Financing

Net cash used in financing was $15 M in 2010 compared to net cash used in financing of $558 M in 2009, respectively.

In 2010, cash was used to reduce borrowings under our credit facilities and to pay dividends. This was partially offset by the issuance of 5.5% Senior Notes in January 2010, drawings under our accounts receivable facility and other short term borrowings. In 2009, cash was mainly used for the repayment of the current portion of long-term debt including the Euro Notes in the amount of $279 M (€200 M) that were due and repaid on July 27, 2009, reducing the amount outstanding under our accounts receivable securitization facility (A/R Facility), and the payment of dividends partially offset by the issuance of long-term debt and borrowings under other existing long-term debt facilities.

The following table summarizes the Company’s available sources of liquidity at December 31, 2010:

The amount of guarantees and other commercial commitments at December 31, 2010 is not significant.

At December 31, 2010, we have short-term borrowings, excluding the current portion of long-term debt of $671 M.

The following table summarizes, as of December 31, 2010, our obligations and commitments to make future payments under our long-term debt, trust preferred securities and other long-term obligations, and our commitments and obligations under lines of credit and letters of credit.

Our obligations under the Amended 2006 Senior Credit Agreement are secured by pledges of capital stock of certain material subsidiaries, including FMCH and D-GmbH, in favor of the lenders. Our Amended 2006 Senior Credit Agreement, EIB agreements, Euro Notes, Senior Notes and the indentures relating to our Trust Preferred Securities include covenants that require us to maintain certain financial ratios or meet other financial tests. Under our Amended 2006 Senior Credit Agreement, we are obligated to maintain a minimum consolidated fixed charge ratio [ratio of consolidated EBITDAR (sum of EBITDAEBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)Corresponds to operative cash flow before taxes. plus Rent expense under operation leases) to Consolidated Fixed Charges as these terms are defined in the 2006 Senior Credit Agreement] and a maximum consolidated leverage ratio (ratio of consolidated funded debt to consolidated EBITDA as these terms are defined in the Amended 2006 Senior Credit Agreement). Other covenants in one or more of each of these agreements restrict or have the effect of restricting our ability to dispose of assets, incur debt, pay dividends and make other restricted payments, create liens or engage in sale-lease backs.

The breach of any of the covenants in any of the instruments or agreements governing our long-term debt – the Amended 2006 Senior Credit Agreement, the EIB agreements, the Euro Notes, the Senior Notes or the notes underlying our Trust Preferred Securities – could, in turn, create additional defaults under one or more of the other instruments or agreements. In default, the outstanding balance under the Amended 2006 Senior Credit Agreement becomes due at the option of the lenders under that agreement, and the “cross default” provisions in our other long-term debt permit the lenders to accelerate the maturity of the debt upon such a default as well. As of December 31, 2010, we are in compliance with all covenants under the Amended 2006 Senior Credit Agreement and our other financing agreements. For information regarding our Amended 2006 Senior Credit Agreement, EIB agreements, Euro Notes, Senior Notes and the indentures relating to our Trust Preferred Securities see Note 9 and Note 11.

Although we are not immune from the global financial crisis, we believe that we are well positioned to continue to grow our business while meeting our financial obligations as they come due. Our business is generally not cyclical. A substantial portion of our accounts receivable are generated by governmental payers. While payment and collection practices vary significantly between countries and even between agencies within one country, government payors usually represent low credit risks. However, limited or expensive Fresenius Medical Care 2010 access to capital could make it more difficult for our customers to do business with us, or to do business generally, which could adversely affect our business by causing our customers to reduce or delay their purchases of our dialysis products; see “Results of Operations” above. If the current conditions in the credit and equity markets continue, or worsen, they could also increase our financing costs and limit our financial flexibility.

Following our earnings-driven dividendDividendPortion of a company’s profits. The profit to be distributed divided by the number of outstanding shares shows the dividend per share. The dividend is paid to shareholders usually once a year in the form of cash, stock or tangible assets. policy, our General Partner’s Management Board will propose to the shareholders at the Annual General meeting on May 12, 2011, a dividend with respect to 2010 and payable in 2011, of €0.65 per ordinary share (for 2009 paid in 2010: €0.61) and €0.67 per preference share (for 2009 paid in 2010: €0.63). The total expected dividend payment is approximately €197 M (approximately $263 M based upon the December 31, 2010 spot rate) compared to dividends of €183 M ($232 M) paid in 2010 with respect to 2009. Our Amended 2006 Senior Credit Agreement limits disbursements for dividends and other payments for the acquisition of our equity securities (and rights to acquire them, such as options or warrants) during 2011 to $330 M in total.

On February 3, 2011, our wholly owned subsidiaries, Fresenius Medical Care US Finance, Inc. and FMC Finance VII S.A., issued $650 M and €300 M (approximately $412 M at the date of issuance) of 5.75% Senior Notes and 5.25% Senior Notes, respectively. The 5.75% Senior Notes had an issue price of 99.06% and have a yield to maturity of 5.875%. The 5.25% Senior Notes were issued at par. Both the 5.75% Senior Notes and the 5.25% Senior Notes are due February 15, 2021. Net proceeds were or will be used to repay indebtedness outstanding under our A/R Facility and the revolving credit facility of the Amended 2006 Senior Credit Agreement, for acquisitions, including payments under our recent acquisition of International Dialysis Centers announced on January 4, 2011, and for general corporate purposes to support our renal dialysis products and services business. Both the 5.75% and the 5.25% Senior Notes are guaranteed on a senior basis jointly and severally by us, FMCH and Fresenius Medical Care Deutschland GmbH.

On September 29, 2010, we amended and extended the 2006 Senior Credit Agreement (as amended to-date and as it may be further modified or amended, our Amended 2006 Senior Credit Agreement). The significant changes are as follows:

• The $1,000 M revolving credit facility has been increased to $1,200 M and is now due and payable on March 31, 2013, an extension from the original due date of March 31, 2011.
• The Term Loan A facility was increased by $50 M to $1,365 M and its maturity extended from March 31, 2011 to March 31, 2013, and will be repaid in quarterly payments of $30 M which started on December 31, 2010, with the remaining balance due and payable in full on March 31, 2013.
• The early repayment requirement for the Term Loan B, which stipulated that Term Loan B was subject to early retirement if the Trust Preferred Securities due June 15, 2011 were not paid, refinanced or extended prior to March 1, 2011, has been removed.
• The definition of the Company’s Consolidated Leverage Ratio, which is used to determine the applicable margin, was amended to allow for the reduction of up to $250 M (increased from $30 M) of cash and cash equivalents from Consolidated Funded Debt, as defined in the initial 2006 Senior Credit Agreement. The applicable margin is then added to LIBOR to determine the interest rate for the appropriate period. In addition, the Amended 2006 Senior Credit Agreement includes increases in certain types of permitted borrowings outside of the Amended 2006 Senior Credit Agreement and provides further flexibility for certain types of investments.
• The limitation on dividends and other restricted payments ($300 M for dividends in 2010 under the 2006 Senior Credit Agreement) has been set for up to $330 M in 2011 and increases by $30 M each year through 2013.

On September 28, 2010, we renewed our accounts receivable facility and increased available borrowings under the facility from $650 M to $700 M.

On February 17, 2010, a €50 M ($67 M at December 31, 2010) loan was disbursed from our 2009 agreement with the European Investment Bank (EIB). The loan is due in 2014. In addition, on March 15, 2010, we drew down the remaining $80.8 M available on our 2005 revolving credit agreement with the EIB, maturing in 2013. Both loans bear variable interest rates which are based on EURIBOR or LIBOR, as applicable, plus an applicable margin. These interest rates change every three months.

On January 20, 2010, our wholly owned subsidiary, FMC Finance VI S.A., issued €250 M ($353.3 M at date of issuance) aggregate principal amount of 5.50% Senior Notes at an issue price of 98.6636% of the principal amount. The 5.50% Senior Notes had a yield to maturity of 5.75% and are due July 15, 2016. Proceeds were used to repay short-term indebtedness and for general corporate purposes. The 5.50% Senior Notes are guaranteed on a senior basis jointly and severally by us, FMCH and D-GmbH.

In addition to the annual renewal of our accounts receivable facility described above, our 2011 financing needs are limited to the €485 M payment for our acquisition of International Dialysis Centers, which we announced on January 4, 2011, the dividend payment of approximately $263 M in May 2011, which is expected to be covered by cash flow from operations and from existing credit facilities, and the amount due upon maturity of our Trust Preferred Securities in June 2011 of approximately $626 M at December 31, 2010, which we expect to meet by entering into diverse capital market transactions see Note 11. We currently have sufficient flexibility under our debt covenants to meet our financing needs in the near future. Generally, we believe that we will have sufficient financing to achieve our goals in the future and to continue to promote our growth.