeit nicht im Hinblick auf diese Akquisition begründet wurde, (v) aufgrund anwendbaren Rechts gesetzlich vorgeschriebene Sicherheiten sind oder solche, deren Bestehen eine Voraussetzung zur Erteilung einer behördlichen Genehmigung sind, (vi) im Zusammenhang mit durch die Emittentin oder durch eine ihrer Tochtergesellschaften begebenen Asset Backed Securities (ABS) stehen, (vii) im Zusammenhang mit durch Zweckgesellschaften begebenen Asset Backed Securities (ABS) stehen, bei denen die Emittentin oder eine ihrer Tochtergesellschaften der Originator der zugrundeliegenden Vermögensgegenstände ist, (viii) der Erneuerung, Verlängerung oder dem Austausch irgendeiner Sicherheit gemäß vorstehend (i) bis (vii) dienen und (ix) Kapitalmarktverbindlichkeiten besichern, deren Kapitalbetrag (bei Aufaddierung auf den Kapitalbetrag sonstiger Kapitalmarktverbindlichkeiten, für die andere Sicherheiten als die nach (i) bis (viii) zulässigen bestehen) EUR 100.000.000 (oder deren jeweiligen Gegenwert in anderen Währungen) nicht überschreitet. |
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For purposes of these Terms and Conditions, Capital Market Indebtedness means any obligation for the payment of borrowed money which is evidenced by a certificate of indebtedness ( Schuldscheindarlehen ) or which is represented by any bond or debt security with an original maturity of more than one year which is, or is intended to be, or is capable of being listed or traded on a stock exchange or other recognized securities market. |
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Im Sinne dieser Emissionsbedingungen bezeichnet Kapitalmarktverbindlichkeit jede Verbindlichkeit zur Rückzahlung aufgenommener Geldbeträge, die durch Schuldscheindarlehen dokumentiert ist oder durch Schuldverschreibungen oder sonstige Wertpapiere mit einer ursprünglichen Laufzeit von mehr als einem Jahr, die an einer Börse oder an einem anderen anerkannten Wertpapiermarkt zugelassen oder gehandelt werden oder zugelassen oder gehandelt werden können, verbrieft, verkörpert oder dokumentiert ist. |
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Fresenius Medical Care Group means Fresenius Medical Care AG & Co. KGaA and its Subsidiaries on a consolidated basis. |
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Fresenius Medical Care-Konzern bezeichnet Fresenius Medical Care AG & Co. KGaA und ihre Tochtergesellschaften auf konsolidierter Basis. |
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Subsidiary means, with respect to any Person, any corporation, limited liability company, association, partnership or other business entity whose results of operations are consolidated in accordance with IFRS with |
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Tochtergesellschaft bezeichnet in Bezug auf einen Rechtsträger, eine Kapitalgesellschaft, eine Gesellschaft mit Haftungsbeschränkung, eine Vereinigung, eine Personengesellschaft oder ein sonstiges Unternehmen, dessen Ergebnisse gemäß den IFRS mit den |
those of: |
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Ergebnissen folgender Personen konsolidiert werden: |
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(a) such Person; |
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(a) dieses Rechtsträgers; |
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(b) such Person and one or more Subsidiaries of such Person; or |
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(b) dieses Rechtsträgers und einer oder mehreren Tochtergesellschaften dieses Rechtsträgers; oder |
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(c) one or more Subsidiaries of such Person. |
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(c) einer oder mehrerer Tochtergesellschaften dieses Rechtsträgers. |
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IFRS refers to International Financial Reporting Standards of the International Accounting Standards Board, as adopted by the European Union. |
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IFRS bezeichnet die International Financial Reporting Standards des International Account Standards Board, wie sie von der Europäischen Union anerkannt werden. |
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(3) Guarantee. |
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(3) Garantie. |
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Fresenius Medical Care Holdings, Inc. (the Guarantor) has given an unconditional and irrevocable guarantee (the Guarantee) for the due and punctual payment of principal of, and interest on, and any other amounts payable under any Notes. The Guarantee constitutes a contract for the benefit of the Holders from time to time as third party beneficiaries in accordance with § 328 paragraph 1 of the German Civil Code ( Bürgerliches Gesetzbuch ) 1 , giving rise to the right of each Holder to require performance of the Guarantee directly from the Guarantor and to enforce the Guarantee directly against the Guarantor. Copies of the Guarantee may be obtained free of charge at the specified office of the Fiscal Agent. |
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Fresenius Medical Care Holdings, Inc. (die Garantiegeberin) hat eine unbedingte und unwiderrufliche Garantie (die Garantie ) für die ordnungsgemäße und pünktliche Zahlung von Kapital und Zinsen und allen anderen zu zahlenden Beträgen unter den Schuldverschreibungen übernommen. Die Garantie stellt einen Vertrag zugunsten der Gläubiger als begünstigte Dritte im Sinne des § 328 Absatz 1 BGB dar, der jedem Gläubiger das Recht gibt, Erfüllung der in der Garantie übernommenen Verpflichtungen unmittelbar von der Garantiegeberin zu verlangen und diese Verpflichtungen unmittelbar gegen die Garantiegeberin durchzusetzen. Kopien der Garantie können kostenlos bei der bezeichneten Geschäftsstelle der Emissionsstelle bezogen werden. |
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(4) Release of Guarantee. |
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(4) Freigabe der Garantie. |
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Pursuant to its terms, the Guarantee (but not any payment obligation under the Guarantee which has already become due and payable) will be automatically and unconditionally released (and thereupon shall terminate and be discharged and be of no further force and effect) at any time when the Guarantor is no |
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Gemäß ihren Bestimmungen wird die Garantie (aber keine Zahlungsverpflichtung im Rahmen der Garantie, die bereits fällig und zahlbar geworden ist) automatisch und unbedingt freigegeben (und gilt von diesem Zeitpunkt an als erloschen und unwirksam), sobald die Garantiegeberin nicht mehr Verpflichtete unter |
1 An English language convenience translation of § 328 paragraph 1 BGB (German Civil Code) reads as follows: A contract may stipulate performance for the benefit of a third party, to the effect that the third party acquires the right directly to demand performance.
longer an obligor under the Amended 2012 Credit Agreement (as defined below), provided that, if under the Amended 2012 Credit Agreement, a new guarantee is granted, the Issuer will procure that substantially the same guarantee will also be granted in respect of the obligations under the Notes for the benefit of the Holders. |
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dem Geänderten Kreditvertrag 2012 ist, wobei, sollte unter dem Geänderten Kreditvertrag 2012 (wie nachstehend definiert) eine neue Garantie gestellt werden, die Emittentin sicherstellen wird, dass eine Garantie zu den im Wesentlichen gleichen Bedingungen auch in Ansehung der Schuldverschreibungen zugunsten der Gläubiger gestellt wird. |
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Amended 2012 Credit Agreement means the Credit Agreement dated as of October 30, 2012 among the Issuer and the Guarantor as borrowers and guarantors, Bank of America N.A. as administrative agent and the lenders named therein, (as amended, restated, modified, extended, renewed and/or supplemented or as refinanced or replaced from time to time). |
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Geänderter Kreditvertrag 2012 bedeutet der Kreditvertrag vom 30. Oktober 2012 zwischen der Emittentin, der Garantiegeberin als Kreditnehmer und Garanten, der Bank of America N.A., als Verwaltungsagent und den darin genannten Kreditgebern (in der jeweils gültigen Fassung, angepasst, modifiziert, erweitert, erneuert und/oder ergänzt oder refinanziert oder ersetzt). |
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(5) In case of a release of the Guarantee, the Issuer will notify the Holders pursuant to § 12. |
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(5) Im Fall einer Freigabe der Garantie wird die Emittentin dies den Gläubigern gemäß § 12 mitteilen. |
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§ 3 |
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§ 3 |
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(INTEREST) |
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(ZINSEN) |
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(1) Rate of Interest and Interest Payment Dates. |
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(1) Zinssatz und Zinszahlungstage. |
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The Notes shall bear interest on their principal amount at the rate of 1.500% per annum from (and including) July 11, 2018 to (but excluding) the Maturity Date (as defined in § 5(1)). Interest shall be payable in arrears on July 11 in each year (each such date, an Interest Payment Date ). The first payment of interest shall be made on July 11, 2019. |
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Die Schuldverschreibungen werden bezogen auf ihren Nennbetrag verzinst, und zwar vom 11. Juli 2018 (einschließlich) bis zum Fälligkeitstag (wie in § 5(1) definiert) (ausschließlich) mit jährlich 1,500%. Die Zinsen sind nachträglich am 11. Juli eines jeden Jahres zahlbar (jeweils ein Zinszahlungstag ). Die erste Zinszahlung erfolgt am 11. Juli 2019. |
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(2) Accrual of Interest. |
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(2) Auflaufende Zinsen. |
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The Notes shall cease to bear interest from the expiry of the day preceding the day on which they are due for redemption. If the Issuer for any reason fails to redeem the Notes when due, interest shall continue to accrue at the default rate of interest established by statutory law 2 on the outstanding aggregate principal amount of the Notes from (and including) the due date to (but excluding) the day on which such redemption payment is made to the |
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Der Zinslauf der Schuldverschreibungen endet mit Ablauf des Tages, der dem Tag vorangeht, an dem sie zur Rückzahlung fällig werden. Falls die Emittentin die Schuldverschreibungen bei Fälligkeit aus irgendeinem Grund nicht zurückzahlt, wird der ausstehende Gesamtnennbetrag der Schuldverschreibungen von dem Tag der Fälligkeit (einschließlich) bis zum Tag der vollständigen Rückzahlung an die Gläubiger (ausschließlich) mit dem gesetzlich |
2 The default rate of interest established by statutory law is five percentage points above the basis rate of interest published by Deutsche Bundesbank from time to time, §§ 288 paragraph 1, 247 paragraph 1 of the German Civil Code.
Holders. |
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bestimmten Verzugszins 3 verzinst. |
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(3) Calculation of Interest for Periods other than a full Year. |
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(3) Berechnung der Zinsen für Zeiträume, die nicht einem vollen Jahr entsprechen. |
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If interest is to be calculated for a period other than a full year, it shall be calculated on the basis of the Day Count Fraction (as defined below). The number of Interest Payment Dates per calendar year (each a Determination Date ) is one. |
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Sofern Zinsen für einen Zeitraum, der nicht einem vollen Jahr entspricht, zu berechnen sind, erfolgt die Berechnung auf der Grundlage des Zinstagequotienten (wie nachfolgend definiert). Die Anzahl der Zinszahlungstage im Kalenderjahr (jeweils ein Feststellungstermin ) beträgt Eins. |
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(4) Day Count Fraction. |
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(4) Zinstagequotient. |
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Day Count Fraction means with regard to the calculation of the amount of interest on the Notes for any period of time (the Calculation Period ): |
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Zinstagequotient bezeichnet im Hinblick auf die Berechnung von Zinsbeträgen auf die Schuldverschreibungen für einen beliebigen Zeitraum (der Zinsberechnungszeitraum ): |
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(a) if the Calculation Period (from and including the first day of such period but excluding the last) is equal to or shorter than the Determination Period during which the Calculation Period ends, the number of days in such Calculation Period (from and including the first day of such period but excluding the last) divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Dates (as specified in § 3(3)) that would occur in one calendar year; or |
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(a) wenn der Zinsberechnungszeitraum (einschließlich des ersten aber ausschließlich des letzten Tages dieser Periode) kürzer ist als die Feststellungsperiode, in die das Ende des Zinsberechnungszeitraumes fällt oder ihr entspricht, die Anzahl der Tage in dem betreffenden Zinsberechnungszeitraum (einschließlich des ersten aber ausschließlich des letzten Tages dieser Periode) geteilt durch das Produkt (1) der Anzahl der Tage in der Feststellungsperiode und (2) der Anzahl der Feststellungstermine (wie in § 3(3) angegeben) in einem Kalenderjahr; oder |
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(b) if the Calculation Period is longer than the Determination Period during which the Calculation Period ends, the sum of: (A) the number of days in such Calculation Period falling in the Determination Period in which the Calculation Period begins divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Dates (as specified in § 3(3)) and (B) the number of days in such Calculation Period falling |
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(b) wenn der Zinsberechnungszeitraum länger ist als die Feststellungsperiode, in die das Ende des Zinsberechnungszeitraumes fällt, die Summe aus (A) der Anzahl der Tage in dem Zinsberechnungszeitraum, die in die Feststellungsperiode fallen, in welcher der Zinsberechnungszeitraum beginnt, geteilt durch das Produkt aus (1) der Anzahl der Tage in dieser Feststellungsperiode und (2) der Anzahl der Feststellungstermine (wie in § 3(3) |
3 Der gesetzliche Verzugszinssatz beträgt für das Jahr fünf Prozentpunkte über dem von der Deutsche Bundesbank von Zeit zu Zeit veröffentlichten Basiszinssatz, §§ 288 Absatz 1, 247 Absatz 1 BGB.
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Garantiegeberin zur Verfügung stehender Maßnahmen vermieden werden kann. |
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However, no such notice of redemption may be given (i) earlier than 90 days prior to the earliest date on which the Issuer or the Guarantor would be obligated to pay such Additional Amounts were a payment in respect of the Notes then due, or (ii) if at the time such notice is given, such obligation to pay such Additional Amounts does not remain in effect. |
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Eine solche Kündigung darf allerdings nicht (i) früher als 90 Tage vor dem frühestmöglichen Termin erfolgen, an dem die Emittentin oder die Garantiegeberin verpflichtet wäre, solche Zusätzlichen Beträge zu zahlen, falls eine Zahlung auf die Schuldverschreibungen dann fällig sein würde, oder (ii) erfolgen, wenn zu dem Zeitpunkt, zu dem die Kündigung erklärt wird, die Verpflichtung zur Zahlung von Zusätzlichen Beträgen nicht mehr wirksam ist. |
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Any such notice shall be given in accordance with § 12. It shall be irrevocable, must specify the date fixed for redemption and must set forth a statement in summary form of the facts constituting the basis for the right of the Issuer so to redeem. |
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Eine solche Kündigung ist gemäß § 12 bekanntzumachen. Sie ist unwiderruflich, muss den für die Rückzahlung festgelegten Termin nennen und eine zusammenfassende Erklärung enthalten, welche die das Rückzahlungsrecht der Emittentin begründenden Umständen darlegt. |
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Before the publication of any notice of redemption pursuant to this subparagraph, the Issuer shall deliver to the Fiscal Agent a certificate signed by a member of the managing board of the general partner of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, and an opinion of independent legal counsel or tax advisers of recognized standing to the effect that the Issuer or the Guarantor, as the case may be, has or will become obliged to pay such Additional Amounts as a result of such change or amendment. |
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Vor Bekanntgabe einer Mitteilung über eine Rückzahlung gemäß diesen Bestimmungen hat die Emittentin der Emissionsstelle eine von einem Mitglied des Vorstands des Komplementärs der Emittentin unterzeichnete Bescheinigung zukommen zu lassen, der zufolge die Emittentin berechtigt ist, eine entsprechende Rückzahlung zu leisten, und in der nachvollziehbar dargelegt ist, dass die Bedingungen für das Recht der Emittentin zur Rückzahlung gemäß diesen Bestimmungen erfüllt sind; zusätzlich hat die Emittentin ein von unabhängigen und anerkannten Rechts-oder Steuerberatern erstelltes Gutachten vorzulegen, demzufolge die Emittentin oder die Garantiegeberin in Folge einer entsprechenden Änderung oder Ergänzung zur Zahlung Zusätzlicher Beträge verpflichtet ist oder sein wird. |
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(3) Early Redemption at the Option of the Issuer for Reasons of Minimal Outstanding Principal Amount. |
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(3) Vorzeitige Rückzahlung nach Wahl der Emittentin bei geringfügig ausstehendem Nennbetrag. |
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If 80% or more in principal amount of the Notes then outstanding have been redeemed or purchased by the Issuer or any Subsidiary of Fresenius Medical Care AG & Co. KGaA, the Issuer may, on not less than 30 or more than 60 days notice to the Holders redeem, at its option, the remaining Notes as a whole at their |
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Wenn 80% oder mehr des Nennbetrags der dann ausstehenden Schuldverschreibungen durch die Emittentin oder eine Tochtergesellschaft der Fresenius Medical Care AG & Co. KGaA zurückgezahlt oder zurückerworben wurde, ist die Emittentin berechtigt, nach ihrer Wahl alle ausstehenden |
principal amount, together with interest (if any) accrued to the date fixed for redemption (excluding). |
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Schuldverschreibungen mit einer Frist von mindestens 30 und höchstens 60 Tagen gegenüber den Gläubigern zu kündigen und zum Nennbetrag zuzüglich etwaiger bis zum Rückzahlungstag (ausschließlich) aufgelaufener Zinsen zurück zu zahlen. |
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(4) Early Redemption at the Option of the Holders upon a Change of Control. |
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(4) Vorzeitige Rückzahlung nach Wahl der Gläubiger bei Vorliegen eines Kontrollwechsels. |
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Each Holder of the Notes, upon the occurrence of a Change of Control Triggering Event, will have the right (unless, prior to the giving of the Put Event Notice referred to below, the Issuer gives notice to redeem the Notes in accordance with § 5(2), i.e. for taxation reasons) to require that the Issuer repurchases such Holders Notes on the Optional Redemption Date at a purchase price in cash equal to 101% of the principal amount together with interest (if any) accrued to the Optional Redemption Date (excluding). |
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Falls ein Kontrollwechselereignis stattfindet, hat jeder Gläubiger das Recht (soweit die Emittentin nicht bereits vor Abgabe der Vorzeitigen Rückkaufsgrunderklärung (wie nachstehend definiert) die Rückzahlung gemäß § 5(2), d.h. aus steuerlichen Gründen, erklärt hat) von der Emittentin am Stichtag den Rückkauf seiner Schuldverschreibungen zu einem Kaufpreis von 101% des Nennbetrags zuzüglich etwaiger bis zum Stichtag (ausschließlich) aufgelaufener Zinsen zu verlangen. |
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In this context the following provisions apply: |
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In diesem Zusammenhang finden die folgenden Vorschriften Anwendung: |
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Change of Control Triggering Event means the occurrence of a Change of Control together with a Ratings Decline. |
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Ein Kontrollwechselereignis liegt vor, wenn ein Kontrollwechsel zusammen mit einer Ratingherabstufung eintreten. |
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Rating Agency means (1) Standard & Poors Credit Market Services Europe Limited ( Zweigniederlassung Deutschland ) and its successors ( S&P ), (2) Moodys Deutschland GmbH and its successors ( Moodys ), and (3) Fitch Ratings Limited and its successors ( Fitch ), or (4) if S&P, Moodys or Fitch, or all three shall not make rating of Fresenius Medical Care AG & Co. KGaA publicly available, a European-wide reputable securities rating agency or agencies, as the case may be, selected by Fresenius Medical Care AG & Co. KGaA, which shall be substituted for S&P, Moodys or Fitch or all three, as the case may be. |
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Ratingagentur bezeichnet (1) Standard & Poors Credit Market Services Europe Limited (Zweigniederlassung Deutschland) oder deren entsprechenden Nachfolger ( S&P ), (2) Moodys Deutschland GmbH oder deren entsprechenden Nachfolger ( Moodys ), (3) Fitch Ratings Limited oder deren entsprechenden Nachfolger ( Fitch ), oder (4) falls S&P, Moodys oder Fitch oder alle drei kein Rating für Fresenius Medical Care AG & Co. KGaA öffentlich zur Verfügung stellen, eine Ratingagentur oder Ratingagenturen mit europaweitem Ansehen, die von Fresenius Medical Care AG & Co. KGaA ausgewählt wird und S&P, Moodys oder Fitch oder alle diese Agenturen ersetzt. |
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Ratings Decline means that if (a), at the time of the occurrence of a Change of Control, Fresenius Medical Care AG & Co. KGaAs (i) has been, rated Investment Grade by at least two Rating Agencies and such rating is, within 120 |
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Eine Ratingherabstufung liegt vor, falls (a) Fresenius Medical Care AG & Co. KGaA bei Eintritt des Kontrollwechsels (i) von mindestens zwei Ratingagenturen mit Investment Grade bewertet ist und diese Ratings von mindestens |
(b) with respect to Moodys, any of the following categories: Ba, B, Caa, Ca, C and D (or equivalent successor categories); and |
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(b) in Bezug auf Moodys eine der folgenden Kategorien: Ba, B, Caa, Ca, C und D (bzw. entsprechende Nachfolgekategorien); und |
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(c) the equivalent of any such category of S&P, Moodys or Fitch used by another rating agency in determining whether the rating of Fresenius Medical Care AG & Co. KGaA has decreased by one or more gradations, gradations within rating categories (+ and - for S&P, 1, 2 and 3 for Moodys, + and - for Fitch; or the equivalent gradations for another rating agency) shall be taken into account (e.g., with respect to S&P, a decline in a rating from BB+ to BB, as well as from BB- to B+, will constitute a decrease of one gradation). |
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(c) diesen Kategorien von S&P oder Moodys oder Fitch entsprechende Ratingkategorien einer anderen Ratingagentur. Bei der Bestimmung, ob das Rating von Fresenius Medical Care AG & Co. KGaA um eine oder mehrere Stufen herabgestuft wurde, werden die jeweiligen Ratingkategorien weiter untergliedernde Zusätze (+ und - bei S&P, 1, 2 und 3 bei Moodys, + und - bei Fitch bzw. entsprechende Zusätze anderer Ratingagenturen) berücksichtigt (z. B. entspricht bei S&P eine Ratingänderung von BB+ auf BB oder von BB- auf B+ jeweils einer Herabstufung um eine Stufe). |
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Investment Grade means a rating of (i) BBB- or higher by S&P and Fitch, and (ii) Baa3 or higher by Moodys, or the equivalent of such ratings by S&P, Moodys or Fitch and the equivalent in respect of rating categories of any Rating Agencies substituted for S&P, Moodys or Fitch. |
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Investment Grade bezeichnet ein Rating von (i) BBB- oder höher im Fall von S&P und Fitch und (ii) Baa3 oder höher im Fall von Moodys, oder das entsprechende Äquivalent dieser Ratings im Fall von S&P, Moodys oder Fitch sowie das entsprechende Äquivalent in den Ratingkategorien einer anderen Ratingagentur, durch die S&P, Moodys oder Fitch ersetzt wurde. |
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A Change of Control means the occurrence of one or more of the following events: |
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Ein Kontrollwechsel bezeichnet den Eintritt eines oder mehrerer der folgenden Ereignisse: |
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(a) so long as Fresenius Medical Care AG & Co. KGaA is organized as a KGaA, if the General Partner of Fresenius Medical Care AG & Co. KGaA charged with the management of Fresenius Medical Care AG & Co. KGaA shall at any time fail to be Fresenius SE & Co. KGaA or a subsidiary of Fresenius SE & Co. KGaA, or if Fresenius SE & Co. KGaA shall fail at any time to own or control, directly or indirectly, more than 25% of the capital stock with ordinary voting power in Fresenius Medical Care AG & Co. KGaA; |
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(a) so lange Fresenius Medical Care AG & Co. KGaA die Rechtsform einer KGaA hat: Wenn es sich bei dem mit der Geschäftsführung von Fresenius Medical Care AG & Co. KGaA beauftragten Komplementär der Gesellschaft zu irgendeinem Zeitpunkt nicht um Fresenius SE & Co. KGaA oder eine Tochtergesellschaft der Fresenius SE & Co. KGaA handelt oder wenn Fresenius SE & Co. KGaA zu irgendeinem Zeitpunkt direkt oder indirekt nicht mehr als 25% des stimmberechtigten Grundkapitals an Fresenius Medical Care AG & Co. KGaA hält und kontrolliert; |
(b) if Fresenius Medical Care AG & Co. KGaA is no longer organized as a KGaA, any event the result of which is that (A) any person or group ( Relevant Person(s )) acting in concert (as defined in § 30 (2) of the German Securities Acquisition and Takeover Act ( Wertpapiererwerbs-und Übernahmegesetz )) or any person or group acting on behalf of any such Relevant Person(s), other than a Permitted Holder, is or becomes the direct or indirect legal or beneficial ownership or any legal or beneficial entitlement (as defined in § 22 of the German Securities Trading Act ( Wertpapierhandelsgesetz )) of, in the aggregate, more than 50% of the voting shares of Fresenius Medical Care AG & Co. KGaA; or |
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(b) wenn Fresenius Medical Care AG & Co. KGaA nicht mehr die Rechtsform einer KGaA hat, ein Ereignis, in dessen Folge (A) eine Person oder mehrere Personen ( Relevante Personen ), die abgestimmt handeln (wie in § 30 (2) Wertpapiererwerbs-und Übernahmegesetz definiert), oder einer oder mehrere Dritte, die im Auftrag einer solchen Relevanten Personen handeln, mit Ausnahme eines Zulässigen Inhabers, unmittelbar oder mittelbar rechtliches oder wirtschaftliches Eigentum in jedweder Form bzw. die unmittelbare oder mittelbare rechtliches oder wirtschaftliche Verfügungsbefugnis in jedweder Form (wie in § 22 Wertpapierhandelsgesetz beschrieben) an insgesamt mehr als 50% der stimmberechtigten Aktien der Fresenius Medical Care AG & Co. KGaA erlangen; oder |
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(c) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of Fresenius Medical Care AG & Co. KGaA (held directly or indirectly) to any Relevant Person other than a Permitted Holder, or any person or group acting on behalf of any such Relevant Person(s). |
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(c) ein Verkauf, ein Leasing, ein Tausch oder eine sonstige Übertragung (im Rahmen einer einzigen Transaktion oder einer Reihe miteinander zusammenhängender Transaktionen) aller oder aller wesentlichen Vermögenswerte (direkt oder indirekt gehalten) der Fresenius Medical Care AG & Co. KGaA an eine oder mehrere Relevante Personen, mit Ausnahme eines Zulässigen Inhabers, oder einen oder mehrere Dritte, die im Auftrag solcher Relevanten Personen handeln. |
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General Partner means Fresenius Medical Care Management AG, a stock corporation organized under the laws of Germany, including its successors and assigns and other Persons, in each case who serve as the general partner ( persönlich haftender Gesellschafter ) of Fresenius Medical Care AG & Co. KGaA from time to time. |
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Komplementär bezeichnet die Fresenius Medical Care Management AG, eine Aktiengesellschaft nach deutschem Recht, sowie ihre Nachfolger, Abtretungsempfänger und sonstige Personen, die zum jeweiligen Zeitpunkt als persönlich haftender Gesellschafter von Fresenius Medical Care AG & Co. KGaA auftreten. |
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Person means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency, instrumentality or political subdivision thereof, |
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Person bezeichnet eine natürliche Person, eine Körperschaft, eine Personengesellschaft, ein Joint Venture, eine Vereinigung, eine Aktiengesellschaft, einen Trust, eine Einrichtung ohne eigene Rechtspersönlichkeit, eine staatliche Stelle oder Behörde, eine |
or any other entity. |
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Gebietskörperschaft oder einen sonstigen Rechtsträger. |
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Permitted Holder means Fresenius SE & Co. KGaA and any of its Affiliates, as long as and to the extent Fresenius SE & Co. KGaA or the relevant Affiliate(s) is or are not acting in concert with, or on behalf of, a Relevant Person(s). |
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Zulässiger Inhaber bezeichnet die Fresenius SE & Co. KGaA und alle mit ihr verbundenen Personen, sofern und soweit die Fresenius SE & Co. KGaA oder eine oder mehrere mit ihr verbundene Person(en) nicht gemeinsam mit oder im Auftrag einer oder mehrerer Relevanten Person(en) handeln. |
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Affiliate of any specified Person means: |
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Verbundene Person einer bestimmten Person bezeichnet: |
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(a) any other Person, directly or indirectly, controlling or controlled by such specified Person, or |
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(a) jede andere Person, die diese Person direkt oder indirekt kontrolliert bzw. direkt oder indirekt von ihr kontrolliert wird, oder |
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(b) under direct or indirect common control with such specified Person. |
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(b) mit dieser bestimmten Person unter direkter oder indirekter gemeinsamer Kontrolle steht. |
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For the purposes of this definition, control when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise (section 15 of the German Stock Corporation Act ( Aktiengesetz ); and the terms controlling and controlled have meanings correlative to the foregoing. |
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Für den Zweck dieser Definition bezeichnet Kontrolle bei Verwendung in Bezug auf eine Person die Befugnis, deren Geschäftsführung und Unternehmenspolitik direkt oder indirekt zu bestimmen (§ 15 Aktiengesetz), sei es durch den Besitz von stimmberechtigten Kapitalanteilen, eine vertragliche Festlegung oder anderweitig, und die Bedeutung der Begriffe kontrolliert und kontrollieren ist entsprechend zu verstehen. |
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Within 30 days upon the Issuer becoming aware that a Change of Control Triggering Event has occurred, the Issuer shall give notice (a Put Event Notice ) to the Holders in accordance with § 12 stating: |
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Innerhalb von 30 Tagen, nachdem die Emittentin von einem Kontrollwechselereignis Kenntnis erlangt hat, wird die Emittentin dies den Gläubigern gemäß § 12 bekannt machen ( Vorzeitige Rückkaufsgrunderklärung ) und dabei folgendes mitteilen: |
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(a) that a Change of Control Triggering Event has occurred; |
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(a) dass ein Kontrollwechselereignis eingetreten ist; |
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(b) the circumstances and relevant facts regarding such Change of Control Triggering Event; |
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(b) die Umstände und relevanten Informationen bezüglich des Kontrollwechselereignisses; |
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(c) the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such Put Event Notice is given) (the Optional |
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(c) den Tag des Rückkaufs (der nicht früher als 30 und nicht später als 60 Tage nach dem Tag, an dem die Vorzeitige Rückkaufsgrunderklärung erfolgt, liegen |
Redemption Date); |
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darf) (der Stichtag ); |
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(d) that each Note will be subject to repurchase only in integral multiples the Specified Denomination; and |
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(d) dass die Schuldverschreibungen nur in ganzen Vielfachen der Festgelegten Stückelung zurückgekauft werden; und |
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(e) the instructions determined by the Issuer that a Holder must follow in order to have its Notes purchased pursuant to this § 5(4). |
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(e) die Anweisungen, die ein Gläubiger befolgen muss, damit die Schuldverschreibungen gemäß diesem § 5(4) zurückgekauft werden. |
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In order to exercise such option, the Holder must submit during normal business hours at the specified office of the Fiscal Agent a duly completed option exercise notice in the form available from the specified office of the Fiscal Agent within the period of 20 days after a Put Event Notice is given. No option so exercised may be revoked or withdrawn without the prior consent of the Issuer. |
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Um ein solches Recht auszuüben, muss ein Gläubiger während der allgemeinen Geschäftszeiten bei der angegebenen Geschäftsstelle der Emissionsstelle eine vollständig ausgefüllte Ausübungserklärung in der durch die Emissionsstelle bereitgestellten Form innerhalb eines Zeitraums von 20 Tagen nach Bekanntmachung der Vorzeitigen Rückzahlungserklärung übermitteln. Kein in dieser Form ausgeübtes Recht kann ohne vorherige Zustimmung der Emittentin widerrufen oder zurückgezogen werden. |
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The Issuer will comply with the requirements of any applicable securities laws or regulations in connection with an early redemption of Notes at the option of the Holders upon a Change of Control pursuant to this § 5(4). To the extent that the provisions of any securities laws or regulations or applicable stock exchange listing rules conflict with the provisions of this § 5(4), the Issuer will comply with the applicable securities laws, regulations and listing rules and will not be deemed to have breached its obligations under this § 5(4) by virtue thereof. |
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Die Emittentin wird die Anforderungen der anwendbaren Wertpapiergesetze oder -vorschriften im Zusammenhang mit einer vorzeitigen Rückzahlung von Schuldverschreibungen nach Wahl der Inhaber bei einem Kontrollwechsel gemäß diesem § 5(4) erfüllen. Soweit die Bestimmungen eines Wertpapiergesetzes oder -verordnung oder eines anwendbaren Börsenzulassungsregelwerks im Widerspruch zu den Bestimmungen dieses § 5(4) stehen, wird die Emittentin die anwendbaren Wertpapiergesetze, -verordnungen und - regelwerke einhalten und dies wird nicht als Verletzung ihrer Pflichten aus diesem § 5(4) angesehen werden. |
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(5) Early Redemption at the Option of the Issuer. |
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(5) Vorzeitige Rückzahlung nach Wahl der Emittentin. |
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(a) The Issuer may, upon notice given in accordance with clause (b), redeem all or some only of the Notes within the Call Redemption Period(s) at the Call Redemption Amount(s) set forth below together with accrued interest, if any, to (but excluding) the relevant redemption |
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(a) Die Emittentin kann, nachdem sie gemäß Absatz (b) gekündigt hat, die Schuldverschreibungen insgesamt oder teilweise innerhalb des/der Wahl- Rückzahlungszeitraums/-räume ( Call ) zum/zu den Wahl-Rückzahlungsbetrag/-beträgen ( Call ), wie nachfolgend angegeben, nebst |
date. |
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etwaigen bis zum maßgeblichen Rückzahlungstag (ausschließlich) aufgelaufenen Zinsen zurückzahlen. |
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Call Redemption Period(s) |
Call Redemption |
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Wahl- |
Wahl- |
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Amount(s) |
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Rückzahlungszeitraum/rä |
Rückzahlungsbetrag/ |
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ume |
beträge |
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(Call) |
(Call) |
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April 11, 2025 to |
100 per cent. of the |
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11. April 2025 bis |
100% des |
July 10, 2025 |
principal amount |
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10. Juli 2025 |
Nennbetrags |
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(b) Notice of redemption shall be given by the Issuer to the Holders of the Notes in accordance with § 12. Such notice shall specify: |
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(b) Die Kündigung ist den Gläubigern der Schuldverschreibungen durch die Emittentin gemäß § 12 bekanntzugeben. Sie muss die folgenden Angaben enthalten: |
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(i) the series of Notes subject to redemption; |
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(i) die zurückzuzahlende Serie von Schuldverschreibungen; |
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(ii) whether such series is to be redeemed in whole or in part only and, if in part only, the aggregate principal amount of the Notes which are to be redeemed; |
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(ii) eine Erklärung, ob diese Serie ganz oder teilweise zurückgezahlt wird und im letzteren Fall den Gesamtnennbetrag der zurückzuzahlenden Schuldverschreibungen; |
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(iii) the relevant redemption date, which shall be not less than 20 nor more than 40 days after the date on which notice is given by the Issuer to the Holders; and |
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(iii) den maßgeblichen Rückzahlungstag, der nicht weniger als 20 und nicht mehr als 40 Tage nach dem Tag der Kündigung durch die Emittentin gegenüber den Gläubigern liegen darf; und |
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(iv) the Call Redemption Amount at which such Notes are to be redeemed. |
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(iv) den Wahl-Rückzahlungsbetrag (Call), zu dem die Schuldverschreibungen zurückgezahlt werden. |
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(c) In the case of a partial redemption of Notes, Notes to be redeemed shall be selected in accordance with the rules of the relevant Clearing System. For technical procedure of the ICSDs, in the case of a partial redemption the outstanding redemption amount will be reflected in the records of the ICSDs as either a reduction in nominal amount or as a pool factor, at the discretion of the |
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(c) Wenn die Schuldverschreibungen nur teilweise zurückgezahlt werden, werden die zurückzuzahlenden Schuldverschreibungen in Übereinstimmung mit den Regeln des betreffenden Clearingsystems ausgewählt. Für das technische Verfahren der ICSDs wird im Fall einer teilweisen Rückzahlung der entstehende Rückzahlungsbetrag entweder als |
ICSDs. |
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reduzierter Nennbetrag oder als Poolfaktor nach Ermessen der ICSDs in das Register der ICSDs aufgenommen. |
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§ 6 |
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§ 6 |
(THE FISCAL AGENT AND THE PAYING AGENT) |
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(DIE EMISSIONSSTELLE UND DIE ZAHLSTELLE) |
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(1) Appointment; Specified Office. |
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(1) Bestellung; bezeichnete Geschäftsstelle. |
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The initial fiscal agent (the Fiscal Agent ) and the initial paying agent (the Paying Agent ) and its initial specified office shall be: |
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Die anfänglich bestellte Emissionsstelle (die Emissionsstelle ) und die anfänglich bestellte Zahlstelle (die Zahlstelle ) und ihre bezeichnete Geschäftsstelle lautet wie folgt: |
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Deutsche Bank Aktiengesellschaft Trust & Security Services Operations Frankfurt Taunusanlage 12 60325 Frankfurt am Main Federal Republic of Germany |
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Deutsche Bank Aktiengesellschaft Trust & Security Services Operations Frankfurt Taunusanlage 12 60325 Frankfurt am Main Deutschland |
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The Fiscal Agent and the Paying Agent reserve the right at any time to change their respective specified offices to some other specified office in the same country. |
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Die Emissionsstelle und die Zahlstelle behalten sich das Recht vor, jederzeit ihre jeweiligen bezeichneten Geschäftsstellen durch eine andere bezeichnete Geschäftsstelle in demselben Land zu ersetzen. |
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(2) Variation or Termination of Appointment. |
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(2) Änderung der Bestellung oder Abberufung. |
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The Issuer reserves the right at any time to vary or terminate the appointment of the Fiscal Agent or any Paying Agent and to appoint another Fiscal Agent or additional or other Paying Agents. The Issuer shall at all times maintain (i) a Fiscal Agent, (ii) so long as the Notes are listed on the Luxembourg Stock Exchange, a Paying Agent (which may be the Fiscal Agent) with a specified office in Luxembourg and/or in such other place as may be required by the rules of such stock exchange and (iii) a Paying Agent in an EU Member State, if possible, that will not be obliged to withhold or deduct tax in connection with any payment made in relation to the Notes unless the Paying Agent would be so obliged in each other EU Member State if it were located there. Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not less than 30 nor more than 45 days prior notice thereof shall have been given |
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Die Emittentin behält sich das Recht vor, jederzeit die Bestellung der Emissionsstelle oder einer Zahlstelle zu ändern oder zu beenden und eine andere Emissionsstelle oder zusätzliche oder andere Zahlstellen zu bestellen. Die Emittentin wird zu jedem Zeitpunkt (i) eine Emissionsstelle unterhalten, (ii) solange die Schuldverschreibungen an der Luxemburger Börse notiert sind, eine Zahlstelle (die die Emissionsstelle sein kann) mit bezeichneter Geschäftsstelle in Luxemburg und/oder an solchen anderen Orten unterhalten, die die Regeln dieser Börse verlangen und (iii) eine Zahlstelle in einem Mitgliedsstaat der Europäischen Union, sofern dies möglich ist, unterhalten, die nicht zum Einbehalt oder Abzug von Quellensteuern oder sonstigen Abzügen verpflichtet ist, es sei denn, dass eine solche Einbehalts- oder Abzugspflicht auch in allen anderen Mitgliedsstaaten der Europäischen Union bestünde. Eine Änderung, Abberufung, Bestellung oder ein sonstiger Wechsel wird nur wirksam (außer im |
to the Holders in accordance with § 12. |
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Insolvenzfall, in dem eine solche Änderung sofort wirksam wird), sofern die Gläubiger hierüber gemäß § 12 vorab unter Einhaltung einer Frist von mindestens 30 und nicht mehr als 45 Tagen informiert wurden. |
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(3) Agent of the Issuer. |
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(3) Erfüllungsgehilfe(n) der Emittentin. |
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The Fiscal Agent and the Paying Agent act solely as the agents of the Issuer and do not assume any obligations towards or relationship of agency or trust for any Holder. |
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Die Emissionsstelle und die Zahlstelle handeln ausschließlich als Erfüllungsgehilfen der Emittentin und übernehmen keinerlei Verpflichtungen gegenüber den Gläubigern und es wird kein Auftrags- oder Treuhandverhältnis zwischen ihnen und den Gläubigern begründet. |
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§ 7 |
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§ 7 |
(TAXATION) |
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(STEUERN) |
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All payments of principal and interest made by the Issuer in respect of the Notes to the Holders shall be made free and clear of, and without withholding or deduction for, any present or future taxes or duties of whatever nature imposed or levied by way of deduction or withholding by or on behalf of (1) the Federal Republic of Germany or any authority therein or thereof having power to tax, (2) any jurisdiction from or through which payment on the Notes or the Guarantee is made, or any political subdivision or governmental authority thereof or therein having the power to tax and/or (3) any other jurisdiction in which the payor is organized or otherwise considered to be resident or doing business for tax purposes, or any political subdivision or governmental authority thereof or therein having the power to tax (each a Relevant Taxing Jurisdiction ), unless such deduction or withholding is required by law. In that event the Issuer shall pay such additional amounts (the Additional Amounts ) as shall result in receipt by the Holders of such amounts as would have been received by them had no such withholding or deduction been required, except that no Additional Amounts shall be payable with respect to: |
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Alle in Bezug auf die Schuldverschreibungen von der Emittentin an die Gläubiger zahlbaren Kapital- oder Zinsbeträge werden ohne Einbehalt oder Abzug an der Quelle für oder wegen gegenwärtiger oder zukünftiger Steuern oder Abgaben gleich welcher Art gezahlt, die von oder im Namen (1) der Bundesrepublik Deutschland oder einer dort zur Steuererhebung ermächtigten Behörde, (2) einer Rechtsordnung, aus der bzw. über die eine Zahlung auf die Schuldverschreibungen oder die Garantie geleistet wird, oder einer dort zur Steuererhebung ermächtigten Gebietskörperschaft oder Behörde, und/oder (3) einer anderen Rechtsordnung, in der die zahlende Partei errichtet ist oder anderweitig als gebietsansässig gilt oder im steuerlichen Sinn geschäftlich tätig ist, oder einer dort zur Steuererhebung ermächtigten Gebietskörperschaft oder Behörde (jeweils eine Relevante Steuerjurisdiktion ) im Wege des Abzugs oder Einbehalts auferlegt oder erhoben werden, es sei denn, ein solcher Abzug oder Einbehalt ist gesetzlich vorgeschrieben. In diesem Fall wird die Emittentin diejenigen zusätzlichen Beträge ( Zusätzliche Beträge ) zahlen, die erforderlich sind, damit die den Gläubigern zufließenden Nettobeträge nach diesem Einbehalt oder Abzug jeweils den Beträgen an Kapital und Zinsen entsprechen, die ohne einen solchen Einbehalt oder Abzug von den Gläubigern erhalten worden wären; jedoch sind solche Zusätzlichen Beträge nicht zu zahlen in Bezug auf: |
(a) taxes or duties which are payable by any Person acting as custodian bank or collecting agent on behalf of a Holder, or otherwise in any manner which does not constitute a deduction or withholding by the Issuer or the Guarantor, as applicable, from payments of principal or interest made by it; or |
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(a) Steuern oder Abgaben, die von einer als Depotbank oder Inkassobeauftragter eines Gläubigers handelnden Person oder auf eine sonstige Weise zu entrichten sind, die keinen Abzug oder Einbehalt von Zahlungen von Kapital oder Zinsen durch die Emittentin bzw. die Garantiegeberin darstellen; oder |
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(b) payments that would not have been so imposed but for the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or a person having a controlling power over, such Holder) and any Relevant Taxing Jurisdiction including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, member, shareholder or person having such a controlling power) being or having been a citizen or resident or treated as a resident of, being or having been engaged in a trade or business in, or having or having had a permanent establishment in, a Relevant Taxing Jurisdiction other than any connections arising solely from a Holder acquiring, holding or disposing of, receiving any payment under or with respect to or enforcing a Note or any Guarantee; or |
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(b) Zahlungen, die nicht erhoben worden wären, wenn nicht (i) eine gegenwärtige oder ehemalige Beziehung zwischen dem betreffenden Gläubiger (oder einem Treuhänder, Treugeber, Begünstigten, Mitglied oder Gesellschafter dieses Gläubigers oder einer Person, die beherrschenden Einfluss auf diesen Gläubiger hat) und einer Relevanten Steuerjurisdiktion bestehen würde, unter anderem in der Form, dass der betreffende Gläubiger (bzw. Treuhänder, Treugeber, Begünstigte, Mitglied, Gesellschafter oder die Person, die beherrschenden Einfluss hat) Staatsbürger einer Relevanten Steuerjurisdiktion ist oder war oder dort ansässig ist oder war oder als dort ansässig gilt oder galt oder dort ein Gewerbe oder eine Geschäftstätigkeit betreibt oder betrieben hat oder dort eine Betriebsstätte unterhält oder unterhalten hat, mit Ausnahme von Beziehungen, die allein dadurch entstehen, dass ein Gläubiger eine Schuldverschreibung oder die Garantie erwirbt, hält oder veräußert bzw. eine Zahlung darunter oder in Bezug auf diese erhält oder Ansprüche darauf geltend macht; oder |
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(c) payments to, or to a third party on behalf of, a Holder where no such withholding or deduction would have been required to be made if the Notes were credited at the time of payment to a securities deposit account with a bank, financial services institution, securities trading business or securities trading bank, in each case outside the Relevant |
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(c) Zahlungen an den Gläubiger oder an einen Dritten für den Gläubiger, falls kein Einbehalt oder Abzug hätte erfolgen müssen, wenn die Schuldverschreibung zum Zeitpunkt der fraglichen Zahlung einem Depotkonto bei einer bzw. einem nicht in der Relevanten Steuerjurisdiktion ansässigen Bank, Finanzdienstleistungsinstitut, |
Taxing Jurisdiction; or |
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Wertpapierhandelsunternehmen oder Wertpapierhandelsbank gutgeschrieben gewesen wäre; oder |
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(d) payments where such withholding or deduction is imposed pursuant to (i) any European Union Directive or Regulation concerning the taxation of savings, or (ii) any international treaty or understanding relating to such taxation and to which the Relevant Taxing Jurisdiction or the European Union is a party/are parties, or (iii) any provision of law implementing, or complying with, or introduced to conform with, such Directive, Regulation, treaty or understanding, or (iv) the Luxembourg law of 23 December 2005; or |
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(d) falls der Einbehalt oder Abzug gemäß (i) einer Richtlinie oder Verordnung der Europäischen Union zur Zinsbesteuerung oder (ii) einem internationalen Abkommen oder Übereinkommen zu einer solchen Besteuerung, bei dem die Relevante Steuerjurisdiktion oder die Europäische Union Parteien sind, oder (iii) einem diese Richtlinie oder Verordnung oder dieses Abkommen oder Übereinkommen umsetzenden oder sie befolgenden oder zu ihrer Befolgung erlassenen Gesetz, oder (iv) dem Luxemburger Gesetz vom 23. Dezember 2005 erhoben wird; oder |
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(e) payments to the extent such withholding or deduction is payable by or on behalf of a Holder who could lawfully mitigate (but has not so mitigated) such withholding or deduction by complying or procuring that any third party complies with any statutory requirements or by making or procuring that a third party makes a declaration of non-residence or other similar claim for exemption to any tax authority in the place where the payment is effected (including, in the case of a payment by a Paying Agent situated in the United States, by providing prior to the receipt of any such payment, a complete, correct and executed IRS Form W-8 or W-9 or successor form, as applicable, with all appropriate attachments); or |
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(e) soweit der Einbehalt oder Abzug von dem Gläubiger oder von einem Dritten für den Gläubiger zahlbar ist, der einen solchen Einbehalt oder Abzug dadurch rechtmäßigerweise hätte vermindern können (aber nicht vermindert hat), dass er gesetzliche Vorschriften beachtet, oder dafür sorgt, dass Dritte dieses tun, oder dadurch dass er eine Nichtansässigkeitserklärung oder einen ähnlichen Antrag auf Quellensteuerbefreiung gegenüber der am Zahlungsort zuständigen Steuerbehörde; abgibt oder dafür sorgt, dass dies durch einen Dritten erfolgt (einschließlich, im Falle einer Zahlung durch eine Zahlstelle mit Sitz in den Vereinigten Staaten, durch Bereitstellung eines vollständigen, korrekten und ausgefüllten IRS-Formulars W-8 oder W-9 oder eines Nachfolgeformulars, falls zutreffend, mit allen entsprechenden Anlagen); oder |
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(f) payments to the extent such withholding or deduction is payable by or on behalf of a Holder who would have been able to mitigate such withholding or deduction by effecting a payment via another Paying Agent in a Member State of the European Union, |
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(f) soweit der Einbehalt oder Abzug von dem Gläubiger oder von einem Dritten für den Gläubiger vorzunehmen ist, der einen solchen Einbehalt oder Abzug durch die Bewirkung einer Zahlung über eine andere Zahlstelle in einem Mitgliedsstaat der Europäischen Union, |
not obliged to withhold or deduct tax; or |
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welche nicht zu einem solchen Einbehalt oder Abzug verpflichtet ist, hätte vermindern können; oder |
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(g) payments to the extent such withholding or deduction is for or on account of the presentation by the Holder of any Note for payment on a date more than 30 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later; or |
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(g) soweit der Einbehalt oder Abzug für einen Gläubiger oder dessen Rechnung vorzunehmen ist, der Schuldverschreibungen mehr als 30 Tage nach dem Tag, an dem eine Zahlung unter den Schuldverschreibungen fällig und zahlbar wurde bzw., soweit dies später eintritt, nach dem Tag, an dem die Zahlung ordnungsgemäß vorgenommen wurde, vorgelegt hat; oder |
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(h) payments to the extent such withholding or deduction is required pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the Internal Revenue Code ), or any amended or successor version thereof, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Internal Revenue Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Internal Revenue Code; or |
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(h) soweit der Einbehalt oder Abzug gemäß §§ 1471 bis 1474 des U.S. Internal Revenue Code von 1986 in seiner jeweils gültigen Fassung (der Internal Revenue Code ), oder einer geänderten oder nachfolgenden Fassung davon, jeder gegenwärtigen oder zukünftigen Verordnung oder offiziellen Auslegung davon, jeder Vereinbarung, die gemäß § 1471(b) des Internal Revenue Codes eingegangen wurde oder jeder steuerlichen oder regulatorischen Gesetzgebung, sowie steuerlichen und regulatorischen Gesetzen oder Vorgehensweisen, die nach einem völkerrechtlichen Vertrag, der zur Umsetzung der Bestimmungen des Internal Revenue Codes geschlossen wurde, vorzunehmen ist; oder |
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(i) any tax imposed on interest by the United States or any political subdivision or governmental authority thereof or therein by reason of any Holder holding or owning, actually or constructively, 10% or more of the total combined voting power of all classes of stock of the Issuer or the Guarantor entitled to vote; or |
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(i) jede Steuer, die von den Vereinigten Staaten oder einer ihrer politischen Unterabteilungen oder Regierungsbehörden auf Zinsen erhoben wird, weil ein Inhaber tatsächlich oder konstruktiv 10% oder mehr der gesamten kombinierten Stimmrechte aller Aktiengattungen der Emittentin oder der Garantiegeberin hält oder besitzt; oder |
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(j) any tax imposed on interest by the United States or any political subdivision or governmental authority thereof or therein by reason of any Holder being a controlled foreign corporation that is a |
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(j) jede Steuer, die von den Vereinigten Staaten oder einer politischen Unterabteilung oder Regierungsbehörde der Vereinigten Staaten oder darin erhoben wird, weil ein Inhaber eine |
related person within the meaning of Section 864(d)(4) of the Internal Revenue Code with respect to the Issuer or the Guarantor; or |
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kontrollierte ausländische Körperschaft ist, die eine verwandte Person im Sinne von Section 864(d)(4) des Internal Revenue Code in Bezug auf die Emittentin oder die Garantiegeberin ist; oder |
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(k) any tax imposed on interest by the United States or any political subdivision or governmental authority thereof or therein by reason of any Holder being a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business; or |
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(k) jede Steuer, die von den Vereinigten Staaten oder einer politischen Unterabteilung oder Regierungsbehörde der Vereinigten Staaten oder darin erhoben wird, weil ein Inhaber eine Bank ist, die einen Kredit gemäß einem Kreditvertrag gewährt, der im normalen Geschäftsverkehr abgeschlossen wurde; oder |
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(l) any combination of items (a)-(k); |
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(l) jegliche Kombination der Absätze (a)-(k). |
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nor shall any Additional Amounts be paid with respect to any payment on a Note to a Holder who is a fiduciary or partnership or who is other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of the Relevant Taxing Jurisdiction to be included in the income, for tax purposes, of a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner who would not have been entitled to such Additional Amounts had such beneficiary, settlor, member or beneficial owner been the Holder of the Note. |
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Zudem werden keine Zusätzlichen Beträge im Hinblick auf Zahlungen auf die Schuldverschreibungen an einen Gläubiger gezahlt, welcher die Zahlung als Treuhänder oder Personengesellschaft oder als sonstiger nicht alleiniger wirtschaftlicher Eigentümer erhält, soweit nach den Gesetzen der Relevanten Steuerjurisdiktion(en) eine solche Zahlung für Steuerzwecke dem Einkommen des Begünstigten bzw. Gründers eines Treuhandvermögens oder dem Gesellschafter der Personengesellschaft zugerechnet würde, der jeweils selbst nicht zum Erhalt von Zusätzlichen Beträgen berechtigt gewesen wäre, wenn der Begünstigte, Gründer eines Treuhandvermögens, Gesellschafter oder wirtschaftliche Eigentümer unmittelbarer Gläubiger der Schuldverschreibungen wäre. |
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For the avoidance of doubt: No Additional Amounts will be paid with respect to German capital gains tax ( Kapitalertragsteuer ), including withholding tax ( Abgeltungsteuer ), to be deducted or withheld pursuant to the German Income Tax Act, even if the deduction or withholding has to be made by the Issuer or its representative, and the German Solidarity Surcharge ( Solidaritätszuschlag ) or any other tax which may substitute the German capital gains tax ( Kapitalertragsteuer ) or solidarity surcharge ( Solidaritätszuschlag ), as the case may be. |
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Zur Klarstellung: Keine Zusätzlichen Beträge werden gezahlt in Bezug auf die deutsche Kapitalertragsteuer (inklusive der sog. Abgeltungsteuer), die nach dem deutschen Einkommensteuergesetz abgezogen oder einbehalten wird, auch wenn der Abzug oder Einbehalt durch die Emittentin oder ihren Vertreter vorzunehmen ist, und den deutschen Solidaritätszuschlag oder jede andere Steuer, welche die deutsche Kapitalertragsteuer bzw. den Solidaritätszuschlag ersetzen sollte. |
§ 8 |
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§ 8 |
(PRESENTATION PERIOD) |
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(VORLEGUNGSFRIST) |
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The presentation period provided in § 801 paragraph 1, sentence 1 BGB (German Civil Code) is reduced to ten years for the Notes. |
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Die in § 801 Absatz 1 Satz 1 BGB bestimmte Vorlegungsfrist wird für die Schuldverschreibungen auf zehn Jahre verkürzt. |
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§ 9 |
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§ 9 |
(EVENTS OF DEFAULT) |
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(KÜNDIGUNG) |
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(1) Events of default. |
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(1) Kündigungsgründe. |
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Each Holder shall be entitled to declare due and payable by notice to the Fiscal Agent its entire claims arising from the Notes and demand immediate redemption thereof at the principal amount together with accrued interest (if any) to (but excluding) the date of repayment, in the event that: |
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Jeder Gläubiger ist berechtigt, seine sämtlichen Forderungen aus den Schuldverschreibungen durch Kündigung gegenüber der Emissionsstelle fällig zu stellen und die unverzügliche Rückzahlung zum Nennbetrag, zuzüglich etwaiger bis zum Tag der Rückzahlung (ausschließlich) aufgelaufener Zinsen zu verlangen, falls: |
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(a) the Issuer fails to pay principal or interest under the Notes within 30 days from the relevant due date, or |
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(a) die Emittentin auf die Schuldverschreibungen Kapital oder Zinsen nicht innerhalb von 30 Tagen nach dem betreffenden Fälligkeitstag zahlt; oder |
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(b) the Guarantor fails to pay amounts payable under the Guarantee within 30 days from the relevant due date, or |
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(b) die Garantiegeberin auf die Garantie zahlbare Beträge nicht innerhalb von 30 Tagen nach dem Fälligkeitstag zahlt; oder |
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(c) the Issuer fails to duly perform any other material obligation arising from the Notes and such failure continues unremedied for more than 60 days after the Fiscal Agent has received a request thereof in the manner set forth in § 9(3) from a Holder to perform such obligation; or |
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(c) die Emittentin die ordnungsgemäße Erfüllung irgendeiner anderen wesentlichen Verpflichtung aus den Schuldverschreibungen unterlässt und die Unterlassung jeweils länger als 60 Tage fortdauert, nachdem die Emissionsstelle eine Aufforderung in der in § 9(3) vorgesehenen Art und Weise von dem Gläubiger erhalten hat, die Verpflichtung zu erfüllen; oder |
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(d) any Capital Market Indebtedness of the Issuer or any of its Material Subsidiaries or the Guarantor (unless the Guarantee has been released in accordance with these Terms and Conditions) becomes prematurely repayable as a result of a default in respect of the terms thereof, or the Issuer or any of its Material Subsidiaries or the Guarantor (unless |
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(d) eine Kapitalmarktverbindlichkeit der Emittentin oder einer ihrer Wesentlichen Tochtergesellschaften oder der Garantiegeberin (es sei denn, die Garantie wurde gemäß diesen Emissionsbedingungen freigegeben) vorzeitig zahlbar wird aufgrund einer Pflichtverletzung aus dem dieser Kapitalmarktverbindlichkeit zugrunde |
the Guarantee has been released in accordance with these Terms and Conditions) fails to fulfill any payment obligation in excess of EUR 75,000,000 or the equivalent thereof under any Capital Market Indebtedness or under any guarantees or suretyships given for any Capital Market Indebtedness of others within 30 days from its due date or, in the case of such guarantee or suretyship, within 30 days of such guarantee or suretyship being invoked, unless the Issuer or the relevant Material Subsidiary or the Guarantor contests in good faith that such payment obligation exists or is due or that such guarantee or suretyship has been validly invoked or if a security granted therefor is enforced on behalf of or by the creditor(s) entitled thereto; or |
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liegenden Vertrag oder die Emittentin oder eine ihrer Wesentlichen Tochtergesellschaften oder die Garantiegeberin (es sei denn, die Garantie wurde gemäß diesen Emissionsbedingungen freigegeben) eine Zahlungsverpflichtung in Höhe oder im Gegenwert von mehr als EUR 75.000.000 aus einer Kapitalmarktverbindlichkeit oder aufgrund einer Bürgschaft oder Garantie, die für Kapitalmarktverbindlichkeiten Dritter gegeben wurde, nicht innerhalb von 30 Tagen nach ihrer Fälligkeit bzw. im Fall einer Bürgschaft oder Garantie nicht innerhalb von 30 Tagen nach Inanspruchnahme aus dieser Bürgschaft oder Garantie erfüllt, es sei denn, die Emittentin oder die betreffende Wesentliche Tochtergesellschaft oder die Garantiegeberin bestreitet in gutem Glauben, dass diese Zahlungsverpflichtung besteht oder fällig ist bzw. diese Bürgschaft oder Garantie berechtigterweise geltend gemacht wird, oder falls eine für solche Verbindlichkeiten bestellte Sicherheit für die oder von den daraus berechtigten Gläubiger(n) in Anspruch genommen wird; oder |
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(e) the Issuer or any of its Material Subsidiaries or the Guarantor (unless the Guarantee has been released in accordance with these Terms and Conditions) announces its inability to meet its financial obligations or ceases its payments generally; or |
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(e) die Emittentin oder eine ihrer Wesentlichen Tochtergesellschaften oder die Garantiegeberin (es sei denn, die Garantie wurde gemäß dieser Emissionsbedingungen freigegeben) gibt ihre Zahlungsunfähigkeit bekannt oder stellt ihre Zahlungen ein; oder |
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(f) a court opens insolvency proceedings against the Issuer or the Guarantor (unless the Guarantee has been released in accordance with these Terms and Conditions) and such proceedings are instituted and have not been discharged or stayed within 90 days, or the Issuer applies for or institutes such proceedings; or
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(f) ein Gericht ein Insolvenzverfahren gegen die Emittentin oder die Garantiegeberin (es sei denn, die Garantie wurde gemäß dieser Emissionsbedingungen freigegeben) eröffnet, und ein solches Verfahren eingeleitet und nicht innerhalb von 90 Tagen aufgehoben oder ausgesetzt worden ist, oder die Emittentin die Eröffnung eines solchen Verfahrens beantragt oder einleitet; oder |
(g) the Issuer or the Guarantor (unless the Guarantee has been released in accordance with these Terms and Conditions) enters into liquidation unless this is done in connection with a merger or other form of combination with another company and such company assumes all obligations contracted by the Issuer or the Guarantor in connection with the Notes or the Guarantee; or |
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(g) die Emittentin oder die Garantiegeberin (es sei denn, die Garantie wurde gemäß dieser Emissionsbedingungen freigegeben) in Liquidation tritt, es sei denn, dies geschieht im Zusammenhang mit einer Verschmelzung oder einer anderen Form des Zusammenschlusses mit einer anderen Gesellschaft und die andere oder neue Gesellschaft übernimmt alle Verpflichtungen, die die Emittentin oder die Garantiegeberin im Zusammenhang mit den Schuldverschreibungen oder der Garantie eingegangen ist; oder |
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(h) the Guarantee shall cease to be in full force and effect in accordance with its terms for any reason except pursuant to these Terms and Conditions or terms of the Guarantee governing the release of the Guarantee or the satisfaction in full of all the obligations thereunder or shall be declared invalid or unenforceable other than as contemplated by its terms, or the Guarantor shall repudiate, deny or disaffirm any of its obligations thereunder or under the Terms and Conditions. |
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(h) die Garantie aus irgendeinem Grund nicht mehr gemäß ihren Bedingungen uneingeschränkt wirksam ist, es sei denn, dies beruht auf diesen Emissionsbedingungen oder den Bedingungen der Garantie bezüglich der Freigabe der Garantie oder der vollständigen Erfüllung aller diesbezüglichen Verpflichtungen, oder aus anderen Gründen als in ihren Bedingungen festgelegt für unwirksam oder undurchsetzbar erklärt wird, oder die Garantiegeberin eine ihrer Verpflichtungen aus der Garantie oder aus den Emissionsbedingungen zurückweist, leugnet oder ablehnt. |
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Material Subsidiary means any Subsidiary of Fresenius Medical Care AG & Co. KGaA which: |
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Wesentliche Tochtergesellschaft bezeichnet eine Tochtergesellschaft von Fresenius Medical Care AG & Co. KGaA: |
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(i) has unconsolidated EBITDA representing 5% or more of the EBITDA of Fresenius Medical Care AG & Co. KGaA and its subsidiaries on a consolidated basis; or |
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(i) deren unkonsolidiertes EBITDA 5% oder mehr des EBITDA der Fresenius Medical Care AG & Co. KGaA und ihrer Tochtergesellschaften auf einer konsolidierten Basis darstellt, oder |
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(ii) has unconsolidated gross assets representing 5% or more of the gross assets of Fresenius Medical Care AG & Co. KGaA and its subsidiaries on a consolidated basis, |
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(ii) deren unkonsolidiertes Bruttovermögen 5% oder mehr des Bruttovermögens der Fresenius Medical Care AG & Co. KGaA und ihrer Tochtergesellschaften auf einer konsolidierten Basis darstellt, |
the Notes is in default, without the consent of the Holders, substitute for the Issuer any Affiliate (as defined below) of Fresenius Medical Care AG & Co. KGaA as the principal debtor in respect of all obligations arising from or in connection with the Notes (any such company, the Substitute Debtor ), provided that: |
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Zahlungsverzug hinsichtlich Kapital oder Zinsen auf die Schuldverschreibungen vorliegt, ohne weitere Zustimmung der Gläubiger ein mit der Fresenius Medical Care AG & Co. KGaA verbundenes Unternehmen (wie nachfolgend definiert) an ihrer Stelle als Hauptschuldnerin (ein solches Unternehmen ist die Nachfolgeschuldnerin ) für alle Verpflichtungen aus und im Zusammenhang mit den Schuldverschreibungen einzusetzen, vorausgesetzt, dass: |
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(a) the Substitute Debtor assumes all obligations of the Issuer in respect of the Notes and is in a position to fulfill all payment obligations arising from or in connection with the Notes in the Specified Currency without, subject to lit. (e) below, the necessity of any taxes or duties levied by the country or jurisdiction in which the Substitute Debtor is domiciled (other than taxes which would also be levied in the absence of such substitution) to be withheld or deducted at source and to transfer all amounts which are required therefore to the Paying Agent without any restrictions, and that in particular all necessary authorizations to this effect by any competent authority have been obtained, and, to the extent service of process must be effected to the Substitute Debtor outside of Germany, a service of process agent in Germany is appointed; |
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(a) die Nachfolgeschuldnerin alle Verpflichtungen der Emittentin im Zusammenhang mit den Schuldverschreibungen rechtswirksam übernimmt und sie sämtliche sich aus oder im Zusammenhang mit den Schuldverschreibungen ergebenden Zahlungsverpflichtungen in der Festgelegten Währung ohne die Notwendigkeit (vorbehaltlich Buchstabe (e)) einer Einbehaltung an der Quelle oder des Abzugs irgendwelcher Steuern oder Abgaben in dem Land oder Hoheitsgebiet, in dem die Nachfolgeschuldnerin ihren Sitz hat (mit Ausnahme von Steuern, die auch angefallen wären, wäre die Ersetzung nicht erfolgt), erfüllen sowie die hierzu erforderlichen Beträge ohne Beschränkungen an die Zahlstelle transferieren kann und sie insbesondere jede hierfür notwendige Genehmigung der Behörden ihres Landes erhalten hat, und, sofern eine Zustellung an die Nachfolgeschuldnerin außerhalb von Deutschland erfolgen müsste, ein Zustellungsbevollmächtigter in Deutschland bestellt wird; |
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(b) if at the time of such substitution the Issuer is Fresenius Medical Care AG & Co. KGaA, the Issuer irrevocably and unconditionally guarantees (the Substitution Guarantee ) in favor of each Holder the payment of all sums payable by the Substitute Debtor in respect of the Notes on terms equivalent to the terms of the Guarantee; |
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(b) wenn zum Zeitpunkt der Ersetzung Fresenius Medical Care AG & Co. KGaA die Emittentin ist, die Emittentin unwiderruflich und unbedingt gegenüber den Gläubigern die Zahlung aller von der Nachfolgeschuldnerin auf die Schuldverschreibungen zahlbaren Beträge zu Bedingungen garantiert (die Ersetzungsgarantie ), die den Bedingungen der Garantie entsprechen; |
(c) the Substitute Debtor and the Issuer have obtained all necessary governmental and regulatory approvals and consents for such substitution and for the giving by the Issuer of the Substitution Guarantee in respect of the obligations of the Substitute Debtor, that the Substitute Debtor has obtained all necessary governmental and regulatory approvals and consents for the performance by the Substitute Debtor of its obligations under the Notes, and that all such approvals and consents are in full force and effect and that the obligations assumed by the Substitute Debtor and the Substitution Guarantee given by the Issuer are each valid and binding in accordance with their respective terms and enforceable by each Holder; |
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(c) die Nachfolgeschuldnerin und die Emittentin alle für die Ersetzung und die Abgabe der Ersetzungsgarantie von der Emittentin notwendigen Genehmigungen und Einverständniserklärungen von Regierungsstellen und Aufsichtsbehörden erhalten haben, die Nachfolgeschuldnerin alle für die Erfüllung ihrer Verpflichtungen aus den Schuldverschreibungen notwendigen Genehmigungen und Einverständniserklärungen von Regierungsstellen und Aufsichtsbehörden erhalten hat und weiterhin sämtliche dieser Genehmigungen und Einverständniserklärungen in vollem Umfang gültig und wirksam sind und zudem die Verpflichtungen der Nachfolgeschuldnerin und die von der Emittentin begebene Ersetzungsgarantie gemäß ihren Bestimmungen wirksam und rechtsverbindlich und durch jeden Gläubiger durchsetzbar sind; |
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(d) § 9 shall be deemed to be amended so that it shall also be an Event of Default under such provision if the Substitution Guarantee shall cease to be valid or binding on or enforceable against Fresenius Medical Care AG & Co. KGaA; |
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(d) § 9 dergestalt als ergänzt gilt, dass ein zusätzlicher Kündigungsgrund unter dieser Bestimmung der Wegfall der Wirksamkeit, Rechtsverbindlichkeit oder Durchsetzbarkeit der Ersetzungsgarantie gegen Fresenius Medical Care AG & Co. KGaA ist; |
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(e) the Substitute Debtor undertakes to reimburse any Holder for such taxes, fees or duties which may be imposed upon such Holder in connection with any payments on the Notes (including taxes or duties being deducted or withheld at source), upon conversion or otherwise, as a consequence of the assumption of the Issuers obligations by the Substitute Debtor, provided that such undertaking shall be limited to amounts that would not have been imposed upon the Holder had such substitution not occurred; and |
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(e) die Nachfolgeschuldnerin sich verpflichtet, jedem Gläubiger alle Steuern, Gebühren oder Abgaben zu erstatten, die ihm im Zusammenhang mit Zahlungen auf die Schuldverschreibungen (einschließlich Steuern und Abgaben, die an der Quelle abgeführt oder einbehalten wurden), durch den Schuldnerwechsel oder in anderer Weise infolge der Schuldübernahme durch die Nachfolgeschuldnerin auferlegt werden, vorausgesetzt, dass sich die Verpflichtung auf Beträge beschränkt, die der Gläubiger ohne die Ersetzung der Emittentin nicht hätte tragen müssen; und |
(f) there shall have been delivered to the Fiscal Agent one opinion for each jurisdiction affected of lawyers of recognized standing to the effect that subparagraphs (a) through (e) above have been satisfied. |
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(f) der Emissionsstelle jeweils ein Rechtsgutachten bezüglich der betroffenen Rechtsordnungen von anerkannten Rechtsanwälten vorgelegt wurden, die bestätigen, dass die Bestimmungen in den vorstehenden Unterabsätzen (a) bis (e) erfüllt wurden. |
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For purposes of this § 10, Affiliate shall mean any affiliated company ( verbundenes Unternehmen ) within the meaning of sections 15 et seqq. of the German Stock Corporation Act ( Aktiengesetz ) held by Fresenius Medical Care AG & Co. KGaA. |
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Für Zwecke dieses § 10 bedeutet verbundenes Unternehmen jedes von Fresenius Medical Care AG & Co. KGaA gehaltene verbundene Unternehmen im Sinne der §§ 15 ff. Aktiengesetz. |
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(2) Discharge from Obligations. References. |
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(2) Schuldbefreiung. Bezugnahmen. |
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Upon a substitution in accordance with this § 10, the Substitute Debtor shall be deemed to be named in the Notes as the principal debtor in place of the Issuer as issuer and the Notes shall thereupon be deemed to be amended to give effect to the substitution including that the relevant jurisdiction in relation to the Issuer in § 7 shall be the Substitute Debtors country of domicile for tax purposes. Furthermore, in the event of such substitution, in § 7 and § 5(2) an alternative reference to the Federal Republic of Germany shall be deemed to have been included in addition to the reference according to the preceding sentence to the country of domicile or residence for taxation purposes of the Substitute Debtor. |
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Nach einer Ersetzung gemäß dieses § 10 gilt die Nachfolgeschuldnerin als in den Schuldverschreibungen an Stelle der Emittentin als Hauptschuldnerin bestimmt und die Schuldverschreibungen gelten als dementsprechend ergänzt, um der Ersetzung zur Durchsetzung zu verhelfen, und als die relevante Steuerjurisdiktion in Bezug auf § 7 gilt die Jurisdiktion, in der die Nachfolgeschuldnerin steuerlich ansässig ist. Desweiteren gilt im Fall einer Ersetzung in § 7 und § 5(2) eine alternative Bezugnahme auf die Bundesrepublik Deutschland als aufgenommen (zusätzlich zu der Bezugnahme nach Maßgabe des vorstehenden Satzes auf das Land, in dem die Nachfolgeschuldnerin ihren Sitz oder Steuersitz hat). |
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Any such substitution, together with the notice referred to in subparagraph (3) below, shall, in the case of the substitution of any other company as principal debtor, operate to release the Issuer as issuer from all of its obligations as principal debtor in respect of the Notes. |
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Jede Ersetzung zusammen mit der Mitteilung gemäß Absatz 3 dieser Bestimmung befreit, im Fall der Einsetzung einer anderen Gesellschaft als Hauptschuldnerin, die Emittentin von allen Verbindlichkeiten, die sie als Hauptschuldnerin unter den Schuldverschreibungen hatte. |
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(3) Notification to Holders. |
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(3) Benachrichtigung der Gläubiger. |
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Not later than 15 Payment Business Days after effecting the substitution, the Substitute Debtor shall give notice thereof to the Holders and, if any Notes are listed on any stock exchange, to such stock exchange in accordance with § 12 and to any other person |
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Spätestens 15 Zahltage nach Durchführung der Ersetzung wird die Nachfolgeschuldnerin dies den Gläubigern und, sollten die Schuldverschreibungen an einer Börse notiert sein, dieser Börse gemäß § 12 mitteilen und jede andere Person oder Stelle, gemäß den |
if published more than once, on the third day following the date of the first such publication). |
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Veröffentlichungen mit dem dritten Tag nach dem Tag der ersten solchen Veröffentlichung) als wirksam erfolgt. |
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(2) Notification to Clearing System. |
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(2) Mitteilungen an das Clearingsystem. |
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So long as any Notes are listed on the official list of the Luxembourg Stock Exchange, subparagraph (1) shall apply. If the Rules of the Luxembourg Stock Exchange otherwise so permit, the Issuer may deliver the relevant notice to the Clearing System for communication by the Clearing System to the Holders, in lieu of publication as set forth in subparagraph (1) above; any such notice shall be deemed to have been given on the seventh day after the day on which the said notice was given to the Clearing System. |
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Solange Schuldverschreibungen im amtlichen Kursblatt (official list) der Luxemburger Börse notiert sind, sind alle die Schuldverschreibungen betreffenden Mitteilungen gemäß Absatz 1 bekanntzumachen. Soweit die Regeln der Luxemburger Börse dies zulassen, kann die Emittentin eine Veröffentlichung nach Absatz 1 durch eine Mitteilung an das Clearing System zur Weiterleitung an die Gläubiger ersetzen; jede derartige Mitteilung gilt am siebten Tag nach dem Tag der Mitteilung an das Clearing System als den Gläubigern mitgeteilt. |
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§ 13
(AMENDMENTS TO THE TERMS AND CONDITIONS BY
RESOLUTION OF THE HOLDERS, HOLDERS
REPRESENTATIVE, AMENDMENT OF THE
GUARANTEE) |
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§ 13
(ÄNDERUNG DER EMISSIONSBEDINGUNGEN DURCH
BESCHLUSS DER GLÄUBIGER; GEMEINSAMER
VERTRETER, ÄNDERUNG DER GARANTIE) |
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(1) Resolutions of Holders. |
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(1) Beschlüsse durch die Gläubiger. |
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The Holders may with consent of the Issuer (if required) by a majority resolution pursuant to section 5 et seqq. of the German Act on Issues of Debt Securities (Gesetz über Schuldverschreibungen aus Gesamtemissionen) (the SchVG ), as amended from time to time, agree to amendments of the Terms and Conditions or resolve any other matters provided for by the SchVG. In particular, the Holders may consent to amendments which materially change the substance of the Terms and Conditions, including such measures as provided for under section 5 paragraph 3 of the SchVG by resolutions passed by such majority of the votes of the Holders as stated under § 13(2) below. A duly passed majority resolution shall be binding upon all Holders. |
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Die Gläubiger können mit Zustimmung der Emittentin (soweit erforderlich) aufgrund Mehrheitsbeschlusses nach Maßgabe der §§ 5 ff. des Gesetzes über Schuldverschreibungen aus Gesamtemissionen (das SchVG ) in seiner jeweils gültigen Fassung die Emissionsbedingungen ändern oder sonstige Maßnahmen gemäß dem SchVG beschließen. Die Gläubiger können insbesondere einer Änderung wesentlicher Inhalte der Emissionsbedingungen, einschließlich der in § 5 Abs. 3 SchVG vorgesehenen Maßnahmen durch Beschlüsse mit den in dem nachstehenden § 13(2) genannten Mehrheiten zustimmen. Ein ordnungsgemäß gefasster Mehrheitsbeschluss ist für alle Gläubiger verbindlich. |
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(2) Majority. |
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(2) Mehrheit. |
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Except as provided by the following sentence and provided that the quorum requirements |
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Vorbehaltlich des nachstehenden Satzes und der Erreichung der erforderlichen |
the scrutineer ( Abstimmungsleiter ) may convene a second meeting within the meaning of section 15 paragraph 3 sentence 3 of the SchVG. Attendance at the second meeting and exercise of voting rights is subject to the Holders registration. The provisions set out in § 13(4) sentence 3 shall apply mutatis mutandis to the Holders registration for a second meeting. |
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Abstimmung ohne Versammlung der Abstimmungsleiter eine zweite Versammlung im Sinne von § 15 Abs. 3 Satz 3 SchVG einberufen. Die Teilnahme an der zweiten Versammlung und die Ausübung der Stimmrechte sind von einer vorherigen Anmeldung der Gläubiger abhängig. Für die Anmeldung der Gläubiger zu einer zweiten Versammlung gilt § 13(4) Satz 3 entsprechend. |
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(7) Holders representative. |
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(7) Gemeinsamer Vertreter. |
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The Holders may by majority resolution provide for the appointment or dismissal of a joint representative (the Holders Representative ), the duties and responsibilities and the powers of such Holders Representative, the transfer of the rights of the Holders to the Holders Representative and a limitation of liability of the Holders Representative. Appointment of a Holders Representative may only be passed by a Qualified Majority if such Holders Representative is to be authorized to consent, in accordance with § 13(2) hereof, to a material change in the substance of the Terms and Conditions. |
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Die Gläubiger können durch Mehrheitsbeschluss einen gemeinsamen Vertreter (der Gemeinsame Vertreter ) bestellen oder abberufen, die Pflichten, Verantwortlichkeiten und Rechte eines solchen Gemeinsamen Vertreters festlegen, die Übertragung der Rechte der Gläubiger auf den Gemeinsamen Vertreter sowie die Haftungsbegrenzung des Gemeinsamen Vertreters bestimmen. Die Bestellung eines Gemeinsamen Vertreters bedarf einer Qualifizierten Mehrheit, wenn der Gemeinsame Vertreter in Übereinstimmung mit § 13(2) autorisiert ist, einer wesentlichen Änderung des Charakters der Emissionsbedingungen zuzustimmen. |
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(8) Publication. |
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(8) Veröffentlichung. |
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Any notices concerning this § 13 shall be made exclusively pursuant to the provisions of the SchVG. |
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Alle Bekanntmachungen diesen § 13 betreffend erfolgen ausschließlich gemäß den Bestimmungen des SchVG. |
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(9) Amendment of the Guarantee. |
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(9) Änderung der Garantie. |
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The provisions set out above applicable to the amendment of the Terms and Conditions of the Notes shall apply mutatis mutandis to the Guarantee. |
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Die oben aufgeführten auf die Änderung der Emissionsbedingungen der Schuldverschreibungen anwendbaren Bestimmungen gelten entsprechend für die Bestimmungen der Garantie. |
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§ 14
(APPLICABLE LAW, PLACE OF JURISDICTION AND
ENFORCEMENT) |
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§ 14
(ANWENDBARES RECHT, GERICHTSSTAND UND
GERICHTLICHE GELTENDMACHUNG) |
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(1) Applicable Law. |
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(1) Anwendbares Recht. |
The Notes, as to form and content, and all rights and obligations of the Holders and the Issuer, shall be governed in every respect by German law. |
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Form und Inhalt der Schuldverschreibungen sowie die Rechte und Pflichten der Gläubiger und der Emittentin bestimmen sich in jeder Hinsicht nach deutschem Recht. |
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(2) Submission to Jurisdiction. |
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(2) Gerichtsstand. |
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Subject to any mandatory jurisdiction for specific proceedings under the SchVG, the District Court ( Landgericht ) in Frankfurt am Main shall have non-exclusive jurisdiction for any action or other legal proceedings ( Proceedings ) arising out of or in connection with the Notes. |
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Vorbehaltlich eines zwingenden Gerichtsstandes für besondere Rechtsstreitigkeiten im Zusammenhang mit dem SchVG, ist das Landgericht Frankfurt am Main nicht ausschließlich zuständig für sämtliche im Zusammenhang mit den Schuldverschreibungen entstehenden Klagen oder sonstige Verfahren ( Rechtsstreitigkeiten ). |
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(3) Enforcement. |
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(3) Gerichtliche Geltendmachung. |
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Any Holder of Notes may in any proceedings against the Issuer or the Guarantor or to which such Holder and the Issuer or the Guarantor are parties, protect and enforce in his own name his rights arising under such Notes on the basis of (i) a statement issued by the Custodian with whom such Holder maintains a securities account in respect of the Notes (a) stating the full name and address of the Holder, (b) specifying the aggregate principal amount of Notes credited to such securities account on the date of such statement and (c) confirming that the Custodian has given written notice to the Clearing System containing the information pursuant to (a) and (b) which has been confirmed by the Clearing System; (ii) a copy of the Note in global form certified as being a true copy by a duly authorized officer of the Clearing System or a depositary of the Clearing System, without the need for production in such proceedings of the actual records or the global note representing the Notes or (iii) any other means of proof permitted in legal proceedings in the country of enforcement. For purposes of the foregoing, Custodian means any bank or other financial institution of recognized standing authorized to engage in securities custody business with which the Holder maintains a securities account in respect of the Notes and which maintains an account with the Clearing System, and includes the Clearing System. Each Holder may, without prejudice to the foregoing, protect and enforce |
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Jeder Gläubiger von Schuldverschreibungen ist berechtigt, in jedem Rechtsstreit gegen die Emittentin oder die Garantiegeberin oder in jedem Rechtsstreit, in dem der Gläubiger und die Emittentin oder die Garantiegeberin Partei sind, seine Rechte aus diesen Schuldverschreibungen im eigenen Namen auf der folgenden Grundlage zu schützen oder geltend zu machen: (i) er bringt eine Bescheinigung der Depotbank bei, bei der er für die Schuldverschreibungen ein Wertpapierdepot unterhält, welche (a) den vollständigen Namen und die vollständige Adresse des Gläubigers enthält, (b) den Gesamtnennbetrag der Schuldverschreibungen bezeichnet, die unter dem Datum der Bestätigung auf dem Wertpapierdepot verbucht sind und (c) bestätigt, dass die Depotbank gegenüber dem Clearingsystem eine schriftliche Erklärung abgegeben hat, die die vorstehend unter (a) und (b) bezeichneten Informationen enthält und einen Bestätigungsvermerk des Clearingsystems trägt; (ii) er legt eine Kopie der die betreffenden Schuldverschreibungen verbriefenden Globalurkunde vor, deren Übereinstimmung mit dem Original eine vertretungsberechtigte Person des Clearingsystems oder des Verwahrers des Clearingsystems bestätigt hat, ohne dass eine Vorlage der Originalbelege oder der die Schuldverschreibungen verbriefenden Globalurkunde in einem solchen Verfahren |
his rights under these Notes also in any other way which is admitted in the country of the Proceedings. |
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erforderlich wäre oder (iii) auf jede andere Weise, die im Lande der Geltendmachung prozessual zulässig ist. Für die Zwecke des Vorstehenden bezeichnet Depotbank jede Bank oder ein sonstiges anerkanntes Finanzinstitut, das berechtigt ist, das Wertpapierverwahrungsgeschäft zu betreiben und bei der/dem der Gläubiger ein Wertpapierdepot für die Schuldverschreibungen unterhält und ein Konto beim Clearingsystem unterhält, einschließlich des Clearingsystems. Jeder Gläubiger kann unbeschadet des Vorstehenden seine Rechte aus diesen Schuldverschreibungen auch auf jede andere Weise schützen und durchsetzen, die im Land des Verfahrens zulässig ist. |
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§ 15
(LANGUAGE) |
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§ 15
(SPRACHE) |
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These Terms and Conditions are written in the German language and provided with an English language translation. The German text shall be controlling and binding. The English language translation is provided for convenience only. |
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Diese Emissionsbedingungen sind in deutscher Sprache abgefasst. Eine Übersetzung in die englische Sprache ist beigefügt. Der deutsche Text ist bindend und maßgeblich. Die Übersetzung in die englische Sprache ist unverbindlich. |
Ergebnisse des Angebots offen zu legen sind |
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The procedure for the exercise of any right of pre-emption, the negotiability of subscription rights and the treatment of subscription rights not exercised. |
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Verfahren für die Ausübung eines etwaigen Vorzugsrechts, die Marktfähigkeit der Zeichnungsrechte und die Behandlung der nicht ausgeübten Zeichnungsrechte |
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C.2 Plan of distribution and allotment |
Not applicable |
Plan für die Aufteilung der Wertpapiere und deren Zuteilung |
Nicht anwendbar |
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If the Offer is being made simultaneously in the markets of two or more countries and if a tranche has been or is being reserved for certain of these, indicate such tranche |
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Erfolgt das Angebot gleichzeitig auf den Märkten zwei oder mehrerer Ländern und wurde/ wird eine bestimmte Tranche einigen dieser Märkte vorbehalten, Angabe dieser Tranche |
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Process for notification to applicants of the amount allotted and indication whether dealing may begin before notification is made |
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Verfahren zur Meldung des den Zeichnern zugeteilten Betrags und Angabe, ob eine Aufnahme des Handels vor dem Meldeverfahren möglich ist |
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C.3 Pricing |
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Kursfeststellung |
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Issue Price |
99.704% |
Ausgabepreis |
99,704% |
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Expected price at which the Notes will be offered |
99.704% |
Preis zu dem die Schuldverschreibungen voraussichtlich angeboten werden |
99,704% |
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Amount of expenses and taxes charged to the subscriber / purchaser |
Not applicable |
Kosten/Steuern, die dem Zeichner/Käufer in Rechnung gestellt Werden |
Nicht anwendbar |
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C.4 Placing and underwriting |
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Platzierung und Emission |
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Name and address of the coordinator(s) of the global offer and of single parts of the offer and, to the extent known to the Issuer or the offeror, or the placers in the various countries where the offer takes place |
Not applicable |
Name und Anschrift des Koordinators/der Koordinatoren des globalen Angebots oder einzelner Teile des Angebots und sofern der Emittentin oder dem Bieter bekannt Angaben zu den Platzierern in den einzelnen Ländern des Angebots |
Nicht anwendbar |
Method of distribution |
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Vertriebsmethode |
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o |
Non-syndicated |
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Nicht syndiziert |
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x |
Syndicated |
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Syndiziert |
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Subscription Agreement |
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Übernahmevertrag |
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Date of Subscription Agreement |
July 9, 2018 |
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Datum des Subscription Agreements |
9. Juli 2018 |
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Material Features of the Subscription Agreement: |
Under the Subscription Agreement, the Issuer agrees to issue the Notes and each Dealer agrees to purchase the Notes; the Issuer and each Dealer agree inter alia on the aggregate principal amount of the issue, the principal amount of the Dealers commitments, the Issue Price, the Issue Date and the commissions. |
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Hauptmerkmale des Übernahmevertrages: |
Unter dem Übernahmevertrag vereinbart die Emittentin, die Schuldverschreibungen zu begeben und jeder Platzeur stimmt zu, die Schuldverschreibungen zu erwerben. Die Emittentin und jeder Platzeur vereinbaren im Übernahmevertrag unter anderem den Gesamtnennbetrag der Emission, die gemäß der Übernahmeverpflichtung auf die Platzeure entfallenden Nennbeträge, den Ausgabepreis, den Valutierungstag und die Provisionen. |
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Management Details including form of commitment |
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Einzelheiten bezüglich des Bankenkonsortiums einschließlich der Art der Übernahme |
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Specify Management Group or Dealer (names and addresses) |
Barclays Bank PLC |
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Bankenkonsortium oder Platzeur angeben (Namen und Anschriften) |
5 The North Colonnade |
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Canary Wharf |
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London E14 4BB |
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United Kingdom |
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Crédit Agricole Corporate |
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and Investment Bank |
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12, place des Etats-Unis |
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CS 70052 |
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92547 Montrouge Cedex |
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France |
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Deutsche Bank AG, London Branch |
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Winchester House |
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1 Great Winchester Street |
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London EC2N 2DB |
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United Kingdom |
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Landesbank Hessen-Thüringen |
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Girozentrale |
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Main Tower |
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Neue Mainzer Straße 52-58 |
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60311 Frankfurt am Main |
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Germany |
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HSBC Bank plc |
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8 Canada Square |
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London E14 5HQ |
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United Kingdom |
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ING Bank N.V. Belgian Branch |
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Legal Financial Markets |
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Marnix I +4 |
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Avenue Marnix 24 |
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1000 Brussels |
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Société Générale |
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Tours Société Générale |
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17 Cours Valmy |
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92987 Paris La Défense Cedex |
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France |
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x |
Firm commitment |
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Feste Zusage |
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o |
no firm commitment / best efforts arrangements |
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Keine feste Zusage / zu den bestmöglichen Bedingungen |
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Commissions |
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Provisionen |
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Management/Underwriting Commission (specify) |
0.25% of the aggregate principal amount |
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Management- und Übernahmeprovision (angeben) |
0,25% des Gesamtnennbetrags |
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Selling Concession (specify) |
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Verkaufsprovision (angeben) |
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Listing Commission (specify) |
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Börsenzulassungsprovision (angeben) |
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Prohibition of Sales to EEA Retail Investors |
Not applicable |
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Verbot des Verkaufs an EWR Privatanleger |
Nicht anwendbar |
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Stabilising Dealer/Manager |
Deutsche Bank AG, London Branch |
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Kursstabilisierender Dealer/Manager |
Deutsche Bank AG, London Branch |
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C.5 Public Offer Jurisdictions |
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Jurisdiktionen für öffentliches Angebot |
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Public Offer Jurisdiction(s) |
Not applicable |
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Jurisdiktionen, in denen ein öffentliches |
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European Parliament and of the Council of 16 September 2009 on credit rating agencies, as amended. Standard & Poors Credit Market Services Europe Limited (Zweigniederlassung Deutschland) is established in the European Community and is registered pursuant to Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies, as amended. Moodys Deutschland GmbH is established in the European Community and is registered pursuant to Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies, as amended. The European Securities and Markets Authority ( ESMA ) publishes on its web site ( http://www.esma.europa.eu/page/List-registered-and- certified-CRAs) a list of credit rating agencies registered in accordance with the CRA Regulation. That list is updated within five working days following the adoption of a decision under Article 16, 17 or 20 CRA Regulation. The European Commission shall publish that updated list in the Official Journal of the European Union within 30 days following such update. |
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Fitch Ratings Limited hat ihren Sitz in der Europäischen Gemeinschaft und ist gemäß Verordnung (EG) Nr. 1060/2009 des Europäischen Parlaments und des Rates vom 16. September 2009 über Ratingagenturen (in der geänderten Fassung) registriert. Standard & Poors Credit Market Services Europe Limited (Zweigniederlassung Deutschland) hat ihren Sitz in der Europäischen Gemeinschaft und ist gemäß Verordnung (EG) Nr. 1060/2009 des Europäischen Parlaments und des Rates vom 16. September 2009 über Ratingagenturen (in der geänderten Fassung) registriert. Moodys Deutschland GmbH hat ihren Sitz in der Europäischen Gemeinschaft und ist gemäß Verordnung (EG) Nr. 1060/2009 des Europäischen Parlaments und des Rates vom 16. September 2009 über Ratingagenturen (in der geänderten Fassung) registriert. Die Europäische Wertpapier und Marktaufsichtsbehörde ( ESMA ) veröffentlicht auf ihrer Webseite ( http://www.esma.europa.eu/page/List-registered-and-certified- CRAs ) ein Verzeichnis der nach der Ratingverordnung registrierten Ratingagenturen. Dieses Verzeichnis wird innerhalb von fünf Werktagen nach Annahme eines Beschlusses gemäß Artikel 16, 17 oder 20 der Ratingverordnung aktualisiert. Die Europäische Kommission veröffentlicht das aktualisierte Verzeichnis im Amtsblatt der Europäischen Union innerhalb von 30 Tagen nach der Aktualisierung. |
F. Information to be provided regarding the consent by the Issuer or person responsible for drawing up the Prospectus and the Final Terms
Zur Verfügung zu stellende Informationen über die Zustimmung der Emittentin oder der für die Erstellung des Prospekts und der Endgültigen Bedingungen zuständigen Person
The consent to the use of the Prospectus and these Final Terms for the subsequent resale or final placement of Notes by all financial intermediaries is given by the Issuer in relation to Luxembourg and Germany.
The subsequent resale or final placement of Notes by financial intermediaries can be made during the offer period. The offer period commences on July 9, 2018 and ends on July 18, 2018.
Die Zustimmung zu der Verwendung des Prospekts und dieser Endgültigen Bedingungen zu der späteren Weiterveräußerung und der endgültigen Platzierung der Schuldverschreibungen durch alle Finanzintermediäre wird von der Emittentin in Bezug auf Luxemburg und Deutschland erteilt.
Die spätere Weiterveräußerung und endgültigen Platzierung der Wertpapiere durch Finanzintermediäre kann während der Angebotsfrist erfolgen. Die Angebotsfrist beginnt am 9. Juli 2018 und endet am 18. Juli 2018.
Third Party Information
Informationen von Seiten Dritter
With respect to any information included herein and specified to be sourced from a third party (i) the Issuer confirms that any such information has been accurately reproduced and as far as the Issuer is aware and is able to ascertain from information available to it from such third party, no facts have been omitted which would render the reproduced information inaccurate or misleading and (ii) the Issuer has not independently verified any such information and accepts no responsibility for the accuracy thereof.
Hinsichtlich der hierin enthaltenen und als solche gekennzeichneten Informationen von Seiten Dritter gilt Folgendes: (i) Die Emittentin bestätigt, dass diese Informationen zutreffend wiedergegeben worden sind und - soweit es der Emittentin bekannt ist und sie aus den von diesen Dritten zur Verfügung gestellten Informationen ableiten konnte -wurden keine Fakten unterschlagen, die die wiedergegebenen Informationen unzutreffend oder irreführend gestalten würden; (ii) die Emittentin hat diese Informationen nicht selbständig überprüft und übernimmt keine Verantwortung für ihre Richtigkeit.
[Signature Page follows]
[Unterschriftsseite folgt]
Fresenius Medical Care AG & Co. KGaA represented by Fresenius Medical Care Management AG, its general partner
Fresenius Medical Care AG & Co. KGaA vertreten durch Fresenius Medical Care Management AG, ihrer pers ö nlich haftenden Gesellschafterin
/s/ Michael Brosnan |
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Michael Brosnan |
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Member of the Management Board/ |
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Mitglied des Vorstands |
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/s/ Olaf Schermeier |
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Dr. Olaf Schermeier |
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Member of the Management Board/ |
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Mitglied des Vorstands |
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SUMMARY
Summaries are made up of disclosure requirements known as Elements . These Elements are numbered in Sections A E (A.1 E.7).
This summary (the Summary ) contains all the Elements required to be included in a summary for this type of notes and issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements.
Even though an Element may be required to be inserted in the Summary because of the type of notes and issuer, it is possible that no relevant information can be given regarding the Element. In this case, a short description of the Element is included in the Summary with the mention of not applicable .
Section A Introduction and Warnings
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Description of |
Disclosure requirement |
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Element |
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A.1 |
Warnings |
· |
This Summary should be read as an introduction to the Prospectus. |
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· |
Any decision to invest in the Notes should be based on consideration of the Prospectus as a whole and the relevant Final Terms by the investor. |
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· |
Where a claim relating to the information contained in the Prospectus or the relevant Final Terms is brought before a court, the plaintiff investor might, under the national legislation of the Member States, have to bear the costs of translating the Prospectus, before the legal proceedings are initiated. |
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· |
Civil liability attaches only to the Issuer which has tabled the Summary including any translation thereof, but only if the Summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such Notes. |
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A.2 |
Consent to the use of the prospectus |
Each Dealer and/or each further financial intermediary subsequently reselling or finally placing the Notes if and to the extent so expressed in the Final Terms is entitled to use the Prospectus and the Final Terms in Luxembourg and Germany for the subsequent resale or final placement of the Notes during the period from July 9, 2018 to July 18, 2018, provided however, that the Prospectus is still valid in accordance with Article 11(2) of the Luxembourg act relating to prospectuses for securities ( Loi du 10 juillet 2005 relative aux prospectus pour valeurs mobilières ) which implements Directive 2003/71/EC of the European Parliament and of the Council of November 4, 2003 (as amended by Directive 2010/73/EU of the European Parliament and of the Council of November 24, 2010). |
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The Prospectus may only be delivered to potential investors together with all supplements published before such delivery. Any supplement to the Prospectus is available for viewing in electronic form on the website of the Luxembourg Stock Exchange ( www.bourse.lu ) and on the website of the Issuer ( www.freseniusmedicalcare.com ). |
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When using the Prospectus and the Final Terms, each Dealer and/or relevant further financial intermediary must make certain that it complies with all applicable laws and |
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regulations in force in the respective jurisdictions.
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In the event of an offer being made by a Dealer and/or a further financial intermediary, the Dealer and/or the further financial intermediary shall provide information to investors on the terms and conditions of the Notes at the time of that offer.
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SECTION B FRESENIUS MEDICAL CARE AG & CO. KGAA ISSUER
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Element |
Description of
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Disclosure requirement |
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B.1 |
Legal and commercial name |
Fresenius Medical Care AG & Co. KGaA is the legal name of the Issuer. The Issuer and its subsidiaries conduct their business under the commercial name Fresenius Medical Care.
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B.2 |
Domicile / Legal form / Legislation / Country of incorporation |
The Issuer is a partnership limited by shares ( Kommanditgesellschaft auf Aktien ) with a German stock corporation ( Aktiengesellschaft ) as a general parner and its registered seat ( Sitz ) at Hof an der Saale, Germany, incorporated under and governed by the laws of Germany. Its registered office is located at Else-Kröner- Straße 1, 61352 Bad Homburg vor der Höhe, Germany and its telephone number is +49(0) 6172 609-0.
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B.4b |
Known trends affecting the Issuer and the industries in which it operates |
We are the worlds largest kidney dialysis company, based on publicly reported sales and number of patients treated. We operate in a competitive, international market environment and are, therefore, subject to certain trends, risks and uncertainties that could cause actual results to differ from our projected results. The major trends affecting the industries in which we operate are:
· the aging population and increased life expectancies, shortage of donor organs for kidney transplants, increasing incidence and better treatment of and survival of patients with diabetes and hypertension, which frequently precede the onset of end-stage renal disease ( ESRD ), all of which contribute to patient growth;
· improvements in treatment quality, which prolong patient life;
· stronger demand for innovative products and therapies;
· advances in medical technology;
· ongoing cost-containment efforts and ongoing pressure to decrease healthcare costs, resulting in limited reimbursement rate increases; and
· reimbursement for the majority of treatments by governmental institutions, such as Medicare and Medicaid in the U.S.
In the emerging markets additional trends are:
· increasing national incomes and hence higher spending on health care;
· improving standards of living in developing countries, which make life-saving dialysis treatment available;
· consolidation of providers (e.g. hospital chains);
· consolidation of healthcare insurers with pricing pressure on providers; and
· privatization of healthcare providers.
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B.9 |
Profit forecast |
Not applicable. No profit forecast or estimate has been made in the prospectus.
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service operations. Our dialysis business is therefore vertically integrated. We describe certain other health care services that we provide in our North America and Asia-Pacific segments as Care Coordination. Care Coordination currently includes, but is not limited to, coordinated delivery of pharmacy services, vascular, cardiovascular and endovascular specialty services as well as ambulatory surgery center services, non-dialysis laboratory testing services (until December 2017), physician nephrology and cardiology services, health plan services, urgent care services and ambulant treatment services. On June 28, 2018, we divested our controlling interest in Sound Inpatient Physicians, Inc. ( Sound ), which included the coordinated delivery of emergency, intensivist and hospitalist physician services as well as transitional care which we referred to as hospital related physician services. (See B.19-B.13). Our Care Coordination services together with dialysis care and related services represent our health care services. |
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As a global company delivering health care services and products, we face the challenge of addressing the needs of a wide variety of stakeholders, such as patients, customers, payors, regulators and legislators in many different economic environments and health care systems. In general, government-funded programs (in some countries in coordination with private insurers) pay for certain health care items and services provided to their citizens. Not all health care systems provide for dialysis treatment. Therefore, the reimbursement systems and ancillary services utilization environment in various countries significantly influence our business. |
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The Issuers ordinary shares are listed in the regulated market (Prime Standard) on the Frankfurt Stock Exchange and American Depositary Receipts evidencing the Issuers ordinary shares are listed on the New York Stock Exchange. |
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B.16 |
Controlling Persons |
The Issuer has been informed that as of June 6, 2018, Fresenius SE & Co. KGaA ( Fresenius SE ) owned 94,380,382 (30.83%) of our shares. Fresenius SE is also the owner of 100% of the outstanding share capital of the Issuers sole general partner, Fresenius Medical Care Management AG, (the General Partner ) and has sole power to elect the supervisory board of the General Partner. The Else Kröner-Fresenius- Stiftung is the sole shareholder of Fresenius Management SE, the general partner of Fresenius SE, and has sole power to elect the supervisory board of Fresenius Management SE. In addition, based on the most recent information available, Else- Kröner-Fresenius-Stiftung owns approximately 26.29% of the Fresenius SE ordinary shares. For more information on the corporate structure of the Issuer, please see Element B.5. |
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B.17 |
Credit ratings of the Issuer |
Standard & Poors Credit Market Services Europe Limited ( Zweigniederlassung Deutschland) 1,2 ( S&P ) has assigned a solicited long-term credit rating of BBB- 3 |
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1 |
Standard & Poors Credit Market Services Europe Limited (Zweigniederlassung Deutschland) is established in the European Community and is registered under Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies, amended by Regulation (EC) No 513/2011 of the European Parliament and of the Council of 11 May 2011 and by Regulation (EC) No 462/2013 of the European Parliament and of the Council of 21 May 2013 (the CRA Regulation). |
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2 |
The European Securities and Markets Authority ( ESMA ) publishes on its website ( http://www.esma.europa.eu/page/List-registered-and- certified- CRAs ) a list of credit rating agencies registered in accordance with the CRA Regulation. That list is updated within five working days following the adoption of a decision under Article 16, 17 or 20 CRA Regulation. The European Commission shall publish that updated list in the Official Journal of the European Union within 30 days following such update. |
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3 |
According to Standard & Poors: BBB- is considered lowest investment grade by market participants. An obligor rated BBB has adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments. The ratings may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. |
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or its debt securities |
(outlook positive) to the Issuer. 4 Moodys Deutschland GmbH 5 ( Moodys ) has assigned a solicited long-term credit rating of Baa3 6 (outlook stable) to the Issuer. 4 Fitch Ratings Limited 7 ( Fitch ) has assigned a solicited long-term credit rating of BBB- 8 (outlook stable) to the Issuer. 4 The expected rating of the Notes is BBB- from S&P, Baa3 from Moodys and BBB- from Fitch. |
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B.18 |
Nature and scope of the Guarantee |
Fresenius Medical Care Holdings, Inc. (the Guarantor ) unconditionally and irrevocably guarantees the due payment of interest and principal and additional amounts, if any, for the Notes issued by the Issuer (the Guarantee ). |
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B.19 |
Summary information about the Guarantor |
Please see elements B.19-B.1 to B.19-B.17 below. |
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FRESENIUS MEDICAL CARE HOLDINGS, INC. GUARANTOR
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Element |
Description of
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Disclosure requirement |
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B.19-B.1 |
Legal and commercial name |
The legal name of the Guarantor is Fresenius Medical Care Holdings, Inc. The Guarantor conducts its business under the commercial name Fresenius Medical Care North America. |
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B.19-B.2 |
Domicile / Legal form / Legislation / Country of incorporation |
The Guarantor was incorporated in the State of New York, United States. As there is no general federal corporation law in the United States, it is organized and existing under the Business Corporation Law of the State of New York. Its executive offices are located at 920 Winter Street, Waltham, Massachusetts, 02451-1457, United States, and its telephone number is +1(781) 699-9000. |
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B.19-B.4b |
Known trends affecting the Guarantor and the industries in which it operates |
The Guarantor acts as holding company for the Groups North America business. Therefore, the Guarantor and its business are affected by the same trends as the Issuer. Please see Element B.4b above. |
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B.19-B.5 |
Description of the Group and the Guarantors position |
The Group is headed by the Issuer, which acts as holding company for the Group. The Guarantor is an indirect and wholly-owned subsidiary of the Issuer and acts as holding company for the Groups North America business. |
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4 |
A credit rating assesses the creditworthiness of an entity and informs an investor therefore about the probability of the entity being able to redeem invested capital. It is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time. |
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5 |
Moodys Deutschland GmbH is established in the European Community and is registered under the CRA Regulation. |
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6 |
According to Moodys: Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics. Moodys appends numerical modifiers 1, 2, and 3 to each generic rating classification [ ]; and the modifier 3 indicates a ranking in the lower end of that generic rating category. |
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7 |
Fitch Ratings Limited is established in the European Community and is registered under the CRA Regulation. |
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8 |
According to Fitch: BBB ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate but adverse business or economic conditions are more likely to impair this capacity. The modifiers + or - may be appended to a rating to denote relative status within major rating categories. |
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9 |
Moodys Deutschland GmbH is established in the European Community and is registered under the CRA Regulation. According to Moodys: Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics. Moodys appends numerical modifiers 1, 2, and 3 to each generic rating classification [ ]; and the modifier 3 indicates a ranking in the lower end of that generic rating category. |
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10 |
A credit rating assesses the creditworthiness of an entity and informs an investor therefore about the probability of the entity being able to redeem invested capital. It is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time. |
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SECTION C SECURITIES
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Element |
Description of
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Disclosure requirement |
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C.1 |
Type and class of the securities, including any security identification number. |
Type and Class
The Notes are fixed rate notes.
Issuance in Series
The Notes are issued as Series number 1, Tranche number 1.
Security Identification Number(s)
ISIN: XS1854532949 Common Code: 185453294 WKN: A2NBE6
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C.2 |
Currency of the securities issue.
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The Notes are issued in euro. |
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C.5 |
Restrictions on the free transferability of the securities.
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Not applicable. The Notes are freely transferable. |
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C.8 |
Rights attached to the Notes, including ranking of the Notes and limitation of rights
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Rights attached to the Notes
Each Holder has the right vis-à-vis the Issuer to claim payment of interest and nominal when such payments are due in accordance with the terms and conditions of the Notes (the Terms and Conditions ). Unless previously redeemed, or purchased and cancelled, each Note will be redeemed at its principal amount on the Maturity Date.
Guarantee
The Notes benefit from an unconditional and irrevocable guarantee for the due payment of interest and principal and additional amounts, if any, granted by the Guarantor. The Guarantee granted by the Guarantor includes a release mechanism in certain circumstances described in the Guarantee.
Negative Pledge
The Notes contain a limited negative pledge provision.
Ranking of the Notes (Status)
The Notes constitute unsecured and unsubordinated obligations of the Issuer ranking pari passu among themselves and pari passu with all other unsecured and unsubordinated obligations of the Issuer, unless such obligations are accorded priority under mandatory provisions of statutory law.
Events of Default
The Notes provide for events of default entitling Holders to demand immediate |
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Derivative component in the Interest Payment
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Not applicable; there is no derivate component in the interest payment. |
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C.11 |
Admission to trading of the Notes on a regulated market or other equivalent markets
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Application has been made to admit Notes to be issued under the Program to trading on the regulated market of the Luxembourg Stock Exchange. |
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SECTION D RISKS
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Element |
Description
of
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Disclosure requirement |
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D.2 |
Key information on the key risks that are specific to the issuer and the Guarantor
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Risks relating to the Issuer and the Group
Risks relating to regulatory matters
· We operate in a highly regulated industry such that the potential for legislative reform provides uncertainty and potential threats to our operating models and results.
· Changes in reimbursement and/or governmental regulations for health care could materially decrease our revenues and operating profit.
· If we do not comply with the numerous governmental regulations applicable to our business, we could be excluded from government healthcare reimbursement programs or our authority to conduct business could be terminated, either of which would result in a material decrease in our revenue.
· If we are unable to protect our information technology security systems against cyber attacks or prevent other privacy and data security incidents that result in privacy and data breaches that disrupt our operations or result in the unintended disclosure and access of sensitive personal information or proprietary or confidential information, we could be exposed to significant regulatory fines or penalties, liability or reputational damage, or experience a material adverse impact on our business, financial condition and results of operations.
· We operate in many different jurisdictions and we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-corruption laws.
· If our joint ventures violate the law, our business could be adversely affected.
Risks relating to our business
On June 28, 2018, we divested our controlling interest in Sound. As a result, certain services previously performed and their associated risks included below are no longer present or will be of less importance for our future business.
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· If we fail to estimate, price for and manage our medical costs in an effective manner, the profitability of our value-based products and services could decline and could materially and adversely affect our results of operations, financial position and cash flows.
· We are exposed to product liability, patent infringement and other claims which could result in significant costs and liability which we may not be able to insure on acceptable terms in the future.
· Our growth depends, in part, on our ability to continue to make acquisitions.
· We face specific risks from international operations.
· We could be adversely affected if we experience shortages of components or material price increases from our suppliers.
· If physicians and other referral sources cease referring patients to our health care service businesses and facilities or cease purchasing or prescribing our products, our revenues would decrease.
· Our pharmaceutical product business could lose sales to generic drug manufacturers or new branded drugs.
· Our competitors could develop superior technology or otherwise impact our sales.
· Global economic conditions as well as further disruptions in financial markets may have an adverse effect on our businesses.
· Any material disruption in federal government operations and funding could have a material adverse impact on our business, financial condition and results of operations.
· If we are unable to attract and retain skilled medical, technical and engineering personnel, we may be unable to manage our growth or continue our technological development.
· Diverging views of fiscal authorities could require us to make additional tax payments.
· A dependency on the payment behavior and decision-making of our business partners can affect the collectability of accounts receivable.
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D.3 |
Key information on the key risks that are specific to the securities |
Risks relating to the Notes
· The Notes may not be a suitable investment for all investors. Each potential investor in the Notes must determine the suitability of that investment in light of its own circumstances.
· The Notes are structurally subordinated to other creditors of non-guarantors within the Group.
· The Notes and the Guarantee will be effectively subordinated to secured debt of the Issuer and the Guarantor to the extent such debt is secured by assets that are not also securing the Notes.
· Although the occurrence of specific change of control events will permit Holders to require redemption or repurchase of the Notes, the Issuer may not be able to redeem or repurchase such Notes.
· There can be no assurance that a liquid secondary market for the Notes will |
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develop or, if it does develop, that it will continue. In an illiquid market, an investor might not be able to sell his Notes at any time at fair market prices. The possibility to sell the Notes might additionally be restricted by country- specific reasons.
· The Holder is exposed to the risk of an unfavorable development of market prices of its Notes which could materialize if the Holder sells the Notes prior to the final maturity of such Notes.
· If the Issuer has the right to redeem the Notes prior to maturity, a Holder of such Notes is exposed to the risk that due to early redemption his investment will have a lower than expected yield. Also, the Holder may only be able to reinvest on less favorable conditions as compared to the original investment.
· A Holder of fixed rate Notes is exposed to the risk that the price of such Note falls as a result of changes in the market interest rate.
· A Holder is subject to the risk of being outvoted and of losing rights against the Issuer in the case that other Holders agree to amendments of the Terms and Conditions of the Notes by majority vote according to the German Act on Issues of Debt Securities (SchVG). Any such resolution may effectively be passed with the consent of less than a majority of the aggregate principal amount of Notes outstanding. In the case of an appointment of a noteholders representative for all Holders (the Holders Representative ), the Holders may lose, in whole or in part, the possibility to individually enforce and claim their rights against the Issuer.
· In case of certain events of default, the Notes, in relation to which default notices have been received by the Fiscal Agent, will only become repayable if Holders representing at least 25 per cent of the aggregate principal amount of Notes then outstanding have declared their Notes due and payable. A simple majority of votes would be sufficient for a resolution on the recession of such acceleration.
· Credit ratings may not reflect all risks of an investment in the Notes; they are not recommendations to buy or hold securities, and are subject to revision, suspension, or withdrawal at any time.
Risks relating to the Guarantee
· U.S. federal and state laws allow courts under specific circumstances to declare the Guarantee void and to require Holders to return payments received from the Guarantor.
· Enforcement of the Guarantee against the Guarantor may be limited, and the Guarantor derives substantially all of its revenue and cash from its operating subsidiaries.
· The proceeds from the enforcement of the Guarantee may not be sufficient to satisfy the obligations under the Notes.
· Each Holder might have to enforce its claims in respect of the Guarantee directly against the Guarantor.
· The Guarantee may be released or impaired without consent of the Holders.
· The terms of the Guarantee like the Terms and Conditions may be |
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amended by resolution of the Holders and such resolution will be binding on all Holders. In the case of an appointment of a Holders Representative, the Holders may lose, in whole or in part, the possibility to individually enforce and claim their rights under the Guarantee against the Guarantor.
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SECTION E OFFER
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Element |
Description of
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Disclosure requirement |
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E.2b |
Reasons for the offer and use of proceeds
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The net proceeds from the issue will be used for general corporate purposes of the Issuer. |
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E.3 |
Terms and conditions of the offer
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The total amount of the issue is EUR 500,000,000. |
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E.4 |
A description of any interest that is material to the issue/offer including conflicting interests.
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None. |
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E.7 |
Estimated expenses charged to the investor by the issuer or the offeror.
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None. |
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GERMAN TRANSLATION OF THE SUMMARY
ZUSAMMENFASSUNG
Zusammenfassungen bestehen aus Offenlegungsvorschriften, die als Elemente bezeichnet sind. Diese Elemente sind in den Abschnitten A E (A.1 E.7) fortlaufend nummeriert.
Diese Zusammenfassung (die Zusammenfassung ) enthält alle Elemente, die für die vorliegende Art von Schuldverschreibungen und für die Emittentin in eine Zusammenfassung aufzunehmen sind. Da einige Elemente nicht behandelt werden müssen, können in der Nummerierungsreihenfolge der Elemente Lücken auftreten.
Selbst wenn ein Element wegen der Art der Schuldverschreibungen und der Emittentin in die Zusammenfassung aufgenommen werden muss, ist es möglich, dass in Bezug auf dieses Element keine relevanten Informationen offengelegt werden können. In diesem Fall enthält die Zusammenfassung eine kurze Beschreibung des Elements mit dem Hinweis entfällt.
Abschnitt A EINLEITUNG UND WARNHINWEISE
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Element |
Beschreibung
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Geforderte Informationen |
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A.1 |
Warnhinweise |
· Diese Zusammenfassung sollte als Einleitung zu dem Prospekt verstanden werden.
· Ein Anleger sollte sich bei jeder Entscheidung, in die Schuldverschreibungen zu investieren, auf den Prospekt als Ganzen und die maßgeblichen Endgültigen Bedingungen stützen.
· Wo ein Anspruch mit Bezug auf die in dem Prospekt oder den in den maßgeblichen Endgültigen Bedingungen enthaltenen Angaben vor Gericht gebracht wird, muss der klagende Investor nach den nationalen Rechtsvorschriften seines Mitgliedstaats möglicherweise für die Übersetzung des Prospekts aufkommen, bevor das Verfahren eingeleitet werden kann.
· Zivilrechtlich haftet die Emittentin nur, wenn sie die Zusammenfassung samt etwaiger Übersetzungen vorgelegt und übermittelt hat, und dies auch nur für den Fall, dass die Zusammenfassung verglichen mit den anderen Teilen des Prospekts irreführend, unrichtig oder widersprüchlich ist, oder oder verglichen mit den anderen Teilen des Prospekts wesentliche Angaben, die für Anlegen eine Entscheidungshilfe darstellen, fehlen.
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A.2 |
Zustimmung zur Verwendung des Prospekts |
Jeder Platzeur und/oder jeder weitere Finanzintermediär, der die Schuldverschreibungen nachfolgend weiterverkauft oder endgültig platziert, ist, wenn und soweit dies in den Endgültigen Bedingungen gestattet wird, berechtigt, den Prospekt und die jeweiligen Endgültigen Bedingungen in Luxemburg und Deutschland für den späteren Weiterverkauf oder die endgültige Platzierung der |
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Schuldverschreibungen während des Zeitraums vom 9. Juli 2018 bis 18. Juli 2018 zu verwenden, vorausgesetzt, dass der Prospekt in Übereinstimmung mit Artikel 11(2) des Luxemburger Wertpapierprospektgesetztes ( Loi du 10 juillet 2005 relative aux prospectus pour valeurs mobilières ), das die Richtlinie 2003/71/EG des Europäischen Parlaments und des Rates vom 4. November 2003 (geändert durch die Richtlinie 2010/73/EU des Europäischen Parlaments und des Rates vom 24. November 2010) umsetzt, noch gültig ist.
Der Prospekt darf potentiellen Investoren nur zusammen mit sämtlichen bis dato veröffentlichten Nachträgen übergeben werden. Jeder Nachtrag zum Prospekt kann in elektronischer Form auf der Internetseite der Wertpapierbörse Luxemburg ( www.bourse.lu ) und der Internetseite der Emittentin ( www.freseniusmedicalcare.com ) eingesehen werden.
Bei der Nutzung des Prospektes und der finalen Bedingungen hat jeder Platzeur und/oder jeweiliger weiterer Finanzintermediär sicherzustellen, dass er alle anwendbaren, in den jeweiligen Jurisdiktionen geltenden Gesetze und Rechtsvorschriften beachtet.
Für den Fall, dass ein Platzeur und/oder weiterer Finanzintermediär ein Angebot macht, informiert dieser Platzeur und/oder weitere Finanzintermediär die Anleger zum Zeitpunkt der Angebotsvorlage über die Angebotsbedingungen der Schuldverschreibungen. |
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ABSCHNITT B FRESENIUS MEDICAL CARE AG & CO. KGAA EMITTENTIN
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Element |
Beschreibung
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Geforderte Informationen |
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B.1 |
Gesetzliche und kommerzielle Bezeichnung |
Fresenius Medical Care AG & Co. KGaA ist der juristische Name der Emittentin der Schuldverschreibungen (die Emittentin und, zusammen mit ihren Tochtergesellschaften, die Gruppe, auch wir , uns oder unser ). Die Emittentin und ihre Tochtergesellschaften verwenden im Geschäftsverkehr die kommerzielle Bezeichnung Fresenius Medical Care.
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B.2 |
Sitz, Rechtsform, geltendes Recht, Land der Gründung |
Die Emittentin ist eine nach deutschem Recht errichtete und deutschem Recht unterliegende Kommanditgesellschaft auf Aktien (KGaA) mit einer Aktiengesellschaft (AG) als alleiniger Komplementärin und mit eingetragenem Sitz in Hof an der Saale, Deutschland. Ihre Geschäftsanschrift lautet Else-Kröner-Straße 1, 61352 Bad Homburg vor der Höhe, Deutschland, und ihre Telefonnummer lautet +49(0) 6172 609-0.
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B.4b |
Beschreibung von bekannten Trends, die sich auf die Emittentin und die Branchen, in denen sie tätig ist, auswirken |
Wir sind nach den veröffentlichen Umsatzzahlen und der Anzahl der behandelten Patienten das weltweit größte Dialyse-Unternehmen. Wir sind in einem kompetitiven, internationalen Markt tätig und unterliegen deshalb bestimmten Trends, Risiken und Unsicherheiten, die zur Folge haben können, dass die tatsächlichen Ergebnisse von den prognostizierten Ergebnissen abweichen. Die wichtigsten Trends, die unsere Branche beeinflussen sind:
· Die alternde Bevölkerung und steigende Lebenserwartung, der Engpass bei Organspenden für Nierentransplantationen, das zunehmende Auftreten und die bessere Behandlung sowie das Überleben von Patienten mit Diabetes und Bluthochdruck, die häufig der terminalen Niereninsuffizienz ( End-Stage Renal Disease ESRD ) vorausgehen; dies alles führt zu einer steigenden Anzahl an Patienten;
· Verbesserungen in der Behandlungsqualität, die das Leben von Patienten verlängern;
· die stärkere Nachfrage nach innovativen Produkten und Therapien;
· Fortschritte in der Medizintechnik;
· anhaltende Sparbemühungen und Kostendruck im Gesundheitswesen, welche die Steigerungen der Erstattungssätze begrenzen; und
· die Vergütung der Mehrheit der Behandlungen durch staatliche Institutionen wie Medicare und Medicaid in den Vereinigten Staaten von Amerika (die USA ).
Zusätzliche Trends in Schwellenländern sind:
· steigende nationale Einkommen und dadurch steigende Ausgaben für medizinische Versorgung;
· ein verbesserter Lebensstandard in Entwicklungsländern, der eine lebensrettende Dialysebehandlung möglich macht;
· die Konsolidierung von anderen Anbietern (z.B. Krankenhausketten);
· die Konsolidierung von Gesundheitsversichern mit Preisdruck auf andere Anbieter; und
· die Privatisierung von Gesundheitsanbietern. |
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B.5 |
Beschreibung der Gruppe und der Stellung der Emittentin innerhalb der
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Konzernobergesellschaft der Gruppe ist die Emittentin, die als Holdinggesellschaft für die Gruppe agiert. Die operativen Geschäftssegmente der Gruppe werden durch unsere Geschäftsführung im Hinblick auf die jeweiligen geographischen Zuständigkeiten festgelegt. Sämtliche Segmente haben in erster Linie mit Gesundheitsdienstleistungen und der Distribution von Produkten und Ausrüstung zur Behandlung von ESRD und anderen extrakorporalen Therapien zu tun. |
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Gruppe |
Der Begriff Nordamerika Segment bezieht sich auf unsere operative Geschäftstätigkeit in Nordamerika. Der Begriff EMEA Segment bezieht sich auf unsere operative Geschäftstätigkeit in Europa, Nahost und Afrika, der Begriff Asien-Pazifik Segment bezieht sich auf unsere operative Geschäftstätigkeit im asiatisch- pazifischen Raum und der Begriff Lateinamerika Segment bezieht sich auf unsere operative Geschäftstätigkeit in Lateinamerika. Die Aufgabenbereiche der Konzernzentrale umfassen auch die Bereiche Rechnungs- und Finanzwesen, zentral gesteuerte Produktion, Vermögensverwaltung, Qualitätsmanagement, Einkauf, Forschung und Entwicklung, die als Corporate ausgewiesen werden. Diese Unternehmensaktivitäten erfüllen nicht die Definition eines operativen Segments nach den International Financial Reporting Standards des International Accounting Standards Board (IASB), wie sie von der Europäischen Union übernommen wurden ( IFRS ) .
Das folgende Diagramm verdeutlicht in abgekürzter Form die Unternehmensstruktur der Emittentin und ihrer wesentlichen Tochtergesellschaften ( significant subsidiaries ) (wie in der Securities & Exchange Commissions Regulation S-X rule 1-02(w) definiert) zum Zeitpunkt dieses Prospektes: |
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B.9 |
Gewinnprogn osen oder - Schätzungen
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Entfällt. Es wurden keine Gewinnprognosen oder -schätzungen in den Prospekt aufgenommen. |
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B.10 |
Art etwaiger Beschränkung en im Bestätigungsv ermerk zu den historischen Finanzinform ationen
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Entfällt. Die KPMG AG Wirtschaftsprüfungsgesellschaft, The Squaire, Am Flughafen, 60549 Frankfurt am Main, Deutschland ( KPMG ), hat einen uneingeschränkten Bestätigungsvermerk für die in Übereinstimmung mit den IFRS aufgestellten Konzernabschlüsse der Emittentin der zum 31. Dezember 2017 und und zum 31. Dezember 2016 endenden Geschäftsjahre erteilt. |
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B.12 |
Ausgewählte wesentliche historische Finanzinform |
Die in diesem Prospekt enthaltenen ausgewählten konsolidierten Finanzinformationen (einschließlich Kennzahlen) und sonstigen Finanzinformationen der Emittentin wurden in Übereinstimmung mit den IFRS erstellt. Die Emittentin wendet die IFRS an, um die Anforderungen des Handelsgesetzbuches und anderer deutscher Gesetze zu erfüllen,
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der jeweils gültigen Fassung, und wird voraussichtlich im Juli 2018 abgeschlossen. |
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B.14 |
Angabe zur Abhängigkeit von anderen Unternehmen innerhalb der Gruppe |
Siehe Element B.5.
Die Emittentin agiert als Holdinggesellschaft, hat keine eigenen erheblichen operativen Vorgänge und bezieht im Wesentlichen sämtliche ihrer konsolidierten Umsätze von ihren operativen Tochtergesellschaften. Somit sind der Cash-Flow und die Fähigkeit der Gesellschaft, ihren Geldbedarf zu decken, von der Profitabilität und dem Cash-Flow ihrer Tochtergesellschaften sowie den Zahlungen solcher Tochtergesellschaften in Form von Darlehen, Dividenden, Gebühren, Mieteinnahmen oder ähnliches, und den eigenen Kreditvereinbarungen der Gesellschaft abhängig.
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B.15 |
Haupttätig-keiten |
Wir sind nach veröffentlichten Umsätzen und der Anzahl der behandelten Patienten das weltweit größte Dialyseunternehmen. Wir erbringen Dialysebehandlungen und zugehörige Leistungen für Personen, die an ESRD leiden. Wir entwickeln und produzieren eine große Bandweite an Gesundheitsprodukten, zu denen sowohl Dialyse- als auch Nicht-Dialyse Produkte gehören. Unsere Dialyseprodukte umfassen Dialysegeräte, Wasseraufbereitungssysteme und Einwegprodukte, während unsere Nicht-Dialyseprodukte akut-kardiopulmonale und apheretische Produkte umfassen. Wir verkaufen unsere Gesundheitsprodukte an Kunden in rund 150 Ländern und setzen sie auch im unseren eigenen Einrichtungen des Gesundheitswesens ein. Unser Dialysegeschäft ist daher vertikal integriert. Bestimmte andere Gesundheitsleistungen, die wir in unseren Segmenten Nordamerika und Asien- Pazifik erbringen, bezeichnen wir als Care Coordination. Care Coordination umfasst derzeit, aber nicht ausschließlich, die koordinierte Erbringung von Apothekendiensten, vaskulären, kardiovaskulären und endovaskulären Spezialdiensten sowie ambulanten Chirurgiezentren, Nichtdialyse- Laboruntersuchungen (bis Dezember 2017), ärztlichen Nephrologie- und Kardiologiediensten, Gesundheitsplandiensten, Notfalldiensten und ambulanten Behandlungsdiensten. Am 28. Juni 2018 haben wir unsere Mehrheitsbeteiligung an Sound Inpatient Physicians, Inc. ( Sound ), veräußert, die auch die koordinierte Erbringung von Notfall-, Intensiv- und Krankenhausarztleistungen sowie die Übergangsversorgung, die wir als krankenhausnahe ärztliche Leistungen bezeichnen, umfasste (vgl. B.19-B.13). Unsere Care Coordination-Dienstleistungen zusammen mit der Dialysebehandlung und den damit verbundenen Dienstleistungen stellen unsere Gesundheitsdienstleistungen dar.
Als globales Unternehmen, das Gesundheitsversorgungsdienstleistungen und -produkte liefert, stehen wir vor der Herausforderung, die Bedürfnisse einer Vielzahl von Interessengruppen wie Patienten, Kunden, Kostenträgern, Regulierungsbehörden und Gesetzgebern in vielen verschiedenen wirtschaftlichen Umfeldern und Gesundheitssystemen zu erfüllen. In der Regel zahlen staatliche Programme (in einigen Ländern in Abstimmung mit privaten Versicherern) für bestimmte Gesundheitsprodukte und Dienstleistungen für ihre Bürger. Nicht alle |
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ABSCHNITT C - WERTPAPIERE
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Die Schuldverschreibungen enthalten eine eingeschränkte Negativverpflichtung. |
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Rangfolge der Schuldverschreibungen (Status) |
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Die Schuldverschreibungen begründen nicht besicherte und nicht nachrangige Verbindlichkeiten der Emittentin, die untereinander und mit allen anderen nicht besicherten und nicht nachrangigen Verbindlichkeiten der Emittentin gleichrangig sind, soweit diesen Verbindlichkeiten nicht durch zwingende Bestimmungen ein Vorrang eingeräumt wird. |
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Kündigungsgründe |
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Die Schuldverschreibungen sehen Kündigungsgründe vor, die die Gläubiger berechtigen, die unverzügliche Rückzahlung der Schuldverschreibungen zu verlangen. |
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Cross-Default |
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Die Schuldverschreibungen enthalten eine Cross-Default-Bestimmung. |
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Kontrollwechsel |
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Die Schuldverschreibungen enthalten ein Recht der Gläubiger, eine vorzeitige Rückzahlung von der Emittentin im Falle eines Kontrollwechsels zu verlangen. |
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Beschränkung von Rechten |
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Vorzeitige Rückzahlung |
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Die Schuldverschreibungen können vor Ablauf ihrer festgelegten Laufzeit aus steuerlichen Gründen oder ansonsten nach Wahl der Emittentin gekündigt und vorzeitig zurückgezahlt werden. Die Schuldverschreibungen können ferner nach Wahl der Emittentin bei geringfügig ausstehendem Nennbetrag gekündigt und vorzeitig zurückgezahlt werden. |
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Beschlüsse der Gläubiger |
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In Übereinstimmung mit dem Gesetz über Schuldverschreibungen aus Gesamtemissionen ( SchVG ) enthalten die Schuldverschreibungen Bestimmungen, nach denen die Gläubiger der Schuldverschreibungen (mit Zustimmung der Emittentin) eine Änderung der Emissionsbedingungen oder sonstige Maßnahmen im Hinblick auf die Schuldverschreibungen beschließen können. Ordnungsgemäß entweder in einer Gläubigerversammlung oder im Wege einer Abstimmung ohne Versammlung gemäß den Emissionsbedingungen gefasste Beschlüsse der Gläubiger sind für alle Gläubiger verbindlich. Beschlüsse, welche Änderungen wesentlicher Inhalte der Emissionsbedingungen vorsehen, bedürfen einer Mehrheit von mindestens 75% der teilnehmenden Stimmrechte. Beschlüsse, welche andere Änderungen vorsehen, werden mit einfacher Mehrheit der teilnehmenden Stimmrechte gefasst. |
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ABSCHNITT D - RISIKEN
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Element |
Beschreibung
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Geforderte Informationen |
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D.2 |
Zentrale Angaben zu den
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Risiken in Bezug auf die Emittentin und die Gruppe
Risiken im Zusammenhang mit regulatorischen Themen
· Wir sind in einer stark regulierten Industrie tätig, sodass mögliche Reformen der Gesetzgebung einen Unsicherheitsfaktor und eine Gefahr für unser Geschäftsmodell und unsere Ergebnisse darstellen könnten.
· Änderungen im Vergütungssystem und/oder den gesetzlichen Vorschriften der Gesundheitsfürsorge könnten zu einem erheblichen Rückgang des Umsatzes und des operativen Gewinns führen.
· Falls wir die für unseren Geschäftsbetrieb geltenden zahlreichen staatlichen Vorschriften nicht einhalten, könnten wir von den Vergütungssystemen der Gesundheitsfürsorgeprogramme ausgeschlossen werden, oder es könnten uns Betriebserlaubnisse entzogen werden, was jeweils zu einem erheblichen Umsatzrückgang führen würde.
· Sollten wir nicht in der Lage sein, unsere IT Sicherheitssysteme gegen Cybersecurity Angriffe zu schützen oder andere Vertraulichkeits- oder Datensicherheitsvorfälle zu vermeiden, die zu Sicherheitslücken, die unseren Geschäftsbetrieb beeinträchtigen oder zu einer ungewollten Verbreitung persönlicher Daten oder geheimer oder vertraulicher Informationen führen, könnten wir erheblichen Bußgeldern oder Strafzahlungen, Schadensersatzansprüchen oder Reputationsschäden ausgesetzt sein oder es kann zu erheblichen negativen Auswirkungen auf unsere Geschäftstätigkeit, Finanz- und Ertragslage und die operativen Ergebnisse kommen.
· Wir sind in vielen verschiedenen Rechtsordnungen tätig, und wir könnten durch eine Verletzung des U.S. Foreign Corrupt Practices Act und weltweit vergleichbarer anderer Anti-Korruptions-Gesetze beeinträchtigt werden.
· Gesetzesverstöße durch unsere Joint Ventures könnten erhebliche nachteilige Auswirkungen auf unsere Geschäftstätigkeit haben.
Risiken in Bezug auf unsere Geschäftstätigkeit
Am 28. Juni 2018 haben wir unsere Mehrheitsbeteiligung an Sound veräußert. Infolgedessen spielen bestimmte, vorher erbrachte Dienstleistungen und einzelne der nachstehenden Risiken keine Rolle mehr f ü r unsere k ünftige Geschäftstätigkeit.
· Wenn es uns nicht gelingt, unsere medizinischen Kosten in effizienter Weise einzuschätzen, einzupreisen und zu verwalten, könnte die Profitabilität unserer |
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Risiken, die den Wertpapiere
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Eignung dieser Anlage vor dem Hintergrund seiner persönlichen Verhältnisse prüfen.
· Die Schuldverschreibungen sind strukturell nachrangig gegenüber Ansprüchen anderer Gläubiger gegenüber Gesellschaften der Gruppe, die keine Garantien zugunsten der Gläubiger der Schuldverschreibungen abgegeben haben.
· Die Schuldverschreibungen und die Garantie sind effektiv nachrangig gegenüber Verbindlichkeiten der Gruppe, soweit diese Verbindlichkeiten durch Vermögenswerte besichert sind, die nicht zugleich die Schuldverschreibungen besichern.
· Auch wenn die Gläubiger bei Eintritt bestimmter Kontrollwechselereignisse berechtigt sind, die Rückzahlung bzw. den Rückkauf der Schuldverschreibungen zu verlangen, könnte die Emittentin nicht in der Lage sein, die Schuldverschreibungen zurückzuzahlen bzw. zurückzukaufen.
· Es besteht keine Gewissheit, dass ein liquider Sekundärmarkt für die Schuldverschreibungen entstehen wird, oder, sofern er entsteht, dass er fortbestehen wird. In einem illiquiden Markt könnte es sein, dass ein Anleger seine Schuldverschreibungen nicht jederzeit zu angemessenen Marktpreisen veräußern kann. Die Möglichkeit, Schuldverschreibungen zu veräußern, kann zudem aus landesspezifischen Gründen eingeschränkt sein.
· Der Gläubiger ist dem Risiko nachteiliger Entwicklungen der Marktpreise seiner Schuldverschreibungen ausgesetzt, welches sich realisieren könnte, falls der Gläubiger seine Schuldverschreibung vor deren Endfälligkeit veräußert.
· Soweit die Emittentin das Recht hat, die Schuldverschreibungen vor Endfälligkeit zurückzuzahlen, ist ein Gläubiger der jeweiligen Schuldverschreibungen dem Risiko ausgesetzt, dass infolge der vorzeitigen Rückzahlung seine Kapitalanlage eine geringere Rendite als erwartet aufweisen wird. Ferner könnte dem Gläubiger die Wiederanlage unter Umständen nur zu weniger vorteilhaften Konditionen verglichen mit der ursprünglichen Anlage möglich sein.
· Der Gläubiger von festverzinslichen Schuldverschreibungen ist dem Risiko ausgesetzt, dass der Preis einer solchen Schuldverschreibung infolge von Veränderungen des aktuellen Marktzinses fällt.
· Ein Gläubiger ist dem Risiko ausgesetzt, überstimmt zu werden und seine Rechte gegen die Emittentin für den Fall zu verlieren, dass andere Gläubiger durch Mehrheitsbeschluss gemäß dem SchVG beschließen, Änderungen der Emissionsbedingungen zuzustimmen. Ein solcher Beschluss kann effektiv mit Zustimmung von weniger als der Mehrheit des ausstehenden Gesamtnennbetrages der Schuldverschreibungen gefasst werden. Für den Fall der Bestellung eines gemeinsamen Vertreters für alle Gläubiger ( Gemeinsamer Vertreter ) verlieren die Gläubiger möglicherweise ganz oder teilweise deren individuelles Recht zur Verfolgung und Durchsetzung ihrer Rechte unter den
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Schuldverschreibungen gegen die Emittentin.
· Im Fall des Eintretens bestimmter Kündigungsgründe werden die Schuldverschreibungen, in Bezug auf die der Emissionsstelle Kündigungserklärungen zugegangen sind, nur vorzeitig zahlbar, wenn die Gläubiger von mindestens 25% des Gesamtnennbetrags der zu diesem Zeitpunkt ausstehenden Schuldverschreibungen die Kündigung erklären. Eine solche vorzeitige Fälligstellung kann durch einen Mehrheitsbeschluss der Gläubiger aufgehoben werden.
· Ratings spiegeln möglicherweise nicht alle Risiken einer Anlage in den Schuldverschreibungen wider; sie sind keine Empfehlungen zum Kauf oder zum Halten von Wertpapieren und können jederzeit geändert, ausgesetzt oder widerrufen werden.
Risiken im Hinblick auf die Garantie
· U.S. Bundesrecht und Landesrecht erlaubt Gerichten unter bestimmten Umständen die Garantie für nichtig zu erklären und Gläubiger zur Rückzahlung von Zahlungen zu verpflichten, die sie von der Garantiegeberin erhalten haben.
· Die Durchsetzung von Ansprüchen aus der Garantie gegen die Garantiegeberin könnte begrenzt sein. Die Garantiegeberin erhält ihr Einkommen und ihre Liquidität im Wesentlichen von ihren operativen Tochtergesellschaften.
· Die Erlöse aus der Verwertung der Garantie sind möglicherweise nicht ausreichend, um die Ansprüche aus den Schuldverschreibungen zu decken.
· Jeder Gläubiger könnte gezwungen sein, seine Ansprüche aus der Garantie unmittelbar gegen die Garantiegeberin durchzusetzen.
· Die Garantie könnte ohne Zustimmung der Gläubiger freigegeben werden oder erlöschen.
· Ebenso wie die Emissionsbedingungen können auch die Bedingungen der Garantie durch einen Beschluss der Gläubiger geändert werden, und ein solcher Beschluss ist für alle Gläubiger verbindlich. Für den Fall der Bestellung eines Gemeinsamen Vertreters verlieren die Gläubiger möglicherweise ganz oder teilweise ihr individuelles Recht zur Verfolgung und Durchsetzung ihrer Rechte unter der Garantie gegen die Garantiegeberin.
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ABSCHNITT E - ANGEBOT
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Beschreibung
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Geforderte Informationen |
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E.2b |
Gründe für das Angebot und Zweckbestim mung der Erlöse
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Die Nettoerlöse der Emission werden für allgemeine Geschäftsaktivitäten der Emittentin verwendet. |
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E.3 |
Anlage-bedingungen
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Die Gesamtsumme der Emission beträgt EUR 500.000.000. |
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E.4 |
Beschreibung aller für die Emission/das Angebot wesentlichen, auch kollidierende n Interessen
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Keine. |
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E.7 |
Schätzung der Ausgaben, die dem Anleger von der Emittentin oder dem Anbieter in Rechnung gestellt werden
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Keine. |
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CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Rice Powell, certify that:
Date: October 30, 2018 |
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By: /s/ RICE POWELL
Rice Powell Chief Executive Officer and Chairman of the Management Board of the General Partner |
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Brosnan, certify that:
Date: October 30, 2018 |
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By: /s/ MICHAEL BROSNAN
Michael Brosnan Chief Financial Officer and member of the Management Board of the General Partner |
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the report of Fresenius Medical Care AG & Co. KGaA (the "Company") on Form 6-K furnished for the month of October 2018 containing its unaudited financial statements as of September 30, 2018 and for the nine-months periods ending September 30, 2018 and 2017, as submitted to the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Rice Powell, Chief Executive Officer and Michael Brosnan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
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(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of
1934; and |
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(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and
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By: /s/ RICE POWELL
Rice Powell Chief Executive Officer and Chairman of the Management Board of the General Partner |
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October 30, 2018 |
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By: /s/ MICHAEL BROSNAN
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October 30, 2018 |