Management Report Results of Operations, Financial Position, Assets and Liabilities Financial Position 
FINANCIAL POSITION
Financial management policies and goals
Ensuring financial flexibility is the key to the financing strategy of the Fresenius Group. We achieve this flexibility through a broad spectrum of financing instruments and the wide diversification of our investors. The maturity profile is characterized by a broad spread of maturities with a large proportion of mid- to long-term financing.
Sufficient financial cushion is assured for the Fresenius Group by the revolving syndicated credit lines that are only partly drawn and the unused bilateral credit lines at our disposal. Market capacity, investor diversification, flexibility, credit covenants, and the current maturity profile are all taken into consideration when selecting financing instruments. At the same time, we seek to optimize our financing costs.
In line with the Group’s structure, financing for Fresenius Medical Care and for the rest of the Fresenius Group is administered separately. There are no joint loans or credit agreements and no mutual guarantees. The Fresenius Kabi and Fresenius ProServe business segments were financed primarily through Fresenius SE in order to avoid any structural subordination.
Financing
Fresenius meets its financing needs through a combination of operating cash flows generated in the business segments and short-, mid-, and long-term debt. In addition to traditional bank financing, important financing instruments include the issuance of senior notes, Euro notes, trust preferred securities, a commercial paper program, and an accounts receivable securitization program.
In 2007, Group financing activities were confined to refinancing operations. The manner in which the refinancing operations were structured widened our financing scope and increased our financial flexibility.
Two capital market transactions were undertaken and were successfully completed before the conditions on the debt markets deteriorated sharply in the third quarter of 2007 in the wake of the subprime mortgage crisis in the United States and the difficulties experienced in the syndication of banks’ extensive loan commitments for financing large debt-leveraged takeover deals:
- On July 2, 2007, a € 200 million private placement with European investors was completed. A syndicated senior unsecured Euro note was offered in four tranches. The placement was divided into tranches of € 100 million, with maturities of five and seven years respectively, with a fixed-rate tranche and floating rate tranche. The Euro note was issued by Fresenius Finance B.V. and guaranteed by Fresenius SE. The proceeds were used, among other things, to refinance a € 126 million Euro note issued in 2004. The very positive response in the capital market and strong interest among investors led to the originally planned volume being several times oversubscribed. Therefore, we were able to place a slightly higher volume on very attractive terms.
- Fresenius Medical Care issued US$ 500 million of senior notes on July 2, 2007, mostly placed with institutional investors in the United States. These were senior unsecured bonds with a maturity of ten years and a coupon of 6 7/8%. The senior note was issued by Fresenius Medical Care Finance III S.A. (Luxembourg) with guarantees from Fresenius Medical Care AG & Co.KGaA, Fresenius Medical Care Holdings, Inc., and Fresenius Medical Care Deutschland GmbH. The net proceeds from the issue were used to reduce the loans (Term Loan A and Term Loan B) drawn under the US$ 4.6 billion credit agreement of March 31, 2006 by US$ 150 million each and for a temporary reduction of the Fresenius Medical Care accounts receivable securitization program. The financial cushion provided by the receivables program has been used to redeem the subordinated trust preferred securities with a coupon of 7 7/8%due in February 2008. At Fresenius Group further refinancing on a big scale is only due from 2011 on.
