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.

Summary Third Quarter 2004:
The Company upgrades net income guidance for 2004.

• Net Revenue: $ 1,577 million, + 12%
• Operating Income (EBIT): $ 214 million, + 9%
• Net Income: $ 102 million, + 17%
• Operating Cash Flow: $ 209 million, + 3%
• Free Cash Flow: $ 161 million, + 6%

Bad Homburg, Germany – August 04, 2004 -- 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 third quarter and the first nine months of 2004.


Third Quarter 2004

Revenue

Total revenue for the third quarter 2004 increased 12% (10% at constant currency) to $ 1,577 million. The consolidation of the Cardio Vascular Resources business and certain dialysis clinics in accordance with a new accounting regulation (FIN 46R) contributed approx. 2% to the growth rate. Dialysis Care revenue grew by 13% to $ 1,149 million (12% at constant currency) in the third quarter of 2004. Organic revenue growth worldwide was 7%. Dialysis Product revenue (including internal sales) increased 9% to $ 555 million (4% at constant currency) in the same period. The internal sales increased to $ 128 million after $ 119 million in the third quarter of 2003.

North America revenue increased 10% to $ 1,078 million, compared to $ 978 million in the same period last year. Dialysis Care revenue increased by 11% to $ 971 million. The average revenue per treatment increased to $ 291 in the third quarter 2004 (Q3 2003: $ 279). Dialysis Product revenue, including sales to company-owned clinics, was up 3% at $ 199 million. Product sales to the available external market was flat.

International revenue was $ 499 million, up 15% from the third quarter of 2003, an increase of 8% adjusted for currency. Dialysis Care revenue reached $ 177 million, an increase of 22% (14% at constant currency). Dialysis Products revenue, including sales to company-owned dialysis clinics, increased 13% to $ 357 million (5% at constant currency).

Earnings

Operating income (EBIT) increased 9% to $ 214 million resulting in an operating margin of 13.6% (Q3 2003: 14.0%). The decrease of 40 basis points was mainly due to price pressure in Japan as a result of bi-annual reimbursement rate reductions partially offset by operating improvements in Latin America. Compared to the third quarter 2003 the margin in North America remained stable at 14.0%. On a comparable basis excluding the new accounting regulation FIN 46R, the margin in North America would have been 14.2% which represents an increase of 20 basis points compared to the third quarter 2003. In our International segment the operating margin decreased by 120 basis points to 14.3% compared to the third quarter in the previous year. In the International segment the comparable margin would have been 14.5% in the third quarter of 2004.

Group net interest expenses decreased by 14% to $ 45 million, compared to $ 53 million last year. This positive development was mainly attributable to a lower debt level and the conversion of a portion of debt from fixed into variable interest rates.

Income tax expense was $ 67 million versus $ 56 million in the third quarter 2003, reflecting an effective tax rate of 39.8% compared to 39.1% in the third quarter of last year.

Net income in the third quarter 2004 was $ 102 million, an increase of 17%.

Earnings per share (EPS) in the third quarter 2004 rose 17% to $ 1.06 per ordinary share ($ 0.35 per ADS), compared to $ 0.90 ($ 0.30 per ADS) in the third quarter of 2003. The weighted average number of shares outstanding during the third quarter of 2004 was approximately 96.2 million.

Cash Flow

In the third quarter of 2004, the Company generated $ 209 million in net cash from operations. This performance was ahead of expectations and the net cash from operations represented about 13% of total revenue.

A total of $ 48 million (net of disposals) was spent for capital expenditures. This resulted in a Free Cash Flow before acquisitions of $ 161 million compared to the third quarter of 2003 with $ 152 million. This was another quarterly record for Free Cash Flow. The high level of Free Cash Flow was primarily supported by the increase in net income. In addition, the days sales outstanding (DSO) were reduced by one day to 85 days in the third quarter compared to the second quarter 2004. Compared with the third quarter of the previous year DSO are reduced by 7 days.

A total of $ 22 million in cash was spent for acquisitions. The Free Cash Flow after acquisitions increased therefore by 7% to $ 139 million compared to $ 130 million last year.


First Nine Months 2004:

Earnings and Revenue

In the first nine months of 2004, net income was $ 294 million, up 24% from the first nine months of 2003. Net revenue was $ 4,588 million, up 13% from the first nine months of 2003. Currency adjusted, net revenue rose 10% in the same period. Operating income (EBIT) increased 14% to $ 625 million resulting in an operating margin of 13.6%. On a comparable basis (excl. the new accounting regulation FIN 46R) the operating margin would have been 13.8% vs. 13.5% for the first nine months 2003.

Group net interest expenses for the first nine months 2004 decreased by 14% to $ 137 million, compared to $ 159 million last year. Income tax expense was $ 193 million in the first nine months of 2004 versus $ 152 million in the same period in 2003. This reflects an effective tax rate of 39.7% compared to 39.0% in the first nine months of last year.

In the first nine months of 2004, earnings per ordinary share rose 24% to $ 3.04. Earnings per ordinary ADS for the same period were $ 1.01.

Cash Flow

Cash from operations during the first nine months of 2004 was up 11% to $ 560 million compared to $ 503 million in the first nine months of 2003. A total of $ 143 million was spent for capital expenditures (net of disposals). This resulted in a record Free Cash Flow before acquisitions for the first nine months of 2004 of $ 417 million compared to $ 374 million for the same period in 2003. Net cash used for acquisitions was $ 74 million. The Free Cash Flow after acquisitions increased by 16% to $ 343 million compared to $ 295 million last year.

Patients - Clinics – Treatments

At the end of the third quarter 2004, Fresenius Medical Care served about 123,000 patients worldwide which represents an increase of 5%. North America provided dialysis treatments for ~84,600 patients (+4%) and the International segment for ~38,400 patients (+7%).

As of September 30, 2004, the Company operated a total of 1,595 clinics worldwide (1,125 clinics/+2% in North America and 470 clinics/+7% International).

Fresenius Medical Care AG performed approximately 14.0 million treatments in the first nine months of 2004, which represents an increase of 6% year over year. North America accounted for 9.6 million treatments (+5%) and the International segment for 4.4 million (+9%).


Outlook 2004

Based on the strong performance in the first nine months of 2004 the company lifts its net income guidance for the full year 2004. 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. The top-line revenue growth at constant currencies should remain in the high single digit range.

Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented: "Our operating fundamentals and our financial focus continues to translate into strong top line revenue growth and bottom line net income growth. We are particularly pleased with the results of Europe, North America and Latin America. Due to this good performance we upgrade our net income guidance for the full year 2004. In addition, we saw continued good performance in Free Cash Flow for the first nine months 2004 reaching our desired leverage ratio of debt to EBITDA at least one year early. This accomplishment provides an opportunity for increased investments in our business going forward".

Statement of earnings: see pdf-file

Video Webcast
Fresenius Medical Care will hold an press conference at its headquarters in Bad Homburg, Germany, to discuss the results of the third quarter and first nine months of 2004 on November 02, 2004 at 10 a. m. The company invites you to listen to the live video webcast of the meeting at the Company's website www.fmc-ag.com. A replay will be available shortly after the meeting.

• 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.

Fresenius Kabi, a subsidiary of the health care group Fresenius, continues to expand its market position in central and eastern Europe. The European market leader in infusion and nutrition therapy today signed an agreement to acquire Infusia a.s., Horatev, a Czech manufacturer of infusion and parenteral* nutrition solutions.

Infusia a.s. markets its products in the Czech Republic, Slovakia and other eastern European countries and can look back on a history spanning more than 70 years. The Group is well-known in the region and expects sales in 2004 of about 10 million euros.

A modern production site in Horatev, about 50 kilometers east of Prague, meets all the quality standards of European pharmaceutical regulators.

With the acquisition of Infusia a.s., Fresenius Kabi will become one of the leading suppliers in the infusion solution and clinical nutrition segments in the Czech Republic and Slovakia.

Fresenius Kabi has around 11,400 employees in more than 30 countries. Sales of 1,463 million Euros were achieved in 2003, generating an operating profit of 147 million Euros.
With it's philosophy "Caring for life" and a broad product and service portfolio, the company aims at improving the quality of life of patients all over the world. Fresenius Kabi's core product range comprises infusion solutions for fluid substitution, blood volume expansion and parenteral nutrition, as well as products for enteral nutrition. Furthermore the company provides concepts for ambulatory health care and is focused on managing and providing home therapies. Fresenius Kabi AG is a 100% subsidiary of the health care group Fresenius AG.

* Providing intravenous nourishment

Fresenius Kabi is well positioned for continued above-average growth in the coming years. Fresenius Kabi AG management emphasizes this today during a Capital Market Day where the Company presents its business activities, strategy and growth prospects. Fresenius Kabi, a subsidiary of the health care group Fresenius, has become the market leader in infusion therapy and clinical nutrition in Europe and emerging markets. The financial results reflect this growth: Fresenius Kabi's contribution to the Fresenius Group's net income more than tripled between 2002 and 2004 (when comparing nine-month figures), climbing from 15 % (13 million euros) to 46 % (57 million euros). "Fresenius Kabi is an important growth driver for the Fresenius Group," says Dr. Ulf M. Schneider, Chairman of the Management Board of Fresenius AG. Future growth potential also lies in the expansion of the I.V. drug (intravenously administered drug) portfolio, which today accounts for about 100 million euros in sales for Fresenius Kabi.

Striving for a 2007 EBIT margin of 15 %
Fresenius Kabi's dynamic growth was made possible by a strong international focus as well as a specialization in infusion and nutrition therapy for patients in hospital and the outpatient environment. Since 1995, sales have grown at 19 % CAGR while EBIT grew at 26 % CAGR. Even when excluding acquisitions, the Company expects mid-term organic sales growth in the mid-single digit range. Profitability should also increase with Fresenius Kabi forecasting an EBIT margin of 15 % in 2007. For fiscal 2004, Fresenius Kabi confirms an EBIT margin of more than 11.5 % and expects organic sales to grow in the mid-single digits.

Exceptional position in Clinical Nutrition and Infusion Therapy
Since the 1960s Fresenius Kabi has significantly influenced the development of parenteral as well as enteral nutrition and is the only company that offers products for both internationally. Fresenius Kabi is able to offer a comprehensive nutrition therapy for hospital doctors as they, for example, switch patients from parenteral to enteral nutrition during recovery or stabilization. Fresenius Kabi can also rely on decades of scientific expertise in infusion therapy and build on successful products: Voluven® for example today sets international standards for blood volume substitution.
With the exception of Japan and the U.S., Fresenius Kabi markets its products worldwide. With a market share in infusion therapy and clinical nutrition of 21 %, the Company has an impressive lead on the nearest competitor*. Fresenius Kabi estimates the value of this market (global market excluding the U.S. and Japan) at 6.3 billion euros.

Leading in Europe, strong roots in Germany
The health care markets in Europe (excluding Germany) and Canada account for 51 % of Fresenius Kabi's overall sales while the domestic market, which accounts for 27 % of sales, highlights the Company's strong roots. Fresenius Kabi is the market leader in infusion therapy and clinical nutrition in Germany as well as in Europe and its German market share is double that of its closest competitor. In Europe and Canada, Fresenius Kabi expects sales to grow at mid-single digit rates and EBIT to grow stronger than sales. In the future, special attention will be paid to the new markets in Eastern Europe where the Company already holds a leading position. That position was further strengthened by the acquisition of Czech Infusia a.s. announced on December 7, 2004 Fresenius Kabi has a global network of 49 sales organizations and 34 production sites that supply their local markets.

Growth markets yielding excellent growth rates
Fresenius Kabi expects strong organic growth in fiscal 2004 in the Asia-Pacific region (+24 %) as well as in Latin America and South Africa (+14 %). Demographic developments and an improved ability to finance better health care are pushing demand higher in these countries. The regional production and sales networks allow Fresenius Kabi to service this demand with high-quality products. The Company is market leader in both infusion therapy and clinical nutrition. In the future, Fresenius Kabi expects organic sales growth of between 15 % and 20 % p.a. in these markets.

China: Market share of 24 %
Growth is especially strong in China, where Fresenius Kabi has become the fifth-largest foreign pharmaceutical company. When founded in 1982, the Sino Swede Pharmaceutical Corporation, which is 51%-owned by Fresenius Kabi, was the first pharma joint venture ever in the People's Republic with foreign ownership. The company employs 740 people and is specialized in clinical nutrition. A second joint venture, the Beijing Fresenius Kabi Pharmaceutical Corporation, which is 65 %-owned by Fresenius Kabi, produces infusion solutions and I.V. drugs with 350 employees. Fresenius Kabi is the leader in clinical nutrition in China with a market share of 24 %. In the past four years, the Company achieved a 20 % sales CAGR. In the third quarter of 2004, Fresenius Kabi introduced two important products to the Chinese market: the parenteral nutrition bag Kabiven® and the blood volume substitute Voluven®.


Background: Fresenius Kabi activities
Infusion therapy - Standard infusion solutions, colloids, I.V. drugs as well as medical devices and disposable products

Infusion solutions and colloids are used to compensate for fluid and blood loss. Standard infusion solutions contain mainly salts (electrolytes) as well as water and are used to offset water and electrolyte imbalances in cases such as dehydration, lack of salt or a lack of specific minerals in the blood. The main indication is the treatment of patients suffering from blood loss due to accident
or surgery. Colloids can present a safe alternative to blood transfusions after accidents or surgery and Fresenius Kabi produces and develops hydroxyethyl starch solutions such as HAES-steril® and Voluven®, which use corn-based raw materials. In addition, Fresenius Kabi offers I.V. drugs such as anesthetics (e.g. Propofol Fresenius), pain relievers and antibiotics. The infusion solution product portfolio also includes medical devices and disposable products (such as cannulae, tubes and pumps) that are used to administer infusion solutions and I.V. drugs.

Clinical nutrition - enteral using the intestines and parenteral using the veins

Fresenius Kabi produces infusion solutions for parenteral nutrition that contain all key nutritional components: carbohydrates, protein, fats, vitamins, trace elements and salts. While this solution is injected directly into the blood stream, liquid enteral nutrition is administered as sip or tube feed. Enteral nutrition also contains all the necessary components with a balanced number of calories. Nutrition therapies can prove useful after accidents or surgery, in cases of malnourishment or in cancer patients.

Transfusion technology
In the field of transfusion technology, Fresenius Kabi offers a comprehensive range of equipment for the production and processing of blood products for blood donation and blood banks.

 

*All market data in this release: Fresenius Kabi Internal Research

Bad Homburg, Germany - December 13, 2004 -- 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 successful closing of the refinancing of $1.2 billion senior credit facilities. A tranche of $750 million revolving facility and a tranche of $450 million term loan have now been extended to February 28, 2010. The total size of these facilities could be reduced from the prior amount of $1.4 billion to now $1.2 billion. This was achieved based on the favorable Cash Flow development of the Company, which resulted in a lower debt level.

The mandated lead arrangers Bank of America, Credit Suisse First Boston and Deutsche Bank have syndicated the facilities. The facilities were substantially oversubscribed due to strong support of the bank group with 37 commitments in total. The improved credit quality of Fresenius Medical Care and the favorable market conditions will result in a substantial reduction of interest expense commencing in 2005 going forward.

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 that it has signed a privatization contract in Romania providing products and services to more than 500 patients in this emerging European market. FME is the market leader in the provision of dialysis services in Eastern Europe where it then treats over 7,000 Hemodialysis patients and has a strong presence in markets such as Poland, Hungary, Slovenia, Slovakia, Estonia and Turkey. As a fully vertically integrated provider, Fresenius Medical Care offers innovative systems, patient therapy solutions, know-how and expertise for End Stage Renal Disease patients and the healthcare systems in these rapidly growing markets.

Dr. Emanuele Gatti, Chief Executive Officer for the regions Europe, Middle East and Africa, commented: "We are very pleased with this development having seized market opportunities that provide for good growth in these key European markets. Our patients and the healthcare systems at large clearly benefit from our fully vertically integrated system and our innovative cost efficient technologies."

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