Fresenius Medical Care AG, Bad Homburg, the worlds largest provider of dialysis products and services for patients with chronic kidney failure, today announced that it acquired Dicamed AB, Sollentuna (Sweden). Dicamed has been the Swedish distributor for Fresenius Medical Care for 23 years.

Sven Gustafsson, the previous owner of Dicamed AB, commented: "It is with great pleasure that I am now selling the company to Fresenius Medical Care, which I see as the natural buyer of Dicamed AB. It is an optimal solution for the staff as well as for our customers with continuity for both parties. At the same time I would like to take the opportunity to thank all our customers for the great confidence which has been shown in Dicamed AB over the years. It will be a pleasure to follow the development of Dicamed AB in the future"

Norman Erhard, Vice President Northern and South Eastern Europe of Fresenius Medical Care: "We are happy about this friendly acquisition, which will help us to maintain and expand our position as one the leading providers in the Swedish dialysis market. Keeping the experienced team of Dicamed in place, we not only will see a very smooth transition for our customers, but also an even more focussed market approach in the future."

In 2003, Fresenius employees and the company itself will donate more than 30,000 euros for medical aid projects throughout the world. Last year, employees made collections for their colleagues affected by the flooding in Eastern Germany and Austria. Dr. Gerd Krick, Chairman of the Managing Board of Fresenius AG, had agreed in advance to double the amount collected. Thanks to the overwhelming generosity of contributors, the collection generated 60,000 euros - more than 30,000 euros in excess of the sum needed for a reasonable level of compensation for those employees affected. The balance will now be used to support humanitarian medical projects, in which employees are personally involved. The German Fresenius employees voted by a large majority for this suggestion in an Intranet poll.

ECG units have already been purchased for 6,700 euros for a Children's Clinic in Romania, which Fresenius employees at our Schweinfurt plant paid for with the proceeds from their annual departmental soccer tournament. "The Children's Clinic urgently needs ECG machines for the intensive care unit and for paediatric dialysis", says Fresenius employee Johann Brede, who is coordinating the aid project. In addition, Fresenius will donate two fully overhauled dialysis machines with a market value of over 10,000 euros. The Children's Clinic located on the Moldavian border is the only one in the entire Moldau region of Romania. Members of the Bavarian Red Cross set up a dialysis unit there in 1995, thereby probably saving the lives of many children. The remainder of the overall donation will be dedicated to similar aid projects, some of them in Asia.

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, announced today that Fresenius Medical Care North America has reached a settlement of litigation with a group of commercial health insurers led by Connecticut General Life Insurance Company. The settled litigation involved allegations of excess medical services claims and counterclaims of alleged delayed payments. No admission of liability has been or will be made by any party. The terms of the settlement are confidential.

Ben Lipps, Chief Executive Officer of Fresenius Medical Care North America, commented, "We are pleased to announce that another legal issue dating back to our 1996 merger has been resolved and, with this settlement, we can confirm that we remain confident in the adequacy of the provision established in 2001 for merger-related matters. We look forward to continuing our important business relationships with these payers. The company remains dedicated to our mission of providing outstanding medical care to our thousands of patients."

• Sales: € 1.7 billion
  + 7 % currency-adjusted, - 7 % at current exchange rates
• EBIT: € 194 million
  + 2 % currency-adjusted, - 11 % at current exchange rates
• Net income: € 36 million
  + 46 % currency-adjusted, + 29 % at current exchange rates

The development of the Fresenius Group in the 1st quarter 2003 was substantially affected by the changes in the exchange rates in the currency translation. On the basis of constant exchange rates, Fresenius increased sales by 7 % in the 1st quarter 2003. However, due to exchange rate effects, especially of the US dollar/euro, sales in the 1st quarter 2003 amounting to € 1,729 million at current exchange rates were 7 % lower than the figure for the previous year. The Fresenius Group achieved an operating profit (EBIT) of 2 % at constant exchange rates. At current exchange rates, EBIT was 11 % lower than in the same period of the previous year. Net income of the Fresenius Group rose by 46 % currency-adjusted (at current exchange rates: 29 %).

Group outlook on year-end 2003
The Group confirms its forecast made in February for the year as a whole and anticipates an altogether positive development for the 2003 financial year. At 2002 exchange rates, a high single-digit sales increase rate is expected. In view of the weak economic development and the increasing cost pressure in the health systems, this is an ambitious target. Earnings are also expected to further increase at constant exchange rates: the growth rate in net income is expected to be higher than that of sales.

Sales
As a result of the exchange rates, consolidated sales of the Fresenius Group decreased by 7 % in the first quarter to € 1,729 million (Q1/2002: € 1,854 million). Organic growth amounted to 4 %. Acquisitions contributed 3 % to this growth. The changes in exchange rates had a negative impact of 14 % on sales development. Especially the 22.4 % weaker US dollar compared to the previous year's quarter and the weakening of the Argentinian peso compared to the euro had negative effects on sales in the currency translation.

The regions with the strongest sales of the Group are still North America with 51 % and Europe with 38 % of total sales, followed by Asia-Pacific with 7 % and Latin America and other regions with a total of 4 %. In all Fresenius' important markets, the Group succeeded in increasing sales at constant exchange rates. We should like to emphasize that despite the continuing difficult economic situation in Argentina and Brazil sales in Latin America increased by 30 % at constant exchange rates.

The breakdown of sales by business segment has shifted to the advantage of Fresenius Kabi and Fresenius ProServe compared to the previous year's quarter. Due to the currency translation effect of the US dollar to the euro the sales contribution of Fresenius Medical Care in the first quarter 2003 was 70 %.

Earnings
The exchange rate effects were also reflected in the earnings of the Fresenius Group: Calculated at constant exchange rates, consolidated earnings before interest, income taxes, depreciation and amortization (EBITDA) increased by 2 % compared to the figure for the previous year. At current exchange rates EBITDA amounted to € 271 million in the 1st quarter 2003, 11 % below previous year's figure of € 303 million. Consolidated EBIT also increased by 2 % at constant exchange rates. On the basis of current exchange rates consolidated EBIT in the 1st quarter 2003, € 194 million, was also 11 % below the previous year's figure of € 217 million. Earnings development in the 1st quarter 2003 was marked by the lower EBIT contribution of Fresenius Medical Care, which was - 3 % compared to the same period of the previous year on a US dollar basis.

The particularly strong increase in EBIT of Fresenius Kabi (84 % compared to the previous year) had a positive impact. The EBIT contribution of Fresenius Kabi is the result of the successful implementation of the restructuring measures in 2001 and 2002. Fresenius ProServe increased its operating profit by 50 % over the previous year.

Balance of interest decreased to € - 64 million in the 1st quarter 2003 compared to the same period of the previous year and was positively influenced by currency effects from the conversion of the US dollar to the euro, since a high proportion of bank loans is in the United States.

As the following table shows, balance of interest and following figures of the statement of income of the previous year have been adjusted, since US GAAP rule SFAS No. 145 stipulates that as of 1.1.2003, the majority of earnings and losses from the early redemption of financial liabilities is no longer classified as extraordinary. This rule also concerns the expenses amounting to € 22 million before taxes (€ 13 million after taxes and related minority interests amounting to € 8 million) for the early redemption in 2002 of trust preferred securities of Fresenius Medical Care due in 2006. Accordingly, the following table shows the development of the previous year's statement of income:

The tax ratio amounted to 39.2 % in the period under report (Q1/2002: 37.9 %).

Minority interests fell to € 43 million, following € 49 million in the 1st quarter 2002. This drop is also a result of the strong exchange rate effects. 95 % of minority interests concern Fresenius Medical Care.

Fresenius increased consolidated net income by 29 % from € 28 million in the 1st quarter 2002 to € 36 million in the 1st quarter 2003. At constant exchange rates, the increase would have amounted to 46 %. Without adjustment of the previous year's figures to take into account the extraordinary expenses, net income would have increased by 9 % (currency-adjusted: 24 %).

Earnings per ordinary share amounted to € 0.87 following € 0.67 in the same period of the previous year, and earnings per preference share amounted to € 0.88 following € 0.68 in the previous year; an increase of 29 % (currency-adjusted: 46 %). Without adjusting the previous year's figures for the extraordinary expenses, earnings per ordinary share for the previous year was € 0.79 and earnings per preference share € 0.80; this corresponds to a plus of 10 % in the 1st quarter 2003 (currency-adjusted: 26 %).

Capital expenditure
Fresenius invested € 88 million in the 1st quarter 2003. This is € 12 million less than in the same period of the previous year when the investment volume was € 100 million.
Of the total capital expenditure of the period under report, 64 % was invested in tangible and intangible assets and 36 % in acquisitions. Investments in tangible and intangible assets dropped by 32 % to € 56 million compared to the same period of the previous year. Cash used for acquisitions increased from € 18 million in the 1st quarter 2002 to € 32 million in the period under report. This increase is solely due to the comparatively low investment volume in the same period of the previous year.

Acquisitions in the 1st quarter 2003 mainly concerned the acquisition of dialysis clinics by Fresenius Medical Care. Investments in tangible assets were chiefly in the founding and equipping of dialysis clinics, especially in the United States, in expanding and modernising existing clinics and in the further expansion and optimisation of production plants.

Looking at the breakdown by business sector, Fresenius Medical Care spent 83 % of the total investment volume, followed by Fresenius Kabi with 10 %. By region, 42 % of the total amount was invested in Europe, 49 % in North America and with a total of 9 % in the regions Asia-Pacific and Latin America.

Cash flow
The consolidated cash flow statement again showed a good development. The operating cash flow and the free cash flow showed high growth rates. The operating cash flow amounted to € 137 million in the period under report (Q1/2002: € 80 million). This corresponds to an increase of 71 % and is largely due to the further improvement in receivables management. The operating cash flow fully covered the financing requirements resulting from investment activities before acquisitions. The free cash flow before acquisitions and dividends also improved significantly and rose from € 3 million in the same period of the previous year to € 83 million in the 1st quarter 2003. This resulted from the considerably lower investment volume; cash used for investments in the Group amounted to € 56 million and cash received from the disposal of tangible assets amounted to € 2 million. The free cash flow after acquisitions and dividends, € 57 million, was positive.

Asset and equity structure
Balance sheet total of the Group changed only slightly compared to 31.12.2002, by 1 % to € 8,964 million (31.12.2002: € 8,915 million). This is largely due to the US$ 133 million reduction in the receivable securitization programme of Fresenius Medical Care to US$ 312 million, which is reflected in a corresponding increase in accounts receivable.
The liabilities side of the balance sheet shows an almost unchanged shareholders' equity including minority interests of - 1 % to € 3,348 million (31.12.2002: € 3,369 million). This drop resulted from the change in exchange rates; at constant exchange rates, an increase of 2 % would have resulted. Equity ratio including minority interests fell slightly from 37.8 % as at 31.12.2002 to 37.3 % at the end of the reporting period.

The liabilities of the Group from bank loans, Eurobonds, commercial papers and trust preferred securities amounted to € 3,337 million on 31.3.2003 (31.12.2002: € 3,283 million). The increase resulted from Fresenius Medical Care utilising credit lines in order to reduce the receivable securitization programme. An opposite effect had the changed exchange rates in the translation of the US dollar loans into euros.

Debt of the Group including liabilities from the receivable securitization programme of Fresenius Medical Care were reduced from € 3,707 million as at 31.12.2002 to € 3,624 million on 31.3.2003.

The key ratio net debt/EBITDA remained unchanged at 3.0 on 31.3.2003 compared to the end of the 2002 financial year.

Employees
On 31.3.2003, the Fresenius Group had 64,806 employees all over the world. This was around 2 % or 1,168 people more than at the end of 2002.


The Business Segments

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

In the 1st quarter 2003, Fresenius Medical Care increased sales by 10 % to US$ 1,299 million (previous year: US$ 1,187 million). 72 % of these sales were achieved in North America and 28 % outside North America.

The dialysis care business generated 73 % of sales, and dialysis products 27 %. Sales of dialysis products increased by 16 % to US$ 355 million (Q1/2002: US$ 305 million). The dialysis care business grew by 7 % to US$ 944 million (Q1/2002: US$ 881 million). The main reason for this growth was the increased number of dialysis treatments: Altogether, Fresenius Medical Care performed 4.2 million treatments in the reporting period, 9 % more than in the same period of the previous year. As at 31.3.2003, Fresenius Medical Care treated around 114,300 patients in 1,500 dialysis clinics, 7 % more than in the same period of the previous year.

Operating profit (EBIT) of Fresenius Medical Care in the 1st quarter 2003 was US$ 169 million. EBIT of the same period of the previous year amounted to US$ 174 million including a one-time benefit of US$ 6.3 million. Before this one-time item, EBIT of the 1st quarter 2002 was 168 US$. Earnings of the 1st quarter 2003 were affected particularly by the Middle East crisis, the difficult economic conditions in various countries of Latin America and the continued price pressure in Central Europe.

Net income of Fresenius Medical Care increased by 10 % to US$ 70 million. Without adjusting the previous year's figures by the extraordinary expenses caused by the early redemption of trust preferred securities, net income would have decreased by 7 %.

(For further information - please see press release Fresenius Medical Care)

The weakness of the dollar means that sales of Fresenius Medical Care amounting to US$ 1,299 million after conversion into euros were 11 % lower than the figure for the previous year. Currency translation caused EBIT to decrease by 21 % to € 157 million (previous year: € 198 million).


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

In the 1st quarter 2003, Fresenius Kabi recorded sales of € 355 million, the same as in the previous year (€ 354 million). This is almost solely the result of currency translation effects. The organic growth of Fresenius Kabi was 7 % in the reporting period and thus within the framework of our defined target of 6 to 7 % for 2003 as a whole. The development of sales was significantly affected by currency effects (- 6 percentage points). Furthermore, disinvestments (the sale of the company ProReha effective August 1, 2002) reduced sales by -1 percentage point.

The hospital business achieved € 284 million, 80 % of total sales (Q1/2002: € 279 million including transfusion and infusion technology), the Ambulatory Care business € 71 million (Q1/2002: € 75 million), 20 % of total sales.

Fresenius Kabi achieved an EBIT of € 35 million in the 1st quarter 2003, significantly higher than the previous year's figure of € 19 million. Thus, Fresenius Kabi achieved an EBIT margin of 9.9 % in the 1st quarter 2003, a significant increase compared to the 1st quarter 2002 (5.4 %). This also substantially exceeded the EBIT margin of the whole 2002 financial year (6.7 %).

The measures to increase efficiency which have been successfully implemented chiefly in the production facilities, particularly in the Uppsala, Sweden, facility, had a positive impact on earnings for the 1st quarter 2003. The measures implemented will continue to make a substantial contribution to the future earnings development of Fresenius Kabi.

Fresenius Kabi has an excellent position in its markets. In the growth countries of the region Asia-Pacific, Fresenius Kabi again achieved double-digit organic growth in the 1st quarter 2003. In Europe, Fresenius Kabi continued its solid growth despite the strong cost pressure in the health systems, which mainly makes itself felt in Germany.

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

Fresenius ProServe succeeded in increasing sales by 11 % in the 1st quarter 2003 to € 166 million (Q1/2002: € 149 million). The company generated sales of € 140 million in the healthcare business, a plus of 18 % over the same period of the previous year (Q1/2002: € 119 million). Sales of services increased by 29 % to € 116 million (Q1/2002: € 90 million). The increase was largely driven by the consolidation for the first time of newly-acquired hospitals (mainly Klinikum Rhein-Sieg in Siegburg). Sales of the project business (€ 24 million) as well as of the pharma industry business (€ 26 million) were lower than the previous year (project business Q1/2002: € 29 million and pharma industry business Q1/2002: € 30 million) due to delays in the invoicing of projects in the 1st quarter, which is traditionally a weak period.

Orders received relating to the project business of Fresenius ProServe dropped to € 66 million (Q1/2002: € 94 million), a result of delays in the closing of projects. Orders on hand were nearly unchanged at € 422 million (31.12.2002: € 424 million).
Fresenius ProServe significantly improved EBIT in the period under report, from € 4 million in the 1st quarter 2002 to € 6 million in the 1st quarter 2003.

Fresenius Group in Figures
(for table see pdf-file)

• Total Revenue of $ 1,299 million up 10%. Adjusted for currency effects revenue increased by 7%.
• Net income of $ 70 million
• Free Cash Flow at Q1 record level of $ 84 million
• Operating margin in North America improved in Q1 2003 compared with Q4 2002 - despite lower number of dialysis days
• International Operating margin impacted by crisis in Middle East, Latin America, pricing pressures in Central Europe

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 first quarter 2003.

OPERATIONS

First Quarter 2003:
Total revenue for the first quarter 2003 increased 10% (7% at constant currency) to $ 1,299 million. Dialysis Care revenue grew by 7% to $ 944 million (+7% at constant currency) in the first quarter of 2003. External Dialysis Product revenue increased by 16% to $ 355 million (+6% at constant currency) in the same period. Internal revenue growth was 4.5%.

North America:
Revenue rose 4% to $ 929 million, compared to $ 892 million in the same period last year. Dialysis Care revenue increased by 5% to $ 824 million. Same store treatment growth year over year was 3.3%. The average revenue per treatment decreased to $ 278 in the first quarter 2003 (Q1 2002: $ 284). Adjusted for the announced intra division billing changes for some Medicare Peritoneal Dialysis patients and the new billing procedures for Vitamin D (Zemplar), the revenue per treatment was comparable with the first quarter 2002. Dialysis Product revenue, including sales to company-owned clinics, increased 5% to $ 190 million. Product sales to the available external market grew by 6.2%.

International:
Revenue was $ 370 million, up 26% from the first quarter of 2002, an increase of 14% adjusted for currency. Dialysis Care revenue reached $ 121 million, an increase of 24% (19% at constant currency). Dialysis Products revenue, including sales to company-owned dialysis clinics, increased 26% to $ 275 million (12% at constant currency).

Operating income (EBIT) was $ 169 million resulting in an operating margin of 13.0%. Operating income in the first quarter of 2002 was $ 174 million including a one-time benefit of $ 6 million. The operating margin was 14.7%. First quarter 2002 operating income before the one-time item was $ 168 million and the operating margin was 14.2%. The first quarter 2003 operating margin was below the targeted range for the year as the situation in the Middle East and Latin America affected the International margin. Additionally, pricing pressure in Central Europe, in particular the difficult environment in Germany following a reimbursement change, impacted the operating margin in the International area.

In North America the operating margin increased sequentially to 13.2%, despite a lower number of dialysis days than in the fourth quarter 2002. In the first quarter of 2002, the North American margin was impacted by the above-mentioned one-time benefit of $ 6 million. Adjusted for this effect the comparable North American operating margin for the first quarter of 2002 would have been 13.5%.

Net income in the first quarter 2003 was $ 70 million, an increase of 10%. In accordance with the new US-GAAP Accounting Standard SFAS 145, the loss from the early redemption of the Trust Preferred Securities in the first quarter of 2002 of $ 12 million after taxes ($ 20 million before taxes) had to be reclassified from extraordinary to operating earnings. Excluding the redemption loss net income in the first quarter 2002 would have been $ 75 million.

Earnings per share (EPS) in the first quarter 2003 rose 10% to $ 0.72 per ordinary share ($ 0.24 per ADS), compared to $ 0.66 ($ 0.22 per ADS) in the first quarter of 2002. The weighted average number of shares outstanding during the first quarter of 2003 was approximately 96.2 million.

The Company achieved record first quarter operating and free cash flow levels. Cash from operations increased to $ 125 million. A total of $ 41 million (net of disposals) was spent for capital expenditures, resulting in Free Cash Flow before acquisitions of $ 84 million. A total of $ 28 million in cash was spent for acquisitions. Free Cash Flow after acquisitions was $ 56 million. In the first quarter of 2002, Free Cash Flow after acquisitions was $ 11 million.

As of March 31, 2003, the Company operated a total of 1,500 clinics worldwide [1,090 clinics in North America and 410 clinics International]. In the first quarter 2003, the Company opened 12 new clinics (de novos). Fresenius Medical Care AG performed approximately 4.2 million treatments, which represents an increase of 9% year over year. North America accounted for 3.0 million treatments (+7%) and the International segment for 1.3 million (+16%). At the end of the first quarter 2003, Fresenius Medical Care treated about 114,300 patients worldwide, which represents an increase of 7%. North America accounted for ~80,200 patients (+4%) and the International segment for ~34,100 patients (+16%).

OUTLOOK 2003
For the year 2003, the Company reconfirms its 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. Due to the increased risks and unpredictability the Company expects to achieve net income growth for the full year 2003 near the lower end within the predicted range.

Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented: "We saw continued momentum during the first quarter of 2003 in our business segments. Our sequential operating margin improvement in North America was achieved through the continued focus towards operating efficiencies. In our Dialysis Care business we have accomplished our desired cost structure and our unique position with the UltraCare therapy. We are now focused on revenue and treatment growth. Products revenue in North America to the Net Available External Market (NAEM) grew at above-market rates. In International we continued to achieve strong above-market revenue growth. We also expect to sequentially improve our International operating margin to the targeted range during the remaining quarters of 2003. We achieved record first quarter Operating and Free Cash Flow demonstrating our abilities to work toward achieving financial targets."

Annual General Meeting approves 10 % dividend increase

At its constituent meeting today, the Supervisory Board of Fresenius AG chose Dr. Gerd Krick to be its new Chairman. Dr. Krick had handed over the chairmanship of the Managing Board, as already announced, to Dr. Ulf M. Schneider at the close of the Annual General Meeting and was voted onto the Supervisory Board. Dr. Karl Schneider, the former speaker of the Managing Board of Südzucker AG, and Chairman of the Supervisory Board of Fresenius AG since 1998, continues to be on the Supervisory Board as an ordinary member. Gerd Holtgrefe from the trade union IGBCE was re-elected Deputy Chairman.


The following members of the Supervisory Board were re-elected by the Annual General Meeting:

• Dr. Gabriele Kröner, Munich
  Doctor
• Gerhard Roggemann, Hanover
  Member of the Managing Board of WestLB AG, Düsseldorf/Münster
• Dr. Dieter Schenk, Munich
  Lawyer and tax consultant
  Law office Nörr, Stiefenhofer & Lutz
• Dr. Bernhard Wunderlin, Bad Homburg v.d.H.
  Former Managing Director Harald Quandt Holding GmbH

Dr. Manfred Schaudwet did not stand for re-election to the Supervisory Board.


The employees of Fresenius AG had already elected the following as their representatives:

• Arnold Danneck, St. Wendel
  Chairman of the General Works Council
• Christel Neumann, Schweinfurt
  Chairman of the Works Council Schweinfurt plant
• Ilona Oesterle, Bad Homburg v.d.H.
  Deputy Chairlady of the General Works Council

The executive staff elected:

• Dr. Bernd Mathieu, St. Wendel
  Business unit Patents

as their representative.


The following representatives of the trade unions were elected:

• Gerhard Herres, DHV
• Gerd Holtgrefe, IGBCE

At today's (28.5.2003) Annual General Meeting the shareholders of the health care company Fresenius approved by a large majority the proposal of the Managing Board and Supervisory Board to increase the dividend by around 10%. Thus, the owners of an ordinary share will receive 1.14 euros (2002: 1.03 euros), the owners of a preference share 1.17 euros (2002: 1.06 euros) per share.

In addition, the Annual General Meeting approved changes to the Articles of Association in accordance with the recommendation of the Corporate Governance Code and agreed to a conditional increase of the subscribed capital in order to issue convertible bonds to employees due to the 2003 stock option plan.

91.89% of the ordinary share capital was represented at the Annual General Meeting of Fresenius AG, and 28.66% of the preference share capital, making 60.29% of total capital.

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

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

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

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

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

Summary second quarter 2003:

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

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

OPERATIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Business Segments

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

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

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

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

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

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

For further information please see press release.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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