Oliver Maier - Head of Investor Relations & Corporate Communications- Fresenius Medical Care Management Ag Benjamin J. Lipps - Chairman of The Management Board of Fresenius Medical Care Management Ag and Chief Executive Officer of Fresenius Medical Care Management Ag Robert Maurice Rice Powell - Vice Chairman of The Management Board of Fresenius Medical Care Management AG and Chief Executive Officer of North America of Fresenius Medical Care Management AG Michael Brosnan - Chief Financial Officer of Fresenius Medical Care Management AG and Member of Management Board - Fresenius Medical Care Management

Thomas M. Jones - Berenberg Bank, Research Division Lisa Bedell Clive - Sanford C. Bernstein & Co., LLC., Research Division Edward Ridley-Day - BofA Merrill Lynch, Research Division Gary Lieberman - Wells Fargo Securities, LLC, Research Division Christoph Gretler - Crédit Suisse AG, Research Division Oliver Reinberg - CA Cheuvreux, Research Division Veronika Dubajova - Goldman Sachs Group Inc., Research Division Ingeborg Øie - Jefferies & Company, Inc., Research Division Martin Wales - UBS Investment Bank, Research Division Holger Blum - Deutsche Bank AG, Research Division

Ladies and gentlemen, thank you for standing by. Welcome to the Fresenius Medical Care Q 2012 Conference Call. [Operator Instructions] I would now like to turn the conference over to Oliver Maier, Head of Investor Relations. Please go ahead, sir.

Great. Thank you so much, Jerry. Thank you, everybody for being back. I would like to welcome all of you to Fresenius Medical Care's Earnings Call for the third quarter and for the first 9 months of 2012. Also a very warm welcome to everybody who joined us today out there on the Web. We very much appreciate your continued interest actually on the company. With us today are Ben Lipps, our Chief Executive Officer and Chairman of the Management Board of Fresenius Medical Care; Rice Powell, Deputy Chairman of Fresenius Medical Care and Chief Executive Officer of Fresenius Medical Care North America; and Mike Brosnan, our Chief Financial Officer. I would like to start presentation also by mentioning our cautionary language that is in our Safe Harbor statement of our presentations and the material we distributed today. For further details concerning risks and uncertainties, please refer to our filings including our SEC filings. One more housekeeping item for today's call, because of the impact of Hurricane Sandy on the East Coast in the U.S., many analysts and investors are still without power or may not have reliable server access to join today's call online. However, for fair disclosure considerations and that we are aware of the fact that we always have a big crowd joining us for our disclosure calls, I would like to ask those who have dialed in to limit their questions to just 2, absolutely max 3 questions per round, in an effort to give everyone an opportunity to participate in the Q&A portion. Obviously, absolutely feel free to reenter the queue if you wish. We will, of course, provide a playback with -- but we would appreciate everyone being considerate of our time constraint. That's it for my end, Ben, and the floor is yours.

Thank you, Oliver. Ladies and gentlemen, again, let me extend a warm welcome to you, our Board members, all of our employees, associates and people who've joined us on the Internet. In terms of the agenda, I'll cover the global business update, Rice will cover our progress in North America, Michael with financials. Then we'll go into questions and answers. Clearly, third quarter was a very challenging quarter yet we did make progress defining our going forward prospects with a number of focused projects that I believe will strengthen our business as we look ahead. In light of the negative implications from the difficult economic environment, the currency fluctuations, we did accomplish a good operating result with excellent cash flow for the third quarter. Although the third quarter is my last quarter that I will report to you as a CEO and Chairman of the Management Board, I would like to point out that the CEO transition to Rice Powell continues on track with the appointment of Ron Kuerbitz as the new CEO for North America effective January 2013. Working with Rice and the management Board, as we have done for the past 13 years, I believe that our prospects for continued growth remain very solid and excellent. I would now like to turn to Chart 4 and talk about the numbers for third quarter. As you can see, our revenue was approximately $3.4 billion, a 7% increase prior -- over prior year. This reflects an 11% constant currency increase. North America grew at 13%, impressive, and the growth in International was 7% at constant currency. Asia Pacific and Europe had seen weaker revenue growth in the -- than normal in the Services business, which I'll talk a little bit about as I get to talking about the services. However,…

Thank you. Ben. Good morning, good afternoon, everyone. Slide 13 begins my prepared remarks. I think it's important that if you'll allow me, to at least start with an update that's not depicted on Slide 13, on Hurricane Sandy. Obviously, it was a tremendous storm, a lot of impact for us. We had 207 clinics that were affected by this monster storm, all the way from North Carolina to Massachusetts. We had roughly 10,000 patients whose scheduled treatments were impacted and what I mean by that is we either were able to move those treatments up and do them on a Sunday, we had great cooperation with our staff to come in and treat patients ahead of the storm. Yes, we had some patients that couldn't do that and we're trying to make those treatments up as quickly as we can. We, today, have around 150 clinics that are closed and will begin opening. The good news for us is our clinics have power. We have generators in each of our clinics and allow them to perform treatments during these difficult times, which happened to us in many cases as roads are closed, municipalities have asked people to stay off the road and we have certainly abided by that request and we do have some water damage in areas, but we are coming back up. We have employees whose homes have been impacted. We're going to work with them to make sure that we can help them get back on their feet as quickly as possible, but all in all, this terrible event we've been able to handle with preparation and tremendous teamwork from our staff, the local municipalities and all of those that take patient care as seriously as we do. Now with my prepared remarks, the integration of…

Thank you, Rice. And good morning, and good afternoon to everyone. I'll go through the financials starting on the Q3 P&L. As you can see, the top line growth of $3.4 billion, as Ben has already commented on, our operating earnings grew 6% to $568 million worldwide. Our EBIT margin is down slightly from 16.8% to 16.6% or roughly 20 basis points and we saw the margin decline in both North America and in our International business. North America, our margins declined by 10 basis points as a result of higher personnel costs this year and higher rebates recorded in Q3 2011 results than the same quarter this year for pharma products. This was partly offset by higher revenue rates and the progression of the Liberty acquisition that Rice reported on. In International the decline in margin was about 50 basis points, driven mostly by a change in methodology regarding cost allocations in our production units related to the International business and some smaller unfavorable reimbursement effects, partly offset by improvements in our debt expense in the International business. Continuing to move through the P&L, our net interest expense increased from $68 million to $108 million, roughly $10 million of this relates to the earnings on the investment note we had on the Renal Advantage business in 2011, prior to our acquisition of Liberty with the balance of the change related to our capital markets activities and our acquisition activities on a year-over-year basis. As you can see from the reported numbers, our debt is up about $1.7 billion from the end of 2011. Moving to tax expense for the quarter, you can see the reported effective tax rate is down about 170 basis points. This difference is essentially due to the higher cost in 2011 due to some tax…

Thank you, Mike. Appreciate it. Just a closing comment and we'll go into Q&A. Again, as I've mentioned since this is my last analyst meeting as CEO, I'd like to express my appreciation to all of you, the investors and the analysts, who have been -- who have followed the company for a number of years, who have been supportive. We really do appreciate your support and we try to work with you in any possible way. And I think your support has been key to our success. And as I said, I really firmly believe, and I think everybody does on the management team throughout the company, that we have a very bright future. Very proud of the new management team and essentially, that the management team is essentially all from inside FMC. And that's a real credit, I think, to the group that I worked with for the last many years. So after all that, I think why don't we open up for questions and answers and get back to the questions that are on their minds. So, Oliver?

Great. Thank you very much, everybody, for the update on the presentation. So, Jerry, I think we can open up the lines for Q&A, and please remember my opening housekeeping remarks in terms of the amount of questions. Thank you so much.

[Operator Instructions] The first question is from Tom Jones, Berenberg Bank.

Thanks for taking my 2 questions. The first was just on commercial revenue per treatment rates. I mean you've seen some softness in Q2 and Q3. Some of it has been of your own volition, some of it has been coming from external pressures. From our perspective, when should we start to think about that annualizing out and you getting back to a more normal, so low single-digit, year-on-year increase in commercial revenue per rate -- commercial rates, sorry? And then the second question was really just on these other measures. I'm still slightly confused about, number one, if you might be able to give us a little bit more detail on what exactly they involve, from what the potential magnitude of them is, I mean in terms of what you're pulling forward or from past periods into Q4 to help you get to your guidance range.

Why don't you get in, Mike?

Yes. In terms of the commercial revenue treatment rates, I think the 2 things we've talked about the most, and I'll just, in terms of order of importance, I guess, would be that, as both Rice and I have commented during the year, we have had some of the larger commercial contracts come up for renewal this year. And we completed those, I think, in the second quarter, we said we're done. So I think you may see some year-over-year effects coming into the first part of 2013 just given the timing of those, but I'd say by midyear, that should be behind us, 2013. And then the other effects, which we commented on both last year and this year, is that with the unbundled commercial contracts, you do have a pharma effect associated with that, that shows up in your revenue rate. Because Rice is reporting on the fact that we're more or less in a stable position at this point on, I would expect that will stop having a volatile effect on the top line. In terms of the collection efforts, I don't have too much more to say, frankly. We felt because we are at the low end of the range that we should highlight it. It's more than we've traditionally seen in terms of normal day-to-day operations, so we just wanted to make that point.

The next question is from Lisa Clive, Sanford Bernstein. Lisa Bedell Clive - Sanford C. Bernstein & Co., LLC., Research Division: Two questions. One, you mentioned that the commercial mix was also unfavorable this quarter. Could you just give us a little more detail? I was under the impression this is really the first time in quite a while that, that's been an issue for you, so maybe comment on how you think we should consider that going forward. And then the second question on the International revenue per treatment. You did mention you have gotten increases in a number of countries, but are there areas in particular where you've had pressure and again, what should we expect for that over the next year or so?

Thank you, Lisa. Again, Mike, I think why don't you take those, okay? Or do you want -- Rice, do you want to do the commercial?

I'll chime in. Go ahead, Mike.

Yes. On the commercial mix, you are correct. Typically, what we've said now for many, many quarters is that it was stable. There's always a little bit of plus, minus in that, but in the third quarter, there was some softness. So just in terms of transparency, we're reporting out on that. I frankly wouldn't read anything into that in terms of any kind of long-term trending. We typically comment on it as to whether it's stable or not, and so we've just maintained our consistency there and we did see some softness in Q3. But I wouldn't do any predicting with regard to as we go forward. On the International rates, Ben, absolutely, is correct, of course. And we have seen, particularly in the third quarter, some favorability. When you look at that on a year-to-date basis, it's a little bit closer to what we had guided to for the year because you did have, as I had commented beginning of the year, we had increased volatility in International rates, both ups and downs. So Q3 was very strong. The full year is a positive, a little over 1%. And what I'd said at the beginning of the year, when you look at revenue rates internationally, that we roughly had a break even to a slight positive. And when I think of revenue rate, including not just the base business, but also the acquisitions we've done, I think my guidance still holds because some of the countries we're growing in and having very good results in are lower-revenue-rate countries than some of the legacy countries. So you've got a little bit of country mix in there that if you were to look at the revenue rate all-in, without regard to legacy business and acquisitions, we'd be right within the range that I'd indicated the beginning of the year. Lisa Bedell Clive - Sanford C. Bernstein & Co., LLC., Research Division: And just lastly, I wanted to say, Ben, you will be missed. Rice, clearly, we think the company is in good hands. And, Ben, I hope you have a good time in Washington, harassing those politicians and Medicare to get integrated care done.

We will, we will. Thank you, Lisa.

The next question is from Edward Ridley-Day, Bank of America.

Firstly, on your IV Iron business, can you give us a little bit more detail on the performance of that business? Clearly, there are some significant challenges in that market. And how -- basically, how you're going to go about renegotiating your agreement there on benefit? That would be my first question. And secondly, I think just quickly on the med tech tax, are you now in a position where you could give us more guidance on the potential impact of that on your business next year?

Ed, this is Ben. I think as far as the IV Iron business and our position that we're in the process of executing this quarter, I'm going to turn that to Rice. And I think, Rice, the tax this year?

Sure. Ed, let's see if I can give you some guidance here. A couple of things, yes, in general, the market is extremely competitive, extremely tight, so let's go back and just a couple of historic points. A couple of years ago was we were going into the bundle, we guided you when we said to you we felt that the IV Iron dose would, in fact, go up in the near future, and we did see that. And then consequently, as EPO has dropped, people have now settled into their iron dose and we are seeing in our own clinics and in the industry in the U.S. that the IV Iron dose has now come down on a trailing effect, if you will, from where EPO ended up. So just in general, we've seen the dose come down some. The renegotiation, there's not a lot I can tell you other than to say the following, Ed. It's a partnership. We contemplated in doing the deal that if there were external circumstances that would fundamentally change the market, that we would both be willing to sit down at the table and try to re-craft the deal in a way that provides economic benefit to all the parties involved, and we're at that point in time. It's just the right time. There is some competition with new products out. Pricing is tightening up, if you will. So we're taking advantage of the gain and those moneys that are available to us to renegotiate and put a more realistic, if you will, deal in place. I don't think there's much more that I can say. We are continuing to meet with our partner, American Regent, Luitpold, and those discussions are ongoing. So there's probably not much more I can say other than we did contemplate that the market could change fundamentally with the bundle coming and all of these things, and we are at the point where renegotiation makes sense.

Rice, if I could just quickly, just a quick follow-up on that.

Yes.

Is there -- do you feel there is something you can do really to sort of otherwise stabilize your business? I mean obviously, renegotiating the contract is one thing, but stabilize the volumes, is there any initiatives you can give us some detail on?

Yes, what we would like to do, obviously, we had a commitment to our partner as to the amount of Venofer we'd be purchasing. And what we're doing, we're trying to redefine what makes sense, what's rational on those commitments. I will tell you that our market share has not dropped. We are continuing to manage the market. We're continuing to invest on our Venofer puff [ph], which will automatically dose Venofer in the clinics. It's a module that goes in our machine. We'll continue to roll that out, but the volumes -- the fact is the volumes are down. And we need to deal with that, Ed. And that's what we're attempting to do. And then secondly, on the med tech tax, I would guide you that the impact of that is somewhere in the $20 million to, say, $25 million range for us as we look at next year.

The next question is from Gary Lieberman, Wells Fargo.

The first question, Mike, I think you addressed, but I just want to make sure I'm clear on it. You said, I guess, that the AR and also, to some extent, the revenue and the guidance is benefiting from prior period recording of revenue?

Yes, services performed in the prior periods. Just when you think about the U.S. healthcare system and how revenues are recognized on services performed, sometimes you get -- you routinely get some carryover from one period to the next. I just highlighted it because it's a little bit bigger.

Is there any way you can sort of quantify it for us or at least directionally kind of quantify for us?

Well, I said it's helping us with our guidance, so that gives you some directional input. And I think beyond that, I've said all I'm planning on saying today.

Okay. And then, I guess, my next question, it sounds -- looks like the volatility with the currency maybe is a little bit bigger than it's been in the past. Have you given any thought to sort of increasing the hedging effort of some of the volatility there?

Yes, I think why don't you take that one.

Okay. When we were more just products, we could have some internal hedges, but we're now 50-plus percent services, so, Mike, second?

Yes. No, I think I'd said in the past, but just to kind of refresh it, we do have an active hedging program but -- and we typically do most of our hedging as we're preparing our operating plan for the following year. We take a look at what we think the overall currency levels are and we typically hedge a portion of the revenue stream, particularly as it relates to the products businesses Ben indicated. And then each region monitors that over the course of the year, paying particular attention to the more volatile countries, and hedging when we think it's appropriate from a cost perspective. Because, as you know, some of the more esoteric currencies get pretty expensive when we look at the forward rates. So I wouldn't say we're changing anything, we're very mindful of it and we've got really very good folks monitoring it around the world and in our central treasury group in Bad Homburg. And as a consequence, I'm not changing the guidance that I provided at the beginning of the year relative to the impact of currency on the business.

Okay. And then if I could just maybe sneak a last question in. You mentioned the change in distributor relationships in China. Could you give us maybe just a little bit more detail on that?

Yes, I think in China, as Japan, there's always what they call, intermediary distributors. You have your own sales force there, but there's a whole system for delivery of the products. And we see -- we've had in China alone, there would be maybe 15 distributors. And again, depending on their financial position, we have to assess that and we do that from time to time when their contracts come up. We particularly believe that with all this, the activity going on between Japan and China, that there may be some very unique opportunities for us over the next couple of years. So we just decided it was time to make sure that we have all the strong horses that we need in terms of this secondary distributorship, and when you do that, there's obviously some loss of revenue at the time. So that's really all it is. We're just truing up that group, truing up that distributorship and getting prepared for what we think is going to be north of 25% growth for the next few years.

And that should take 1 quarter or 2 quarters to kind of smooth itself out?

You could see the main hit of it probably in the third quarter.

The next question is from Chris Gretler, Crédit Suisse. Christoph Gretler - Crédit Suisse AG, Research Division: Now, 2 questions. Now the first relates to your cost per treatment. I think your guidance during last conference call, you mentioned that you expect that to be down 1%, 2%. And now, it looks more like, a little bit, an ambitious assumption. How do you stand to that statement nowadays? And then the second question relates to the cost allocation that hit in your International margins. Can you explain that to me? I thought that would be basically in the consolidation process, now that is would basically now canceled out. So I was just wondering, any more insights? And then lastly also, I wanted to wish all the best to Ben for his future.

Thank you. I think, Mike, that's clearly your question.

Okay. Thanks, Chris. Yes, on the cost per treatment in Q2, I did say that I knocked the cost increase down from 2% to 3% to 1% to 2%, and in light of what we're seeing in the fourth quarter, I think I would adjust that further in terms of our full year expectations on the cost per treatment probably being in the flat to plus 1% range. So you're taking note of the favorability that we have to earn in the U.S. on the cost side. And in terms of the change in allocating methodology, I commented on it only because when you're looking at just the -- you're actually correct, it makes no difference to the consolidated results. But when you're looking at only the International margins, any change we make with regard to how we allocate those costs around the world has an impact. So it's my way of explaining the change in margin, but it actually has absolutely no impact on the consolidated business worldwide.

The next question is from Oliver Reinberg, Cheuvreux.

Yes, Oliver Reinberg from Cheuvreux. And I have 2 questions, plus one housekeeping. Firstly, I'd like to come back to the mix of commercial patients, how much of these are actually bundled and unbundled? I fully understand that you do not give any kind of color what the percentage is, but given the fact that there's now probably a meaning for all moving item, can you just give us any kind of idea of how many percentage points the mix of bundled contracts has actually increased? That would be helpful. And secondly, I think at the beginning of the year, you guided us to what's the kind of increase in minority charges to about $160 million. I think if we take Q3 as a run rate, we would probably only get half of this increase coming through. So probably we fall $25 million to $30 million short of that. Could you just give us an idea of how much of this kind of shortfall would probably initial conservatism and how much of this is the fact that the Liberty integration is somewhat behind schedule, in which we should actually consider some kind of increase among all these charges next year? And on the housekeeping briefly, Michael, can you just give us any kind of color from the refinancing, what would be the absolute impact on the interest cost on a 12 months basis in absolute dollar terms?

Rice, do you want to take the...

Yes. Oliver, it's Rice. On the mix of commercials and the bundling, I know I'm not going to make you happy. I'm probably not going to give you what you're looking for, unfortunately. Again, what I will take you back to is the comment that Mike made earlier. We had some big contracts. We've done those. Those are behind us now. We are comfortable with where we sit, but I'm not particularly comfortable giving you any more color than that. I apologize, but I think I'm going to hold it at that point.

Mike, you want to cover the other questions?

Sure. Yes, Oliver. On the minority interest, you have a better memory than I do. I didn't remember the $160 million earlier in the year. But yes, with 3 -- with 9 months done, I think you're right. I think the minorities will come in a little bit better than that for the full year. And I think Q3 and -- or the 9-month date is probably a pretty reasonable guide for the full year. On the interest side, we'll provide more guidance when we do our -- or more transparency when we do our full year guidance for 2013. I think overall, we are very happy with our cost of money, and I think we've taken advantage of the market for the last couple of years to do most of our refinancing activity at very favorable rates. But I'll say more on that probably when I do my full year guidance with the year-end results.

Okay. Can I just -- and coming back to the minorities, I mean the shortfall, is that mostly conservatism or is it the kind of delay of delivered integration? So would that actually be something that we have to be in mind for next year?

Yes, it was just conservatism in the guidance. The fact that it's lower than the $160 million is, I think, good news.

The next question is from Veronika Dubajova, Goldman Sachs.

I also want to start off by thanking Ben for guiding us over the past number of years and we wish you all the best for your retirement. We will miss you and, Rice, congratulations and we look forward to working with you. I have 2 questions, if I can. My first one is on the International same-store growth rate. And you've now seen meaningful deceleration here from 5.5%, 6%, if I look back at where you were tracking in '09, '10 to this quarter, 2%. And I understand that there are some onetime efforts or effects here that are driving that, but I'm just slightly puzzled and trying to think through this not just for 2012 or 2013, but really thinking about this trend on a 3- to 5-year view. What do you think is a realistic expectation for a same-store growth rate given the type of demographic trends that you are seeing? And also, what type of profitability impact might this have on your business if we do see this lower growth rate persist down in the medium term? And then my second question, and I appreciate, Mike, you might not be able to comment on this fully, but given that 2013 will be somewhat of a tough year in the U.S., we have the sequester coming in, we have the medical device tax and your business did benefit from some onetime gains this year on disposals, any guidance initially you can give us in terms of how we should be thinking about developments in cost lines across 2013?

Thank you. Look, this is Ben. I'll try to put more clarity on the same market growth in International. Yes, the 2%, as I mentioned, was clearly below the norm and there's no change in patient growth in these areas, so it's not something that we see is going to be permanent. And also, what we're looking at is around the 4% same market growth into the future. And right now, so a couple of countries are. They have room in their hospitals so the patients are going to their hospitals because it's all paid by the government. So this is a temporarily trend, long-term plan on the 4%, I think, same market growth...

Ben, I was just going to quickly follow up because if I look historically, I mean this business used to grow 7%, 8%, 9% same market or 5% in '09 and '10. So is there a reason -- is the geographic mix changed or were those earlier years not good indications for underlying patient demand?

No, I think we have 2 metrics we're looking at. One of them is the same market growth and it was always in the 5% to 6% range in terms of if we're buying clinics or have clinics in the developing countries. And then there was the organic growth, which would have the revenue increase or additional services. And when we jumped up to a higher organic growth, which is revenue growth, that was when Portugal went to a bundle, and so we ended up with a 50% increase in reimbursement. And so the actual same market growth has been in the 5% to 6%, we believe, now because we are in all the countries, not just the developing countries, that a 4% is a better same market growth, okay? And so I don't think we've ever had a same market growth that high that I can remember. But we did have an organic growth because of some bundling in some countries, primarily Portugal.

Veronika, It's Rice. On guidance, let me try to give you a little bit of color, but I will preface it by saying, obviously, guidance for 2013 will be one of my first duties. We will plan to do that at the end of February as we give you full year results. We will be as transparent as we can be on that. Let me answer your question on sequestration and then on the device tax. If you look at it in terms of North America, we estimate that to be somewhere in the neighborhood of around $100 million to $105 million impact on us. The sequestration in and of itself is around $80 million to $85 million. And as I said to Ed, I told Ed the other day, we did see the device taxes around $20 million to $25 million. Now that's big numbers. Obviously, we don't know yet exactly how this will play out. It is the law of the land, so as we budget, we're planning on that. So that's the numbers that we're trying to work with. But if you put it in the context of a global company, the impact of sequestration is about 0.5% on our overall revenue. So we have to kind of look at it in 2 ways, but that's probably the best I can give you in terms of color at this point, is to how we see the impact and to let you know that at this point, it is the law of the land and so we are expecting that this will happen.

The next question is from Ingeborg Oie from Jefferies. Ingeborg Øie - Jefferies & Company, Inc., Research Division: My first question is on the International margin and the developments which are going on internationally where it seems that governments are willing to listen to kind of increasing bundling and increasing numbers of services taken on by you, which could drive revenue growth but at lower margins. So should we expect the margins in the International segment actually to trend downwards and over time? And then my second question is on the $70 million renegotiation, well, up to $70 million renegotiation charge. Is this high number relating to any penalties for volumes that you have not used or is there another reason why the charge seems relatively high?

Mike, why don't you take [indiscernible] and Rice [indiscernible].

Yes, and you'll forgive me, and I think I probably have the best excuse known to man. I'm not going to prognosticate with regard to the midterm on the International margins because we're in the middle of our CEO transition, so I'll take Rice up on his comment that we'll come back to you next year on that and leave it at that because we are -- obviously, we had a Capital Markets Day several years ago, so when you look at the natural cycle of things, probably at some point in '13, we'll also refresh our midterm guidance and you'll get some more transparency on that. And I'll pass it to Rice relative to the renegotiation.

Yes. Ingeborg, what I will tell you is that there are no penalties assessed. The deal that we struck was not put together in that way so there's not a penalty per se. I don't know that I can give you much more color on the size of the number. I will listen to your judgment that, that's a big number, I'll hold my comments on that, but we're not in a penalty phase. We are in what I would call a proactive and positive relationship renegotiation phase. If this thing were really not going well, I would tell you that, and that's not the case. But we're not in a penalty phase. We're trying to plan for the future and just re-craft the deal based off what's going on in the marketplace.

The next question comes from Mr. Martin Wales of UBS.

Two quick ones. Thinking about 2013, which I know you don't want to comment on, but obviously, we have to forecast it. As sure we'd be worried if 2012 is an artificially high base as a result of these payments from prior years or is it awash with the other impacts you've talked about? Secondly, coming back to this renegotiation charge...

Martin, can you repeat the question? We didn't get that actually. Sorry.

Sorry. Should we be concerned that we're looking at an artificially high base in 2012 as result of these special collections from prior years or does it wash with some of the other things you've talked about that impacted the year?

I understand the questions. I think if I read these things together, I would say that with comments that Rice has made on sequestration and the device tax, '13 is going to be -- we'll have to look at it differently in terms of the starting point. And I'd actually chunk your question up to that level and say that '13 is going to have to be different because of all the things we're talking about. And we're being very open about it. If the sequestration happens, that's a pretty -- Rice, we're talking about some fairly large numbers.

Yes.

Okay. But that's -- actually, you can't exclude it because like you say, it's the law of the land. But I'm just trying to get a sense of the 2012 base ex-sequestration and the devices tax. Is it going to be -- is it artificially high because of these collections or not?

No, I think -- I had said before that I probably answered it what I'm going to do, so I -- we'll come to this point. I appreciate every question I answer is going to lead to another question.

Okay. And just a very quick clarification on the $70 million or up to $70 million renegotiation charge. Just to be clear, that would all be cash?

We -- actually, I think it's a safe assumption because it's a conservative one, but since we haven't finished the discussion, it's not entirely clear how that will manifest itself relative to cash or charge.

Yes, Martin, I think Mike's right. I really just want to stress to give you a little more color. We are in discussion as we are speaking. We have folks that are sitting down with our partner and meeting, and I will be part of those meetings in another day or so. So it's just too in the moment for us to give you much more guidance than what Mike just did.

The next question comes from Holger Blum of Deutsche Bank.

Holger Blum from Deutsche. I want to start off with [indiscernible] a company to resolve to anything like that, but, Ben, in that specific case, I think thank you very much. Congratulate to your career at FMC, really impressive. Always been a pleasure working with you. So most of the questions are answered, maybe just a short one. What would the -- what are the hedging gains year-to-date in the first 9 months that you have booked?

Holger, while we're thinking about that, I want to thank you for the compliment and again, as I mentioned, we very much enjoy working with all the analysts. I don't know that Rice -- we're caucusing on your questions. We probably don't have an answer on that.

No, it's -- I'm trying to think of the best way to answer your question, Holger. And I think we don't think of it as a pure hedging gain because in our International business, we actually use the currencies that we're hedging. So if you will, in the sense of if the folks in Asia are paying euros associated with some of the material they're procuring, we just sell the bill with the hedged currencies. So we're not capturing and calculating all these things in the context of a gain. From time to time, we do talk about the translation and the transaction effects of currency. And when I give guidance, I'm typically commenting on the fact that those naturally offset each other so you have a much lower impact on earnings than you do on revenues, for instance, when you look at the currency effects. So I don't have a year-to-date or reported number to give you, but typically, what you'd see it in is you'd see it in the transaction effects that we comment on from time to time as opposed to the translation. Appreciate that's not spot on for you, but we just don't think of it that way in the business because we're actually using the hedged currency to settle the obligation.

And that's primarily on the products side?

Yes, yes, it's primarily products. And as we increase manufacture in each of the regions, that becomes less and less of a long-term issue, Holger. But that's -- potentially, that's what we do. Anything -- does that -- Holger, does that give you enough clarity? That helps you on that?

Close enough. [indiscernible]

Yes, that's fine. Basically, a little about making the bridge from '12 from a fair base and headwinds, tailwinds, where we could end up then in '13. But I understand that it's, in summary, a bit too early for you to comment on that earnings bridge going into next year.

Mr. Maier, there are no further questions at this time. Please continue with any other points you wish to raise.

Okay, great. Thank you so much, everybody. All the comments about Fresenius Medical Care and the management are much appreciated. We really appreciate your support in working with you guys for the last 14 years. I guess, internally, we will have the pleasure to work with Ben since he's going to be the Honorary Chairman of the Supervisor Board, so, nevertheless, thank you so much and we are looking forward to talk to you next time actually when we announce the full year results. Thank you so much.

Thank you for your kind comments.

Ladies and gentlemen, this concludes the Fresenius Medical Care Earnings Conference Call. Thank you for participating. You may now disconnect.