The Biotechnology Division of Fresenius and the US company Enzon Pharmaceuticals have signed an agreement regarding the development and marketing of the immunosuppressive agent ATG-Fresenius S for North America. Enzon will be granted the exclusive sales and distribution rights for ATG-Fresenius S after the product has been approved by the US authorities. The polyclonal antibody preparation is used for T-lymphocyte suppression following organ transplantations. It is currently marketed by Fresenius in over 60 countries.

Enzon will initiate a Phase III clinical programme to obtain regulatory approval for this product by the US Food and Drug Administration (FDA). Under the terms of the agreement, Enzon will be responsible for the costs related to the clinical development and registration in North America, and Fresenius for the manufacturing aspects in accordance with the requirements of the US authorities. Fresenius will receive two milestone payments of 1 million dollars each: the first payment upon approval of the IND (Investigational New Drug Application) and the second on submission of the BLA (Biological License Application). After the market launch, ENZON will purchase the product from Fresenius.

"We are very happy to have Enzon as our partner in North America. The company has proven expertise in the fields of development, regulatory approval and marketing. This co-operation opens up a wide market for our long-established, successful product", said Dr. Thomas Gottwald, Managing Director of Fresenius Biotechnology.

Arthur Higgins, Enzon's Chairman and CEO: "ATG-Fresenius S is a great strategic fit. We can utilize our development and marketing competence in this segment and enhance our product pipeline. ATG-Fresenius S has the potential to generate annual sales of more than 50 million dollars."

ATG-Fresenius S is a polyclonal antibody preparation that has proved to be extremely effective in suppressing the rejection by the immune system of organ and bone marrow transplants. The demand for ATG-Fresenius S has steadily risen over the past years, largely due to the increase in the number of bone marrow transplantations.

Summary second quarter 2003:

• Total Revenue of $ 1,366 million up 9%
• Operating income (EBIT) of $ 184 million up 8%
• Net income of $ 79 million up 7%
• Free Cash Flow at record level of $ 138 million
• Operating margin and same store treatment growth improvement in North America and International compared to the first quarter 2003
• The company confirms its outlook for 2003

Fresenius Medical Care AG ("FME") (Frankfurt Stock Exchange: FME, FME3) (NYSE: FMS, FMS_p), the world's largest provider of Dialysis Products and Services, today announced the results for the second quarter and the first six months of 2003.

OPERATIONS

Second Quarter 2003:
Fresenius Medical Care AG reports a 7% increase in net income to $ 79 million for the second quarter 2003.

Total revenue for the second quarter 2003 increased 9% (4.5% at constant currency) to $ 1,366 million. Dialysis Care revenues grew by 7% to $ 978 million (+5% at constant currency) in the second quarter of 2003. Same store treatment growth worldwide was 5%.

Dialysis Product revenues (including internal sales) increased by 14% to $ 504 million (+5% at constant currency) in the same period. The internal sales increased to $ 116 million after $ 98 million in the second quarter of 2002.

North America:
Revenue rose 3% to $ 955 million, compared to $ 928 million in the same period last year. Dialysis Care revenue in the US increased by 4% to $ 846 million. Same store treatment growth increased sequentially 40 basis points to 3.7%. The average revenue per treatment was within the forecasted range at $ 275 in the second quarter of 2003.

North American Dialysis Product revenue, including sales to company-owned clinics, increased 3% to $ 195 million. Product sales to the available external market increased by 5%.

International:
Revenue was $ 412 million, up 26% (+9% adjusted for currency). Dialysis Care revenue reached $ 133 million in the second quarter 2003, up 36% (+18% at constant currency). Dialysis Products revenue, including sales to company-owned dialysis clinics, increased 23% to $ 309 million (6% currency adjusted).

Operating Income (EBIT) increased 8% to $ 184 million resulting in an operating margin of 13.5% (Q2 2002: 13.6%). In the first quarter of 2003, the Company achieved an operating margin of 13.0%. The increase of approximately 50 basis points in the second quarter was mainly due to increased treatments, improved product margins in North America and increased dialyzer sales in International. The International EBIT-margin was still influenced by the same items discussed for the first quarter, such as the crisis in Middle East / Latin America and the pricing pressure in Central Europe. With implemented measures some of these impacts became less influential in the second quarter of 2003. The margin in the International area went up by 70 basis points compared to the prior quarter.

Earnings per share (EPS) in the second quarter 2003 rose 7% to $ 0.82 per ordinary share ($ 0.27 per ADS), compared to $ 0.77 ($ 0.26 per ADS) in the second quarter of 2002. The weighted average number of shares outstanding during both the second quarter of 2003 and the second quarter of 2002 was approximately 96.2 million.

In the second quarter of 2003, the Company generated $ 175 million in cash from operations. A total of $ 37 million (net of disposals) was spent for capital expenditures, resulting in a Free Cash Flow for the second quarter 2003 of $ 138 million. This is an all-time record for any single historical quarter and was mainly driven by improved accounts receivable collections in North America and low capital expenditures. A total of $ 29 million in cash was spent for acquisitions. Free Cash Flow after acquisitions was at a Q2 record level of $ 109 million.

First Half Year 2003:
For a complete overview of the first half year of 2002/3 please refer to the appendix (see pdf-file).

In the first half of 2003, net income was $ 149 million, up 8% from the first half of 2002. In accordance with the new US-GAAP Accounting Standard SFAS 145, the loss from the early redemption of the Trust Preferred Securities in the first quarter of 2002 of $ 12 million after taxes (20 million before taxes) had to be reclassified from extraordinary to operating earnings. Excluding the redemption loss, net income in the first half of 2002 would have been $ 149 million. Net revenue was $ 2.67 billion, up 9% from the first half of 2002. Currency adjusted, net revenue rose 5% in the first half of 2003. Operating income (EBIT) increased 2% to $ 353 million resulting in an operating margin of 13.2%. In the first half of 2003, earnings per ordinary share rose 8% to $ 1.54. Earnings per ordinary ADS for the first half of 2003 were $ 0.51.

Cash from operations during the first six months of 2003 was up 23% or $ 300 million compared to $ 244 million in the first six months of 2002. A total of $ 78 million was spent for capital expenditures (net of disposals) resulting in a Free Cash Flow for the first half of 2003 of $ 222 million compared to $ 154 million in the first half of 2002. Net cash used for acquisitions was $ 57 million.

As of June 30, 2003, the Company operated a total of 1,510 clinics worldwide (1,095 clinics/+4% in North America and 415 clinics/+9% International). Fresenius Medical Care AG performed approximately 8.7 million treatments, which represents an increase of 9% year over year. North America accounted for 6.1 million treatments (+7%) and the International segment for 2.6 million (+15%). At the end of the second quarter 2003, Fresenius Medical Care AG provided treatment to around 115,800 patients worldwide which represents an increase of 7%. North America accounted for ~81,000 patients (+4%) and the International segment for ~34,800 patients (+14%).

OUTLOOK 2003
For the year 2003, the Company reconfirms its outlook and expects mid single digit revenue growth (in constant currency) and net income growth in the high single digit to low double digit range. As mentioned in the first quarter of 2003, the Company expects to achieve net income growth for the full year 2003 near the lower end within the predicted range due to the increased risks and unpredictability.

Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented: "The results of the second quarter reinforce our confidence that Fresenius Medical Care's global strategy in patient care is on the right track. We expect that our initiatives will lead to continuous improvements in our financial results. In addition, we see continued strong acceptance of our new renal product technologies, underscoring that our strategy and investments of the past several years are correct. We clearly can accomplish more in terms of financial returns from these investments and our targets are clear. Our management team and employees have the dedication, skills and resources to achieve our objectives."

• Sales: € 3.46 billion
  + 5 % at constant currency, - 8 % at current exchange rates
• EBIT: € 390 million
  + 7 % at constant currency, - 7 % at current exchange rates
• Net income: € 70 million
  + 45 % at constant currency, + 27 % at current exchange rates
• Exchange rates affect sales and earnings
• Operating cash flow and free cash flow at record level
• Continued margin improvements at Fresenius Medical Care
• Operating improvement at Fresenius Kabi
• Program initiated to reduce costs and increase profitability at Fresenius ProServe

In the first half of 2003 the Fresenius Health Care Group was substantially impacted by exchange rate fluctuations in the currency translation. At constant currency, sales increased 5 % in the first half of 2003. At current rates sales decreased 8 % to € 3,456 million mainly due to the strengthening of the euro against the dollar. Operating income (EBIT) increased 7 % at constant currency. At current rates, EBIT was 7 % lower than in the same period of 2002. Net income of the Fresenius Group grew 27 %, 45 % at constant currency.

Group outlook on year-end 2003
In the first half of 2003, health care systems were affected by cost-cutting, delayed investments and price pressure. The Fresenius Group showed positive results despite this difficult environment. With 5 % sales growth in the first half of 2003, the Group now anticipates a mid single-digit revenue growth rate at constant currency for the full year 2003.

The Fresenius ProServe business segment initiated a program at Wittgensteiner Kliniken AG to reduce costs and increase profitability. With these measures Fresenius ProServe is overcoming at an early stage challenges in the German health care system, and is supporting its strong position in the German hospital market. The expected one-time expenses of this program are € 25 million (see also page 8).

Before these one-time expenses, the Managing Board maintains its forecast that at constant currency, net income will increase at a double-digit rate. This increase will be mainly driven by the good performance of Fresenius Medical Care and Fresenius Kabi. After these one-time expenses, net income at constant currency will remain at previous year's level.

Sales
Sales of the Fresenius Group decreased by 8 % in the first half of 2003 to € 3,456 million (first half 2002: € 3,749 million) due to exchange rate fluctuations. Organic growth was 3 %. Acquisitions contributed 2 % to this growth. Exchange rates had a 13 % negative impact on sales development. On average the 23 % weaker US dollar and 33 % weaker Argentinian peso had a negative impact on sales due to currency translation.

The region with the strongest sales was North America with 51 %, followed by Europe with 38 %. Asia-Pacific had 7 % and Latin America and other regions a total of 4 %. In almost all the regions the Group increased sales at constant currency. Even with the continuing difficult economic climate in Latin America, sales increased by 29 % at constant currency.

Fresenius Kabi and Fresenius ProServe increased their sales contribution compared to the first half of 2002. Due to the weaker US dollar the sales contribution of Fresenius Medical Care in the first half of 2003 was 70 %.

Earnings
The stronger euro was also reflected in the earnings of the Fresenius Group. At constant currency, earnings before interest, income taxes, depreciation and amortization (EBITDA) increased by 5 % compared to the previous year. At current rates EBITDA was € 543 million in the first half of 2003, 8 % below previous year's € 592 million. EBIT increased 7 % at constant currency. At current rates, EBIT of € 390 million in the first half of 2003 was 7 % below previous year's € 420 million.

The 87 % increase in EBIT of Fresenius Kabi had a positive impact on group earnings. This increase is the result of the successful implementation of restructuring measures in 2001 and 2002 and the strong operating performance.

Net interest decreased to € -125 million in the first half of 2003 from € -165 million in the first half of 2002.

In the following table the previous year's income statement has been adjusted according to Statement of Financial Accounting Standards No. 145 which stipulates that as of January 1, 2003 the gains and losses from the early redemption of financial instruments are no longer classified as extraordinary. This rule requires the reclassification of € 22 million of expenses before taxes (€ 13 million after taxes and related minority interests of € 8 million) for the early redemption of Fresenius Medical Care's trust preferred securities which were to come due in 2006.

The decrease of net interest is mainly due to changes in US GAAP. Further, net interest was positively influenced by the translation of US dollar to the euro, since a large portion of Fresenius Medical Care's bank loans are in US dollars.

The tax ratio was 39.2 % in the first half of 2003 compared to 38.0 % in the first half of 2002.

Minority interests decreased to € 91 million from € 103 million in the first half of 2002. This is a result of exchange rate effects. 93 % of minority interests involve Fresenius Medical Care.

Fresenius increased net income considerably. It grew 27 % from € 55 million in the first half of 2002 to € 70 million in the first half of 2003. At constant currency the increase was 45 %.

Earnings per ordinary share were € 1.70, up from € 1.33 in the same period of 2002. Earnings per preference share were € 1.72, up from € 1.35 in 2002. This was an increase of 28 % and 27 %, respectively (at constant currency: 46 % and 45 %).

Capital expenditure and acquisitions
Fresenius spent € 157 million in the first half of 2003 for capital expenditure and acquisitions. This is a reduction of 39 % compared to € 257 million in the first half of 2002 and was in line with Company planning. In 2001 and 2002 Fresenius made significant investments in increased capacity of production plants and further market expansion.

Of the total investments, 72 % was for capital expenditure, 28 % was for acquisitions. Capital expenditure was € 113 million, 39 % below the first half of 2002. Acquisitions were
€ 44 million in the first half of 2003 compared to € 72 million in the first half of 2002.

Acquisitions in the first half of 2003 were mainly dialysis clinics purchased by Fresenius Medical Care. Capital expenditure was mainly used for opening and equipping new dialysis clinics, especially in the United States, for expanding and modernising existing clinics and for the further expansion and optimization of production plants.

49 % of capital expenditure was made in Europe, 41 % in North America and 10 % elsewhere.

Cash flow
The Fresenius Group's operating cash flow and free cash flow were at record levels. Operating cash flow was € 311 million in the first half of 2003 (first half 2002: € 296 million). This 5 % increase is mainly due to continued improvement in receivables management. The free cash flow before acquisitions and dividends also improved and rose by 35 % to a record figure of € 208 million (first half 2002: € 154 million). This increase resulted from a lower investment volume of € 103 million (first half 2002: € 142 million). After net cash used for acquisitions of € 38 million and dividends of € 107 million Fresenius achieved an excellent free cash flow of € 63 million (first half 2002: € -6 million).

Asset and equity structure
Balance sheet total of the Group was € 8,867 million, a decrease of € 48 million (1 %) compared to December 31, 2002 (€ 8,915 million). This is solely due to currency effects. At constant currency balance sheet total increased 4 % over the previous year. This was mainly due to the reduction in the receivables securitization program of Fresenius Medical Care from US$ 445 million to US$ 249 million which led to a corresponding increase in accounts receivable.

Shareholders' equity including minority interests was € 3,217 million at June 30, 2003 compared to € 3,369 million as at December 31, 2002. This was a result of exchange rate fluctuations; at constant currency there was an increase of 2 %. Equity ratio including minority interests was 36.3 % at June 30, 2003 compared to 37.8 % as at December 31, 2002.

Liabilities from bank loans, Eurobonds, commercial paper and trust preferred securities were € 3,339 million on June 30, 2003. (December 31, 2002: € 3,283 million). This increase was the result of Fresenius Medical Care using existing credit lines to reduce the receivables securitization program. US dollar exchange rate fluctuations had an opposite effect.

Debt, including liabilities from the receivables securitization program of Fresenius Medical Care decreased from € 3,707 million as at December 31, 2002 to € 3,557 million on June 30, 2003.

The key ratio net debt/EBITDA was unchanged at 3.0 on June 30, 2003, the same as at the end of 2002.

Employees
On 30.6.2003, the Fresenius Group had 65,626 employees worldwide. This was around 3 % or 1,988 people more than at the end of 2002.

Fresenius Biotechnology
In biotechnology, Fresenius is active in the field of immune and cell therapies. Various clinical trials for the immunotherapeutical treatment of cancer are currently being carried out. The results of a phase I/II study for treatment of ovarian cancer patients with symptomatic ascites are to be presented at the European Cancer Conference (ECCO) in September.

The Business Segments

Fresenius Medical Care
Fresenius Medical Care AG is the world's leading provider of products and services for patients with chronic kidney failure.

In the first half of 2003, Fresenius Medical Care increased sales 9 % to US$ 2,666 million (previous year: US$ 2,441 million). 71 % of sales were achieved in North America, 29 % elsewhere. At constant currency, Fresenius Medical Care increased sales 5 % in the first half of 2003.

Dialysis care business contributed 72 % to sales and dialysis products 28 %. Sales of dialysis products increased 15 % to US$ 743 million (first half 2002: US$ 648 million). The dialysis care business grew 7 % to US$ 1,922 million (first half 2002: US$ 1,793 million). The main source of growth was the increased number of dialysis treatments. Fresenius Medical Care performed approximately 8.7 million treatments in the first half of 2003, an increase of 9 % year over year. As at June 30, 2003, Fresenius Medical Care provided treatment to around 115,800 patients in 1,510 dialysis clinics, 7 % more than in the first half of 2002.

EBIT of Fresenius Medical Care in the first half of 2003 increased 2 % to US$ 353 million. Net income increased 8 % to US$ 149 million. In accordance with the new US-GAAP Accounting Standard SFAS 145, the loss from the early redemption of the Trust Preferred Securities in the first quarter of 2002 of $ 12 million after taxes (20 million before taxes) had to be reclassified from extraordinary to operating earnings. Excluding the redemption loss, net income in the first half of 2002 would have been $ 149 million.

For the year 2003, the Fresenius Medical Care reconfirms its outlook and expects mid single digit revenue growth (in constant currency) and net income growth in the high single digit to low double digits range. As mentioned in the first quarter of 2003 Fresenius Medical Care expects to achieve net income growth for the full year 2003 near the lower end within the predicted range due to the increased risks and unpredictability.

Fresenius Medical Care's US dollar sales of US$ 2,666 million were € 2,718 million after conversion into euros. This is a decrease of 11 % compared to previous year's € 2,413 million. EBIT decreased 17 % to€ 319 million (first half 2002: € 383 million) due to currency translation.

For further information please see press release.

Fresenius Kabi
The portfolio of Fresenius Kabi focuses on the nutrition and infusion therapy of patients in the hospital, many of whom are seriously ill, and in ambulatory care, as well as on infusion and transfusion technology.

^{* The previous year's figures have been adjusted to include the newly-assigned activities of the business segment Fresenius HemoCare (transfusion and infusion technology) effective January 1, 2003.}

In the first half of 2003, Fresenius Kabi's sales were € 718 million, substantially the same as in the previous year (€ 717 million). This is the result of currency translation effects of -6%. The organic growth of Fresenius Kabi increased 7 %. This is fully in line with our expected growth of 6 to 7 % for 2003 as a whole. Furthermore, divestments (the sale of the company ProReha effective August 1, 2002) reduced sales by 1 percentage point.
The hospital business had € 574 million in sales, which was 80 % of total sales (first half 2002: € 568 million). The Ambulatory Care business had sales of € 145 million (first half 2002: € 149 million), which was 20 % of total sales.

Fresenius Kabi achieved an EBIT of € 71 million in the first half of 2003 compared to the previous year's figure of € 38 million. Fresenius Kabi achieved an EBIT margin of 9.9 % in the first half 2003 compared to 5.3 % in the first half of 2002. This also exceeds the EBIT margin for 2002 as a whole (6.7 %).

Our restructuring of production facilities, particularly in Uppsala, Sweden, and the good operating performance had a positive impact on earnings in the first half of 2003. These measures will continue to contribute to the future earnings growth of Fresenius Kabi.

In the important European market, the Company achieved a single-digit growth rate. In all other regions, Fresenius Kabi achieved double-digit organic growth in the first half of 2003.

For the full year 2003, Fresenius Kabi expects to achieve an organic growth of 6 to 7 %. EBIT of the second half of 2003 is expected to be in the range of the first half of the year.

Fresenius ProServe
Fresenius ProServe offers services for the international health care systems. The range of services includes hospital management, the planning and construction of hospitals as well as of pharmaceutical and medical-technical production plants.

Fresenius ProServe increased sales 5 % to € 336 million in the first half of 2003 (first half 2002: € 321 million). 85 % of sales were from the Healthcare business, 15 % from the Pharma Industry business. Sales were € 287 million in the Healthcare business, an increase of 12 % (first half 2002: € 256 million). Sales were € 49 million in the Pharma Industry business compared to € 65 million in the previous year due to a general investment caution of the pharma industry and delays in project handling.

In the Healthcare business, sales generated by services increased 31 % to € 239 million (first half 2002: € 183 million). This was driven by the consolidation of newly-acquired hospitals (mainly Klinikum Rhein-Sieg in Siegburg). Project sales in the healthcare business were € 48 million compared to € 73 million in the first half of 2002 due to delays in project handling.

Fresenius ProServe's EBIT in the first half of 2003 was € 10 million compared to € 8 million in 2002. However, Fresenius ProServe did not achieve its earnings target for the second quarter. This is mainly due to the hospital management business in Germany. The bed utilization rate declined to 81 % compared to 85 % for the same period of the previous year. In addition, delays in the project business had an impact on earnings.

A major study of Wittgensteiner Kliniken AG, which is part of Fresenius ProServe, was completed in July 2003. This study shows that in addition to the measures carried out in the past one and a half years, there is additional potential to reduce costs and increase efficiency. Fresenius ProServe expects to fully utilize this potential and create a solid basis for Wittgensteiner Kliniken to achieve sustainable growth. The implementation of the measures, including further staff reductions, will result in one-time expenses of € 25 million before tax. It is expected that Wittgensteiner Kliniken will achieve annual cost savings of € 20 - 25 million which will become fully effective in the 2005 financial year.

Assuming a reserve is created for the one-time expenses in 2003, Fresenius ProServe expects, that it will have a single-digit negative EBIT for the full year 2003. Sales for 2003 are expected to increase to approximately € 800 million.
These measures will significantly strengthen the position of Wittgensteiner Kliniken in the German hospital market.

Fresenius Medical Care AG ("the Company") (Frankfurt Stock Exchange: FME, FME3) (NYSE: FMS, FMS_p), the world's largest provider of Dialysis Products and Services, is pleased to announce the appointment of Lawrence Rosen (45) as Chief Financial Officer. He will start in his new position on November 1st, 2003 and will succeed Dr. Ulf M. Schneider (37) who has assumed the position Chief Executive Officer of Fresenius AG.

Lawrence Rosen currently serves as Group Senior Vice President for Corporate Finance and Treasury with Aventis S.A., in Strasbourg, France. In that position he is responsible for all Corporate Finance activities as well as Risk and Cash Management, including Banking and Rating-agency relationships.

Lawrence Rosen has worked for Aventis S.A. and its predecessor companies since 1984 and has served in senior finance and treasury positions in North America, Germany, and France. He holds a Master of Business Administration (MBA) from the University of Michigan, USA and a Bachelor of Science in Economics from the State University of New York at Brockport, USA.

Ben Lipps, the Chief Executive Officer of Fresenius Medical Care AG commented, "We are fortunate to have a person as qualified as Lawrence Rosen to fill the role of Chief Financial Officer. His depth of global experience and track record of corporate financial leadership with Aventis S.A. will provide us with a seamless transition and continued strength in this area. We are looking forward to working with Larry in his new role."

The Fresenius Health Care Group has successfully completed a phase I/II study with the new trifunctional antibody removab®. This antibody was used to treat late-stage ovarian cancer patients with symptomatic ascites, which is an accumulation of fluid in the abdominal cavity caused by tumor cells. The study is the world's first completed trial with a trifunctional antibody.

This phase I/II study was designed to identify potential side effects associated with removab® therapy, to evaluate potential dosing schedules and to obtain first indications regarding efficacy. Results of the completed study demonstrate that the antibody is well tolerated at various doses. Four or five very small doses of the antibody were infused into the patient's abdominal cavity over a period of less than two weeks. The most frequent side effects observed in the trial were increased temperature and nausea. In addition, initial indications observed from this study suggest that removab® is efficacious in killing tumor cells in the ascites fluid and thus prevents the re-accumulation of fluid. All patients responded to the therapy. 22 of 23 patients who previously suffered from ascites were ascites-free on day 37, the last day of the study. A significant decrease in the number of tumor cells detected in the ascites fluid was observed in all patients in the study. The average number of tumor cells detected per one million cells in ascites fluid decreased from 540,000 prior to treatment to 39 following the last infusion.

The head of the clinical trial, Prof. Dr. Rainer Kimmig from The University Hospital of Essen, presented the results of the study yesterday (22.9.) at the European Cancer Conference (ECCO) in Copenhagen. In total, 23 ovarian cancer patients with malignant ascites were treated. Prior to entering the Phase I/II study, all patients had suffered one or more relapses following surgical tumor resection, with consequent tumor development in the abdominal cavity. In most cases, patients had previously undergone one or more courses of chemotherapy. The adhesion molecule EpCAM, the target of the removab® antibody, had been detected on the surface of tumor cells in the abdominal cavity fluid of all patients participating in the study. Production of EpCAM, which is also present in healthy cells, is significantly increased in approximately 90 per cent of ovarian cancer patients. EpCAM can thus be targeted for tumor cell recognition and induction of tumor-specific killing.

Due to the encouraging results of the phase I/II study, Fresenius Biotech is planning to launch two further studies in December 2003 and February 2004. The first study is designed to test the efficacy of the antibody with regard to ovarian cancer metastases and thus increase life expectancy. The second trial will investigate the efficacy of the antibody against ascites in other malignancies.

Assuming successful completion of clinical trials and following consultation with regulatory officials, Fresenius plans potential market launch of removab® in Europe in 2007.

Background information

Trifunctional antibodies
The trifunctional antibodies developed and produced by TRION Pharma, a Fresenius partner, are proteins which specifically bind cancer cells to two different immune cells of the immune system, T-cells and macrophages, thus triggering a process that effectively kills tumor cells. The goal of scientists and clinicians is to eradicate those tumor cells that may still be present in the body following surgical resection of the tumor, preventing the development of ascites or metastases and extending patient survival.

Ascites
Ascites, an accumulation of body fluid in the abdominal cavity, is painful and severely impairs a patient's quality of life. Up to 89 per cent of final-stage ovarian cancer patients develop ascites. Existing palliative treatment methods are unsatisfactory: Puncturing the abdominal cavity (paracentesis) and draining the fluid provides rapid but short-lived relief to the patients. In addition, paracentesis causes patients to lose valuable endogenous proteins. Another approach is to infuse chemotherapeutic agents into the abdominal cavity. This method is not generally accepted due to the severe side effects and limited clinical benefits.

Phase I/II Studies
Phase I studies are aimed at determining the dose and side effects, while phase II studies test the efficacy of the drug treatment.

Fresenius Medical Care AG ("FME") (Frankfurt Stock Exchange: FME, FME3) (NYSE: FMS, FMS_p), the world's largest provider of Dialysis Products and Services, has been informed that Goldman Sachs is managing a sale of 7.68 million Fresenius Medical Care AG preference shares for a group of shareholders in an accelerated bookbuilding offering.

Goldman Sachs and other investors acquired the preference shares from the Company in March of 2000. Since then, these shares have been reflected in the Company's financial statements as issued and outstanding. In addition, these shares were initially subject to a two-year restricted sale agreement, which expired in March of 2002.

Dr. Ben Lipps, the Chief Executive Officer of Fresenius Medical Care stated that, "I am delighted that one of the Company's principal objectives for the 2000 share placement has been achieved. I look forward to more trading in the Company's preference shares, thereby increasing liquidity and trading volume."

Summary third quarter 2003:

• Net Revenues : $ 1,409 million, + 10%
• Operating income (EBIT): $ 197 million, + 18%
• Net income: $ 87 million, + 25%
• Operating Cash Flow : $ 203 million, + 34%
• Free Cash Flow: $ 152 million, + 81%
• The Company confirms its outlook for 2003

Fresenius Medical Care AG (Frankfurt Stock Exchange: FME, FME3) (NYSE: FMS, FMS_p), the world's largest provider of Dialysis Products and Services, today announced the results for the third quarter and the first nine months of 2003.

OPERATIONS

Third Quarter 2003:

Fresenius Medical Care AG reports a 25% increase in net income to $ 87 million for the third quarter 2003.

Total revenue for the third quarter 2003 increased 10% (+7% at constant currency) to $ 1,409 million. Dialysis Care revenue grew by 8% to $ 1,018 million (+7% at constant currency) in the third quarter of 2003.
Dialysis Product revenues (including internal sales) increased by 14% to $ 510 million (+8% at constant currency) in the same period. The internal sales increased to $ 119 million after $ 103 million in the third quarter of 2002.

North America:
Revenue rose 3% to $ 978 million, compared to $ 947 million in the same period last year. Dialysis Care revenue in the US increased by 5% to $ 873 million. The average revenue per treatment was at $ 279 in the third quarter of 2003 (Q2 2003: $ 275). North American Dialysis Product revenue, including sales to company-owned clinics, increased 1% to $ 194 million. Product sales to the net available external market grew by 4%.

International:
Revenue was $ 432 million, up 28% (+16% adjusted for currency). Dialysis Care revenue reached $ 146 million in the third quarter 2003, up 35% (+22% currency adjusted). Dialysis Products revenue, including sales to company-owned dialysis clinics, increased 24% to $ 317 million (13% currency adjusted).

Operating Income (EBIT) increased 18% to $ 197 million resulting in an operating margin of 14.0% (Q3 2002: 13.0%). The increase of 100 basis points was mainly due to increased treatments and efficiency improvements in North America but partially offset by pricing pressure in Central Europe. In the second quarter of 2003, the Company achieved an operating margin of 13.5%. The margin in North America and in International increased by 50 basis points compared to the prior quarter.

Earnings per share (EPS) in the third quarter 2003 rose 25% to $ 0.90 per ordinary share ($ 0.30 per ADS), compared to $ 0.72 ($ 0.24 per ADS) in the third quarter of 2002. The weighted average number of shares outstanding during both the third quarter of 2003 and the third quarter of 2002 was approximately 96.2 million.

In the third quarter of 2003, the Company generated $ 203 million in cash from operations (14% of net revenues). A total of $ 51 million (net of disposals) was spent for capital expenditures, resulting in Free Cash Flow before acquisitions for the third quarter 2003 of $ 152 million (11% of net revenues), a solid 81% growth compared with third quarter of 2002 with $ 84 million. A total of $ 22 million in cash was spent for acquisitions. Free Cash Flow after acquisitions was $ 130 million. In the third quarter of 2002, Free Cash Flow after acquisitions was $ 51 million.

First Nine Months 2003:
For a complete overview of the first nine months 2003 please refer to the appendix.

In the first nine months of 2003, net income was $ 237 million, up 14% from the same period in 2002.

In accordance with the new US-GAAP Accounting Standard SFAS 145, the loss from the early redemption of the Trust Preferred Securities in the first quarter of 2002 of $ 12 million after taxes ($ 20 million before taxes) had to be reclassified from extraordinary loss to interest expense and income tax expense. Excluding the redemption loss, net income for the first nine months of 2002 would have been $ 219 million. Net revenue was $ 4,075 million, up 9% from the nine months of 2002. Currency adjusted, net revenue rose 6% from January to September of 2003 compared to 2002. Operating Income (EBIT) increased 8% to $ 550 million resulting in an operating margin of 13.5%. In the nine months of 2003, earnings per ordinary share rose 14% to $ 2.44. Earnings per ordinary ADS for the first nine months of 2003 were $ 0.81.

Cash from operations during the first nine months of 2003 was up 27% or $ 503 million compared to $ 395 million in the first nine months of 2002. A total of $ 129 million was spent for capital expenditures (net of disposals) resulting in a Free Cash Flow before acquisitions for the first nine months of 2003 of $ 374 million compared to $ 238 million in the first nine months of 2002. Free Cash Flow for the first nine months already exceeded the $ 349 million Free Cash Flow generated in the full year 2002. This exceptional performance is primarily driven by strong improvements in working capital management. Net cash used for acquisitions was $ 79 million. Free Cash Flow after acquisitions increased therefore 78% to $ 295 million.

As of September 30, 2003, the Company operated a total of 1,540 clinics worldwide (1,100 clinics/+3% in North America and 440 clinics/+16% International). Fresenius Medical Care AG performed approximately 13.2 million treatments, which represents an increase of 9% year over year. North America accounted for 9.2 million treatments (+7%) and the International segment for 4.0 million (+16%). At the end of the third quarter 2003, Fresenius Medical Care served about 117,600 patients worldwide which represents an increase of 7%. North America accounted for ~81,700 patients (+4%) and the International segment for ~35,900 patients (+14%).


OUTLOOK 2003

For the year 2003, the Company reconfirms its outlook and expects mid single digit revenue growth (in constant currency) and net income growth in the high single digit to low double digit range. As mentioned in the first quarter of 2003, the Company expects to achieve net income growth for the full year 2003 near the lower end within the predicted range.

Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented: "Our results for the third quarter of 2003 improved in all key financial metrics and showed a strong performance of our underlying operations. We achieved another record operating and free cash flow for the third quarter 2003 and we are confident that our global strategy is on the right track. We are well positioned to achieve our full year targets and we can look favourably to the future."

• Sales: € 5.25 billion
  + 6 % at constant currency, - 5 % at actual exchange rates
• EBIT: € 590 million
  + 8 % at constant currency, - 4 % at actual exchange rates
• Net income: € 105 million
  + 38 % at constant currency, + 24 % at actual exchange rates

• Operating cash flow and free cash flow at record levels
• Fresenius Medical Care: strong margin improvement in Q3
• Fresenius Kabi: Strong organic growth and positive earnings development
• Fresenius ProServe: further measures to improve profitability
• Reported figures impacted by exchange rate fluctuations

In the first nine months of 2003 the results of the Fresenius Group were significantly impacted by exchange rate fluctuations in the currency translation. At constant currency, sales increased 6 % for the first nine months of 2003. At actual rates, sales decreased 5 %. Operating income (EBIT) increased 8 % at constant currency and decreased 4 % at actual rates. Net income grew significantly at both constant currency and actual rates (+38 % and +24 % respectively).

Group outlook for the full year 2003
In the first nine months the health care systems were affected by postponed investments, cost-cutting measures and price pressure. In this difficult environment, Fresenius Group achieved further significant improvements in sales and earnings at constant currency. For the full-year 2003 expectations for a mid single digit sales growth remain unchanged.

The largest business segments, Fresenius Medical Care and Fresenius Kabi, both performed very well during the first nine months of 2003. The Group expects this trend to continue in the fourth quarter. Fresenius ProServe's performance during the third quarter 2003 was marked by declining bed utilization rates in the German hospitals, project delays and a general investment caution of the pharma industry. Fresenius ProServe plans to focus its business operations to improve profitability. In addition to the restructuring program initiated in the second quarter for Wittgensteiner Kliniken AG (WKA), Fresenius ProServe will take measures in the current year to reorganize its health care project and Pharma Industry businesses.

The Managing Board maintains its forecast that, at constant currency and before one-time expenses for the WKA program and the reorganization of the health care project and Pharma Industry businesses, the Group's net income will increase at a double-digit rate. Forecast is based on the continued strong performance of Fresenius Medical Care and Fresenius Kabi. After one-time expenses, it is expected that net income at constant currency will show a high single to low double digit rate decrease compared to previous year.

Sales
In the first nine months of 2003, Fresenius Group increased sales at constant currency 6 %. Organic growth was 4 %. Acquisitions contributed 2 %. At actual rates, consolidated sales of € 5,254 million were 5 % lower than previous year's figure (Q1-3/2002: € 5,552 million). Exchange rates fluctuations had a 11 % negative impact on sales, mainly due to the 20 % weaker US dollar.

In all regions, Fresenius expanded its business successfully and increased sales at constant currency. The strongest sales were in North America with 50 % and Europe with 38 % of total sales. Asia-Pacific had 7 %, Latin America 4 % and other regions a total of 1 %. Despite the continuously difficult economic climate in Latin America, sales showed a significant growth of 31 % at constant currency.

Sales contribution of the business segments:

Fresenius Medical Care's reduced proportion of sales is mainly a result of currency translation effects.

Earnings
At constant currency, earnings before interest, income taxes, depreciation and amortization (EBITDA) increased 5 % compared to previous year. Currency translation effects also had a negative impact on Group earnings. At actual rates, EBITDA for the first nine months of 2003 was € 825 million, 6 % below previous year's € 874 million. EBIT increased 8 % at constant currency but decreased 4 % at actual rates to € 590 million (Q1-3/2002: € 617 million).

Fresenius Kabi contributed the largest share to the EBIT increase (+ € 42 million or +65 % compared to previous year). This is thanks to the successful implementation of restructuring measures in 2001 and 2002 and a strong operating performance in the regions.

Net interest expense for the first nine months of 2003 improved to € -186 million compared to € -230 million for the same period in 2002.

In the following table previous year's consolidated statement of income has been adjusted according to Statement of Financial Accounting Standards No. 145 which stipulates that, as of January 1, 2003, the gains and losses from the early redemption of financial instruments are no longer classified as extraordinary. This rule requires the reclassification of € 21 million of expenses before taxes (€ 13 million after taxes and related minority interests of € 8 million) for the early redemption of Fresenius Medical Care's trust preferred securities in February 2002 which were to come due in 2006.

The decrease in net interest expense is equally attributable to the change in US GAAP and to currency translation effects of US dollar into euro, since a large portion of Fresenius Medical Care's bank loans are in US dollars.

The effective tax rate for the first nine month of 2003 was 39.1 % (Q1-3/2002: 38.5 %).

Minority interests decreased to € 141 million from € 153 million for the first nine months of 2002, solely due to exchange rate effects. 96 % of minority interests relate to Fresenius Medical Care.

Net income increased 24 % to € 105 million, compared to € 85 million for the first nine months of 2002. At constant currency, the increase was with 38 % even more significant.

Earnings per ordinary share were € 2.55, up from € 2.06 in the same period of 2002. Earnings per preference share were € 2.57, up from € 2.08 in 2002. This was an increase of 24 % (at constant currency: 38 %).

Capital expenditure and acquisitions
Fresenius spent € 247 million in the first nine months of 2003 on capital expenditure and acquisitions. (Q1-3/2002: € 393 million). This reduction was in line with Company planning. In 2001 and 2002 Fresenius made significant investments to increase the capacity of production plants and further market expansion.

73 % of total investments was for capital expenditure, 27 % was for acquisitions. Capital expenditure was € 180 million, 36 % less than in the same period of 2002. Acquisitions were € 67 million compared to € 110 million in the first nine month of 2002.

Acquisitions related mainly to the purchase of dialysis clinics by Fresenius Medical Care. Capital expenditure was mainly used to equip new dialysis clinics, to expand and modernize existing clinics and to expand and optimize production plants.

Fresenius invested 55 % in Europe, 36 % in North America and 9 % in other regions.

Cash flow
Operating cash flow and free cash flow for the first nine months of 2003 were at record levels. Operating cash flow increased 11 % to € 565 million (Q1-3/2002: € 507 million). This excellent figure resulted from improved receivables management. Free cash flow before acquisitions and dividends increased 47 % to € 399 million (Q1-3/2002: € 272 million). This increase was also due to the significantly lower investment volume of € 166 million (Q1-3/2002: € 235 million). Free cash flow after acquisitions (€ 61 million) and dividends (€ 114 million) tripled to € 224 million (Q1-3/2002: € 72 million). In the third quarter 2003, operating cash flow was € 254 million (Q3 2002: € 211 million) and free cash flow before acquisitions and dividends was € 191 million (Q3 2002: € 118 million), again record levels for a third quarter.

Asset, liability and equity structure
Balance sheet total of the Group was € 8,817 million, a decrease of € 98 million (1 %) compared to December 31, 2002 (€ 8,915 million). This was due to currency effects. At constant currency, balance sheet total increased by 5 %.

Shareholders' equity (including minority interests) was € 3,264 million as of September 30, 2003 compared to € 3,369 million as of December 31, 2002, a decrease of 3 % or € 105 million due to currency translation effects. At constant currency there was an increase of 4 %. Equity ratio (including minority interests) was 37.0 % as of September 30, 2003 compared to 37.8 % as of December 31, 2002.

Bank loans, Eurobonds, commercial paper and trust preferred securities were € 3,181 million as of September 30, 2003 compared to € 3,283 million as of December 31, 2002. The reduction was due to currency translation effects, partially offset by reduction in Fresenius Medical Care's receivables securitization program.

Debt, including liabilities from the receivables securitization program of Fresenius Medical Care decreased from € 3,707 million as of December 31, 2002 to € 3,335 million as of September 30, 2003. The reduction was almost equally achieved from the strong free cash flow as well as currency translation effects.

The key ratio net debt/EBITDA improved substantially as of September 30, 2003 to 2.8 (December 31, 2002: 3.0). The Group is therefore well on track to achieve its target of 2.5 in 2005.

Employees
As of September 30, 2003, Fresenius Group had 65,941 employees worldwide. This was 4 % or 2,303 people more than at the end of 2002.


The Business Segments

Fresenius Medical Care

Fresenius Medical Care AG is the world's leading provider of products and services for patients with chronic kidney failure. As of September 30, 2003, Fresenius Medical Care provided treatment to around 117,600 patients in 1,540 dialysis clinics, 7 % more than at the same date last year.

Fresenius Medical Care increased sales for the first nine months of 2003 by 9 % to US$ 4,075 million (Q1-3/2002: US$ 3,726 million). At constant currency, the increase was 6 %. Fresenius Medical Care had 70 % of sales in North America and 30 % elsewhere.

Both, dialysis products and dialysis care had increased sales. Sales of dialysis products increased 14 % to US$ 1,134 million (Q1-3/2002: US$ 991 million). The international business in particular showed strong growth rates. The number of dialysis treatments increased 9 % to 13.2 million, increasing sales by 8 % to US$ 2,941 million (Q1-3/2002: US$ 2,735 million). Dialysis care sales and dialysis products sales were 72 % and 28 % of sales respectively.

Fresenius Medical Care improved EBIT 8 % to US$ 550 million (Q1-3/2002: US$ 511 million). Net income increased 14 % to US$ 237 million.
For the year 2003, Fresenius Medical Care confirms its outlook and expects mid single digit revenue growth (in constant currency) and net income growth in the high single digit to low double digit range. As mentioned in the first quarter of 2003, Fresenius Medical Care expects to achieve net income growth for the full year 2003 near the lower end within the predicted range.

As a result of the weaker US dollar against the euro, Fresenius Medical Care's sales of US$ 4,075 million (€ 3,665 million) were 9 % lower than the € 4,018 million recorded in the first nine months of 2002 after conversion to euros. EBIT decreased 10 % to € 494 million (Q1-3/2002: € 551 million), also due to currency translation effects.

For further information please see Fresenius Medical Care Investor News at www.fmc-ag.com.

Fresenius Kabi

Fresenius Kabi focuses on nutrition and infusion therapy of patients, many of whom are seriously ill, in hospital and the ambulatory environment, as well as on infusion and transfusion technology.

Fresenius Kabi's sales for the first nine months of 2003 were € 1,082 million, 1 % above the level of € 1,068 million recorded in the same period last year. Currency translation had a negative impact of –5 % on sales. Fresenius Kabi achieved strong organic sales growth of 7%, in line with the full-year target. Divestments (the sale of the company ProReha effective August 1, 2002) reduced sales by –1 % percentage point.

The hospital business generated sales of € 865 million (Q1-3/2002: € 843 million; +3 %). The Ambulatory Care business had sales of € 217 million (Q1-3/2002: € 225 million).

EBIT for the first nine months of 2003 increased to € 107 million, well ahead of previous year's figure of € 65 million. The EBIT margin for the first nine months of 2003 was 9.9 %, well above the margin achieved in the same period last year (6.1 %). Next to the good development in the operating business, cost optimization measures had a positive impact on earnings. These improvements will continue to make a significant contribution to future earnings growth.

This positive development is based on the sustainable success of Fresenius Kabi's products in the European, Asian-Pacific and Latin American markets. In Europe, Fresenius Kabi was able to achieve a good 4 % organic sales growth despite cost saving measures and price pressure in the first nine months of 2003. In other, strong growing regions, Fresenius Kabi achieved double-digit organic growth rates.

For the full year 2003, Fresenius Kabi confirms its outlook of achieving organic sales growth of 6 to 7 %. EBIT for the full year 2003 is expected to be in the range of € 140 million.

* The previous year's figures have been adjusted to include the newly-assigned activities of the business segment Fresenius HemoCare (transfusion and infusion technology) effective January 1, 2003.
 

Fresenius ProServe

Fresenius ProServe offers services for the international healthcare systems. The range of services includes hospital management, the planning and construction of hospitals as well as of pharmaceutical and medical-technical production plants.

Fresenius ProServe increased sales 11 % to € 526 million for the first nine months of 2003 (Q1-3/2002: € 475 million). The Healthcare and Pharma Industry businesses achieved 86 % and 14 % of sales respectively.

Healthcare sales grew by 20 % to € 452 million (Q1-3/2002: € 377 million). Sales generated by services increased 30 % to € 361 million (Q1-3/2002: € 277 million). This was mainly due to the first-time consolidation of newly-acquired hospitals (mainly Klinikum Rhein-Sieg in Siegburg). Healthcare sales from project business, at € 91 million, were 10 % lower than in the same period last year (Q1-3/2002: € 100 million) due to project delays. Pharma Industry sales of € 74 million were 24 % lower than in the same period last year due to a general investment caution of the pharma industry.

Fresenius ProServe's EBIT for the first nine months of 2003 was € 5 million, after one-time expenses of € 8 million (Q1-3/2002: 16 million). The company announced in August 2003 a program at WKA to reduce costs and improve profitability. The program has been implemented in line with plan.

A bed utilization rate of 80 % in the third quarter 2003, compared to one of 81% in the last quarter, shows that bed utilization in acute and post-acute hospitals has not yet seen a turnaround. In addition, delayed project business orders had a negative impact on quarterly earnings.

A primary task is to improve Fresenius ProServe's profitability. In addition to the WKA program, further reorganization measures are currently being taken for the health care project and Pharma Industry businesses and will be implemented during the current year. This includes focusing Pharma Industry business regionally on selected key markets and the related closure of business sites. In addition, the ProServe subsidiary hospitalia international, which is active in the hospital project business such as the subsidiary VAMED, will operate in future under the umbrella of VAMED. This will lead to advantages from a joint market approach and from cost savings in administration. The reorganization will lead to one-time expenses of approximately € 15 million, mainly in connection with the write-down of the carrying amount of assets. These expenses will incur in 2003.

For the full year 2003, Fresenius ProServe expects EBIT before one-time expenses to be in the range of € 15 million. After one-time expenses, Fresenius ProServe anticipates that it will report a negative EBIT of approximately € 20 million.

Fresenius Medical Care AG ("The Company") (Frankfurt Stock Exchange: FME, FME3) (NYSE: FMS, FMS_p), the world's largest provider of Dialysis Products and Services, today announced that during December it produced "Dialyzer No. 50 Million", which is the first year ever having reached production output of 50 million dialyzers annually. Over the past several years, the Company has expanded its manufacturing base and capacity in all major key markets, such as Europe, North America and recently also in Asia Pacific, specifically the market in Japan.

Over the recent years, the Company also introduced its next generation polysulfone high-flux dialyzer membrane technologies with the FX class dialyzer in the international market. Last year, the Company took a big step forward for both patients and the Company by switching its U.S. clinics to single-use (one time use) of dialyzers. Today, Fresenius Medical Care's U.S. clinics provide single-use dialyzer treatments for their patients as part of the Company's UltraCareTM program, which is a patient care treatment program that includes the new single-use Optiflux dialyzers as well as patient care treatment technologies with its series of 2008 dialysis machines.

At this year's American Society of Nephrology (ASN) Conference, one of the major renal conferences, which was held in San Diego on November 14 – 17, a scientific study was presented regarding the improvements in medical outcomes of single-use dialyzers compared to re-use dialyzers. This scientific study concludes that the use of new synthetic membrane dialyzers with each treatment suggests a survival advantage for patients compared to the use of dialyzers that have been clinically reprocessed (re-used).

Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented: "We are all proud to have reached this level of dialyzer production output on a global basis and we are confident that our global strategy is on the right track."

• Sales:+ 7 % to € 3.75 billion
• EBIT:+ 11 % to € 420 million
• Net income: + 34 % to € 55 million

The Fresenius health care group increased sales by a 7 % growth rate to € 3.75 billion in the first six months of 2002. The development of earnings was positively influenced by the change in accounting methods to change US GAAP. In accordance with these rules, goodwill is no longer amortized.*)

Sales
In the first half of 2002, Fresenius increased consolidated sales to € 3,749 million. Of the 7 % increase, 6 percentage points derived from organic growth and 3 percentage points from acquisitions. The change in exchange rates diminished the growth rate by 2 percentage points. The negative exchange rate effect is mainly due to the devaluation of the peso in Argentina. In the period under report, the current weakness of the US dollar compared to the euro has not had any impact. Accordingly, sales growth would have amounted to 9 % at overall constant exchange rates.

In North America, Fresenius increased sales by 3 %. In Europe, the Group achieved a 19 % sales growth. Sales in the Asia-Pacific region developed very positively, with a plus of 22 %. The decline in sales of 28 % in Latin America was largely due to the devaluation of the Argentinean peso over the dollar. At constant exchange rates, a 5 % sales growth would have been achieved in Latin America.

The contributions of the business segments to total sales compared to the previous year shifted in favour of the business segment Fresenius ProServe as a result of the acquisition of Wittgensteiner Kliniken AG:

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to € 592 million and was thus 3 % lower than the previous year's figure of € 613 million. EBIT rose by 11 % to € 420 million (1st six months 2001: € 377 million). The EBIT ratio amounted to 11.2 % (previous year: 10.8 %). The accounting change concerning the amortization of goodwill in accordance with US GAAP financial accounting standards rule 142 had an impact of € 77 million. Without this effect, EBIT would have been 7 % lower than in the previous year (see table on page 9 with adjusted figures for the previous year) due to the development of Fresenius Medical Care.
The fact that goodwill is no longer amortized puts an end to companies being discriminated if they make acquisitions in order to expand their market positions.

The interest expense of the Group amounted to € -143 million (first six months 2001: € -38 million). The increase is mainly a result of the expansion of business through acquisitions.

The tax ratio dropped from 46.0 % in the first half of 2001 to 38.3 % in the year under report, largely due to goodwill no longer being written off. Profits allocated to minority interest holders increased to € 111 million, after € 87 million in the first half of 2001.

Net income before extraordinary items increased by 43 % to € 60 million (1st half 2001: € 42 million). In the first quarter of 2002 Fresenius Medical Care redeemed trust preferred securities which were originally due in 2006. This redemption resulted in extraordinary expenses in the Fresenius Group of € 5 million after taxes so that net income for the first six months amounted to € 55 million (1st half 2001: € 41 million).

The change in exchange rates, especially due to the effects of Latin American currencies, had a negative impact on consolidated earnings. At constant exchange rates, i.e. calculated at the exchange rates of the previous year, EBIT growth amounted to 13 % and net income to 37 %.

Earnings per share amounted to € 1.34 (same period previous year: € 1.03).

Investments
Total investments, € 257 million, dropped significantly in the first half of 2002 compared to the € 866 million invested in the previous year. This decline is due to the one-off effect of the acquisition of Everest Healthcare Corp. in the first half of the previous year, and the acquisition of Wittgensteiner Kliniken AG. 72 % of the total amount was invested in intangible and tangible assets and 28 % was allocated to acquisitions.
Investments in fixed assets mainly concerned the equipping of dialysis clinics, the expansion of production capacities and the optimisation of production processes.

Cash flow
The operating cash flow of the Fresenius Group amounted to € 296 million in the first half of 2002 (previous year: € 128 million). Operating cash flow totally covered the financing requirements before acquisitions (€ 142 million). The free cash flow before acquisitions and dividends totalled € 154 million, considerably higher than the previous year's figure of € -33 million. The financing requirements from the change in working capital amounted to € -34 million compared to € -235 million in the same period of the previous year.

Asset and equity structure
The balance sheet total dropped to € 9,175 million compared to the 31.12.2001 (€ 9,867 million; -7 %). This decrease is mainly due to the exchange rate effects. The equity ratio including minority interests, 36 %, was slightly below the ratio of 37 % as of end 2001. Bank loans, Eurobonds, commercial papers and trust preferred securities amounted to € 3,537 million (31.12.2001: € 3,737 million). The drop compared to the end of 2001 results from the conversion into euros of the financial liabilities reported in US dollars. Net debt amounted to € 3,372 million on 30.6.2002 (as of 31.12.2001: € 3,556 million).

The business segments

Fresenius Medical Care
Fresenius Medical Care, the world's largest provider of dialysis products and dialysis care, further strengthened its international market position. Altogether around 108,600 dialysis patients were cared for in 1,430 clinics on 30.6.2002.

Sales increased by 3 % to US$ 2,441 million (1st half 2001: US$ 2,361 million) (currency-adjusted: 6 %).
73 % of Fresenius Medical Care's sales, or US$ 1,793 million, (1st six months 2001: US$ 1,733 million) were generated by dialysis care; this division grew by 4 % in the period under report. The growth resulted from the increased number of dialysis treatments performed. In the first half of 2002 Fresenius Medical Care carried out 7.9 million dialysis treatments, 7 % more than in the same period of the previous year. In North America the number of dialysis treatments performed increased by 4 % to 5.7 million. Outside North America 2.3 million treatments were carried out, an increase of 18 % compared to the same period of the previous year. Sales of dialysis products, including product sales to the company's own clinics, rose by 4 % (currency-adjusted: 6 %) in the period under report to US$ 835 million.

In North America, Fresenius Medical Care increased sales by 3 % to US$ 1,821 million (1st half 2001: US$ 1,769 million). The international business achieved sales of US$ 620 million (1st half 2001: US$ 592 million). When adjusted for currency effects, growth amounted to 13.5 %.

Fresenius Medical Care increased EBIT by 6 % from US$ 326 million in the first half of 2001 to US$ 344 million. Net income before extraordinary items rose by 27 % from US$ 118 million in the first six months of 2001 to US$ 149 million in the first half of 2002. Earnings development was influenced among others by the delay in the introduction of single-use dialysers in the United States.

The business prospects of Fresenius Medical Care continue to be positive. Additional opportunities to increase sales and earnings are expected especially in North America. Outside North America, the growth rates of Fresenius Medical Care are substantially higher than overall market growth.

Despite this positive environment, Fresenius Medical Care reduces its forecast for 2002. This is largely due to the delay in switching from re-use dialysers to single-use dialysers. The strategic decision to change to treatment with single-use dialysers will help to ensure the future growth of Fresenius Medical Care in the North American market.

Fresenius Medical Care expects a sales growth of six percent on the basis of constant exchange rates. The target for earnings after tax is revised from US$ 350 million to approximately US$ 300 million.

For further information – please see Investor News Fresenius Medical Care.


Fresenius Kabi
Sales of Fresenius Kabi, Europe's leading provider of infusion and nutrition therapies, amounted to € 627 million in the first half of 2002, the same level as the previous year (1st half 2001: € 628 million).

The breakdown of sales is as follows: Sales of the hospital business amounted to € 478 million (1st half 2001: € 475 million). This figure was influenced by the decrease in sales from the contract manufacturing business. In the ambulatory care business Fresenius Kabi achieved sales amounting to € 149 million (1st half 2001: € 153 million). The drop in sales is largely a result of adjustments in product portfolio of the subsidiary ProReha. If these effects are not taken into account, Fresenius Kabi achieved an organic growth of 7 %. Currency conversion had a negative influence of 1 percentage point on the sales development of Fresenius Kabi.

EBIT of Fresenius Kabi amounted to € 35 million in the first half of 2002 compared to € 19 million in the comparable period of the previous year. This corresponds to a growth of 84 %. This result was influenced by measures to increase profitability in the Uppsala facility, including a special charge in connection with the reduction of personnel, ongoing measures to optimise production and the focus on production in this location.


Fresenius ProServe
Fresenius ProServe, the engineering and management specialist which operates in the global hospital market, achieved sales of € 321 million in the first half of 2002, thus considerably exceeding the previous year's figure of € 160 million.

Sales of the healthcare business almost doubled to € 256 million compared to the same period of the previous year. Of this figure, 72 % of sales were generated by services and 28 % by projects. The increase in sales of services to € 184 million was significantly influenced by the acquisition of Wittgensteiner Kliniken AG (same period previous year: € 73 million). Sales of the project business developed well in the first half of the year and amounted to € 72 million, 29 % higher than sales of the first six months of 2001, € 56 million.

Sales of the pharma industry business, € 65 million, also registered a positive development in the first six months of 2002 (1st half 2001: € 31 million).

EBIT of Fresenius ProServe increased from € 3 million in the first half of 2001 to € 8 million in the first six months of 2002.

Orders received and orders on hand of the project business registered a substantial increase over the previous year:

Fresenius HemoCare
The Fresenius Group business segment Fresenius HemoCare, which specializes in blood preparation and treatment and in immune therapy, increased its sales by 8 % in the first half of 2002 to € 114 million (1st half 2001: € 106 million). This increase was achieved both as a result of organic growth as well as through the consolidation for the first time of the acquisitions carried out in 2001.

EBIT of Fresenius HemoCare amounting to € 4 million in the first half of 2002 was the same as the previous year. Ongoing expenses for building up distribution organizations as well as a continuous high level of research and development expenses had an impact on earnings development.


Group outlook on 2002
Based on the revised business outlook of Fresenius Medical Care, the Fresenius Group anticipates a high single-digit growth rate in sales at the end of 2002, assuming constant exchange rates. Earnings are expected to grow more strongly than sales. This growth is due to the fact that goodwill is no longer amortized as a result of the changed US GAAP accounting rules which have been in force since the beginning of the 2002 financial year; these new rules have most impact on Fresenius Medical Care.

The implementation of strategic decisions such as the introduction of single-use dialysers in the United States, and the measures taken by Fresenius Kabi, temporarily affects the development of our business. Fresenius is convinced that these decisions will further strengthen the leading market position of Fresenius Medical Care in dialysis and of Fresenius Kabi in infusion and nutrition therapy, and will result in increased profitability of the companies in the future.

The Fresenius Group, with its four business segments, is in an excellent global strategic position. Demand for our life-saving products and services continues to be strong despite sustained pressure to save costs especially in the health care markets of the West. The markets of the Asia-Pacific region in particular offer very good growth prospects for Fresenius.

^*) The Fresenius Group will prepare its accounts as of January 1, 2002 in accordance with US GAAP. The figures for the previous year therefore correspond to the US GAAP accounting rules in force 2001, i.e. the figures for 2001 include amortization of goodwill.