• 02.1
  Operations and Business Environment
• 02.2
  Results of Operations, financial Situation, Assets and Liabilities
• 02.3
  Non-financial Performance Indicators
• 02.4
  Risk Report
• 02.5
  Subsequent Events
• 02.6
  Outlook

02.2

Results of Operations, financial Situation, Assets and Liabilities

ASSETS AND LIABILITIES

In 2008, we recorded an increase in total assets and once again improved our asset situation. The key indicators of the balance sheet reflect the sustained growth and successful performance of our company.

BALANCE SHEET AND ASSET SITUATION

The Company’s total assets increased by 5 % from $14.17 billion to $14.92 billion. In constant currency, they grew by 7 %.

Fixed assets rose by 4 % (+ 5 % in constant currency) to $10.71 billion at the end of the year. This corresponds to approximately 72 % of the company’s total assets, slightly below last year’s number of 73 %. The absolute increase in non-current assets was primarily due to investments in property, plant and equipment, the purchase of license and distribution rights for the commercialization and the distribution of intravenous iron products of Galenica Ltd. and Luitpold Pharmaceutical Inc.. As a result, the values of license and distribution agreements shown under intangible assets have increased. For further information, please see the section “Events Significant for the Business Development”.

Fixed assets include goodwill of $7.31 billion, primarily related to the acquisition of Renal Care Group in 2005 and the formation of Fresenius Medical Care in 1996. The slight increase in goodwill compared to the previous year’s amount of $7.25 billion was the result of acquisitions made in 2008, slightly offset by exchange rate effects.

Property, plant and equipment rose by 9 % to $2.24 billion in 2008, mainly due to capital expenditure of $687 million less depreciation amounting to $368 million and exchange rate effects of $68 million. For more information, please see the „Investments and Acquisitions” section and the financial report.

Current assets increased by 9 % to $4.21 billion (13 % at constant currency). This increase was mainly due to higher trade accounts receivable as well as an increase in prepaid expenses and other current assets and inventories.

In 2008, the group’s inventories went up by 11 % to $707 million. In constant currency, the increase was 15 %. This rise resulted from expanding our production capacities over the course of the year. In the previous year, inventory was reduced due to capacity shortages and reached to normal levels in 2008. In addition, we built up inventory as a result of our purchase of licenses for intravenous iron products.

Accounts receivable grew by 7 % to $2.18 billion, an increase of 13 % at constant currency. This was above the revenue growth of 9 % in 2008 and reflects the increase of the days sales outstanding. For further information, please see section „Financial Situation“.

SHAREHOLDERS’ EQUITY FURTHER STRENGTHENED IN 2008

Shareholders’ equity rose by 7 % to $5.96 billion compared to $5.58 billion in 2007. This increase was mainly due to net income of $818 million and proceeds from the exercise of stock options in the amount of $42 million. The dividend payout for 2007 in the amount of $252 million and exchange rate effects of $171 million partially offset the shareholders equity. The equity ratio increased slightly by one percentage point to 40 % in 2008.

Debt amounted to $8.96 billion ($8.60 billion in the previous year). Financial liabilities in the amount of $5.74 billion (2007: $5.64 billion) included short-term liabilities of $1.14 billion (2007: $974 million) as well as medium to long-term debt in the amount of $4.60 billion compared to $4.67 billion in 2007. In 2008, our financial liabilities amounted to 80 % compared to 77 % in the previous year.

For the period the group has no significant accruals. The largest single accrual – amounting to $115 million – 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. Please see note 18 of the financial report for further details.