• 05.1
  Statements of Income
• 05.2
  Balance Sheets
• 05.3
  Statements of Cash Flows
• 05.4
  Statements of Shareholders’ Equity
• 05.5
  Notes
• 05.6
  Management’s Annual Report on Internal Control over Financial Reporting
• 05.7
  Report of Independent Registered Public Accounting Firm
• 05.8
  Auditors’ Report: Report of Independent Registered Public Accounting Firm

05.5

Notes to Consolidated Financial Statements

8. SHORT-TERM BORROWINGS, OTHER FINANCIAL LIABILITIES AND SHORT-TERM BORROWINGS FROM RELATED PARTIES

As of December 31, 2008 and 2007, short-term borrowings, other financial liabilities and short-term borrowings from related parties consisted of the following:

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SHORT-TERM BORROWINGS AND OTHER FINANCIAL LIABILITIES

LINES OF CREDIT. Short-term borrowings of $121,476 and $71,908 at December 31, 2008 and 2007, respectively, represent amounts borrowed by the Company and certain of its subsidiaries under lines of credit with commercial banks. The average interest rates on these borrowings at December 31, 2008 and 2007 were 5.30 % and 4.50 %, respectively.

Excluding amounts available under the 2006 Senior Credit Agreement (see Note 9), at December 31, 2008, the Company had $226,221 available under such commercial bank agreements. In some instances, lines of credit are secured by assets of the Company’s subsidiary that is party to the agreement or may require the Company’s guarantee. In certain circumstances, the subsidiary may be required to meet certain covenants.

ACCOUNTS RECEIVABLE FACILITY. The Company has an asset securitization facility (the “A/R Facility”) which is typically renewed in October of each year and was most recently renewed in October 2008. Under the A/R Facility, certain receivables are sold to NMC Funding Corporation (“NMC Funding”), a wholly-owned subsidiary. NMC Funding then assigns percentage ownership interests in the accounts receivable to certain bank investors. Under the terms of the A/R Facility, NMC Funding retains the right to recall all transferred interests in the accounts receivable assigned to the banks under the facility. As the Company has the right at any time to recall the then outstanding interests, the receivables remain on the Consolidated Balance Sheet and the proceeds from the transfer of percentage ownership interests are recorded as short-term borrowings.

At December 31, 2008 there are outstanding short-term borrowings under the A/R Facility of $539,000. NMC Funding pays interest to the bank investors, calculated based on the commercial paper rates for the particular tranches selected. The average interest rate at December 31, 2008 was 3.89 %. Annual refinancing fees, which include legal costs and bank fees (if any), are amortized over the term of the facility.

OTHER FINANCIAL LIABILITIES. At December 31, 2008, the Company also had $22,679 of other financial liabilities which was related to the Venofer transaction in the year 2008 (see Note 6). At December 31, 2007, the Company also had $60,589 of other financial liabilities of which $56,427 was related to the 2007 rsi acquisition and was paid in November 2008.

SHORT-TERM BORROWINGS FROM RELATED PARTIES

From time to time during each of the years presented, the Company received advances under the existing loan agreements with Fresenius SE for those years. During the year ended December 31, 2008, the Company received advances ranging from €13,200 to €153,400 with interest rates ranging from 4.02 % to 5.11 %. At December 31, 2008 and 2007, there were no advances outstanding with Fresenius SE. On December 31, 2008, the Company had advances outstanding with a Fresenius SE subsidiary in the amount of $1,330 with an interest rate of 7.25 %. On December 31, 2007, the Company had advances outstanding with a Fresenius SE subsidiary in the amount of $2,287 (€1,554) with an interest rate of 4.1 % which was repaid in 2008. Annual interest expense on the borrowings during the years presented was $81 and $506 for the years 2008 and 2007, respectively.