Operations and Business Environment - Fresenius Medical Care

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02. 2 Our Fiscal year 78 Assets and Liabilities Balance Sheet and Asset Situation The Company’s total assets increased significantly in 2006. At $13.05 billion, they were substantially higher than in the previous year (2005: $ 7.98 billion). In constant currency, the total assets increased by $ 4.82 billion or 60 %, primarily due to the RCG acquisition. Non-current assets rose to $ 9.63 billion, representing 74 % of total assets, compared to 69 % in 2005. Noncurrent assets include goodwill of $ 6.89 billion. Thereof goodwill of $ 3.38 billion is related to the acquisition of RCG, and goodwill of $ 2.11 billion is related to the founding of Fresenius Medical Care in 1996. Property, plant and equipment rose by 42 % to $1.72 billion in 2006, primarily as a result of investments of $ 422 million minus depreciation of $ 265 million and acquisitions amounting to $ 341 million. More information on this can be found in the preceding section “Investments and Acquisitions”. Current assets also changed significantly due to the acquisition of RCG, increasing by 39 % to $ 3.41 billion or 33 % in constant currency. Trade accounts receivable climbed to $1.85 billion, following $1.47 billion in 2005 – an increase of 22 % in constant currency. Shareholders’ equity increased significantly by 23 % to $ 4.87 billion compared to $ 3.97 billion in 2005. This increase was mainly due to the net income of $ 537 million, the proceeds from share conversions amounting to $ 307 million, exchange rate effects of $114 million and proceeds from the exercise of stock options totaling $ 54 million. The dividend distribution for 2005 of $154 million partially offset this increase. The equity ratio decreased considerably by 13 percentage points to 37 % in 2006. Of the financial liabilities, 82 % are in U.S. dollars. Shortterm financial liabilities amounted to $ 496 million after $ 296 million at the end of 2005. The medium- to longterm financial liabilities amounted to $ 5.08 billion compared to $1.89 billion in 2005. This increase is due to the debt-financed acquisition of Renal Care Group. Assets 2006 2005 $ 13,045 million $ 7,983 million 74 % 8 % 14 % 4 % 69 % 8 % 18 % 5 % Non-current assets Other current assets Accounts receivable Inventories Equity and Liabilities 2006 $ 13,045 million 37 % 45 % 18 % 2005 $ 7,983 million 50 % 30 % 20 % Shareholders’ equity Non-current liabilities Current liabilities A detailed representation can be found in the consolidated financial statements in the financial report from page 46 onwards. Fresenius Medical Care 2006
The Group has no significant accruals. The largest single accrual is for the settlement of fraudulent conveyance claims and all other legal matters in connection with the National Medical Care transaction in 1996 resulting from the bankruptcy of W.R. Grace. This accrual amounts to $115 million. Please see page 69 of the finance report for details. The net debt to equity ratio including minorities (gearing) increased from 0.5 in 2005 to 1.1 in the year under review. The return on equity after taxes rose to 11.8 % (2005: 11.4 %). Currency and Interest Risk Management On December 31, 2006, the nominal value of all foreign currency hedging contracts was $1.083 billion. The nominal value of interest rate hedging contracts amounted to $ 3.615 billion. Further information can be found in the risk report starting on page 94 and in note 19 on the financing instruments in the financial report from page 101 onwards. Debt/EBITDA Ratio The ratio of debt to Earnings Before Interest, Taxes and Amortization (EBITDA) was 3.23 at the end of 2006 after 1.82 in the previous year. The increase resulted from the completely debt-financed acquisition of RCG. As a result of the strong cash flow from operating activities and the good earnings situation, this ratio was clearly below the 3.6 debt/EBITDA ratio forecast for the end of the year. 79 Fresenius Medical Care 2006
Page 1 and 2: 02. 1-6 With more than 56,000 emplo
Page 3 and 4: Our Fiscal year 02. 1 02. 1 Operati
Page 5 and 6: Path 2: Acquisitions. We intend to
Page 7 and 8: In addition, our development depart
Page 9 and 10: on the basis of growing clinical ex
Page 11 and 12: Asia While Japan’s gross domestic
Page 13 and 14: dialysis and about 165,000 receive
Page 15 and 16: As in previous years, many healthca
Page 17 and 18: Dialysis machines constitute anothe
Page 19 and 20: Comparison of the Actual Business R
Page 21 and 22: The Management’s General Assessme
Page 23 and 24: In terms of dialysis products, we w
Page 25 and 26: Europe, including the Middle East a
Page 27 and 28: egarding stock options and the incr
Page 29 and 30: Financing Detailed information on f
Page 31: of existing production facilities i
Page 35 and 36: is among our most important goals.
Page 37 and 38: departments enter into outline cont
Page 39 and 40: Quality and Environmental Managemen
Page 41 and 42: Clinical Databases Clinical databas
Page 43 and 44: In addition, we received regulatory
Page 45 and 46: combines RCG’s industry-leading s
Page 47 and 48: - In April 2006, new guidelines wer
Page 49 and 50: titative appraisals of the likeliho
Page 51 and 52: Risks in the Healthcare Industry Ri
Page 53 and 54: possibility of default. Please see
Page 55 and 56: to page 95 of the Consolidated Fina
Page 57 and 58: 02. 6 Outlook Business Policy Frese
Page 59 and 60: dialysis will remain the treatment
Page 61 and 62: Employees At this point, Fresenius

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