On August 12, 2005, Citadel Equity Fund Ltd., London, submitted a countermotion to agenda item 1 of the Extraordinary General Meeting and to the only agenda item of the Separate Meeting of Preference Shareholders – Resolution on the conversion of non-voting bearer preference shares into bearer ordinary shares. Citadel Equity Fund Ltd. hereby requests all shareholders of Fresenius Medical Care AG to approve the conversion only when the conversion premium will be reduced to € 9.75 per bearer preference share.

Fresenius AG as shareholder of Fresenius Medical Care AG will vote in favor of this countermotion in the Extraordinary General Meeting. The Company owns 50.76 % of the ordinary shares of Fresenius Medical Care AG.

The proposed step towards just one share class at Fresenius Medical Care AG was well accepted by the shareholders. This is also reflected in the share price development of Fresenius Medical Care's ordinary and preference shares since the announcement of this measure beginning of May. The conversion of preference shares into ordinary shares is expected to improve trading liquidity of the ordinary shares and Fresenius Medical Care's position in the German stock index (DAX). In addition, it will increase the company's flexibility to finance future growth. Therefore, this initiative is in the interests of Fresenius Medical Care AG as well as of its preference and ordinary shareholders and accordingly in the interests of Fresenius AG.

The countermotion, however, indicates that the attractiveness of the conversion premium to be paid by the preference shareholders is perceived differently by some shareholders. In order to increase the incentive to the preference shareholders to participate in the conversion, Fresenius AG considers the reduced conversion premium of € 9.75 as proposed in Citadel's countermotion as acceptable. Given the advantages of a single share class, Fresenius AG is convinced that voting in favor of the countermotion is to the benefit of all shareholders of Fresenius Medical Care AG.

• Acquisition of HELIOS Kliniken builds Fresenius ProServe's hospital management business 
• Acquisition of Clinico to develop Fresenius Kabi's medical devices business  
• Committed financing 
• Excellent financial results in the 1st-3rd quarter of 2005 (preliminary);
  2005 Group outlook – earnings guidance raised

Acquisition of HELIOS Kliniken GmbH, a leading hospital operator in Germany

Fresenius has entered into an agreement to acquire HELIOS Kliniken GmbH, Fulda, Germany. Through the acquisition, Fresenius creates an excellent platform for further growth in the German acute care market. HELIOS is recognized for having medical quality standards of the highest level in the industry. With expected sales of approx. € 1.2 billion in 2005 the company ranks among the largest and financially most successful private hospital chains in Germany. The acquisition of HELIOS will establish Fresenius ProServe as one of the leading private hospital operators in Germany and create a strong third business segment within Fresenius Group.

„The hospital management business in Germany has been our clear focus following the streamlining of Fresenius ProServe's operations in 2003 and 2004. The acquisition of one of the most successful German hospital operators is an unique opportunity to strengthen our position in acute care hospitals. Building on this strong position, we will capitalize on the excellent growth potential of the ongoing privatization process in the German hospital market. HELIOS is an extremely well-managed company and is, just like Fresenius, strongly committed to deliver best-in-class medical treatment," commented Dr. Ulf M. Schneider, Chairman of the Management Board of Fresenius AG.

HELIOS Kliniken GmbH is one of the leading private German hospital operators in terms of revenue growth and profitability. Since 2002, the company posted a compounded annual growth rate of 28 % in sales. In 2004, HELIOS achieved revenues of € 1,161 million, operating income of € 95 million and net income of € 66 million. The company owns 24 hospitals with a total capacity of approx. 9,300 beds. HELIOS is the only hospital chain in Germany that operates four maximum-care hospitals with more than 1,000 beds each. The company has approx. 18,000 employees and performs about 330,000 inpatient and about 700,000 outpatient treatments annually.

HELIOS enjoys an excellent reputation with medical experts and patients. The company implemented a comprehensive medical quality management system and is the first German hospital chain that sets quantitative medical targets. The Annual report as well as the quality and intellectual capital reports document HELIOS's achievements and targets with outstanding transparency. HELIOS's experienced and acquisition-proven management team will continue to manage the company. All members of the HELIOS Management continue to be shareholders in the company.

"Our proven medical know-how and partnership network management is the basis for our leading position in medical quality standards. With Fresenius, we will further strengthen this position. We are well prepared for further growth in the highly dynamic German hospital market for acute care, even for ambitious privatization projects," commented Ralf Michels, Managing Director of HELIOS Kliniken GmbH.

In the future, the hospitals of HELIOS and the Fresenius hospitals of the Wittgensteiner Group will operate under the leadership and brand of HELIOS. Both companies are highly complementary in terms of geographical fit and medical focus. The combined business will include 55 clinics with 2004 pro-forma revenues of approx. € 1.5 billion.

The purchase price for 100 % of the HELIOS shares is € 1.5 billion plus € 100 million for the net cash position. Fresenius will acquire 94 % of the HELIOS shares, 6 % will continue to be held by the HELIOS management.

The acquisition requires antitrust approval. Fresenius anticipates to close this transaction at the end of 2005.


Acquisition of the business of Clinico GmbH – Fresenius Kabi strengthens product portfolio and production network of medical devices

Fresenius Kabi has entered into an agreement to acquire the business of Clinico GmbH, Bad Hersfeld, Germany. Clinico manufactures medical devices used for the application of infusion therapies and clinical nutrition, such as sterile disposables for the application of drugs, application systems for clinical nutrition as well as catheter systems. The company has a development center and a tool-making site in Germany as well as production plants in Poland and China with state-of-the-art production technologies. All Clinico production plants are certified according to ISO and meet the requirements of the FDA.

Fresenius Kabi is the European leader in infusion therapy and clinical nutrition and offers medical devices for the application of these therapies. With the acquisition of Clinico, Fresenius Kabi extends its product portfolio and will distribute Clinico's products through its existing sales and distribution organization. In addition, the company increases its development and production network for medical devices.

Preliminary sales for the fiscal year 2004/05 (September 30) were about € 51 million, mainly achieved with industrial clients. Clinico has over 1,500 employees.

The acquisition requires the approval of the German antitrust authority.


Committed financing

It is planned to finance the acquisitions through a capital increase in the amount of around € 800 million and a bond in the amount of around € 700 million. The capital increase from approved capital is planned to be completed in 2005 with a subscription right granted to shareholders. A major German bank has committed to underwrite the total amount of the capital increase at customary market conditions. The details of the capital increase will be published in the coming weeks. Commitments for a € 700 million bridge financing have been received from two international banks, as the bond is planned to be issued in the first half of 2006. The Else Kröner-Fresenius-Foundation has notified us, that it will participate in the planned capital increase with an amount of € 100 million. In addition, the proceeds from the disposal of unused subscription rights will be fully invested. Allianz Lebensversicherungs-AG has notified us, that it will positively support the planned capital increase.

Fresenius expects the 2005 acquisitions of Labesfal, Clinico and HELIOS to be slightly accretive to 2006 earnings per share and to be clearly accretive as from 2007.

The financing mix of equity and debt is designed to keep Fresenius Group's key credit ratios substantially unchanged.


Excellent financial results in the 1st-3rd quarter 2005 (preliminary);
2005 Group outlook – earnings guidance raised

In context with the announced transactions, Fresenius provides an overview on the financial results of the first nine months 2005.

Based on preliminary figures, Fresenius achieved excellent financial results in the first nine months of 2005.

Group sales increased 7 % in constant currency. At actual rates, sales were € 5,717 million, an increase of 6 %. Earnings increased stronger than sales: Group EBIT rose 13 % in constant currency and 12 % at actual rates to € 702 million. Group net income grew by 28 % in constant currency and 27 % at actual rates to € 159 million.

The business segments made the following contribution to this excellent development:

Based on preliminary figures, Fresenius Medical Care achieved sales growth of 9 % to US$ 5,000 million in the first nine months of 2005. EBIT and net income posted a strong performance: EBIT rose 11 % to US$ 694 million including US$ 8 million of one-time costs related to the transformation of Fresenius Medical Care's legal form into a KGaA. Net income was US$ 338 million, up 15 % from the first nine months of 2004.

For the year 2005, Fresenius Medical Care confirms its outlook and expects a revenue growth at constant currency between 6 and 9 % and a net income growth between 12 and 15 %. The company expects to achieve the upper end of the net income guidance. This guidance does not take into effect the impact of the Renal Care Group acquisition or the one-time costs for the full year 2005 in connection with the transformation of the company's legal form, or the conversion of the preference shares into ordinary shares.

Fresenius Kabi achieved an excellent sales growth of 12 % to € 1,239 million in the first nine months. EBIT increased significantly by 32 % to € 170 million. The EBIT margin was 13.7 % (Q1-3 2004: 11.7 %). In Q3 2005, the EBIT margin improved to 14.3 %.

Fresenius Kabi confirms its full-year EBIT margin outlook of >13.5 %. Constant-currency sales growth is expected at about 10 %.

In the first nine months of 2005, Fresenius ProServe achieved sales of € 552 million, a decrease of 5 % compared to the previous year. On a comparable basis (excluding the nursing home business sold in 2004 and the discontinued international hospital management business), sales would have been on previous year's level. EBIT was € 11 million in the first nine months of 2005 (Q1-Q3 2004: € 3 million; before one-time expenses: € 11 million). Based on a stronger order intake in its project business, Fresenius ProServe expects improved sales and earnings in Q4 2005.

Fresenius ProServe confirms its full-year outlook for 2005 and expects EBIT of € 20 to € 25 million and organic sales growth of 5 to 8%.

Based on these excellent preliminary Group figures, Fresenius raises its full-year earnings outlook (before the announced acquisitions): Net income is expected to grow at >25 % in constant currency. Previously, the Company expected 20 to 25 % net income growth. The projection for constant-currency sales growth remains at 6 to 9 %.

The final figures for the first nine months of 2005 will be announced on November 3, 2005, as originally scheduled.


Key figures of the business segments (preliminary):

Analyst Meeting and live video webcast

Fresenius AG will host an analyst meeting today, Friday, October 14, 2005, at 3.00 p.m. CEDT / 9.00 a.m. EDT at its headquarters in Bad Homburg, Germany.

The live video webcast of the analyst meeting can be followed at www.fresenius-ag.com.  A replay of the webcast will be available shortly after the meeting.


Glossary - maximum-care hospitals
The government plan for general and specialty hospitals basically encompasses four categories. Hospitals for maximum-care generally go far beyond the other categories with their range of services. They typically hold their clinical capacities for 24 hours 7days a week and are obliged to particular standards of quality assurance. Furthermore they shall provide state of the art medical and technical equipment. Hospitals for maximum-care are especially obliged to educational and professional training.

Today, the Management Board of Fresenius AG, with the approval of the Supervisory Board, has decided to increase the Company's subscribed share capital by 4,700,000 new ordinary shares and 4,700,000 new preference shares from approved capital with a subscription right granted to shareholders.

The new ordinary shares and preference shares will be subscribed by the members of an underwriting syndicate led by Deutsche Bank as the Global Co-ordinator and Dresdner Kleinwort Wasserstein and WestLB as Joint Bookrunners in line with market practice with the obligation to offer the new ordinary shares to the existing ordinary shareholders and the new preference shares to the existing preference shareholders of Fresenius AG at a subscription ratio of 9:2. For a residual amount of up to 113,533 bearer ordinary shares and up to 113,533 bearer preference shares the subscription rights were excluded.

The subscription prices amount to at least € 86 per ordinary share and € 93 per preference share and may be increased by a step-up until November 15, 2005. The final subscription prices are expected to be announced on November 15, 2005. The subscription period is expected to run from November 17 to November 30, 2005 and trading in the subscription rights is expected to be established during the period from November 17 to November 28, 2005. Fresenius AG expects to generate approximately € 840 million of (gross) proceeds from the capital increase.

The Else Kröner-Fresenius-Foundation has notified that it will participate in the planned capital increase with an amount of € 100 million. In addition, the proceeds from the disposal of unused subscription rights will be fully invested. Allianz Lebensversicherungs-AG has notified that it will positively support the planned capital increase. WestLB has notified that it will fully exercise its subscription rights.

After issuance of the new shares, the total number of outstanding ordinary shares of Fresenius AG will increase from currently 20,639,100 to 25,339,100 and the total number of outstanding preference shares will increase from currently 20,639,100 to 25,339,100.

The new shares are expected to be included in the quotation of the shares of Fresenius AG at the Frankfurt, Munich and Düsseldorf stock exchanges as of December 1, 2005 and have full dividend entitlement for 2005.


Capital Increase Data
 
Issuer: Fresenius AG

Transaction Structure: Capital increase with subscription rights

Offering: 4,700,000 new ordinary shares,
4,700,000 new preference shares

Subscription Ratio: 9 old ordinary shares entitle to the subscription of 2 new ordinary shares at the subscription price and 9 old preference shares entitle to the subscription of 2 new preference shares at the subscription price

Residual Amount:Up to 113,533 bearer ordinary shares,
Up to 113,533 bearer preference shares

Minimum Subscription Price: Euro 86 € per ordinary share,
Euro 93 € per preference share

Final Subscription Price: Announcement expected 15 November 2005

Subscription Period: Expected 17 November 2005 to 30 November 2005

Trading of Subscription Rights: Expected 17 November 2005 to
28 November 2005

Placement of Shares not subscribed: Private placement with institutional investors in Germany and abroad

Start of Trading of new shares subscribed for: Expected 1 December 2005

Stock Exchanges: Frankfurt (Prime Standard), Munich, Düsseldorf

Underwriting Syndicate:
Global Co-ordinator: Deutsche Bank

Joint Bookrunner: Deutsche Bank, Dresdner Kleinwort Wasserstein, WestLB

Joint Lead Manager: Deutsche Bank, Dresdner Kleinwort Wasserstein, WestLB

Co-Manager: ABN Amro Rothschild, Bayern LB, Commerzbank, DZ Bank, Helaba, HVB, Société Générale

• Sales € 5.7 billion,
• + 7 % in constant currency, + 6 % at actual rates
• EBIT € 703 million,
  + 13 % in constant currency, + 12 % at actual rates
• Net income € 161 million,
  + 30 % in constant currency, + 29 % at actual rates 

• Fresenius Medical Care continues strong sales and earnings growth
• Fresenius Kabi achieves excellent operating income and strong organic growth
• Fresenius ProServe increases order intake by 20 %

Compared to the preliminary figures announced on October 14, 2005, EBIT improved by € 1 million to € 703 million and net income by € 2 million to € 161 million.


2005 Group outlook confirmed
Fresenius confirms its increased earnings guidance as announced in the preliminary nine-month results release on October 14, 2005 as well as its sales expectation for the full-year 2005 (before the announced acquisitions).

Sales – high organic growth
In the first nine months of 2005, Group sales increased 7 % in constant currency. Organic growth contributed 6 % and acquisitions 2 % to this increase. Currency translation had a -1 % and divestments a -1 % effect on sales. Sales were € 5,712 million, an increase of 6 % at actual rates (Q1-3 2004: € 5,399 million).

Remarkable constant-currency sales growth was achieved in the main markets North America and Europe of 7 % each. Strong growth rates were achieved in Latin America (+20 %) and in Africa (+29 %). In Asia-Pacific, Fresenius Kabi achieved excellent sales growth. The lower project volume at Fresenius ProServe impacted the sales development in this region.

 Sales contribution of the three business segments: 
 

Excellent earnings growth
EBITDA increased 11 % in constant currency and 9 % at actual rates to € 937 million (Q1-3 2004: € 857 million). Group EBIT rose 13 % in constant currency and 12 % at actual rates to € 703 million (Q1-3 2004: € 628 million). The Group EBIT margin further improved to 12.3 % in the first nine months of 2005 (Q1-3 2004: 11.6 %).

Group net interest was € -146 million in the first nine months of 2005 (Q1-3 2004: € -156 million). This improvement was mainly the result of a lower debt level compared to the first nine months of 2004 in combination with lower interest rates.

The tax rate for the first nine months of 2005 was 39.3% (Q1-3 2004: 40.3 %), in line with the full-year expectation.

Minority interest increased to € 177 million (Q1-3 2004: € 157 million). 96 % was attributable to minority interest of Fresenius Medical Care.

Group net income grew strongly by 30 % in constant currency and by 29 % at actual rates to € 161 million (Q1-3 2004: € 125 million). Excellent operating results of the two largest business segments Fresenius Medical Care and Fresenius Kabi, lower interest expenses and a lower tax rate contributed to this increase.

Earnings per ordinary share were € 3.92 (Q1-3 2004: € 3.04). Earnings per preference share were € 3.94 (Q1-3 2004: € 3.06). EPS increased 29 % for both share classes.


Investments considerably increased
In the first nine months of 2005, Group investments increased considerably to € 460 million (Q1-3 2004: € 253 million). € 196 million was spent for property, plant and equipment and intangible assets (Q1-3 2004: € 174 million) and € 264 million for acquisitions (Q1-3 2004: € 79 million). The increase in acquisition spending was mainly driven by Fresenius Kabi.


Solid cash flow performance
Fresenius achieved a very good operating cash flow of € 592 million in the first nine month of 2005 (Q1-3 2004: € 580 million). This positive performance was driven by improved earnings whereas higher income tax payments of Fresenius Medical Care in North America had a negative effect. Free cash flow before acquisitions and dividends was € 412 million (Q1-3 2004: € 423 million). Free cash flow after acquisitions (€ 213 million) and dividends (€ 132 million) was € 67 million (Q1-3 2004: € 232 million). This figure was driven by significantly higher acquisition-spending and higher dividend payments.


Solid balance sheet structure
Total assets increased 12% to € 9,196 million (December 31, 2004: € 8,188 million). In constant currency, total assets grew 5 %. Current assets increased 15 % to € 3,163 million (December 31, 2004: € 2,755 million). In constant currency, current assets grew 9 %. This increase was driven by acquisitions and growth of operations.

Group debt rose 3 % to € 2,821 million as of September 30, 2005 (December 31, 2004: € 2,735 million). In constant currency, debt was 1 % below previous year-end's figure.

The net debt/EBITDA ratio was 2.1 as of September 30, 2005 (December 31, 2004: 2.2).
Shareholders' equity including minority interest rose 17 % to € 3,932 million compared to € 3,347 million on December 31, 2004 (at constant currency: +6 %). The equity ratio including minority interest improved to 42.8 % due to strong increase in earnings and currency translation effects (December 31, 2004: 40.9 %).


Employee numbers continue to grow
As of September 30, 2005, the Group had 72,484 employees worldwide, an increase of 6 % (December 31, 2004: 68,494).


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

In the field of trifunctional antibody therapies, the current studies for ovarian cancer (Phase IIa), malignant ascites (Phase II/III) and malignant pleural effusion (Phase I) are continuing according to plan. Results of those studies will be presented for ovarian cancer in the first half of 2006 and for malignant ascites as well as malignant pleural effusion in the second half of 2006. Two phase II studies are in preparation to investigate the treatment of gastric cancer and breast cancer following positive results from two phase I studies for the treatment of peritoneal carcinomatosis and breast cancer. In addition, Fresenius Biotech acquired from its partner Trion the exclusive worldwide clinical development, registration, marketing and sales rights for the trifunctional antibody lymphomun. With this antibody Fresenius Biotech extends its range of indications from solid tumors to malignancies of the blood. The antibody is in preclinical development.


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, 2005, Fresenius Medical Care was serving approximately 130,400 patients (+6 %) in 1,670 dialysis clinics (+5 %). The company delivered about 14.7 million treatments in the first nine months of 2005 (+5 %).

• Strong sales and earnings growth continued
• Excellent performance in North America and Europe
• 2005 outlook confirmed

In the first nine months of 2005, Fresenius Medical Care achieved sales growth of 9 % to US$ 4,999 million (Q1-3 2004: US$ 4,588 million). In constant currency, sales rose 8 %. Organic growth was 7 %.

In North America Fresenius Medical Care achieved a strong sales increase of 7 % to US$ 3,383 million (Q1-3 2004: US$ 3,149 million). Sales outside North America ("International") showed an even stronger growth of 12 % to US$ 1,616 million (Q1-3 2004: US$ 1,439 million). Sales in dialysis care increased 8 % to US$ 3,610 million (Q1-3 2004: US$ 3,334 million). In dialysis products, Fresenius Medical Care achieved sales growth of 11 % to US$ 1,389 million (Q1-3 2004: US$ 1,254 million).

EBIT rose 11 % to US$ 695 million (Q1-3 2004: US$ 625 million) and the EBIT margin was 13.9 % (Q1-3 2004: 13.6 %). EBIT includes one-time costs of US$ 8 million related to the transformation of Fresenius Medical Care's legal form into a KGaA. As previously announced, the company expects one-time costs for the full year 2005 to be approximately US$ 10 million for the transformation. Net income grew by 16 % to US$ 339 million in the first nine months of 2005.

For the year 2005, the Fresenius Medical Care reconfirms its outlook. This guidance does not take into effect the impact of the Renal Care Group acquisition or the one-time costs for the full year 2005 in connection with the transformation of the company's legal form, nor the conversion of the preference shares into ordinary shares.

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


Fresenius Kabi
Fresenius Kabi offers infusion therapies and clinical nutrition for seriously and chronically ill patients in the hospital and out-patient environments. The company is also a leading provider of transfusion technology products.

• New record EBIT margin of 14.3 % in the third quarter of 2005 
• Excellent organic growth of 7 % in the first nine months of 2005 
• 2005 outlook confirmed

In the first nine months of 2005, Fresenius Kabi's sales rose 12 % to € 1,239 million (Q1-3 2004: € 1,105 million). The company achieved an excellent organic growth of 7 %. Acquisitions, primarily the generic I.V. drug company Labesfal, contributed 5 % to sales. Currency translation added 1 % to sales growth. Divestments had a -1 % effect on sales.

Sales in Germany rose 2 %. Sales in Europe (excluding Germany) increased 14 %. Acquisitions contributed significantly to this growth. Fresenius Kabi continued to grow at double-digit rates outside of Europe: In Asia-Pacific Fresenius Kabi achieved strong growth of 15 %, in Latin America of 20 % and in Africa of 18 %.

EBIT of Fresenius Kabi significantly increased by 32 % in the first nine months to € 170 million (Q1-3 2004: € 129 million). The EBIT margin was 13.7 % (Q1-3 2004: 11.7 %). In Q3 2005, the EBIT margin improved by 50 basis points to 14.3 % compared to Q2 2005.
Fresenius Kabi confirms its full-year 2005 outlook.


Fresenius ProServe
Fresenius ProServe offers services for the international health care sector including hospital management and hospital planning and construction as well as planning and construction of pharmaceutical and medical-technical production sites.

• Order intake increased by 20 % in the first nine months of 2005
• Strong 4th quarter in project business expected
• 2005 outlook confirmed

In the first nine months of 2005, Fresenius ProServe achieved sales of € 551 million (Q1-3 2004: € 581 million). On a comparable basis (excluding the nursing home business sold in 2004 and the discontinued international hospital management business), sales were at previous year's level. Sales growth of 2 % to € 260 million was achieved in the hospital management business (Wittgensteiner Kliniken). In the hospital engineering and services business (VAMED) sales rose by 1 % to € 236 million. In the pharmaceutical engineering and services business (Pharmaplan) the order intake improved and Pharmaplan's sales increased in the third quarter 2005.

EBIT was € 11 million in the first nine months of 2005 (Q1-3 2004: € 3 million; before one-time expenses: € 11 million) and in line with the company's expectations.

Order intake and order backlog developed very positively: Order intake in the first nine months of 2005 increased 20 % to € 239 million (Q1-3 2004: € 199 million). Order backlog as of September 30, 2005 rose 19 % to € 399 million (December 31, 2004: € 335 million). Fresenius ProServe expects a strong fourth quarter 2005 in its project business.

Fresenius ProServe confirms its full-year outlook for 2005.


Live video webcast
As part of the earnings announcement for the first nine months of 2005, an analyst conference will be held at the Fresenius headquarters in Bad Homburg on November 3, 2005 at 1:30 p.m. CET (7.30 a.m. EST). All investors are cordially invited to follow the conference in a live broadcast over the Internet at www.fresenius-ag.com / Investor Relations / Presentations. Following the meeting, a recording of the conference will be available as video-on-demand.


Quarterly report
The full nine-months and third-quarter report will be available on the Internet in due course at www.fresenius-ag.com / Investor Relations / Publications.

Today, the Management Board of Fresenius AG, with the approval of the Supervisory Board, has fixed the subscription prices for the new shares at € 93 per ordinary share and € 102 per preference share. The preliminary subscription prices were € 86 per ordinary share and € 93 per preference share. 4,700,000 new ordinary shares and 4,700,000 new preference shares will be issued.

As already announced, the new ordinary shares and preference shares will be subscribed by the members of an underwriting syndicate led by Deutsche Bank as the Global Co-ordinator and Dresdner Kleinwort Wasserstein and WestLB as Joint Bookrunners in line with market practice. They have the obligation to offer the new ordinary shares to the existing ordinary shareholders and the new preference shares to the existing preference shareholders of Fresenius AG at a subscription ratio of 9:2. For a residual amount of up to 108,635 bearer ordinary shares and up to 108,635 bearer preference shares the subscription rights were excluded. Due to the positive market reception, Fresenius AG expects to generate approximately € 900 million of proceeds.

The Else Kröner-Fresenius-Stiftung has sold a limited number of Fresenius shares prior to the subscription period. The proceeds from this disposal and the additional investment already announced in the amount of € 100 million will allow the Else Kröner-Fresenius-Stiftung to fully exercise the subscription rights from its remaining shares.

The subscription period is expected to run from November 17 to November 30, 2005. The trading in the subscription rights is expected to be established during the period from November 17 to November 28, 2005. The new shares are expected to be delivered and included in the quotation of the shares of Fresenius AG at the Frankfurt, Munich and Düsseldorf stock exchanges on December 1, 2005. The shares have full dividend entitlement for 2005.

The new shares created by Fresenius AG's capital increase have met substantial demand from existing and new shareholders. Approx. 99.7 % of the subscription rights for ordinary shares and approx. 99.5 % of the subscription rights for preference shares were exercised.

Existing shareholders of Fresenius AG were offered two new ordinary shares for every nine existing ordinary shares and two new preference shares for every nine existing preference shares. The subscription prices were € 93 for each new ordinary share and € 102 for each new preference share. The subscription rights were traded from November 17 to November 28, 2005. The new shares will be included in the quotation of the existing shares of Fresenius AG at the Frankfurt, Munich and Düsseldorf stock exchanges on December 1, 2005. They have full dividend entitlement for 2005. Proceeds generated in the transaction are in excess of € 900 million.

Dr. Ulf M. Schneider, CEO of Fresenius AG: "The positive market reception of the capital increase reflects the confidence of the capital markets in Fresenius and confirms the acceptance of our strategy. We are very pleased with the success of the capital increase."

The transaction was executed by a bank consortium led by Deutsche Bank as Global Co-ordinator and Dresdner Kleinwort Wasserstein and WestLB as Joint Bookrunners.

Fresenius obtained antitrust approval from the European Commission for the acquisition of HELIOS Kliniken GmbH, Fulda, Germany, announced in October. Furthermore, Fresenius obtained the approval of the German antitrust authority to acquire the business of Clinico GmbH, Bad Hersfeld, Germany. This will allow the closing of both acquisitions before the end of this year.

With HELIOS, Fresenius has an excellent platform for further growth in the German hospital market. HELIOS is one of the largest and most successful private German hospital operators with expected sales of approx. € 1.2 billion in 2005. The company is recognized for having the highest medical standards in the sector. HELIOS owns 24 hospitals with a total capacity of approx. 9,300 beds. The company is the only hospital chain in Germany that operates four maximum-care hospitals with more than 1,000 beds each.

Clinico manufactures medical devices used for the application of infusion therapies and clinical nutrition. With this acquisition, Fresenius Kabi extends its product portfolio and will distribute Clinico's products through its existing sales and distribution organization. In addition, the company expands its development and production network for medical devices. Clinico achieved sales of € 51.5 million in the fiscal year 2004/05 (September 30).

• 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.

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.

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.

* Comparable figure without special charge for US legal issues

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.

The Supervisory Board of Fresenius AG announced today that Dr. Gerd Krick has decided to resign his position as Member and Chairman of the Managing Board of Fresenius AG at the close of the Annual General Meeting on May 28, 2003. It is planned that Dr. Krick (64) will then move to the Supervisory Board and succeed Dr. Karl Schneider as its Chairman. Dr. Gerd Krick will continue to be Chairman of the Supervisory Board of Fresenius Medical Care AG, thus further underlining his continued close ties with the Group.

"After two difficult years, we have brought Fresenius back onto the growth track. Fresenius has an outstanding position in the health care market and excellent perspectives. Therefore, now it is the right time to pass on the responsibility for the company to younger hands", commented Dr. Gerd Krick, who will turn 65 this year, his decision.

The departure of Gerd Krick from the Managing Board of Fresenius AG marks the end of an era of an extremely successful entrepreneurial personality: Krick was at Fresenius for 28 years. For 11 of these years he was the Chairman of the Managing Board. He had assumed this position as successor to Dr. Hans Kröner who had built up the company together with his wife. During Dr. Krick's term of office, sales of the Group increased tenfold to 7.5 billion euros at the end of 2002. Krick, with skill and strategic farsightedness, has made Fresenius an international group of companies; the company generates 87 % of its sales abroad. Under his management it was possible to constantly increase the dividend – the tenth consecutive dividend increase will be proposed to the Annual General Meeting this year.

"After Hans Kröner, Gerd Krick has put his stamp on Fresenius as nobody else has. We are indebted to him and are extremely pleased that he will continue to support the company as the Chairman of its Supervisory Board" said Dr. Karl Schneider (75). It is planned that Dr. Schneider will continue to be an ordinary member of the Supervisory Board.

In its meeting of today, the Supervisory Board unanimously decided to appoint Dr. Ulf M. Schneider (37) as the new Chairman of the Managing Board of Fresenius AG. Dr. Schneider will assume his new position after the close of the Annual General Meeting on May 28, 2003.

"Dr. Ulf M. Schneider has exceptional experience in the health care field and in international business. He has already proven his abilities as a member of the Managing Board of Fresenius Medical Care AG and is the right person to ensure that we will achieve our ambitions", said Dr. Gerd Krick.

Ulf M.Schneider has been Chief Financial Officer of Fresenius Medical Care AG since November 2001. He will resign from this position when he assumes the Chairmanship of the Managing Board of Fresenius AG. Previously, he was Group Finance Director of Gehe UK plc. in Great Britain that is part of the Haniel Group for which Dr. Schneider worked for twelve years. Schneider holds a degree in Finance and Accounting and a Ph.D. in Economics from the University of St. Gallen and an MBA from Harvard University.

Dr. Karl Schneider, Chairman of the Supervisory Board of Fresenius AG, commented on the appointment: "Dr. Ulf M. Schneider was likewise the first choice of the Supervisory Board. We are pleased that we have found an experienced executive for this task".

• 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 the Fresenius Medical Care Investor News (www.fmc-ag.com).

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.

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

Fresenius ProServe

Fresenius ProServe offers services for the international 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.



Note:
The full quarterly report including notes will be available in the middle of May on our website www.fresenius-ag.com under Investor Relations / Publications.

For your information, you can find figures on the subsequent quarters of 2002 on page 12 of this Investor News. These figures have been adjusted for:

• the extraordinary expenses resulting from the early redemption of trust preferred securities of Fresenius Medical Care
• the newly-assigned activities of the business segment Fresenius HemoCare, effective January 1, 2003.