UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO
SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
x | ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2021
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________________ to __________________
Commission file number 001-32749
A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
Fresenius Medical Care North America 401(k) Savings Plan
920 Winter Street
Waltham, MA 02451-1457
B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
Fresenius Medical Care AG & Co. KGaA
Else-Kröner Straße 1
61352 Bad Homburg, v.d. H. Germany
FRESENIUS MEDICAL CARE
NORTH AMERICA 401(k) SAVINGS PLAN
FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
DECEMBER 31, 2021 and 2020
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
AND REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Fresenius Medical Care North America 401(k) Savings Plan (the "Plan") is subject to the Employer Retirement Income Security Act of 1974 ("ERISA"). Therefore, in lieu of the requirements of Items 1-3 of Form 11-K, the following financial statements and schedule have been prepared in accordance with the financial reporting requirements of ERISA.
The following financial statements and schedule are filed as a part of this Annual Report on Form 11-K:
INDEX
Page | ||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 1-2 | |
FINANCIAL STATEMENTS: | ||
Statements of Net Assets Available for Benefits as of December 31, 2021 and 2020 | 3 | |
Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 2021 | 4 | |
Notes to Financial Statements | 5-21 | |
SUPPLEMENTAL SCHEDULE*: | ||
Schedule of Assets (Held at End of Year) as of December 31, 2021 | 22 | |
SIGNATURES: | ||
Signatures | 23 | |
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||
Exhibit Index | 24 | |
Exhibit 23.1 - Consent of WithumSmith+Brown, PC | 25 |
*- Other schedules required by Section 2520.103-10 of the Department of Labor Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable.
Report of Independent Registered Public Accounting Firm
To the Administrative Committee,
Fresenius Medical Care North America 401(k) Savings Plan:
Opinion on the Financial Statements
We have audited the accompanying statements of net assets available for benefits of the Fresenius Medical Care North America 401(k) Savings Plan (the “Plan”) as of December 31, 2021 and 2020, and the related statement of changes in net assets available for benefits for the year ended December 31, 2021, and the related notes and schedules (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2021 and 2020, and the changes in net assets available for benefits for the year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
1
Supplemental Information
The supplemental information in the accompanying schedule of assets (held at end of year) as of December 31, 2021 has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedule, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information in the accompanying schedule is fairly stated, in all material respects, in relation to the Plan’s financial statements as a whole.
We have served as the Plan’s auditor since 1999.
/s/ WithumSmith+Brown, PC
East Brunswick, New Jersey
June 29, 2022
2
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2021 AND 2020
2021 | 2020 | |||||||
ASSETS: | ||||||||
Participant directed investments, at fair value | $ | 2,940,081,520 | $ | 2,589,879,133 | ||||
Stable value investment at contract value | 915,326,548 | 716,830,615 | ||||||
Interest and dividends receivable | - | 16 | ||||||
Contributions receivable - employer | 71,804,148 | 76,930,405 | ||||||
Contributions receivable - participant | - | 7,746,696 | ||||||
Notes receivable from participants | 111,741,464 | 106,445,616 | ||||||
Total assets | 4,038,953,680 | 3,497,832,481 | ||||||
LIABILITIES: | ||||||||
Payable for securities purchased | 430,479 | 360,873 | ||||||
Accrued administrative expenses | 603,854 | 627,241 | ||||||
Total liabilities | 1,034,333 | 988,114 | ||||||
NET ASSETS AVAILABLE FOR BENEFITS | $ | 4,037,919,347 | $ | 3,496,844,367 |
See accompanying notes to financial statements.
3
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2021
ADDITIONS: | ||||
Participant contributions - | ||||
Salary deferrals | $ | 254,262,715 | ||
Rollovers | 31,034,576 | |||
Employer contributions - | ||||
Matching | 75,841,763 | |||
Defined contribution | 558,024 | |||
Interest income on notes receivable from participants | 6,471,130 | |||
Dividend and interest income | 22,229,085 | |||
Net appreciation in value of investments | 454,596,535 | |||
Total additions | 844,993,828 | |||
DEDUCTIONS: | ||||
Benefits paid to participants | 334,899,310 | |||
Administrative expenses | 3,363,589 | |||
Total deductions | 338,262,899 | |||
NET ADDITIONS BEFORE TRANSFERS | 506,730,929 | |||
TRANSFERS IN FROM OTHER PLANS | 34,344,051 | |||
NET ADDITIONS | 541,074,980 | |||
NET ASSETS AVAILABLE FOR BENEFITS, BEGINNING OF YEAR | 3,496,844,367 | |||
NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR | $ | 4,037,919,347 |
See accompanying notes to financial statements.
4
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
Organization - Fresenius Medical Care North America 401(k) Savings Plan (the “Plan”) is sponsored by National Medical Care, Inc. d/b/a Fresenius Medical Care North America (“NMC” and, together with certain entities owned, controlled or under common control with NMC, the “Company”) for the benefit of the employees of the Company. NMC is an indirect, wholly-owned subsidiary of Fresenius Medical Care AG & Co. KGaA, a German partnership limited by shares (“Fresenius Medical Care AG & Co. KGaA”). The Company provides dialysis care and related services to persons who suffer from End-Stage Kidney Disease, as well as other health care services. The Company also develops, manufactures and distributes a wide variety of health care products.
The administration of the Plan is the responsibility of the Administrative Committee, which is appointed by NMC’s Board of Directors. In 2020, Wells Fargo’s Institutional Retirement and Trust business, which was operated by Wells Fargo Bank, N.A. (“Wells Fargo”), was the trustee and recordkeeper of the Plan. On April 9, 2019, Wells Fargo announced that it entered into an agreement with a subsidiary of Principal Financial Group (“Principal”) to sell certain assets and liabilities of its Institutional Retirement & Trust business. Following closing of the transaction, Wells Fargo continued as trustee and recordkeeper of the Plan under a transition service agreement with Principal. On June 22, 2021, Delaware Charter Guarantee & Trust Company d/b/a Principal Trust Company and Principal Life Insurance Company replaced Wells Fargo as trustee and recordkeeper, respectively, of the Plan. Each of these companies is a wholly-owned subsidiary of Principal, successor to certain assets and liabilities of the Institutional Retirement & Trust business of Wells Fargo.
The following description of the Plan provides only general information. Special provisions may apply for certain participants who joined the Plan pursuant to Company acquisitions. Participants should refer to the Plan document for a complete description of the Plan’s provisions.
General - The Plan is a defined contribution plan covering substantially all employees meeting the eligibility requirements of the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). A summary description of the Plan is available from the Plan administrator.
Eligibility - An employee becomes eligible for participation in the Plan on the first day of the month following the completion of ninety days of service, subject to further limitations, as described in the Plan document. Temporary employees become eligible to make elective contributions beginning the first of the month after completing one year of eligibility service. One year of eligibility of service is earned by completing at least 900 hours of service.
5
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN (continued)
Company Match - An employee becomes eligible for company matching contributions the first of the month following ninety days of service.
Participant Accounts - Each participant's account is credited with the participant's and Company's contributions and allocations of Plan earnings. Participant and employer contributions are invested as directed by the participants into one or more designated investment options offered by the Plan. Additionally, participants have the option to establish a plan level brokerage account which provides the opportunity to invest in a wide array of securities. Participants may change their investment selections at any time. Allocations of Plan earnings are based on participant account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account.
Participant and Company Matching Contributions - Each participant may contribute from 1% to 75% of his or her eligible earnings on a pre-tax basis, subject to certain IRS limitations. Participating employees age 50 and above may elect to make “catch-up” pre-tax contributions to the Plan above the Plan maximums. The maximum additional “Catch Up” contribution was $6,500 for 2021. The Company makes matching contributions to the Plan at an amount equal to 50% of the first 6% of eligible employee earnings, subject to certain limitations. Company matching contributions commence for participants who have completed ninety days of service. Company matching contributions are funded on an annual basis. Participants who are not employed by the Company at the end of the Plan year (December 31) are not eligible for the matching contribution.
Participants are at all times 100% vested to the extent of their own contributions and related earnings. Participants terminated prior to January 1, 2007 vest in the employer matching contributions according to the vesting schedule in effect at the time of termination. Active participants since January 1, 2007 vest in the employer matching contributions according to the following schedule:
Period of Service | Percentage Vested | |||
Less than 1 year | 0 | % | ||
1 but less than 2 years | 20 | % | ||
2 but less than 3 years | 40 | % | ||
3 but less than 4 years | 60 | % | ||
4 but less than 5 years | 80 | % | ||
5 years or more | 100 | % |
6
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN (continued)
Company Profit Sharing - The Company may make discretionary profit sharing contributions to the Plan for the benefit of all eligible participants. Employees who have completed ninety days of service for the plan year for which the contribution relates and are employed by the Company on the last day of the plan year for which the contribution relates are eligible to participate in this component of the Plan. Any discretionary profit sharing contributions are immediately 100% vested and are allocated to eligible participants based on compensation, with participants having ten years or more of service as of January 1, 2002 entitled to a higher profit sharing allocation. There was no profit sharing contribution made to the Plan in 2021.
Forfeitures - At December 31, 2021 and 2020, forfeited account balances totaled $2,152,306 and $2,279,252 respectively. Forfeitures are used to reduce Company contributions and/or offset administrative expenses of the Plan. In January 2022, the Company used $1,929,178 of the forfeited account balance to reduce Company matching contributions for 2021 that were funded in 2022. In January 2021, the Company used $1,816,040 of forfeited account balances to reduce Company matching contributions for 2020 that were funded in 2021.
Defined Contribution - The Company makes payments to the Plan referred to as a “defined contribution” for the benefit of all eligible participants. Employees satisfying all of the following requirements are eligible to participate in this component of the Plan: (i) the employee was employed by the Company as of March 9, 2002; (ii) the employee was a participant in the Fresenius Medical Care North America Retirement Plan (“Pension Plan”) on March 9, 2002, and (iii) the employee had completed ten years of benefit service as of March 9, 2002. Employees eligible to participate will only receive a defined contribution allocation for a given plan year after the completion of 15 years of benefit service as long as the employee is employed by the Company on the last day of the plan year for which the contribution relates. Eligible participants are immediately 100% vested in such contributions.
7
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. | DESCRIPTION OF THE PLAN (continued) |
The amount of the defined contribution for each eligible participant is actuarially determined and is principally based on the participant’s length of service, level of compensation, projected benefit from the Pension Plan, and the projected benefit from the profit sharing component of this Plan. Certain actuarial assumptions related to annual compensation percentage increases, annual investment returns and anticipated profit sharing funding levels are made in determining the defined contribution funding amounts.
Distributions - At termination of employment or the date of disability, the participant is entitled to withdraw his or her vested account balance from the Plan. Any remaining unpaid loan balances at termination of employment are treated as distributions. Terminated employees with account balances of less than $5,000 must withdraw their account balances from the Plan. Terminated employees with participant account balances greater than $5,000 may elect to defer receiving distributions from the Plan until age 72. The Plan allows any participants with account balances greater than $5,000 to elect payouts in the form of an annuity over a period not to exceed 25 years. In certain instances, prior to termination, participants who suffer a hardship may (subject to approval by the Administrative Committee and in compliance with ERISA) request a withdrawal from their account balance. In addition, plan participants are eligible to take in service distributions at age 59 ½. In the event of a participant's death, the participant's vested account balance shall be distributed as soon as practicable thereafter to his or her beneficiary.
Plan Termination - Although the Company expects to continue the Plan as a permanent, tax-deferred savings program for the exclusive benefit of Company employees, the continuance of the Plan is not assumed by the Company as a contractual obligation. The Company reserves the right to amend or terminate the Plan subject to the provisions set forth by ERISA. If the Company terminates the Plan, accounts will be valued as of the termination date and distributed in a lump sum payment to each participant subject to ERISA and/or other legal requirements that may exist at that time and in compliance with ERISA. Affected plan participants will become 100% vested upon Plan termination.
8
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Method of Accounting - The accompanying financial statements have been prepared using the accrual method of accounting under accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Investments - Investments are reported at fair value (except for fully benefit responsive contracts which are reported at contract value). Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 5 for discussion of fair value measurements.
As required under U.S. GAAP, the Plan’s investment in a stable value separate account with underlying investments in a fully benefit-responsive investment contract is presented in the statements of net assets available for benefits at contract value. The statement of changes in net assets available for benefits with respect to such contract is also presented on a contract value basis. Contract value represents contributions made, plus earnings, less participant withdrawals and is the relative measurement attributable to a fully benefit-responsive investment contract because contract value is the amount participants would ordinarily receive if they were to initiate permitted transactions under the terms of the Plan.
Purchases and sales of securities are recorded on a trade-date basis. Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis.
Notes Receivable from Participants - Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Participants may borrow from their vested accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50 percent of their account balance. The loans are secured by the balance in the participant’s account. The originating loan interest rate, determined quarterly, is set at 2% above the prime rate, as defined. Principal and interest are paid ratably through monthly payroll deductions.
Payment of Benefits - Benefits are recorded when paid.
9
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
Administrative Expenses - Certain administrative costs of the Plan have been absorbed by the Company. In addition, certain investment related administrative expenses are reflected as a reduction in net investment income and are not readily determinable.
Estimates - The preparation of financial statements in conformity with U.S. GAAP requires the Plan administrator to make estimates and assumptions that affect certain reported amounts and disclosure of contingent assets and liabilities. Actual results may differ from those estimates.
10
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
3. | PARTICIPANT INVESTMENT OPTIONS |
The following table presents a description of the investment options and the fair value (or contract value as appropriate) of the investments of each fund option as of December 31:
2021 | 2020 | |||||||
BlackRock Large Cap Blend Index Fund Option - This option invests in the Equity Index Fund F, a collective investment fund offered by BlackRock Institutional Trust Company N.A., that seeks to match the performance of the S&P 500® Index by investing in stocks that make up the index. | $ | 858,260,875 | $ | 697,424,914 | ||||
BlackRock Mid Cap Index Fund Option - This option invests in the Mid Capitalization Equity Index Fund F, a collective investment fund offered by BlackRock Institutional Trust Company N.A., that seeks to match the performance of the S&P 400® Index by investing in stocks that make up the index. | 182,325,639 | 140,807,009 | ||||||
BlackRock Small Cap Index Fund Option - This option invests in the Russell 2000® Index Fund F, a collective investment fund offered by BlackRock Institutional Trust Company N.A., that seeks to match the performance of the Russell 2000® Index by investing in a diversified sample of stocks that make up the index. | 180,045,584 | 154,841,847 | ||||||
BlackRock International Index Fund Option - This option invests in the BlackRock MSCI ACWI ex – U.S. Index Fund F, a collective investment fund offered by BlackRock Institutional Trust Company N.A., that seeks to match the performance of the MSCI ACWI ex – U.S. Index by investing in stocks that make up the index. | 87,936,646 | 79,960,281 | ||||||
BlackRock U.S. Debt Index Fund Option - This option invests in the U.S. Debt Index Fund F, a collective investment fund offered by BlackRock Institutional Trust Company N.A., that seeks to match the performance of the Barclays Capital Aggregate Bond Index by investing in a diversified sample of the bonds that make up the index. | 66,625,805 | 71,065,297 |
11
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
3. | PARTICIPANT INVESTMENT OPTIONS (continued) |
2021 | 2020 | |||||||
BlackRock TIPS Index Fund Option - This option invests in the U.S. Treasury Inflation Protected Securities Fund F, a collective investment fund offered by BlackRock Institutional Trust Company N.A., that seeks to match the performance of the Barclays Capital U.S. TIPS Index by investing in some or all of the bonds that make up the index. | 23,125,793 | 19,258,248 | ||||||
BlackRock Emerging Markets Index Fund Option - This fund invests in the Emerging Markets Index Non-Lendable Fund F, a collective investment fund offered by BlackRock Institutional Trust Company N.A., that seeks to match the performance of the MSCI Emerging Markets Index by investing in stocks that make up the index. | 29,619,753 | 28,257,312 | ||||||
MassMutual Stable Value Separate Account Option - This option is designed to provide a stable rate of return, generated from performance of a Core Bond portfolio, that insulates the fund from daily fluctuations in the bond market. The fixed rate of return resets quarterly. | 458,048,472 | 447,380,394 | ||||||
Target Date Retirement Funds Option - These options invest in a mix of the above underlying funds and are designed for Plan participants expecting to retire around the year indicated in the fund name. The asset allocation strategy of these options generally become increasingly conservative as the target retirement date approaches. The target date options are as follows: | ||||||||
Target Retirement Income Fund Option | 210,290,602 | 33,431,795 | ||||||
Target Retirement 2015 Fund Option | - | 40,753,760 | ||||||
Target Retirement 2020 Fund Option | - | 146,136,533 | ||||||
Target Retirement 2025 Fund Option | 290,943,287 | 257,341,329 | ||||||
Target Retirement 2030 Fund Option | 314,612,267 | 256,380,245 | ||||||
Target Retirement 2035 Fund Option | 331,133,970 | 262,725,635 | ||||||
Target Retirement 2040 Fund Option | 251,875,250 | 199,704,290 | ||||||
Target Retirement 2045 Fund Option | 185,543,341 | 139,996,449 | ||||||
Target Retirement 2050 Fund Option | 225,193,971 | 166,367,899 | ||||||
Target Retirement 2055 Fund Option | 5,170,732 | - | ||||||
Target Retirement 2060 Fund Option | 2,074,387 | - | ||||||
Target Retirement 2065 Fund Option | 632,939 | - |
12
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
3. | PARTICIPANT INVESTMENT OPTIONS (continued) |
2021 | 2020 | |||||||
Vanguard Long Term Bond Index Fund Option - This option is a publicly traded mutual fund that seeks to match the performance of the Barclays Capital U.S. Long Government/Credit Float Adjusted Bond Index. | 50,094,824 | 61,928,249 | ||||||
Fresenius Company Stock Fund Option - This option invests in Fresenius Medical Care AG & Co. KGaA company stock and cash. This option was frozen as of June 15, 2015. | 34,026,346 | 49,429,689 | ||||||
Brokerage Link - This investment option allows participants to establish a plan level brokerage account with Charles Schwab for the opportunity to invest in common stocks, mutual funds, corporate bonds and other securities. | 58,557,980 | 44,245,186 | ||||||
Interest-Bearing Cash - This option automatically sweeps uninvested cash into a deposit account where it earns interest. | 9,269,605 | 9,273,387 | ||||||
Total | $ | 3,855,408,068 | $ | 3,306,709,748 |
4. | STABLE VALUE SEPARATE ACCOUNT |
The Plan provides a stable value separate account option to participants, referred to as the “MassMutual Stable Value Separate Account”, consisting of an investment in an underlying guaranteed investment contract. This fund option is designed to provide a guaranteed rate of return with crediting interest rates that reset on a quarterly basis. The Plan has entered into a group annuity contract with Massachusetts Mutual Life Insurance Company (“MassMutual”), whereby deposits made by the Plan to the contract are maintained in an account separate from MassMutual’s general investment account thereby insulating the account from liability arising out of other business activities conducted by MassMutual. The separate account invests in a diversified portfolio of fixed income securities, including corporate, mortgage backed, and government and agency bonds and may include derivative instruments. At December 31, 2021, the contract value of the Plan’s investment in the contract was $915,326,548. At December 31, 2020, the contract value of the Plan’s investment in the contract was $716,830,615.
13
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
4. | STABLE VALUE SEPARATE ACCOUNT (continued) |
The stable value separate account is considered fully benefit-responsive whereby participants are permitted to make withdrawals at contract value for benefit payments, loans or transfers to other investment options.
If one of the following conditions was present it would limit the Plan’s ability to conduct transactions at contract value.
1) Complete or partial termination of the Plan as notified by the Contractholder/Plan sponsor,
2) Complete or partial termination of the Separate Account Guaranteed Investment Contract (SAGIC), as notified by the Contractholder/Plan sponsor,
3) Determination by IRS that the Plan no longer meets Code Section 401(a),
4) Breach of the SAGIC Contract by the Contractholder with inability to cure within 15 business days of breach.
5) Market Value Event withdrawals, including but not limited to:
· | Plan’s establishment, activation or material change to a Plan investment fund; change in regulation that will have a material adverse financial effect on MassMutual in the context of the SAGIC Agreement, |
· | Removal or transfer of a group of employees from the Plan due to layoff, merger, early retirement package, sale or discontinuance of all or any part of the Plan sponsor’s or Affiliated Employer’s business, etc. |
· | Employer directed transfer of assets from the SAGIC to any other fund. |
None of the above conditions were present as of the date of these financial statements.
The Plan administrator does not believe that any events that would limit the Plan’s ability to transact at contract value with the Plan participants are probable of occurring.
14
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
5. | FAIR VALUE MEASUREMENTS |
Under U.S. GAAP, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy has been established under U.S. GAAP that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
The three levels of the fair value hierarchy are as follows:
Level 1 | Observable inputs based on unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access. |
Level 2 | Inputs for assets or liabilities, other than quoted prices included in Level 1, which are either directly or indirectly observable as of the measurement date. Inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; and inputs derived principally from or corroborated by observable market data by correlation or other means. |
Level 3 | Unobservable inputs where there is little or no market activity for the assets or liabilities. These inputs reflect Plan management’s assumptions of the data market participants would use in pricing an asset or liability, based on the best information available in the circumstances. |
15
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
5. | FAIR VALUE MEASUREMENTS (continued) |
Following is a description of the valuation methodologies used for Plan assets measured at fair value at December 31, 2021 and 2020.
Fresenius Medical Care AG & Co. KGaA shares - The Plan’s investment in shares of Fresenius Medical Care AG & Co. KGaA (the parent company of the Plan sponsor), which trade on the New York Stock Exchange in the form of American Depository Receipts (ADRs), is valued at the share’s closing price on the last business day of the Plan year.
Mutual Funds - Shares of mutual funds are valued at quoted market prices, which represent the net asset value (NAV) of the shares held by the Plan at year end.
Brokerage Link - Included in the brokerage link account are common stocks and corporate bonds. Common stocks are valued at end of year using quoted prices on the market on which the individual securities are traded. Certain corporate bonds are valued at the closing price on the market on which the bonds are traded. Corporate bonds traded in the over-the-counter market are valued at the average of the last reported bid and asked prices.
Interest-bearing Cash – This investment is valued at historical cost, which approximates fair value.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
16
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
5. | FAIR VALUE MEASUREMENTS (continued) |
The following tables set forth by level, within the fair value hierarchy, the Plan’s investments at fair value as of December 31, 2021 and 2020:
December 31, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Mutual Funds | $ | 49,349,821 | $ | - | $ | - | $ | 49,349,821 | ||||||||
Fresenius Medical | ||||||||||||||||
Care AG & Co KGaA- Shares | 33,236,443 | - | - | 33,236,443 | ||||||||||||
Brokerage Link(a) | 58,349,449 | 208,531 | - | 58,557,980 | ||||||||||||
Interest – bearing Cash | 9,269,605 | - | - | 9,269,605 | ||||||||||||
Total Investments at Fair value | $ | 150,205,318 | $ | 208,531 | $ | - | 150,413,849 | |||||||||
Total Investments at Net Asset Value* | 2,789,667,671 | |||||||||||||||
Total Investments | $ | 2,940,081,520 |
December 31, 2020 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Mutual Funds | $ | 60,136,178 | $ | - | $ | - | $ | 60,136,178 | ||||||||
Fresenius Medical | ||||||||||||||||
Care AG & Co KGaA- Shares | 48,046,726 | - | - | 48,046,726 | ||||||||||||
Brokerage Link(a) | 44,123,365 | 121,821 | - | 44,245,186 | ||||||||||||
Interest – bearing Cash | 9,273,387 | - | - | 9,273,387 | ||||||||||||
Total Investments at Fair value | $ | 161,579,656 | $ | 121,821 | $ | - | 161,701,477 | |||||||||
Total Investments at Net Asset Value* | 2,428,177,656 | |||||||||||||||
Total Investments | $ | 2,589,879,133 |
* In accordance with subtopic 820-10, certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statements of net assets available for benefits.
17
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
5. | FAIR VALUE MEASUREMENTS (continued) |
(a) - Investments in brokerage accounts of Plan participants choosing the “Brokerage Link” investment option. Such investments consist of a variety of classes of common stocks, mutual funds, corporate bonds and other investments as directed by Plan participants.
For the year ended December 31, 2021, there were no transfers among Levels 1, 2 or 3.
The following table for December 31, 2021 and 2020 sets forth a summary of the Plan’s investments with a reported NAV.
Investments | Fair Value December 31, 2021* | Fair Value December 31, 2020* | Redemption Frequency | Other Redemption Restrictions | Redemption Notice Period | |||||||||
Equity Index Fund | $ | 1,398,647,161 | $ | 1,154,213,049 | Daily | None | None | |||||||
Russell 2000 Index Fund | 271,616,804 | 262,343,346 | Daily | None | None | |||||||||
Mid Capitalization Equity Index Fund | 324,881,926 | 285,655,269 | Daily | None | None | |||||||||
U.S. Debt Index Fund | 300,143,776 | 230,596,739 | Daily | None | None | |||||||||
Blackrock MSCI ACWI ex-U.S. Index Fund | 347,744,364 | 352,271,241 | Daily | None | None | |||||||||
U.S. Treasury Inflation Protection Securities Fund | 35,735,482 | 23,712,751 | Daily | None | None | |||||||||
Emerging Markets Index Non-Lendable Fund | 109,363,252 | 116,210,227 | Daily | None | None | |||||||||
Black Rock Short Term Investment Fund | 1,534,906 | 3,175,034 | Daily | None | None | |||||||||
Total | $ | 2,789,667,671 | $ | 2,428,177,656 |
* The fair value of the investments has been estimated using the net asset value of the investment as a practical expedient.
18
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
6. | NOTES RECEIVABLE FROM PARTICIPANTS |
Participants may at any time borrow up to 50% (but not more than $50,000) of their vested account balances with a minimum loan amount of $500. Such loans are secured by the participants’ account balances. The loans bear a reasonable rate of interest ranging from 4.25% to 7.25% per annum as of December 31, 2021 and 2020, and generally must be repaid in equal payments in five years or less. A longer repayment period may be allowed for loans granted to purchase a primary residence. In addition, participants borrow from their vested account balance. Plan participants are a party in interest and these transactions are exempt from the prohibited transaction rules.
7. | RELATED PARTY TRANSACTIONS |
The Plan invests in collective investment funds offered and managed by BlackRock Institutional Trust Company N.A. (“BlackRock”). BlackRock charged the Plan investment management fees of $798,693 in 2021, of which $158,966 and $202,417 was payable as of December 31, 2021 and 2020, respectively.
Wells Fargo charged the Plan $730,516 in 2021 for recordkeeping services. As of December 31, 2021 and 2020, the Plan had amounts payable for these services of $0 and $424,824, respectively.
Principal charged the Plan $1,037,042 in 2021 for recordkeeping services. As of December 31, 2021 and 2020, the Plan had amounts payable for these services of $444,888 and $0, respectively.
The Plan invests in the Wells Fargo Money Market Fund. Transactions in such investments are considered party-in-interest transactions as defined by ERISA but are exempt from the prohibited transaction rules.
The Plan invests in shares of Fresenius Medical Care AG & Co. KGaA, the parent company of the Plan Sponsor. Transactions in such investments are considered party-in-interest transactions as defined by ERISA but are exempt from the prohibited transaction rules.
19
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
8. TAX STATUS OF THE PLAN
The Internal Revenue Service, by letter dated April 30, 2015, determined that the Plan constitutes a qualified trust under Section 401(a) of the Internal Revenue Code (the "Code") and is, therefore, considered to be exempt from Federal income taxes under the provisions of Section 501(a). The Plan has been amended since receiving the determination letter, however, the Plan administrator and the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Code. Accordingly, no provision for income taxes has been included in the Plan’s financial statements.
U.S. GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the tax authorities. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2021 and 2020, there are no uncertain tax positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements. The Plan is subject to routine audits by the tax authorities; however, there are currently no audits for any tax periods in progress. In addition, there are no tax related interest or penalties for the periods presented in these financial statements.
20
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
9. RISKS AND UNCERTAINTIES
The Plan provides for various investment options in any combination of collective investment funds, stable value separate account and mutual funds. An option to invest in shares of Fresenius Medical Care AG & Co. KGaA was frozen in 2015. Additionally, Plan participants can invest in a wide array of securities through a plan level brokerage account. Such investments are exposed to various risks, such as interest rate, market, and credit risks. Due to such risks, it is at least reasonably possible that changes in market values, interest rates or other factors in the near term would materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.
The 2019 Novel coronavirus (or “COVID-19”) has adversely affected economic activity globally, nationally and locally. Following the COVID-19 outbreak in March 2020, the financial markets have experienced significant volatility, therefore affecting the values of investment securities. These economic and market conditions and other effects of the COVID-19 outbreak may continue to cause volatility. The extent of any adverse impact of the COVID-19 outbreak on the Plan’s participants’ account balances and the amounts reported in the 2021 statement of net assets available for benefits cannot be predicted at this time.
10. TRANSFERS FROM/TO OTHER PLANS
In January 2021, the assets of the Cardiovascular Consultants 401(k) Plan, were merged into the Plan. The total amount of $9,507,701 is reflected as transfers on the statement of changes in net assets.
In January 2021, the assets of the Laurus Healthcare Management 401(k) Plan, were merged into the Plan. The total amount of $24,415,245 is reflected as transfers on the statement of changes in net assets.
In January 2021, the assets of the Florida Kidney Care 401(k) Plan, were merged into the Plan. The total amount of $421,105 is reflected as transfers on the statement of changes in net assets. During 2021, there were no transfers to other plans.
11. SUBSEQUENT EVENTS
The Company has evaluated subsequent events occurring from the date of the financial statements through June 29, 2022, the date that these financial statements were available to be issued.
There were no subsequent events which require an adjustment to or disclosure in these financial statements.
21
FRESENIUS MEDICAL CARE NORTH AMERICA 401(k) SAVINGS PLAN
I.D. NO. - 04-2835488
PLAN NO. - 002
FORM 5500, SCHEDULE H, PART IV, LINE 4i -
SCHEDULE OF ASSETS
(HELD AT END OF YEAR)
DECEMBER 31, 2021
(a) | (b) | (c) | (d) | (e) | ||||||||||
Identity of Issuer | Description | Cost | Current Value | |||||||||||
Collective Investment Funds - | ||||||||||||||
* | BlackRock Institutional Trust Company N.A.: | |||||||||||||
Equity Index Fund F | 14,584,924 Units | ** | $ | 1,398,647,161 | ||||||||||
Russell 2000 Index Fund F | 3,789,430 Units | ** | 271,616,804 | |||||||||||
Mid Capitalization Equity Index Fund F | 3,952,588 Units | ** | 324,881,926 | |||||||||||
U.S. Debt Index Fund F | 8,370,310 Units | ** | 300,143,776 | |||||||||||
BlackRock MSCI ACWI ex - U.S. Index Fund F | 10,189,908 Units | ** | 347,744,364 | |||||||||||
U.S. Treasury Inflation Protected Securities Fund F | 1,368,237 Units | ** | 35,735,482 | |||||||||||
Emerging Markets Index Non-Lendable Fund F | 7,585,109 Units | ** | 109,363,252 | |||||||||||
Short Term Investment Fund | 1,534,906 Units | 1,534,906 | ||||||||||||
2,789,667,671 | ||||||||||||||
* | Fresenius Medical Care AG & Co. KGaA | 1,023,920 Shares (ADRs) | ** | 33,236,443 | ||||||||||
Mutual Funds - | ||||||||||||||
Vanguard Long Term Bond Index Fund | 471,821 Shares | ** | 48,559,918 | |||||||||||
* | Wells Fargo Money Market Fund | 789,903 Shares | ** | 789,903 | ||||||||||
49,349,821 | ||||||||||||||
Interest-Bearing Cash | 9,269,605 Units | 9,269,605 | ||||||||||||
MassMutual Stable Value Separate Account | Group annuity contract | ** | 915,326,548 | |||||||||||
Brokerage Link | Brokerage accounts | ** | 58,557,980 | |||||||||||
* | Notes Receivable from Participants | Interest range of 4.25%-7.25% | - | 111,741,464 | ||||||||||
Total | $ | 3,967,149,532 |
* | - | denotes a party-in-interest as defined by ERISA | ||||||||
** | - | participant directed |
SEE REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
22
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
Fresenius Medical Care North America | ||||
401(k) Savings Plan | ||||
Date | June 29, 2022 | By: | /s/ Mark Fawcett | |
Mark Fawcett | ||||
Member of the Administrative Committee |
23
Exhibit No. | Description of Exhibit | Internal Page No. | Sequential Page No. |
23.1 | Consent of WithumSmith+Brown, PC | 25 | 28 |
24