Fresenius today announced that it has received Orphan Drug Designation from the European Commission for the trifunctional antibody removab® to treat patients with ovarian cancer. The Orphan Drug Designation entitles Fresenius to up to 10 years market exclusivity in the EU for removab® for the treatment of ovarian cancer upon marketing approval.

Fresenius in September 2003 successfully completed a phase I/II study using the trifunctional antibody removab® for the treatment of malignant ascites in ovarian cancer. The antibody proved to be well-tolerated and demonstrated first significant effects regarding tumor cell reduction.

Based on the encouraging results of the phase I/II study, a clinical phase Ila study for the treatment of ovarian cancer should begin shortly. The primary objective of this study is to determine an optimized dosing as well as to further examine its efficacy. The final report is expected by the end of 2005.


Background information

Orphan Drug
"Orphan Drugs" are medicinal products used for rare, life-threatening diseases or chronically debilitating condition where no other or no sufficient effective treatment exists. Additional benefits include regulatory assistance as well as advice on the conduct of clinical trials from the EMEA (European Agency for the Evaluation of Medicinal Products).

Fresenius Biotech
Fresenius Biotech GmbH is a company of the Fresenius Group, focused on the development and marketing of biopharmaceuticals in the fields of oncology, immunology and regenerative medicine.

Fresenius
Fresenius is a global health care group providing products and services for dialysis, the hospital and the medical care of patients at home. In 2003 Group sales amounted to € 7.1 billion. Fresenius had 66,264 employees worldwide on December 31, 2003

• Sales: € 1.72 billion, + 8 % in constant currency; - 1 % at actual exchange rates
• EBIT: € 197 million, + 12 % in constant currency; + 2 % at actual exchange rates
• Net income: € 39 million, + 17 % in constant currency; + 8 % at actual exchange rates

Fresenius Group business development in the first quarter 2004 was very positive but significantly impacted by exchange rate fluctuations: Sales rose 8 % in constant currency and decreased 1 % at actual exchange rates. EBIT rose 12 % in constant currency and 2 % at actual exchange rates. Net income increased 17 % in constant currency and 8 % at actual exchange rates. The Group's two largest business segments Fresenius Medical Care and Fresenius Kabi contributed strongly to this positive business development. Fresenius ProServe continued its profit improvement program at Wittgensteiner Kliniken (WKA) in the first quarter 2004.

Positive Group outlook for the full year 2004
The very strong first quarter results and the positive business development at Fresenius Medical Care and Fresenius Kabi reinforce our full-year outlook for the Group: Fresenius expects a mid single-digit percent increase in 2004 sales in constant currency. Net income is expected to grow in the range of 25 to 30 % in constant currency. We expect sales and earnings to increase in all business segments.

Sales
In the first quarter 2004, Group sales increased 8 % in constant currency. Organic growth contributed 6 % and acquisitions 2 %. Currency translation effects had a 9 % negative impact on sales. At actual exchange rates sales were € 1.72 billion, down 1 % on last year's figure of € 1.73 billion.

Sales in North America accounted for 48 % and Europe for 40 % of total sales, followed by Asia-Pacific with 7 %. Sales in Latin America and other regions contributed with 5 % to total sales. The highest regional growth rates were achieved in Asia-Pacific and Latin America. We expect that Asia-Pacific and Latin America will continue to offer above-average growth potential for Fresenius in the future.

Sales contribution of the three business segments:

Fresenius Medical Care's lower share of Group sales is mainly due to currency translation.

Earnings
Currency translation effects also impacted Group earnings: In constant currency earnings before interest, income taxes, depreciation and amortization (EBITDA) increased 8 % compared to the first quarter of 2003. At actual rates EBITDA decreased 1 % to € 269 million (Q1 2003: € 271 million). Group EBIT increased 12 % in constant currency and 2 % at actual exchange rates to € 197 million (Q1 2003: € 194 million).

Group net interest expense improved by 19 % to € -52 million compared to € -64 million last year. This positive development was attributable to a lower debt level, and the fact that Fresenius Medical Care converted a portion of its debt from fixed to variable interest rates. In addition, currency translation had a positive effect.

The effective tax rate for the first quarter 2004 was 40.0 % (Q1 2003: 39.2 %).

Minority interests increased to € 48 million (Q1 2003: € 43 million). 96 % of minority interests relate to Fresenius Medical Care.

At actual exchange rates Group net income was € 39 million, up 8 % from the first quarter 2003. In constant currency Group net income would have increased 17 %.

Earnings per ordinary share were € 0.94, an increase of 8 % from € 0.87 in the first quarter 2003. Earnings per preference share were € 0.95 (Q1 2003: € 0.88), an increase of 8 %.

Capital expenditure and acquisitions
Fresenius spent € 89 million in the first quarter 2004 on capital expenditure and acquisitions (Q1 2003: € 88 million). Of this amount € 48 million was spent on capital expenditure (Q1 2003: € 56 million) and € 41 million on acquisitions (Q1 2003: € 32 million).

Capital expenditure was mainly used to expand and modernize existing dialysis clinics at Fresenius Medical Care. We also invested in further expanding and optimizing production plants at Fresenius Kabi, and in modernizing and supplying medical technical equipment to Fresenius ProServe clinics.

Acquisitions related mainly to the purchase of dialysis clinics by Fresenius Medical Care. Fresenius Medical Care spent € 38 million on acquisitions in the first quarter 2004.

Europe accounted for 51 % of Group investments, North America for 43 % and other regions for 6 %.

Cash flow
Group operating cash flow and free cash flow again showed a strong performance. Operating cash flow increased 33 % to € 182 million (Q1 2003: € 137 million). This was mainly due to the positive change in working capital. Free cash flow before acquisitions and dividends increased 64 % to € 136 million (Q1 2003: € 83 million). This increase resulted from the strong operating cash flow, while net investments were down 15 % to € 46 million. Free cash flow after acquisitions and dividends was € 98 million, a significant increase of 72 % (Q1 2003: € 57 million).

Asset and capital structure
Total assets increased 5 % to € 8,757 million (December 31, 2003: € 8,347 million). In constant currency total assets would have increased 3 %. Total current assets were up 10 % to € 3,008 million (December 31, 2003: € 2,744 million). This resulted mainly from an increase in trade accounts receivable, since receivables from the Fresenius Medical Care receivable securitization program are stated in the balance sheet following an amendment of the program. In addition, business expansion had an impact.

This led to an increase in debt to € 3,155 million at actual rates and € 3,095 million in constant currency as of March 31, 2004 (December 31, 2003: € 3,023 million; debt including liabilities from the receivables securitization program of Fresenius Medical Care as at December 31, 2003: € 3,148 million).

The key ratio of net debt/EBITDA was 2.7 on March 31, 2004, the same as at the end of 2003.

Shareholders' equity (including minority interests) was € 3,360 million, up 5 % from € 3,214 million as at December 31, 2003. The equity ratio including minority interests slightly decreased from 38.5 % as at December 31, 2003 to 38.4 % at the end of the first quarter 2004.

Employees
As at March 31, 2004, Fresenius had 67,189 employees worldwide, an increase in headcount of 1 % compared to 66,264 employees as at December 31, 2003.

Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer and cell therapies used to treat end-stage HIV infection. In the field of polyclonal antibodies, Fresenius Biotech has successfully marketed ATG Fresenius S for many years. This product is an immune suppressive agent used to prevent rejections following organ transplantations.

Fresenius Biotech continued its projects according to plan. In the field of trifunctional antibodies for cancer treatment, a phase Ila study for the treatment of ovarian cancer is starting up. The primary objective of this study is to determine an optimized dosage as well as to further examine its efficacy on refractory cancer patients. Some weeks ago Fresenius received Orphan Drug Designation from the European Commission for the trifunctional antibody removab® to treat patients with ovarian cancer.

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 March 31, 2004, Fresenius Medical Care treated around 120,700 patients in 1,575 dialysis clinics, corresponding to a 6 % increase year over year.

Fresenius Medical Care's first quarter 2004 sales increased by 12 % to US$ 1,459 million (Q1 2003: US$ 1,299 million). In constant currency the increase was 8 %.

Sales in its largest market North America (68 % of total sales) showed a very good 7 % growth in the first quarter 2004. Sales in the international business rose by 25 % at actual rates and by 10 % in constant currency.

Sales of dialysis products increased 13 % to US$ 401 million. Sales of dialysis services increased 12 % to US$ 1,058 million. Growth in dialysis services is mainly driven by the number of treatments, which increased 8 % in the first quarter 2004. Fresenius Medical Care carried out 4.6 million dialysis treatments in the first quarter 2004, thereof 3.2 million in North America (+ 6 %) and 1.4 million (+ 12 %) in the international business.

Fresenius Medical Care increased EBIT by 17 % to US$ 198 million (Q1 2003: US$ 169 million). This increase is based on the very positive development of Fresenius Medical Care's US operations as well as the strong performance of its international business. Net income increased 30 % to US$ 91 million in the first quarter 2004.

For the year 2004, Fresenius Medical Care confirms its outlook for the top-line and expects sales growth in constant currency in the mid-single digit range. Net income growth is now expected to be at the high end of Fresenius Medical Care's original guidance - which is in the low double digit range.

For further information, please see Fresenius Medical Care's website www.fmc-ag.com.  

Fresenius Kabi

Fresenius Kabi focuses on nutrition and infusion therapy for critically and chronically ill patients, in both the hospital and ambulatory care environment, and on infusion and trans-fusion technology.

Fresenius Kabi's sales were € 362 million in the first quarter 2004, up 2 % from previous year's sales of € 355 million. Fresenius Kabi had a very good organic growth of 6 %. Latin America and Asia-Pacific achieved growth rates of 18 % each. Europe contributed with a growth of 2 %, despite -5 % in Germany. Besides increasing cost savings in health care and price pressure, the German market was marked by uncertainties about the new reimbursement regulations for the ambulatory area. Currency translation reduced sales by 2 % and disinvestments had an impact of -2 %. In the first quarter 2004, Fresenius Kabi sold the medical-technical equipment rental activities of a French subsidiary through a management buy-out.

Fresenius Kabi achieved a 5 % increase in hospital business sales, to € 298 million (Q1 2003: € 284 million). Ambulatory Care sales were € 64 million, down 10 % (Q1 2003: € 71 million). This was mainly caused by the disinvestment mentioned above.

Fresenius Kabi's EBIT rose 17 % in the first quarter 2004 to € 41 million, a significant improvement on previous year's figure of € 35 million. The EBIT margin increased to 11.3 %, continuing the positive earnings trend (Q1 2003: 9.9 %).

For the full year 2004, Fresenius Kabi sales are expected to increase by mid single-digit growth rates in constant currency. The EBIT margin is expected to increase to about 11 % (2003: 10 %).

Fresenius ProServe

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

Fresenius ProServe increased sales in the first quarter 2004 by 20 % to € 199 million (Q1 2003: € 166 million). This sales increase is entirely based on organic growth. The strong increase in sales is mainly due to the positive development in the Health care Project business.

Order intake at Fresenius ProServe increased 6 % to € 70 million in the first quarter 2004 (Q1 2003: € 66 million). This increase was mainly driven by the Health care Project business. Order backlog slightly decreased to € 431 million compared to € 435 million at December 31, 2003.

Fresenius ProServe achieved an EBIT of € 1 million in the first quarter 2004 (Q1 2003: € 6 million). This figure includes € 1 million before tax of one-time expenses for measures to cut costs and improve profitability at Wittgensteiner Kliniken AG (WKA). By reducing staffing levels and optimizing processes and costs, Fresenius ProServe is adjusting its fixed cost structure to better reflect market conditions. The current bed utilization rate in WKA's German hospitals decreased in the first quarter 2004 to 78 % compared to the previous year's level of 79 %.

Fresenius ProServe expects 2004 sales to grow by around 10 %. Based on the weak first quarter earnings performance, it will be a challenge to achieve the full-year EBIT projection of € 25 million before the anticipated 2004 WKA one-time expenses of € 8 million.

First Half 2004: Fresenius raises sales and earnings outlook

• Sales: € 3.55 billion, +9 % in constant currency, +3 % at actual exchange rates
• EBIT: € 412 million, +13 % in constant currency, +6 % at actual exchange rates
• Net income: € 80 million, +21 % in constant currency, +14 % at actual exchange rates

Business continues to develop successfully

• Earnings performance improved.
• Cashflow of € 239 million at record level.
• Fresenius Medical Care and Fresenius Kabi with excellent sales and earnings performance.
• Weak market condition continues to affect Fresenius ProServe.
• Group outlook for 2004 raised.

Group outlook for 2004
Based on the excellent results at Fresenius Medical Care and Fresenius Kabi the Company raises its full-year outlook: Fresenius now expects a high-single digit percent increase in sales in constant currency. Previously, the Company expected a mid-single digit percent increase in sales. Net income is expected to grow approximately 30 % in constant currency. Previously, the Company expected net income to grow at 25-30 %. Sales and earnings growth is expected in all business segments.

Sales
Sales in the first half of 2004 rose 9 % in constant currency. Organic growth was 7 %, acquisitions contributed 2 %. Currency translation effects had a negative 6 % effect on sales. At actual exchange rates sales increased 3 % to € 3,553 million.

Sales in North America accounted for 48 % and Europe for 39 % of total sales, followed by Asia-Pacific with 7 %. Sales in Latin America and other regions accounted for 6 % of total sales. Very good regional growth rates of 19 % in constant currency were achieved in Asia-Pacific and Latin America. We expect that Asia-Pacific and Latin America will continue to offer above-average growth opportunities for Fresenius in the future.

Sales contribution of the three business segments:

Fresenius Medical Care's lower share of Group sales is due to currency translation effects.

Earnings
The Group was able to increase earnings despite negative currency translation effects: Using actual exchange rates, EBITDA rose 4 % to € 564 million (first half 2003: € 543 million). In constant currency, EBITDA rose 10 %. Group EBIT increased 13 % in constant currency and 6 % at actual exchange rates to € 412 million (first half 2003: € 390 million).

Net interest also improved to € -104 million in the first half of 2004 compared to
€ -125 million last year. This is due to a lower debt level as well as the conversion to a variable rate from a fixed interest rate on payments on some of Fresenius Medical Care's debt. Currency exchange rates also had a favorable impact.

The effective tax rate for the first half 2004 was 40.6 % (first half 2003: 39.2 %).

In the first half of 2004, minority interests increased to € 103 million compared to € 91 million in the first half of 2003. 96 % of minority interests were attributed to Fresenius Medical Care.

Net income rose 21 % in constant currency and 14 % at actual exchange rates, to € 80 million (first half 2003: € 70 million). The excellent operating performance of Fresenius Medical Care and Fresenius Kabi as well as significantly lower interest expenses resulted in the increase in net income despite higher taxes.

Earnings per ordinary share rose to € 1.95 (first half 2003: € 1.70). Earnings per preference share rose to € 1.97 (first half 2003: € 1.72). This represents an increase of 14 %.

Investments
In the first half, Fresenius invested € 172 million (first half 2003: € 157 million) including € 111 million on capital expenditures for property, plant and equipment and intangible assets (first half 2003: € 113 million) and € 61 million on acquisitions (first half 2003: € 44 million).

Capital expenditures at Fresenius Medical Care were mainly used to construct new dialysis clinics or expand and modernize existing clinics as well as maintain and expand production sites. Fresenius Kabi's production sites were expanded and optimized. The investments at Fresenius ProServe included the purchase of technical medical equipment as well as the modernization of hospitals and clinics, such as the construction of highly modern operating theatres in an orthopedic clinic.

Fresenius Medical Care spent € 49 million on acquisitions mainly to buy dialysis clinics. € 12 million was spent on acquisitions for Fresenius Kabi and Fresenius ProServe. Europe accounted for 45 % of Group investments, North America for 44 % and other regions for 11 %.

Cash flow
Operating cash flow and free cash flow reached new all-time highs in the first-half year: Operating cash flow rose 9 % to € 340 million (first half 2003: € 311 million) due to the positive development of Group net income. Free cash flow before acquisitions and dividends increased 15 % to € 239 million (first half 2003: € 208 million). Free cash flow after acquisitions and dividends rose 6 % to € 67 million (first half 2003: € 63 million). Cash used for acquisitions was € -53 million (net) and dividends were € -119 million.

Asset and capital structure
Total assets rose 5 % to € 8,792 million (December 31, 2003: € 8,347 million) or 3 % in constant currency. Total current assets increased 10 % to € 3,031 million (December 31, 2003: € 2,744 million). This increase was due mainly to an increase in trade accounts receivable (+14 %), since receivables from the Fresenius Medical Care receivable securitization program are stated in the balance sheet starting this year following an amendment of the program.

This change impacted also group debt. Debt was € 3,188 million at actual rates (constant currency: € 3,123 million) as of June 30, 2004. In comparison, debt at the end of 2003 including liabilities related to the receivable securitization program was € 3,148 million (excluding the securitization program: € 3,023 million).

The ratio of net debt/EBITDA remained unchanged from the end of 2003 at 2.7.

Shareholders' equity including minority interests was € 3,375 million, up 5 % from € 3,214 million on December 31, 2003. The equity ratio including minority interests was 38.4 % (December 31, 2003: 38.5 %).

Employees
Fresenius had 69,128 employees worldwide on June 30, 2004, an increase of 4 % over the 66,264 employees at the end of 2003.

Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer as well as cell therapies used to treat end-stage HIV infection. In the field of polyclonal antibodies, Fresenius Biotech has successfully marketed ATG-Fresenius S for many years. ATG-Fresenius S is an immunosuppressive agent used to prevent and treat rejection following organ transplantations.

As expected, the first results from a phase I study using the trifunctional antibodies in non-small-cell lung cancer, breast cancer and peritoneal carcinomatosis are planned to be announced during the remainder of this year.

First intermediate results of a phase I/II study reviewing the treatment of patients with end-stage HIV infection will be available in early 2005. The study is expected to show whether the mode of action functions in treating humans.

Business Segments

Fresenius Medical Care

Fresenius Medical Care is the world's leading provider of products and services for patients with chronic kidney failure. As at June 30, 2004, Fresenius Medical Care treated about 122,700 patients (+6 %) in 1.590 dialysis clinics (+5 %).

• Excellent growth in sales (+13 %) and net income (+28 %)
• Number of dialysis treatments rose 7 %
• Full-year guidance raised

In the first half of 2004, Fresenius Medical Care achieved significant sales growth of 13 % to $ 3,011 million (first half 2003: $ 2,666 million), or 10 % in constant currency.

Fresenius Medical Care increased sales by strong 9 % in its key North American market which accounts for 68 % of sales. Outside North America (International segment) sales rose 23 %, or a strong 13 % increase in constant currency.

Sales of dialysis products at Fresenius Medical Care increased 11 % to $ 826 million. Sales of dialysis services grew 14 % to $ 2,185 million. Dialysis services sales are mainly determined by the number of treatments: In the first half of 2004, Fresenius Medical Care performed 9.2 million dialysis treatments, 7 % more than in the first half of 2003, including 6.3 million (+5 %) in North America and 2.9 million (+11 %) outside North America.

Fresenius Medical Care increased EBIT by 16 % to $ 411 million in the first half of 2004 from $ 353 million in the first half of 2003. Net income at Fresenius Medical Care increased 28 % in the first half to $ 192 million.

Based on the strong performance in the first half of 2004 Fresenius Medical Care lifts its guidance for the full year 2004. After expecting a net revenue growth at constant currencies in the mid-single digit range Fresenius Medical Care now expects the top-line to grow in the high-single digits. After expecting a net income growth for 2004 in the low double digit range Fresenius Medical Care now expects net income growth to be in the mid teens.

For further information, please see Fresenius Medical Care's website: www.fmc-ag.com.  

Fresenius Kabi

Fresenius Kabi is a leading provider of nutrition and infusion therapy for critically and chronically ill patients in the hospital and ambulatory environment. In addition, the company offers products in the field of infusion and transfusion technology.

• EBIT increase of 20 %
• Excellent organic growth of 6 %
• Full-year margin forecast increased from 11.0 % to approximately 11.5 %
• Capital Market Day planned for December 8, 2004

Sales at Fresenius Kabi rose 3 % to € 738 million (first half 2003: € 718 million). Fresenius Kabi achieved excellent overall organic growth of 6 %. Latin America and Asia-Pacific performed exceptionally well, accounting for organic growth of 13 % and 21 % respectively. Pricing pressure and cost-cutting in the health care sector led to a 6 % decline in sales in Germany. Excluding Germany, Fresenius Kabi achieved organic revenue growth of 8 % in Europe. Currency exchange rates had an effect of -1 % on first-half sales. Divestments decreased sales by 2 %.

Fresenius Kabi's EBIT increased by 20 % to € 85 million in the first half of 2004. This result significantly exceeds last year's figure of € 71 million. The EBIT margin increased by 160 basis points from 9.9 % in the first half of 2003 to 11.5 %, continuing the positive earnings trend.

Based on the good first-half year results, Fresenius Kabi is raising its earnings outlook and now expects the EBIT margin to increase to approximately 11.5 % after predicting 11.0 % in February. Full-year sales at Fresenius Kabi in constant currency are expected to achieve an increase in the mid-single digit percentages.

A Capital Market Day is dated for December 8, 2004 to present in detail Fresenius Kabi's business and strategic direction.

Fresenius ProServe

Fresenius ProServe offers services to the international health care sector. The health care business includes hospital management as well as the planning and construction of hospitals. The pharma industry business focuses on the planning and the construction of pharmaceutical plants and medical technical production sites.

• Organic growth of 14 %
• Order intake increased
• Continued low bed utilization in Germany
• 2004 EBIT forecast lowered to € 15 to € 20 million before one-time expenses

First-half sales at Fresenius ProServe rose to € 383 million, an increase of 14 % compared to the first half of 2003 (€ 336 million) due entirely to organic growth. Sales growth came primarily from the positive development of the health care project business.

Order intake at Fresenius ProServe increased in the first half by 6 % to € 136 million (first half 2003: € 128 million). This increase grew out of projects both in the health care and the pharma industry business. The order backlog was € 438 million (December 31, 2003: € 435 million).

Fresenius ProServe achieved an EBIT before one-time expenses of € 6 million (first half 2003: € 10 million). Including one-time expenses of € 6 million (before tax), EBIT was € 0 million. The 79 % bed utilization rate at the German hospital business of WKA was below the 80 % in the first half of 2003. To adjust its fixed costs to market conditions, Fresenius ProServe is reducing staff and optimizing processes and costs.

The full-year EBIT target of € 25 million before one-time expenses is no longer achievable since first-half results of 2004 were below expectations and the bed utilization rate continues to remain weak. Fresenius ProServe now expects an EBIT between € 15 million and € 20 million before one-time expenses. One-time expenses are expected to be in the range of € 8 million. Sales at Fresenius ProServe are still expected to increase 10 % in 2004.

Please note:

An analyst meeting will take place today at 1.30 pm CET. This meeting will be broadcasted live over the Internet in a listen only mode at www.fresenius-ag.com.

Fresenius AG today announces the retirement of Mr. Udo Werlé (60) after eleven successful years as Chief Financial Officer and Labor Relations Director of Fresenius AG, effective December 31, 2004. He will continue to be involved with the Group as a consultant.

After joining the Management Board of Fresenius AG in 1994, Udo Werlé was instrumental in the successful growth of the Group. He played a key role in the acquisition of the dialysis services company National Medical Care as well as the formation of Fresenius Medical Care in 1996. He also served on the Board of Management of Fresenius Medical Care AG as Chief Financial Officer from 1996 to 1997 and as Chief Executive Officer from 1998 to 1999.

The Supervisory Board of Fresenius AG unanimously appointed Mr. Stephan Sturm (41) as new Chief Financial Officer and Labor Relations Director beginning January 1, 2005.

Stephan Sturm began his career at McKinsey before entering the banking sector in 1991. In 1998 he joined Credit Suisse First Boston where he currently serves as Managing Director Investment Banking responsible for Germany and Austria. He also is a member of CSFB's European Management Committee.

"Mr. Werlé played a key role in the development of the Group for many years. We are very indebted to him for his contributions and wish him all the best for the future. I very much welcome Mr. Sturm as a new member of our Management Board and Chief Financial Officer and look forward to working together. His broad financial experience and familiarity with Fresenius and the health care industry will assure a seamless transition in this vital function," commented Dr. Ulf M. Schneider, Chairman of the Management Board of Fresenius AG.

Fresenius ProServe has reached an agreement to sell its subsidiary hospitalia care to Kursana Residenzen GmbH, Berlin, a division of the Dussmann Group. hospitalia care currently operates and manages 23 nursing care facilities in Germany with more than 2,600 beds. The Company had sales of € 27 million in 2003 and approximately 760 employees. The sale is subject to certain conditions, including the approval of the antitrust authorities.

Kursana operates 16 retirement residences and 30 retirement care centres in Germany, Austria, Switzerland and Estonia and will become the second largest private nursing care operator in Germany through the purchase of hospitalia care. Kursana's excellent quality standards will ensure high-quality care at hospitalia care's facilities going forward.

The sale of the nursing care activities is a further significant step by Fresenius ProServe to focus on its core business activities:

• hospital management in Germany, Wittgensteiner Kliniken AG
• hospital engineering and services, VAMED AG
• engineering and services for the pharmaceutical industry, Pharmaplan GmbH. ´

The company has already put all of its hospital engineering activities under the management of VAMED and has focussed the geographic presence of Pharmaplan on key markets. Fresenius ProServe has also discontinued the international hospital management activities of its subsidiary hospitalia activHealth. The sale of hospitalia care completes the strategic reorientation of Fresenius ProServe.

In this context, Fresenius ProServe confirms its full-year targets for 2004 and a sales increase of around 10%. EBIT is expected to reach between € 15 million and € 20 million before one-time expenses. One-time expenses are expected to be in the range of € 8 million. These expenses will cover the restructuring costs needed to adjust to the current market environment.

• Sales: € 5.4 billion, + 8 % constant currency, + 3 % at actual exchange rates
• EBIT: € 628 million, + 13 % constant currency, + 6 % at actual exchange rates
• Net Income: € 125 million, + 26 % constant currency, + 19 % at actual exchange rates
• Fresenius Medical Care posts continued strong sales and earnings growth
• Continued excellent organic revenue development and improved EBIT margin at Fresenius Kabi
• Fresenius ProServe within revenue and earnings expectations
• Earnings outlook for 2004 raised

Group outlook for 2004
In the third quarter, Fresenius Medical Care and Fresenius Kabi continued to exceed their earnings targets. Revenues and earnings of Fresenius ProServe are within expectations for 2004. Based on these excellent results, Fresenius Group raises its earnings outlook for the full year 2004: Net income is expected to grow approximately 35 % in constant currency. Previously, the Company expected net income to increase at approximately 30 %. Fresenius expects 2004 sales growth in constant currency in the high single-digit range. Sales and earnings growth is expected in all business segments.

Sales
Sales in the first nine months of 2004 increased 8 % in constant currency. Organic growth was 6 %, acquisitions contributed 2 %. Currency translation effects had a negative 5 % effect on sales. At actual exchange rates sales increased 3 % to € 5,399 million (Q1-Q3 2003: € 5,254 million).

Sales in North America accounted for 48 % of Group sales followed by Europe with 39 % and Asia-Pacific with 7 %. Sales in Latin America and the remaining regions accounted for 6 % of total sales. Very strong growth rates of 14 % and 18 % in constant currency were achieved in Asia-Pacific and Latin America. Fresenius expects Asia-Pacific and Latin America to continue above-average growth in the future.

The table below lists the sales contribution of the three business segments:

Fresenius Medical Care's lower sales contribution is the result of currency translation effects.

Earnings
Strong growth rates were achieved in earnings: In constant currency, EBITDA rose 10 %. At actual exchange rates, EBITDA increased 4 % to € 857 million (Q1-Q3 2003: € 825 million). Group EBIT increased 13 % in constant currency and 6 % at actual exchange rates to € 628 million (Q1-Q3 2003: € 590 million). The EBIT margin improved from 11.2 % in the first nine months 2003 to 11.6 %.

The net interest result improved to € -156 million in the first nine months and was € 30 million below last year's level of € -186 million. This is the result of a lower debt level as well as the conversion of a portion of Fresenius Medical Care's debt from fixed to variable interest rates. Currency exchange rates also had a favorable impact.

The effective tax rate for the first nine months of 2004 was 40.3 % (Q1-Q3 2003: 39.1 %).

In the first nine months of 2004, minority interests increased to € 157 million compared to € 141 million in the first nine months of 2003. 96 % of minority interests were attributed to Fresenius Medical Care.

Net income rose 26 % in constant currency and 19 % at actual exchange rates to € 125 million (Q1-Q3 2003: € 105 million). The excellent operating performance of Fresenius Medical Care and Fresenius Kabi as well as significantly lower interest expenses contributed to the increase in net income.

Earnings per ordinary share rose to € 3.04 ( Q1-Q3 2003: € 2.55). Earnings per preference share rose to € 3.06 (Q1-Q3 2003: € 2.57). This represents an increase of 19 %.

Investments
In the first nine months of 2004, Fresenius invested € 253 million (Q1-Q3 2003: € 247 million). Of this amount € 174 million was spent on capital expenditures for property, plant and equipment and intangible assets (Q1-Q3 2003: € 180 million) and € 79 million on acquisitions (Q1-Q3 2003: € 67 million).

Europe accounted for 50 % of Group investments, North America for 40 % and Asia-Pacific, Latin America and Africa for 10 %.

Cash flow
Operating cash flow and free cash flow reached new all-time highs in the first nine months: Operating cash flow increased 3 % to € 580 million (Q1-Q3 2003: € 565 million) primarily due to the positive development of Group net income. Free cash flow before acquisitions and dividends increased 6 % to € 423 million (Q1-Q3 2003: € 399 million). Free cash flow after acquisitions and dividends rose 4 % to € 232 million (Q1-Q3 2003: € 224 million) despite higher spending for acquisitions (€ -72 million, net) and dividends (€ -119 million).

Asset and capital structure
Total assets rose 4 % to € 8,690 million (December 31, 2003: € 8,347 million) or 3 % in constant currency. Total current assets increased 10 % to € 3,023 million (December 31, 2003: € 2,744 million). This increase was due mainly to an increase in trade accounts receivable (+13 %), since receivables from the Fresenius Medical Care receivable securitization program are stated in the balance sheet starting this year following an amendment to the program.

Debt was € 3,006 million at actual rates as of September 30, 2004 (constant currency: € 2,979 million). In comparison, debt at the end of 2003 including liabilities related to the receivables securitization program was € 3,148 million (excluding securitization program: € 3,023 million).

The ratio net debt/EBITDA was 2.5 by September 30, 2004. Fresenius had originally targeted this level for 2005 and thus achieved this goal earlier than expected. This was mainly accomplished due to the excellent cash flow.

Shareholders' equity including minority interests was € 3,443 million, up 7 % from € 3,214 million on December 31, 2003. The equity ratio including minority interests was 39.6 % (December 31, 2003: 38.5 %).

Employees
Fresenius had 69,522 employees worldwide on September 30, 2004, an increase of 5 % compared to 66,264 employees at December 31, 2003.

Fresenius Biotech
Fresenius Biotech develops innovative therapies with trifunctional antibodies for the treatment of cancer as well as cell therapies for the treatment of end-stage HIV infection. In the field of polyclonal antibodies, Fresenius Biotech has successfully marketed ATG-Fresenius S for many years. ATG-Fresenius S is an immuno-suppressive agent used to suppress graft rejection following an organ transplantation.

In 2004, a phase I study using the antibody removab® to treat non-small-cell lung cancer was completed. In addition, a phase I study using removab® to treat peritoneal carcinomatosis as well as a phase I study using the antibody rexomun against breast cancer provided preliminary results on safety and tolerability. Due to the encouraging results, Fresenius Biotech is planning to launch further studies in both indications. The final reports of these two studies are planned to be published in the first half of 2005. As part of the clinical trial plan, a phase II/III study was launched to investigate the use of the removab® antibody as a therapy against malignant ascites. The final report of this study is expected in the second half of 2006.

First intermediate results of a phase I/II study reviewing the treatment of patients with end-stage HIV infection will be available in early 2005. The study is expected to show whether the mode of action functions in treating humans.

The business segments

Fresenius Medical Care
Fresenius Medical Care is the world's leading provider of products and services for patients with chronic kidney failure. As of September 30, 2004, Fresenius Medical Care treated 123,000 patients (+5 %) in 1,595 dialysis clinics (+4 %).

• Excellent top-line and net income growth continued
• Continued strong performance of North American service business and International product business
• Company upgrades net income guidance for 2004

In the first nine months of 2004, Fresenius Medical Care achieved significant sales growth of 13 % to $ 4,588 million (Q1-Q3 2003: $ 4,075 million) or 10 % in constant currency.

Fresenius Medical Care increased sales by a strong 9 % in its key North American market which accounts for 68 % of all sales. Sales outside of North America ("international" segment) rose 20 %. In constant currency, the international segment had an impressive growth of 11 %.

Dialysis products sales at Fresenius Medical Care increased 11 % to $ 1,254 million. Dialysis services sales were up 13 % at $ 3,334 million. In the first nine months of 2004, Fresenius Medical Care performed approximately 14.0 million dialysis treatments. This is an increase of 6 % compared to the first nine months of 2003. North America accounted for 9.6 million treatments (+5 %) and the international segment for 4.4 million (+9 %).

Fresenius Medical Care grew EBIT by 14 % to $ 625 million (Q1-Q3 2003: $ 550 million). Net income at Fresenius Medical Care was $ 294 million, up 24 % from the first nine months of 2003.

Based on the strong performance in the first nine months of 2004 the company lifts its net income guidance for the full year 2004. The top-line revenue growth at constant currencies should remain in the high single digit range. After expecting a net income growth for 2004 in the mid teens the Company now expects net income growth to be in the high teens.
For further information: see Investor News Fresenius Medical Care at www.fmc-ag.com.  

Fresenius Kabi
Fresenius Kabi is a leading provider of nutrition and infusion therapy for critically and chronically ill patients in the hospital and ambulatory environment. In addition, the Company offers products in the field of infusion and transfusion technology.

• Profitability improvement continued
• Organic sales growth reaches 5 %
• Earnings outlook raised
• Live webcast of Capital Market Day on December 8, 2004

Sales at Fresenius Kabi increased 2 % to € 1,105 million (Q1-Q3 2003: € 1,082 million). Fresenius Kabi achieved good overall organic growth of 5 %. Asia-Pacific and Latin America performed exceptionally well, achieving organic growth of 20 % and 12 % respectively. Cost-cutting in the health care sector and price pressure led to a 6 % decline in Germany. Excluding Germany, Fresenius Kabi achieved organic revenue growth of 6 % in Europe. Currency exchange rates had in effect of -1% on sales for the first nine months. Divestments decreased sales by 2 %.

Fresenius Kabi significantly increased its earnings. EBIT increased by 21 % in the first nine months of 2004 to € 129 million (Q1-Q3 2003: € 107 million). The EBIT margin in the first nine months of 2004 was 11.7 %, an increase of 180 basis points from 9.9 % in the first nine months of 2003.

Based on these positive results, Fresenius Kabi raised its earnings guidance for the full-year: The EBIT margin is now expected to increase to more than 11.5 %. Fresenius Kabi expects constant-currency sales to grow in the mid-single digits.

A Capital Market Day will be held on December 8, 2004 where the Management Board of Fresenius Kabi will discuss in detail the products, markets, strategy and growth prospects of the company. The event will begin at 10am and will be broadcasted live over the Internet on this website.

Fresenius ProServe
Fresenius ProServe offers services to the international health care sector. The health care business includes hospital management as well as the planning and construction of hospitals. The pharma industry business focuses on the planning and construction of pharmaceutical plants and medical technical production sites.

• Organic sales growth of 10 %
• Order intake up 18 %
• Agreement reached on the sale of nursing care business
• Business development in line with full-year outlook

Sales in the first nine months of 2004 rose to € 581 million at Fresenius ProServe. This is an increase of 10 % that was achieved solely through organic growth (Q1-Q3 2003: € 526 million). Sales growth came primarily from the positive development of the health care project business.

Order intake increased significantly by 18% in the first nine months to € 199 million (Q1-Q3 2003: € 169 million). This increase grew out of projects in the health care business. The order backlog was € 435 million (December 31, 2003: € 435 million).

Fresenius ProServe's EBIT in the first nine months of 2004 was € 3 million (Q1-Q3 2003: € 5 million). This figure includes € 8 million before tax of one-time expenses. Excluding the one-time expenses, EBIT was € 11 million in the first nine months. The 80 % bed utilization rate in the first nine months of 2004 at the German hospital business of Wittgensteiner Kliniken was at previous year's level.

The sales of its subsidiary hospitalia care is a further step of Fresenius ProServe to focus on its core activities, Wittgensteiner Kliniken, VAMED and Pharmaplan. hospitalia care currently operates and manages 23 nursing care facilities in Germany. The sale of hospitalia care completes the strategic reorientation of the Fresenius ProServe Group.

Fresenius ProServe confirms its full-year outlook and expects 2004 EBIT of between € 15 million and € 20 million before one-time expenses. One-time expenses are expected to be in the range of € 8 million. Sales at Fresenius ProServe are expected to increase about 10 % in 2004.

Video Webcast
As part of the earnings announcement for the first nine months of 2004, a press conference will be held at the Fresenius headquarters in Bad Homburg on November 2, 2004 at 10 a.m. CET. You are cordially invited to follow the conference in a live broadcast on this website . Following the meeting, a recording of the conference will be available as video-on-demand.

Bad Homburg, Germany - Fresenius Medical Care AG (Frankfurt Stock Exchange: FME, FME3) (NYSE: FMS, FMS_p), the world's largest provider of dialysis products and services, and its United States subsidiary Fresenius Medical Care Holdings, Inc. ("FMCH") (OTC: FSMEM.OB, FSMEN.OB, FSMEO.OB and FSMEP.OB), today announced the exercise of FMCH's right to redeem all of the outstanding shares of the Class D Preferred Stock (the "Class D Shares") of FMCH.*

The Class D Shares were issued to the common shareholders of W.R. Grace & Co. in connection with the 1996 combination of the worldwide dialysis business of Fresenius AG with the dialysis business of W.R. Grace to form Fresenius Medical Care AG. The Class D Shares trade in the National Association of Security Dealer's OTC Bulletin Board under the symbol "FSMEP.OB".

J.P. Morgan Chase Bank will serve as the payment and redemption agent for the redemption.

Class D Shares that have been properly transmitted to, and received by, the redemption agent will be redeemed commencing on March 28, 2003 at a redemption price of $0.10 per share. FMCH intends to redeem the 89 million outstanding Class D Shares at a total cash outflow of approximately $9 million. This transaction will have no earnings impact for the Company.

FMCH will arrange to mail to each Class D Shareholder of record as of February 11, 2003 a written notice of the redemption together with instructions for transmittal of Class D Share certificates to the redemption agent.

The Company confirms adequacy of accrued reserve

Bad Homburg, Germany – 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 it has signed a definitive agreement with the official committees of asbestos creditors for the settlement of all fraudulent conveyance and other claims related to the bankruptcy of W.R. Grace & Co.

Under the terms of the definitive agreement, fraudulent conveyance and other claims raised by the asbestos committees on behalf of the Grace bankruptcy estates will be dismissed with prejudice upon confirmation of the W.R. Grace & Co. bankruptcy reorganization plan. In addition, the Company will also receive protection against all current and future W.R. Grace-related claims including fraudulent conveyance, asbestos and income tax claims relating to the non-NMC members of the W.R. Grace & Co. consolidated tax group.

This definitive agreement supersedes the terms of the earlier agreement in principle announced on November 29, 2002, under which the Company would have paid $ 15 million to the W.R. Grace bankruptcy estate upon plan confirmation and also retained responsibility to resolve the outstanding pre-merger income taxes of the W.R. Grace & Co. consolidated group. Payments and expenses under those previous terms were expected to remain within the amount reserved by the Company in the fourth quarter 2001.

In the definitive agreement announced today the Company has agreed to pay in total $ 115 million to the W.R. Grace bankruptcy estate or as otherwise directed by the court upon plan confirmation. Consequently, the Company is relieved of the burden of resolving W.R. Grace's tax obligations and can confirm the adequacy of it's accrued reserve. No admission of liability has been or will be made. As part of the W.R. Grace Chapter 11 proceeding, the definitive agreement will be submitted to the court for approval.

Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented: "The terms of this definitive agreement provide certainty and finality for Fresenius Medical Care upon plan confirmation. This settlement not only avoids the costs of expensive and distracting fraudulent conveyance litigation, but also relieves Fresenius Medical Care of the burden of resolving the tax liabilities of the W.R. Grace consolidated group. We are indeed pleased to have this behind us and we now look forward to focusing all of our energies on bringing innovative therapies to the treatment of kidney disease."

• Sales: + 3 % to € 7.5 billion
  currency-adjusted: + 9 %
• EBIT: + 10 %^* to € 837 million
• Net income: + 44 %* to € 134 million Dividend: + 10 % to € 1.14 per ordinary share and € 1.17 per preference share

The Fresenius health care group increased sales in the 2002 financial year by a plus of 3 % to € 7,507 million. Calculated at the exchange rates of the previous year the sales increase amounted to 9 %. Net income of the Fresenius Group increased by 44 % to € 134 million. This increase resulted from goodwill no longer being amortized in accordance with the changes in the US GAAP accounting rules effective since January 1, 2002.

^* Comparable figure without special charge for US legal issues

Dividend
The Managing Board will propose to the Supervisory Board that the dividend be increased. This also reflects our strong belief in the future earnings development. A dividend of € 1.14 (2001: € 1.03) per ordinary share entitled to dividend, and of € 1.17 (2001: € 1.06) per preference share entitled to dividend is to be paid. This corresponds to an increase of 11 % per ordinary share and 10 % per preference share, and a total payment of € 47.3 million.

Group outlook on year-end 2003
The Fresenius Group is in an excellent strategic position worldwide. Thanks to its leading market positions in many of its fields of activity, Fresenius has a solid basis for growth in the future, supported by new products and therapies. Despite the difficult economic development and sustained pressure to save costs in the health systems, especially in the western health care markets, the Group expects a positive development in the 2003 financial year. At the exchange rates in force during 2002, a high single-digit sales growth rate is expected for the 2003 financial year. This is an ambitious target in view of the absolute sales figure of € 7.5 billion achieved in 2002, and since Fresenius has to exceed market growth. Earnings are also expected to further increase at constant exchange rates: The growth rate in net income will be higher than that of sales.

Sales
In the 2002 financial year, Fresenius increased consolidated sales to € 7,507 million (+ 3%). A continued strong organic growth of 6 % again confirms the good position of Fresenius in the markets. Acquisitions increased growth by 3 percentage points. The changes in exchange rates had an effect of -6 percentage points. The devaluation of the Argentinean peso, and in particular the weaker US dollar compared to the euro
(- 5.6% on average over the year) negatively affected sales in the currency conversion.

The strongest regions of the Group from a sales point of view continue to be North America with 54 % and Europe with 34 % of total sales, followed by the region Asia-Pacific with 8 % and Latin America and other regions with 4 %. Fresenius achieved sales increases in all regions of the world on a currency-adjusted basis: High growth rates were achieved particularly in the region Asia-Pacific. Despite the difficult economic situation in Argentina and Brazil, sales in Latin America rose by 11 % currency-adjusted.

The breakdown of sales by business segment compared to the previous year changed in the favour of Fresenius ProServe, since Wittgensteiner Kliniken AG which was acquired effective June 1, 2001 was consolidated for a whole year for the first time in 2002.

Earnings
In the 2001 financial year Fresenius Medical Care had taken a special charge for expenses in connection with legal disputes in the United States relating to the National Medical Care transaction in 1996. In order to make it easier to compare the development of the Group, the following report includes comments on the previous year's figures without this special charge.

Earnings of the Fresenius Group were influenced in the 2002 financial year by two main factors: On the one hand, goodwill was no longer amortized as a result of the change in US GAAP accounting rules as of January 1, 2002, which had a positive effect on earnings. On the other hand, there were negative impacts on earnings through expenses in the production facilities and in the services field in connection with the conversion of dialysis treatment from re-use to single-use dialysers by Fresenius Medical Care in the United States.
Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to € 1,178 million and were 6 % (1 % at constant exchange rates) lower than the previous year's figure. The EBIT growth rate, 10 % to € 837 million, resulted from goodwill no longer being amortized. If EBIT of the year 2001 before special charge does not include goodwill amortization, EBIT of 2002 would have been 8 % (currency-adjusted: 4 %) lower. The goodwill in the Fresenius Group's balance sheet has substance.

Net interest of the Group amounted to € -270 million and improved in the 2002 financial year by 6 % (2001: € -286 million). The conversion of interest expenses from US dollars to euros had a positive effect, since a large portion of bank loans were granted in the United States. Furthermore, the redemption of the high-interest trust preferred securities due in 2006 of Fresenius Medical Care reduced the interest expense.

The tax ratio dropped from 42.6 % in 2001 to 37.0 % in the year under report, largely caused by goodwill no longer being amortized.

The share of earnings allocated to minority interests increased to € 218 million, after € 180 million in the 2001 financial year. Of this amount, 94 % of minority interests concern Fresenius Medical Care.

Net income increased to € 134 million compared to € 93 million in 2001.

Earnings per share amounted to € 3.27 after € 2.29 in the previous year, based on a total of 40,969,684 ordinary and preference shares.

The changes in currency exchange rates negatively influenced the earnings situation of the Group through translation effects: At constant exchange rates, i.e. calculated at the 2001 exchange rates, EBIT would have increased by 15 % and net income by 53 %.

Capital expenditure
Fresenius invested € 507 million in the year under report. This is 7 % of total consolidated sales. In the previous year the investment was € 1,233 million (17% of sales), strongly marked by acquisitions. With the number of acquisitions in the recent years Fresenius was able to achieve leading positions in its markets. These considerable efforts have been carried out to secure future growth.

While investments in tangible and intangible assets decreased by € 52 million to € 377 million, funds provided for acquisitions dropped substantially to € 130 million from € 804 million in 2001. Of the total amount invested in the year under report, 74 % was allocated to tangible and intangible assets and 26 % to acquisitions.

Acquisitions mainly concerned the purchase of dialysis clinics by Fresenius Medical Care. Major investment projects in the field of tangible assets were the founding and equipping of dialysis clinics, mainly in the United States, as well as the extension and modernisation of existing clinics, the building of a joint production facility in Mexico for infusion solutions of Fresenius Kabi and peritoneal dialysis products of Fresenius Medical Care. In addition, Fresenius Kabi's European production plants for infusion solutions continued to be build up and optimised.

Split into business segments, Fresenius Medical Care invested 68 % of the total amount, followed by Fresenius Kabi with 15 %. By region, 49 % of investments were made in Europe, followed by North America with 35 % and the regions Asia-Pacific and Latin America with 8 % each.

Cash flow
The cash flow statement of the Group developed extremely well. The operating cash flow and free cash flow showed high growth rates.

The operating cash flow amounted to € 697 million in the year under report (€ 509 million in 2001). This corresponds to an increase of 37 %. It fully covers the financing requirements from investment activities before acquisitions: Funds provided for investments of the Group amounted to € 377 million and proceeds from disposals of fixed assets amounted to € 62 million. The free cash flow before acquisitions and dividends amounted to € 382 million and was three times higher than the figure for the previous year due to the significantly lower capital expenditure and improved working capital management. All acquisitions and the dividends for 2002 were able to be financed from the free cash flow. The free cash flow after acquisitions and dividends was positive and amounted to € 163 million.

Asset and equity structure
The balance sheet total of the Group dropped by € 952 million (10 %) compared to 31.12.2001 to € 8,915 million. This decrease is solely a result of currency effects. At constant exchange rates the balance sheet total increased only slightly, by 1 % over the previous year. This reflects the reduced acquisition activity of the Group and improvements in current assets.

The liabilities side of the balance sheet shows a decrease in equity including minority interests of 9 % to € 3,369 million (2001: € 3,689 million). This is largely due to the change in exchange rates; currency-adjusted the increase would have been 4 %. The equity ratio including minority interests increased marginally from 37.4 % as of 31.12.2001 to 37.8 % at the end of the year under report.

The liabilities of the Group from bank loans, Eurobonds, commercial papers and trust preferred securities totalled € 3,283 million on 31.12.2002; this corresponds to a drop of € 454 million compared to the previous year's figure of € 3,737 million. The decrease resulted to a large extent from the changed exchange rates in the translation into euros of the US dollar loans. € 175 million financial liabilities were repaid in the year under report.

The Business Segments

Fresenius Medical Care
In 2002, Fresenius Medical Care further expanded its market position in dialysis. As of 31.12.2002 Fresenius Medical Care treated around 112,200 patients in 1,480 dialysis clinics, 6 % more than in the previous year. In Europe, Latin America and the region Asia-Pacific growth rates were registered that were substantially higher than those of the market. As a result of the introduction of single-use dialysers the growth rates in North America were lower than anticipated. The switch from single-use dialysers however represents a major strategic step and the basis for future growth.

In 2002 Fresenius Medical Care increased sales by 5 % (currency-adjusted: 6 %) to US$ 5,084 million (2001: US$ 4,859 million). 74 % of sales were achieved in the United States, 18 % in Europe and 8 % in the other regions of the world.

The main growth driver was dialysis care, sales of which rose by 4 % to US$ 3,709 million (2001: US$ 3,557 million). The main reason for this growth was the increased number of dialysis treatments: Altogether Fresenius Medical Care performed 16.4 million dialysis treatments in the year under report, 7 % more than in the previous year. Sales of dialysis products amounted to 27 % of total sales of Fresenius Medical Care and rose by 6% to US$ 1,375 million (2001: US$ 1,302 million). If sales of products to company-owned dialysis clinics are included, sales reached US$ 1,776 million, which likewise corresponds to a 6 % increase.

Fresenius Medical Care increased EBIT by 8 % to US$ 695 million from US$ 644 million before special charge in the previous year (2001: goodwill-adjusted: US$ 765 million). The result was influenced by costs in connection with the switch from re-use to single-use dialysers in the United States.

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

In the currency conversion into euros, the weakness of the dollar meant that sales of Fresenius Medical Care totalling € 5,378 million were 1 % lower than the previous year's figure of € 5,426 million. As far as EBIT is concerned, currency conversion resulted in an increase of 2 % to € 735 million (previous year: € 719 million before special charge).

Fresenius Kabi
Fresenius Kabi achieved sales of € 1,262 million, 1 % lower than the previous year's figure of € 1,277 million. The sales development was influenced to a large extent by shrinking sales of the company ProReha and its sale in August 2002 as well as lower sales in the manufacturing contract business. If these effects are not taken into account, Fresenius Kabi achieved an organic growth of 7 %, growing faster than the market. Acquisitions contributed 1 percentage point, currency effects reduced growth by 3 percentage points. The hospital business achieved a 76 % share of sales, namely € 959 million (2001: € 954 million). The Ambulatory Care Business, € 303 million, corresponded to 24 % of total sales (2001: € 323 million).

Fresenius Kabi achieved an EBIT amounting to € 91 million in the 2002 financial year compared to € 53 million in 2001 (goodwill-adjusted: € 63 million). The development of earnings was negatively affected in the 2002 financial year by measures to increase profitability at the factory in Uppsala, Sweden. Furthermore, losses made by the company ProReha, and its sale effective August 1, 2002, affected earnings. These expenses totalled € 27 million. The measures carried out in the year under report will make a substantial contribution towards the future development of earnings of Fresenius Kabi.

Fresenius ProServe
Fresenius ProServe was able to present a 55 % sales upswing: Sales amounted to € 701 million (2001: € 451 million). The healthcare business generated 80 % (€ 559 million) of total sales, and the pharma industry business € 142 million, or 20 %. Of the € 250 million increase in sales about € 100 million were generated organically and € 145 million were generated by acquisitions, mainly Wittgensteiner Kliniken AG which in 2001 only contributed seven months towards the total sales of Fresenius ProServe.

Orders received and orders on hand even exceeded the high level of the previous year: Orders received in the project business of Fresenius ProServe rose to € 327 million (2001: € 266 million); orders on hand reached € 424 million (2001: € 266 million). This corresponds to a plus of 23 % and 16 % respectively. Important orders were received by the healthcare business in the 2002 financial year. Fresenius ProServe was awarded engineering orders and turnkey projects for hospitals.

Fresenius ProServe achieved an EBIT of € 24 million in the year under report (2001: € 6 million; goodwill-adjusted: € 11 million). This significant increase is largely a result of the development in the healthcare business, particularly of the consolidation for the whole year of Wittgensteiner Kliniken AG.

Fresenius HemoCare
Fresenius HemoCare achieved sales of € 229 million in 2002 (2001: € 215 million). The 7 % increase is due to acquisition activities and organic growth. Currency conversion effects had an impact of -2 % on the sales development of Fresenius HemoCare.

EBIT of Fresenius HemoCare amounting to € 10 million was 25 % higher than the previous year's figure of € 8 million (goodwill-adjusted: € 10 million). Sustained high expenditure on research and development and the building up of the sales organisations had negative effects on earnings.

As from the 2003 financial year, the activities of the business segment Fresenius HemoCare were re-allocated within the Fresenius Group.

Accounting at the Fresenius Group has been in accordance with US GAAP since January 1, 2002. The figures for the previous year therefore correspond to the US GAAP accounting rules in force during 2001, i.e. the figures for 2001 include amortization of goodwill

Summary:

• Net income of $ 302 million after minorities and before extraordinary item
• Full-Year Free Cash Flow at record level of $ 349 million
• Outstanding success by achieving definite agreement in fraudulent conveyance case and confirming adequacy of accrued reserve (see Press Release Feb. 12, 2003)
• Implementation of the UltraCare™ program continues to show its fundamental strategic value while fourth quarter 2002 EBIT-margin has improved in North America
• Refinancing of the senior credit agreement completed
• Dividend increase proposed for the sixth consecutive time

The results in the year 2002 are based on the new accounting standards on Goodwill and Other Intangible Assets (FAS 142) which came into effect January 1, 2002. In order to facilitate a year-over-year comparison, goodwill adjusted key figures for the full-year 2001 and the fourth quarter 2001 are provided in the appendix.

Bad Homburg, Germany - February 25, 2003 -- 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 the results for the fourth quarter and the full-year 2002.

OPERATIONS

Fourth Quarter 2002¹:
Total revenue for the fourth quarter 2002 increased 7% (8% at constant currency) to $ 1,358 million. Same store revenue growth at constant exchange rates was 7%. Dialysis Care revenue grew by 6% to $ 974 million (+9% at constant currency) in the fourth quarter of 2002. External Dialysis Product revenue increased by 9% to $ 384 million (+5% at constant currency) in the same period.
¹: FY 2001 figures exclude special charge of $ 258 million

North America:
Revenue rose 7% to $ 979 million, compared to $ 918 million in the same period last year. Dialysis Care revenue increased by 7% to $ 861 million. Same store treatment growth was 4%. The average revenue per treatment increased to $286 in the fourth quarter (Q3 2002: $282). Dialysis Product revenue, including sales to company-owned clinics, increased 2.4% to $ 197 million. Product sales to the available external market grew by 9.2%.

International:
Revenue was $ 378 million, up 11 % adjusted for currency. Dialysis Care revenue reached $ 113 million in the fourth quarter 2002 (+20% constant currency). Dialysis Products revenue, including sales to company-owned dialysis clinics, increased 10% to $ 292 million (6% constant currency).

Earnings before interest and taxes (EBIT) increased to $ 184 million resulting in an operating margin of 13.6%. The operating margin remained within the targeted range as the Company completed its 2002 rollout of the UltraCare™ dialysis treatment concept, including Fresenius Polysulfone high-flux single-use dialyzers, in North America.

Fresenius Medical Care AG reports a 36% increase in net income after minorities to $ 82 million for the fourth quarter 2002.

Earnings per share (EPS) in the fourth quarter 2002 rose 36% to $ 0.85 per ordinary share ($ 0.28 per ADS), compared to $ 0.62 ($ 0.21 per ADS) in the fourth quarter of 2001. The weighted average number of shares outstanding during the fourth quarter of 2002 was approximately 96.2 million, compared to 96.1 million in the same period of 2001.

In the fourth quarter of 2002, the Company generated $ 155 million in cash from operations. A total of $ 45 million (net of disposals) was spent for capital expenditures, resulting in record fourth quarter Free Cash Flow before acquisitions of $ 110 million. A total of $ 7 million in cash was spent for acquisitions. Free Cash Flow after acquisitions was $ 103 million. In the fourth quarter of 2001, Free Cash Flow after acquisitions was $ 50 million.

Full-year 2002²:
Net revenue grew by 5% to $ 5.08 billion. Adjusted for currency, net revenue rose 6% compared to 2001. Earnings before interest and taxes (EBIT) increased 8% to $ 695 million resulting in an operating margin of 13.7%. In the full-year of 2002, net income after minorities and before extraordinary item was $ 302 million, up 23% from the same period in 2001. The extraordinary item covers the cost of $12 million for the redemption of the entire US$ 360 million aggregate amount outstanding of its 9% Trust Preferred Securities due 2006 (see Investor News January 16, 2002).

²: FY 2001 figures exclude special charge of $ 258 million and prior quarter related expenses of $ 7 million

In the full-year 2002, earnings per ordinary share before extraordinary item rose 23% to $ 3.12. Earnings per ordinary ADS before extraordinary item for the full-year of 2002 were $ 1.04.

Fresenius Medical Care generated $ 550 million in cash from operations during the full-year of 2002, an increase of 30% from the previous year. Capital expenditures (net of disposals) were $ 201 million. Free Cash Flow for the full-year of 2002 was a record $ 349 million compared to $ 173 million in the previous year. Free Cash Flow for the full-year significantly exceeded the full-year target of $ 200 million set by the Company. This exceptional performance is primarily driven by significant improvements in working capital management, in particular accounts receivable collection, and by moderate capital expenditure. Net cash used for acquisitions was $ 80 million.

As of December 31, 2002, the Company operated a total of 1,480 clinics worldwide [1,080 clinics in North America and 400 clinics International]. In the Full-year 2002, the Company opened 90 new clinics (de novo's). Fresenius Medical Care AG performed approximately 16.4 million treatments, which represents an increase of 7% year over year. North America accounted for 11.6 million treatments (+4%) and the Iternational segment for 4.7 million (+16%). At the end of the fourth quarter 2002, Fresenius Medical Care treated about 112,200 patients worldwide, which represents an increase of 6%. North America accounted for ~79,600 patients (+4%) and the International segment for ~32,600 patients (+12%).

Credit Agreement
On February 21, 2003 the Company completed the refinancing of its senior credit agreement, which was scheduled to mature on September 30, 2003. The amended and restated Credit Agreement provides up to $ 1.5 billion through three credit facilities: a revolving credit facility of up to $ 500 million and a term loan facility "Loan A" of $ 500 million, both due on October 31, 2007.
The third tranche, a term loan facility "Loan B" for institutional investors of $ 500 million will be due after seven years. All three tranches were significantly over-subscribed.

The Credit Agreement provides the Company with a solid and reliable source of financing for the next years, with no significant debt maturing before 2007. The terms and conditions of the new Credit Agreement are fully reflected in the Company's reconfirmed outlook for 2003.

Dividends
Consistent with prior years the Company will continue to follow an earnings driven dividend policy. For the sixth year in a row, Shareholders can expect an increasing dividend for the fiscal year 2002. The Managing Board will propose to the Supervisory Board for the Fiscal Year 2002 a dividend of € 0.94 per ordinary share (2001: € 0.85) and € 1.00 per preference share (2001: € 0.91) for shareholders approval at the Annual General Meeting on May 22, 2003.

Outlook 2003
For the year 2003, the Company reconfirms it's outlook and expects mid single digit revenue growth before acquisitions (in constant currency) and net income growth in the high single digit to low double digits range.

Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented: "We are pleased to have achieved an operating margin improvement in North America in the fourth quarter of 2002. We also continued our momentum with strong fourth quarter cash flow performance and record Free Cash Flow for the full-year. In North America we completed our strategic objective of developing and implementing a unique and differentiated dialysis therapy based on Fresenius Medical Care's technology, which includes the UltraCare™ NR a program that uses the latest technology of single use high-fluxFresenius

Polysulfone dialyzers. Making this program cost neutral was an important milestone. We are well positioned in the United States where the net patient growth rate currently is in the range of 4-5%, and we believe this strategy provides for growth opportunities above market and new opportunities for future margin expansion. We are also positioned to succeed in a reimbursement environment that allows the provider to share in the healthcare savings achieved. In International, we continued to strengthen our position in both our patient care and products business. In our worldwide products business we achieved a growth rate of 6%, in constant currency, which exceeds the market growth rate and is a clear sign that our product technologies continue to be well received in the market place. Finally, I would like to thank all our employees again for their dedication to patient care and for their commitment to the Company's vision and values."