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As filed with the Securities and
Exchange Commission on June 30, 2003

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549




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FORM 20-F

|  |  |                                                                                               
|- |  | ----------------------------------------------------------------------------------------------
|o |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

|  |  |                                                                                     
|- |  | ------------------------------------------------------------------------------------
|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|  |  | for the fiscal year ended December 31, 2002                                         

OR

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-12009

INSTRUMENTARIUM CORPORATION

(Exact name of Registrant as specified in its charter)

Republic of Finland

(Jurisdiction of incorporation or organization)

Kuortaneenkatu 2, FIN-00510 Helsinki

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act: None

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Shares  evidenced by American Depositary Receipts

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuers classes
of capital or common stock as of the close of the period covered by the annual
report.

48,537,361 Shares

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes x No o


Indicate by check mark which financial statement item the registrant has
elected to follow.

Item 17o   Item 18 x



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TABLE OF CONTENTS



|                                      |                                                                                       |                                                              |  |  |  |  |  | 
|------------------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------------------------ |  |  |  |  |  | 
|INTRODUCTION AND USE OF CERTAIN TERMS
|FORWARD-LOOKING INFORMATION          
|PART I                               
|                                      | ITEM 1: IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS                        
|                                      | ITEM 2:OFFER STATISTICS AND EXPECTED TIMETABLE                                       
|                                      | ITEM 3:KEY INFORMATION                                                               
|                                      |                                                                                       | 3.A. Selected Financial Data                                
|                                      | ITEM 4: INFORMATION ON THE COMPANY                                                   
|                                      |                                                                                       | 4.A. History and development of Instrumentarium             
|                                      |                                                                                       | 4.B. Business Overview                                      
|                                      |                                                                                       | 4.C. Organizational Structure                               
|                                      |                                                                                       | 4.D. Property, Plants and Equipment                         
|                                      | ITEM 5:OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                  
|                                      |                                                                                       | 5.A. Operating Results                                      
|                                      |                                                                                       | 5.B. Liquidity and Capital Resources                        
|                                      |                                                                                       | 5.C. Research and Development, Patents and Licenses         
|                                      |                                                                                       | 5.D. Trend Information                                      
|                                      |                                                                                       | 5.E. New Accounting Standards                               
|                                      | ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   
|                                      |                                                                                       | 6.A. Directors and Senior Management of the Company         
|                                      |                                                                                       | 6.B. Compensation of Directors and Senior Management        
|                                      |                                                                                       | 6.C. Board Practices                                        
|                                      |                                                                                       | 6.D. Employees                                              
|                                      |                                                                                       | 6.E. Share Ownership                                        
|                                      | ITEM 7: MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            
|                                      |                                                                                       | 7.A. Major Shareholders                                     
|                                      |                                                                                       | 7.B. Related Party Transactions                             
|                                      |                                                                                       | 7.C. Interests of Experts and Counsel                       
|                                      | ITEM 8: FINANCIAL INFORMATION                                                        
|                                      |                                                                                       | 8.A. Consolidated Statements and Other Financial Information
|                                      |                                                                                       | 8.B Significant Changes                                     
|                                      | ITEM 9: THE OFFER AND LISTING                                                        
|                                      |                                                                                       | 9.A. Offer and Listing Details                              
|                                      |                                                                                       | 9.B. Plan of Distribution                                   
|                                      |                                                                                       | 9.C. Markets                                                
|                                      |                                                                                       | 9.D. Selling Shareholders                                   
|                                      |                                                                                       | 9.E. Dilution                                               
|                                      |                                                                                       | 9.F. Expenses of the Issue                                  
|                                      | ITEM 10: ADDITIONAL INFORMATION                                                      
|                                      |                                                                                       | 10.A. Share Capital                                         
|                                      |                                                                                       | 10.B. Memorandum and Articles of Association                
|                                      |                                                                                       | 10.C. Material Contracts                                    
|                                      |                                                                                       | 10.D. Exchange Controls                                     
|                                      |                                                                                       | 10.E. Taxation                                              
|                                      |                                                                                       | 10.F. Dividends and paying agents                           
|                                      |                                                                                       | 10.G. Statement by experts                                  
|                                      |                                                                                       | 10.H. Documents on display                                  
|                                      |                                                                                       | 10.I. Subsidiary Information                                
|                                      | ITEM 11: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                  
|                                      | ITEM 12: DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                      
|                                      | ITEM 13: DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                             
|                                      | ITEM 14: MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|                                      | ITEM 15: CONTROLS AND PROCEDURES                                                     
|                                      | ITEM 16: [RESERVED]                                                                  
|                                      | ITEM 17: FINANCIAL STATEMENTS                                                        
|                                      | ITEM 18: FINANCIAL STATEMENTS                                                        
|                                      | ITEM 19: EXHIBITS                                                                    
|Exhibit 4.3                          
|Exhibit 10                           



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##### Table of Contents



TABLE OF CONTENTS

|                                      |                                                                                       |                                                              |   |    |    | 
|------------------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------------------------ | - | -- | -- | 
|INTRODUCTION AND USE OF CERTAIN TERMS |                                                                                       |                                                              | 1 |   
|FORWARD-LOOKING INFORMATION           |                                                                                       |                                                              | 2 |   
|                                      | ITEM 1: IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS                         |                                                              |   | 4  |   
|                                      | ITEM 2: OFFER STATISTICS AND EXPECTED TIMETABLE                                       |                                                              |   | 4  |   
|                                      | ITEM 3: KEY INFORMATION                                                               |                                                              |   | 4  |   
|                                      |                                                                                       | 3.A. Selected Financial Data                                 |   |    | 4  | 
|                                      |                                                                                       | 3.D. Risk Factors                                            |   |    | 7  | 
|                                      | ITEM 4: INFORMATION ON THE COMPANY                                                    |                                                              |   | 11 |   
|                                      |                                                                                       | 4.A. History and development of Instrumentarium              |   |    | 11 | 
|                                      |                                                                                       | 4.B. Business Overview                                       |   |    | 13 | 
|                                      |                                                                                       | 4.C. Organizational Structure                                |   |    | 24 | 
|                                      |                                                                                       | 4.D. Property, Plants and Equipment                          |   |    | 26 | 
|                                      | ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                  |                                                              |   | 27 |   
|                                      |                                                                                       | 5.A. Operating Results                                       |   |    | 27 | 
|                                      |                                                                                       | 5.B. Liquidity and Capital Resources                         |   |    | 36 | 
|                                      |                                                                                       | 5.C. Research and Development, Patents and Licenses          |   |    | 38 | 
|                                      |                                                                                       | 5.D. Trend Information                                       |   |    | 38 | 
|                                      |                                                                                       | 5.E. New Accounting Standards                                |   |    | 39 | 
|                                      | ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                    |                                                              |   | 40 |   
|                                      |                                                                                       | 6.A. Directors and Officers of the Company                   |   |    | 40 | 
|                                      |                                                                                       | 6.B. Compensation of Directors and Officers                  |   |    | 44 | 
|                                      |                                                                                       | 6.C. Board Practices                                         |   |    | 44 | 
|                                      |                                                                                       | 6.D. Employees                                               |   |    | 44 | 
|                                      |                                                                                       | 6.E. Share Ownership                                         |   |    | 45 | 
|                                      | ITEM 7: MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                             |                                                              |   | 47 |   
|                                      |                                                                                       | 7.A. Major Shareholders                                      |   |    | 47 | 
|                                      |                                                                                       | 7.B. Related Party Transactions                              |   |    | 48 | 
|                                      |                                                                                       | 7.C. Interests of Experts and Counsel                        |   |    | 48 | 
|                                      | ITEM 8: FINANCIAL INFORMATION                                                         |                                                              |   | 48 |   
|                                      |                                                                                       | 8.A. Consolidated Statements and Other Financial Information |   |    | 48 | 
|                                      |                                                                                       | 8.B. Significant Changes                                     |   |    | 49 | 
|                                      | ITEM 9: THE OFFER AND LISTING                                                         |                                                              |   | 49 |   
|                                      |                                                                                       | 9.A. Offer and Listing Details                               |   |    | 49 | 
|                                      |                                                                                       | 9.B. Plan of Distribution                                    |   |    | 52 | 
|                                      |                                                                                       | 9.C. Markets                                                 |   |    | 52 | 
|                                      |                                                                                       | 9.D. Selling Shareholders                                    |   |    | 52 | 
|                                      |                                                                                       | 9.E. Dilution                                                |   |    | 52 | 
|                                      |                                                                                       | 9.F. Expenses of the Issue                                   |   |    | 52 | 
|                                      | ITEM 10: ADDITIONAL INFORMATION                                                       |                                                              |   | 52 |   
|                                      |                                                                                       | 10.A. Share Capital                                          |   |    | 52 | 
|                                      |                                                                                       | 10.B. Memorandum and Articles of Association                 |   |    | 52 | 
|                                      |                                                                                       | 10.C. Material Contracts                                     |   |    | 54 | 
|                                      |                                                                                       | 10.D. Exchange Controls                                      |   |    | 55 | 
|                                      |                                                                                       | 10.E. Taxation                                               |   |    | 55 | 
|                                      |                                                                                       | 10.F. Dividends and paying agents                            |   |    | 58 | 
|                                      |                                                                                       | 10.G. Statement by experts                                   |   |    | 58 | 
|                                      |                                                                                       | 10.H. Documents on display                                   |   |    | 58 | 
|                                      |                                                                                       | 10.I. Subsidiary Information                                 |   |    | 58 | 
|                                      | ITEM 11: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   |                                                              |   | 58 |   
|                                      | ITEM 12: DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |                                                              |   | 60 |   
|                                      | ITEM 13: DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |                                                              |   | 60 |   
|                                      | ITEM 14: MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |                                                              |   | 61 |   
|                                      | ITEM 15: CONTROLS AND PROCEDURES                                                      |                                                              |   | 61 |   
|                                      | ITEM 16: [RESERVED]                                                                   |                                                              |   | 61 |   
|                                      | ITEM 17: FINANCIAL STATEMENTS                                                         |                                                              |   | 61 |   
|                                      | ITEM 18: FINANCIAL STATEMENTS                                                         |                                                              |   | 61 |   
|                                      | ITEM 19: EXHIBITS                                                                     |                                                              |   | 61 |   





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INTRODUCTION AND USE OF CERTAIN TERMS

Instrumentarium Corporation is a public limited liability company
incorporated under the laws of the Republic of Finland. As used herein, except
as the context otherwise requires, the term we or the Company refers to
Instrumentarium Corporation and Group to the Company and its consolidated
subsidiaries. We publish our consolidated financial statements in euro.

References to U.S. dollars, U.S.$ or $ are to the lawful currency of
the United States and references to the euro or EUR are to the lawful
currency of the 11 member states of the European Union participating in the
Economic and Monetary Union, or EMU, which adopted the single currency in
accordance with the Treaty on European Union signed in Maastricht in 1992.

Instrumentariums consolidated financial statements are prepared in
accordance with generally accepted accounting principles in Finland, which
differ in certain respects from generally accepted accounting principles in the
United States. For a narrative discussion of the principal differences between
Finnish GAAP as currently in effect and U.S. GAAP, see Note 23 of the notes to
the consolidated financial statements.

The financial information set forth in a number of tables herein has been
rounded to the nearest whole number. Accordingly, in a certain instances, the
sum of the numbers in a column may not conform exactly to the total figure
given for that column.

Our principal executive office is located at Kuortaneenkatu 2, FIN-00510
Helsinki, Finland. Its telephone number is +358-10-394-11 and fax number is
+358-9-146-4172.

We furnish JP Morgan Chase Bank, who acts as depositary for American
depositary shares representing our ordinary shares, with annual reports
containing annual consolidated financial statements prepared in accordance with
Finnish GAAP and an audit opinion thereon by our independent public
accountants. Our 2002 annual report to shareholders contains a reconciliation
to U.S. GAAP of net income and shareholders equity. We also furnish the
depositary with quarterly reports containing unaudited financial information
prepared in accordance with Finnish GAAP. Upon receipt thereof, the depositary
generally mails all such reports to record holders of ADRs. We also furnish to
the depositary all notices of shareholders meetings and other reports and
communications that are made generally available to shareholders. The
depositary makes such notices, reports and communications available for
inspection by record holders of ADRs and mails to all record holders of ADRs
notices of shareholders meetings that it receives.

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FORWARD-LOOKING INFORMATION

This annual report contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934 with respect to our Groups
financial condition, result of operations, business, sectors in which we
operate and certain of our plans and objectives.

All statements other than statements of historical fact regarding future
plans, events and prospects are forward-looking statements. Certain such
forward-looking statements can be identified by the use of forward-looking
terminology such as believes, expects, may, are expected to, will,
will continue, should, would be, seeks or anticipates or similar
expressions or the negative thereof or other variations thereof or comparable
terminology, or by discussions of strategy, plans or intentions. These
statements reflect our current views with respect to future events and are
subject to certain risks, uncertainties and assumptions. In particular,
certain statements in Item 3, Key Information under the heading Risk
Factors, Item 4, Information on the Company under the headings Strategy,
Market and Regulatory Environment and relating to management objectives,
market trends, market standing and product volumes and certain statements in
Item 5, Operating and Financial Review and Prospects relating to trends in
results of operations, margins, overall market trends, risk management,
exchange rates, the euro and GEs tender offer for all of the outstanding
shares and options of the company are forward-looking in nature. As such,
forward-looking statements involve risk and uncertainty because they relate to
future events and depend on circumstances that will occur in the future.

There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied by these
forward-looking statements. These factors include among others:



| |  |  | trends towards managed care, healthcare cost containment and
other changes in government and private sector initiatives, in the
United States, and other countries in which we do business, that are
placing increased emphasis on the delivery of more cost-effective
medical therapies;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the trend of consolidation in the medical device industry as
well as among customers of medical device manufacturers, results in
more significant, complex and long-term contracts than in the past
and potentially greater pricing pressures;                                           
|
| |  |  | the difficulties and uncertainties associated with the lengthy
and costly new product development and regulatory approval processes,
which may result in lost market opportunities or preclude product
commercialization;                                                                
|
| |  |  | safety concerns with respect to marketed products, whether
scientifically justified or not, that may lead to product recalls,
withdrawals or declining sales;                                                                                                                            
|
| |  |  | the potential impact of GEs tender offer on customer decision
making;                                                                                                                                                                                                                   
|
| |  |  | changes in governmental laws, regulations and accounting
standards and the enforcement thereof that may adversely affect us;                                                                                                                                                             
|
| |  |  | other legal factors including product liability, environmental
concerns and patent disputes with competitors;                                                                                                                                                                            
|
| |  |  | agency or government actions or investigations affecting the
industry in general or the Group in particular;                                                                                                                                                                             
|
| |  |  | the development of new products or technologies by competitors,
technological obsolescence and other changes in competitive factors;                                                                                                                                                     

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| |  |  | business acquisitions, dispositions, discontinuations or
restructuring; and                                                             
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | economic factors over which we have no control, including
growth rates, changes in inflation, foreign currency rates and
interest rates.

We do not intend, and do not assume any obligation, to update any industry
information or forward-looking statements set out in this annual report.

3



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PART I




ITEM 1:     IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS



| |               
| | --------------
| | Not applicable




ITEM 2:     OFFER STATISTICS AND EXPECTED TIMETABLE



| |               
| | --------------
| | Not applicable




ITEM 3:     KEY INFORMATION




3.A.     Selected Financial Data

The selected financial data set forth below at December 31, 2001 and 2002
and for each of the years in the three year period ended December 31, 2002,
have been derived from our consolidated financial statements included in Item
18 herein. Such consolidated financial statements have been audited by
PricewaterhouseCoopers Oy (until March 1, 2002, SVH Pricewaterhouse Coopers
Oy). The selected financial data at December 31, 1998, 1999 and 2000 and for
each of the years in the two year period ended December 31, 1999 have been
derived from our published financial statements not included herein. Certain
prior year amounts have been reclassified to conform with the current year
presentation under Finnish GAAP.

The audited consolidated financial statements from which the selected
consolidated financial data set forth below have been derived were prepared in
accordance with Finnish GAAP, which differ in certain significant respects from
U.S. GAAP. For a discussion of the principal differences between Finnish GAAP
and U.S. GAAP, see note 23 to the consolidated financial statements.

All balances prior to January 1, 2000 have been restated from Finnish
markka into euros using the Finnish markka/euro irrevocable conversion rate as
of January 1, 1999 of EUR 1.0 = FIM 5.94573. The Company restated euro
financial statements depict the same trends as would have been presented if it
had continued to present its consolidated financial statements in Finnish
markka. The Companys consolidated financial statements will, however, not be
comparable to the euro financial statements of other companies that previously
reported their financial information in a currency other than Finnish markka.

The selected financial data at December 31, 2001 and 2002 and for each
year of the three year period ended December 31, 2002 should be read in
conjunction with, and are qualified in their entirety by reference to, the
consolidated financial statements and the notes thereto included in Item 18
herein.

|                                                                         |  |                                           |         |      |  |      |         |      |  |      |         |  |  |  |           |  |  |  |           | 
|------------------------------------------------------------------------ |  | ----------------------------------------- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  |  | --------- |  |  |  | --------- | 
|                                                                         |  | As at and for the year ended December 31,
|                                                                         |  | 1998                                      |         | 1999 |  | 2000 |         | 2001 |  | 2002
|                                                                         |  |                                           |         |      |  |      |         |      |  |     
|                                                                         |  | EUR                                       |         | EUR  |  | EUR  |         | EUR  |  | EUR 
|                                                                         |  |                                           |         |      |  |      |         |      |  |     
|                                                                         |  | (in thousands, except per share data)    
|CONSOLIDATED INCOME
STATEMENTS                                           |  |                                           |         |      |  |      |         |      |  |      |         |  |  |  |           |  |  |  |           | 
|Finnish GAAP                                                             |  |                                           |         |      |  |      |         |      |  |      |         |  |  |  |           |  |  |  |           | 
|Net sales                                                                |  |                                           | 654,373 |      |  |      | 773,477 |      |  |      | 912,843 |  |  |  | 1,025,361 |  |  |  | 1,126,671 | 
|Operating profit before non-recurring items
and amortization of goodwill |  |                                           | 28,597  |      |  |      | 59,834  |      |  |      | 89,896  |  |  |  | 131,978   |  |  |  | 147,113   | 
|Operating profit                                                         |  |                                           | 42,247  |      |  |      | 46,666  |      |  |      | 79,729  |  |  |  | 115,477   |  |  |  | 126,466   | 
|Income before extraordinary items                                        |  |                                           | 30,449  |      |  |      | 31,158  |      |  |      | 66,552  |  |  |  | 103,578   |  |  |  | 128,127   | 
|Net income                                                               |  |                                           | 15,778  |      |  |      | 47,518  |      |  |      | 46,579  |  |  |  | 72,136    |  |  |  | 155,757   | 

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|                                        |                                          |  |                                           |      |      |  |         |      |      |  |         |      |  |  |         |      |  |  |           |      | 
|--------------------------------------- | ---------------------------------------- |  | ----------------------------------------- | ---- | ---- |  | ------- | ---- | ---- |  | ------- | ---- |  |  | ------- | ---- |  |  | --------- | ---- | 
|                                        |                                          |  | As at and for the year ended December 31,
|                                        |                                          |  | 1998                                      |      | 1999 |  | 2000    |      | 2001 |  | 2002   
|                                        |                                          |  |                                           |      |      |  |         |      |      |  |        
|                                        |                                          |  | EUR                                       |      | EUR  |  | EUR     |      | EUR  |  | EUR    
|                                        |                                          |  |                                           |      |      |  |         |      |      |  |        
|                                        |                                          |  | (in thousands, except per share data)    
|Finnish GAAP                            |                                          |  |                                           |      |      |  |         |      |      |  |         |      |  |  |         |      |  |  |           |     
|Basic earnings per share and ADS(1)     |                                          |  | 0.38                                      |      |      |  | 0.34    |      |      |  | 0.90    |      |  |  | 1.50    |      |  |  | 1.80      |     
|Diluted earnings per share and ADS(1)   |                                          |  | 0.37                                      |      |      |  | 0.34    |      |      |  | 0.90    |      |  |  | 1.50    |      |  |  | 1.74      |     
|U.S. GAAP                               |                                          |  |                                           |      |      |  |         |      |      |  |         |      |  |  |         |      |  |  |           |     
|Income from continuing operations       |                                          |  | 988                                       |      |      |  | 8,264   |      |      |  | 65,896  |      |  |  | 63,107  |      |  |  | 79,606    |     
|Income from discontinued
operations     |                                          |  | 3,419                                     | (4)  |      |  | 4,604   |      |      |  | 14,636  |      |  |  | 8,165   |      |  |  | 90,717    |     
|Net income in accordance with U.S.      |                                          |  |                                           |      |      |  |         |      |      |  |         |      |  |  |         |      |  |  |           |     
|GAAP                                    |                                          |  | 4,407                                     |      |      |  | 12,868  |      |      |  | 80,533  |      |  |  | 71,272  |      |  |  | 170,323   |     
|Basic earnings per share and ADS: (1)   |                                          |  |                                           |      |      |  |         |      |      |  |         |      |  |  |         |      |  |  |           |     
|                                        | Continuing operations                    |  |                                           | 0.02 |      |  |         | 0.17 |      |  |         | 1.37 |  |  |         | 1.32 |  |  |           | 1.66 | 
|                                        | Discontinued operations                  |  |                                           | 0.08 | (4)  |  |         | 0.10 |      |  |         | 0.31 |  |  |         | 0.17 |  |  |           | 1.89 | 
|                                        | Total basic earnings per share and ADS   |  |                                           | 0.10 |      |  |         | 0.27 |      |  |         | 1.68 |  |  |         | 1.49 |  |  |           | 3.55 | 
|Diluted earnings per share and ADS: (1) |                                          |  |                                           |      |      |  |         |      |      |  |         |      |  |  |         |      |  |  |           |     
|                                        | Continuing operations                    |  |                                           | 0.02 |      |  |         | 0.17 |      |  |         | 1.37 |  |  |         | 1.31 |  |  |           | 1.60 | 
|                                        | Discontinued operations                  |  |                                           | 0.08 | (4)  |  |         | 0.10 |      |  |         | 0.31 |  |  |         | 0.17 |  |  |           | 1.82 | 
|                                        | Total diluted earnings per share and
ADS |  |                                           | 0.10 |      |  |         | 0.27 |      |  |         | 1.68 |  |  |         | 1.48 |  |  |           | 3.42 | 
|CONSOLIDATED BALANCE SHEETS             |                                          |  |                                           |      |      |  |         |      |      |  |         |      |  |  |         |      |  |  |           |     
|Finnish GAAP                            |                                          |  |                                           |      |      |  |         |      |      |  |         |      |  |  |         |      |  |  |           |     
|Non-current assets                      |                                          |  | 518,014                                   |      |      |  | 497,079 |      |      |  | 423,797 |      |  |  | 420,230 |      |  |  | 443,699   |     
|Current assets                          |                                          |  | 385,695                                   |      |      |  | 427,643 |      |      |  | 494,496 |      |  |  | 521,654 |      |  |  | 607,096   |     
|Cash and cash equivalents               |                                          |  | 22,117                                    |      |      |  | 20,366  |      |      |  | 22,419  |      |  |  | 23,753  |      |  |  | 56,325    |     
|Total assets                            |                                          |  | 925,826                                   |      |      |  | 945,088 |      |      |  | 940,713 |      |  |  | 965,637 |      |  |  | 1,107,121 |     
|Share capital                           |                                          |  | 40,507                                    |      |      |  | 48,169  |      |      |  | 48,169  |      |  |  | 48,169  |      |  |  | 97,075    |     
|Total shareholders equity              |                                          |  | 426,239                                   |      |      |  | 445,622 |      |      |  | 473,255 |      |  |  | 522,376 |      |  |  | 651,465   |     
|Minority interest                       |                                          |  | 489                                       |      |      |  | (35     | )    |      |  | (6      | )    |  |  | 245     |      |  |  | 1,606     |     
|Long-term liabilities                   |                                          |  | 232,642                                   |      |      |  | 208,133 |      |      |  | 173,955 |      |  |  | 159,676 |      |  |  | 64,048    |     
|Short-term liabilities                  |                                          |  | 269,457                                   |      |      |  | 291,368 |      |      |  | 293,510 |      |  |  | 283,340 |      |  |  | 390,001   |     
|U.S. GAAP                               |                                          |  |                                           |      |      |  |         |      |      |  |         |      |  |  |         |      |  |  |           |     
|Shareholders equity                    |                                          |  | 417,805                                   |      |      |  | 403,815 |      |      |  | 459,619 |      |  |  | 502,312 |      |  |  | 650,717   |     

5



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|                                           |                                |  |                                           |        |      |  |                                       |        |      |  |      |        |  |  |      |        |  |  |      |        | 
|------------------------------------------ | ------------------------------ |  | ----------------------------------------- | ------ | ---- |  | ------------------------------------- | ------ | ---- |  | ---- | ------ |  |  | ---- | ------ |  |  | ---- | ------ | 
|                                           |                                |  | As at and for the year ended December 31,
|                                           |                                |  | 1998                                      |        | 1999 |  | 2000                                  |        | 2001 |  | 2002
|                                           |                                |  |                                           |        |      |  |                                       |        |      |  |     
|                                           |                                |  | EUR                                       |        | EUR  |  | EUR                                   |        | EUR  |  | EUR 
|                                           |                                |  |                                           |        |      |  |                                       |        |      |  |     
|                                           |                                |  |                                           |        |      |  | (in thousands, except per share data) |        |      |  |     
|OTHER FINANCIAL INFORMATION                |                                |  |                                           |        |      |  |                                       |        |      |  |      |        |  |  |      |        |  |  |      |       
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|Finnish GAAP                               |                                |  |                                           |        |      |  |                                       |        |      |  |      |        |  |  |      |        |  |  |      |       
|Weighted average number of shares          |                                |  |                                           |        |      |  |                                       |        |      |  |      |        |  |  |      |        |  |  |      |       
|                                           | outstanding (in thousands) (1) |  |                                           | 42,119 |      |  |                                       | 48,097 |      |  |      | 47,960 |  |  |      | 47,946 |  |  |      | 47,980 | 
|Dividends per share and ADS(1) (EUR)       |                                |  | 0.29                                      |        |      |  | 0.34                                  |        |      |  | 0.50 | (2)    |  |  | 0.60 |        |  |  | 4.70 |       
|Dividends per share and ADS(1) (U.S.$) (3) |                                |  | 0.35                                      |        |      |  | 0.34                                  |        |      |  | 0.47 | (2)    |  |  | 0.53 |        |  |  | 4.93 |       



---

|(1) |  | Adjusted for the 1998 share issue and for the 2002 bonus issue. The
annual general meeting held on March 25,2002, decided to increase
Instrumentarium  ́s share capital through a bonus issue by issuing for one
old share of Instrumentarium, one additional new share without
consideration. In addition to the bonus issue, the number of ADSs has been
adjusted so that one ADS equals one share in Instrumentarium. For
principles of earnings per share calculation according to Finnish GAAP,
see note 1 to the consolidated financial statements and of earnings per
share calculation according to U.S. GAAP, see note 23 to the consolidated
financial statements.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes a 100-year anniversary bonus dividend of EUR 0.10 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(3) |  | Solely for the convenience of the reader dividends per share and per ADS
euro amounts have been translated into U.S. dollars by using the year-end
noon buying rate for each period reported.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(4) |  | Not restated to reflect the 2002 disposition of the Optical Retail
division.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Exchange Rates

On January 1, 1999, the 11 member states of the European Union initially
participating in the Economic and Monetary Union, or EMU, introduced a single
European currency known as euro. The following 12 member states of the
European Union participate in the EMU and have adopted the euro as their
national currency: Austria, Belgium, Finland, France, Germany, Greece, Ireland,
Italy, Luxembourg, The Netherlands, Portugal and Spain. The irrevocable
conversion rate between the Finnish markka and the euro was fixed on January 1,
1999 at EUR 1.00 = FIM 5.94573.

In 2001, the euro was only an accounting currency and the national
currencies of the EMU member states continued to be legal tender and were
considered to be sub-units of the euro. During the first few months of 2002
euro banknotes and coins were entered into circulation, replacing the national
currencies of the EMU member states.

The following table sets forth, for the periods indicated, certain
information with respect to the noon buying rate for the euro expressed in U.S.
dollars per euro. On June 11, 2003 the noon buying rate was U.S.$ 1.1764 per
euro.

6



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##### Table of Contents



|              |  |         |        |      |  |                    |        |            |  |  |        |  |  |  |        | 
|------------- |  | ------- | ------ | ---- |  | ------------------ | ------ | ---------- |  |  | ------ |  |  |  | ------ | 
|              |  | Average |        | High |  | Low                |        | Period-end
|              |  |         |        |      |  |                    |        |           
|              |  |         |        |      |  | (in FIMper U.S.$)  |        |            |  |  |        |  |  | 
|1998          |  |         | 5.3433 |      |  |                    | 5.6280 |            |  |  | 4.8995 |  |  |  | 5.0645 | 
|              |  |         |        |      |  | (in U.S.$ per EUR) |        |            |  |  |        |  |  | 
|1999(1)       |  |         | 1.0588 |      |  |                    | 1.1812 |            |  |  | 1.0016 |  |  |  | 1.0070 | 
|2000          |  |         | 0.9232 |      |  |                    | 1.0335 |            |  |  | 0.8270 |  |  |  | 0.9388 | 
|2001          |  |         | 0.8952 |      |  |                    | 0.9535 |            |  |  | 0.8370 |  |  |  | 0.8901 | 
|2002          |  |         | 0.9454 |      |  |                    | 1.0485 |            |  |  | 0.8594 |  |  |  | 1.0485 | 
|December 2002 |  |         | 1.0194 |      |  |                    | 1.0485 |            |  |  | 0.9927 |  |  |  | 1.0485 | 
|January 2003  |  |         | 1.0622 |      |  |                    | 1.0861 |            |  |  | 1.0361 |  |  |  | 1.0739 | 
|February 2003 |  |         | 1.0785 |      |  |                    | 1.0875 |            |  |  | 1.0708 |  |  |  | 1.0779 | 
|March 2003    |  |         | 1.0797 |      |  |                    | 1.1062 |            |  |  | 1.0545 |  |  |  | 1.0900 | 
|April 2003    |  |         | 1.0862 |      |  |                    | 1.1180 |            |  |  | 1.0621 |  |  |  | 1.1180 | 
|May 2003      |  |         | 1.1556 |      |  |                    | 1.1853 |            |  |  | 1.1200 |  |  |  | 1.1766 | 

(1) The noon buying rate for the Finnish markka ceased to be available after
January 15, 1999.

3.B.     Capitalization and Indebtedness



| |               
| | --------------
| | Not applicable

3.C.     Reasons for the offer and use of proceeds



| |               
| | --------------
| | Not applicable

3.D.     Risk Factors

You should consider carefully all of the information set forth in this
annual report and the following risk factors. The risks explained below are
not exhaustive and additional risks that we do not know currently or that we do
not deem material may affect our business and results of operations.

Health care changes may put downward pressure on prices for our products or may
result in a reduction in the size of the markets for our products.

Greater emphasis is being placed on the delivery of more cost-effective
medical care through trends such as greater use of managed care and other cost
containment initiatives. These changes could adversely affect the demand for
and prices of our products. For example:



| |  |  | Third-party payers of hospital services, including
Medicare, Medicaid and private health care insurers in the United
States, have revised their payment methodologies during the last
few years, resulting in stricter standards for reimbursement of
hospital charges for medical procedures, which may impact the
ability of hospitals to finance purchases of equipment;                             
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | There has been a consolidation among health care
facilities and purchasers of medical devices. For example, group
purchasing organizations, or GPOs, in the United States, are
seeking to reduce the number of suppliers from whom they purchase
medical products. These entities may decide to stop purchasing
products from us or use their increased leverage to demand
discounts on our list prices;
|
| |  |  | In several of our major markets, including the United
States, broad proposals to reform national health care systems are
under consideration. These reforms could limit prices and tighten
demand for our products.                                                                                                                                                                                     

Pressure to reduce prices for our products in response to these trends, or a
potential decrease in the size of the market for our product, could have a
material adverse affect on our business.

We operate in a highly competitive environment in which our success depends on
our ability to develop and market new products.

7



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We operate in a highly competitive environment, and a substantial part of
our revenue comes from the sale of state-of-the-art medical products.
Innovation is key to our success. We face competition from Philips Medical
Systems; GE Medical Systems-IT, an affiliate of General Electric Company;
Siemens Medical, an affiliate of Siemens AG; Draeger Medical Group an affiliate
of Draegerwerk AG and the Nellcor Puritan-Bennett division of Tyco Inc.,
Datascope, Niho Kohden, Invivo/MDE, Fukuda Denshi, Mennen, and Welch Allyn. In
addition, we expect further competition from recently formed joint venture
between Siemens Medical and Draeger Medical Group. Some of these competitors
have greater resources than we do, and some are able to offer bundled products
which compete with ours in a portfolio of products we may not be able to offer.
Although we have competed successfully in the past, our financial performance
will continue to depend upon our ability to introduce and upgrade leading edge
products.



| |  | It is imperative that we develop new products and deliver them to the
market in a timely manner. Delays and even cancellation of projects for
new products can be caused by factors such as:
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Internal delays in the research and development process;                                    
| | - |  | --------------------------------------------------------------------------------------------
|
| |  |  | Introduction of competing products by our competitors;                                      
|
| |  |  | Unanticipated changes in the markets readiness to accept new products and technologies; and
|
| |  |  | Problems receiving regulatory approval.                                                     

Our failure to develop and to market successfully new products in the future,
or our competitors ability to introduce superior products before we are able
to do so, may adversely affect our business, financial condition and results of
operations.

We may be unable to adequately protect our intellectual property rights.

Our ability to compete is affected by our ability to innovate and to
protect know-how and innovative techniques, processes and products. We rely on
a combination of patents, trademarks, trade secrets and confidentiality
agreements to protect our proprietary technology, rights and know-how. Our
major patents and trademarks are registered in our key markets and other
countries. However, we cannot assure you that the measures we take to protect
our intellectual property will afford us adequate protection against patent and
trademark infringements, that pending patent applications will eventually be
issued or that the claims allowed for any of our existing or future patents and
trademarks will provide competitive advantages to our products or will not be
successfully challenged or circumvented by competitors.

In addition, we may be required to obtain licenses, redesign products or
processes, or abandon production in order to avoid patent infringement.
Litigation or administrative proceedings, including interference proceedings
before the U.S. Patent and Trademark Office or patent authorities in other
jurisdictions in which we operate related to intellectual property rights could
be brought against us by our competitors. An adverse judgment in litigation or
proceedings arising in connection with a patent or patent application could
affect our business materially. The costs of any such proceeding, including
any applicable damages, could be substantial.

Governmental regulation may adversely affect our ability to develop and
introduce new products.

Because we operate in a highly regulated industry we must ensure that we
comply fully with laws and regulations in all countries in which we manufacture
and sell our products. The manufacture and sale of our products are subject to
regulation by numerous governmental authorities, principally the Food and Drug
Administration in the United States and corresponding agencies in other
countries. See Item 4.B. Business Overview  Regulatory Environment. As a
highly technical business, we also face regulation by national and
international patent and intellectual property rights authorities.

8



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Although we believe that we are in compliance with all material applicable
regulations and we are not aware of any significant pending changes in
applicable laws and regulations, we cannot assure you that governments or
states will not change existing laws or regulations or adopt new laws or
regulations that might impact our industry. Changes in or adoption of new laws
or regulations could result in negative consequences that could have a material
adverse effect on our business, financial condition and results of operations.

Our products may be subject to product liability claims or product recalls.

The manufacture and sale of medical products entails significant risk of
product liability claims. The product liability insurance that we maintain is
adequate based on past product liability claims in our businesses. There is no
assurance, however, that the amount of such insurance will be sufficient to
satisfy claims made against us in the future. Product liability claims could
result in significant costs or costs of litigation. In addition, a successful
claim brought against us in excess of available insurance coverage, or any
claim that results in significant adverse publicity, could have a material
adverse effect on our results of operations and business.

In the event that we find any of our products do not meet our quality
standards, we may voluntarily recall those products and inform the regulatory
authorities. Moreover, should a national regulatory authority, for example the
FDA in the United States, find a product defective, that authority could
require us to redesign or implement a recall of such products. We voluntarily
have recalled products in the past, incurring significant costs, and future
recalls could also result in significant costs. Although our previous recalls
did not result in negative publicity, there is no assurance that our reputation
and ability to market products in the future will be unharmed in the event of a
product recall. Potential recalls of a significant product could have a
material adverse effect on our business, financial condition and results of
operations.

We rely on subcontractors for our product components, some of which are single
suppliers, which may cause interruptions and delays in production and delivery.

We currently engage independent subcontracting manufacturers to supply
components for our products, including circuit boards, molded plastic
components, valves, pneumatics, cables and power supply assemblies. The risks
involved in our reliance on these independent subcontractors involves the
potential for inadequate capacity, availability of, or interruptions in access
to, process technologies, and reduced control over delivery schedules, costs
and quality. Interruptions due to supply or quality issues in our
manufacturing processes or delays in product deliveries could have a material
adverse effect on our business.

In addition, although we aim to use standard parts and components for our
products, some components are purchased from sole or single source vendors for
which alternative sources are not readily available. Our inability to obtain
sufficient quantities of such components may result in production and delivery
delays or product redesign, which could have a material adverse effect on our
business, and results of operations.

We depend on dedicated manufacturing facilities for some major products, making
it difficult to shift capacity.

We have tooled dedicated manufacturing facilities for certain products.
Damage or incapacity to a facility could force us to reduce or cease
manufacturing at that facility, which could impact our business, financial
condition or results of operations. Additionally, one facility may experience
higher demand for its products while another facility experiences reduced
demand for its products, causing an increase in negative manufacturing
variances. Because of the different tooling requirements of different
products, it may not be possible to rapidly utilize excess capacity at one
facility to meet higher demand for a product manufactured at another facility,
which may affect results of operations.

We depend on enterprise resource planning and other third party software for
logistics management.

9



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##### Table of Contents



We have installed Enterprise Resource Planning software in our factories
and sales offices to manage the product supply logistics, such as order
handling, order fulfillment and billing. Although we have sourced the
applications and databases from respected global companies, such as Oracle
Corp. and QAD Inc., such applications are known to malfunction on occasion.
Although we use best efforts to ensure we have our own resources, and backup in
reserve from consultants, there can be no assurance that a malfunction can be
quickly rectified. If a serious malfunction occurs immediately prior to the
end of a reporting period, there can be no assurance that delivery and billing
delays would not affect the results of operations.

We depend on key personnel.

A large number of individuals in our employment have made a significant
contribution to the growth and success of our businesses in the past. We do
not believe that we are dependent on the skills and experience of any single
employee. However, if a significant number of these key employees were to
leave the company, there can be no assurance that their contribution could be
replaced by other existing or new employees.

Although we have successfully recruited and retained key sales and
business managers in the past, there can be no assurance that the company will
be able to do so in the future. Failure to recruit talented and motivated
business and sales managers, particularly for our global core business and in
the United States, could have a material adverse affect on our business. Our
success is also dependent upon the skills, knowledge and experience of our
personnel. We require consultants and advisors to enter into confidentiality
agreements, and require disclosure and assignment to us of ideas, developments,
discoveries and inventions. In some countries, we are also able to secure such
protection from employees. We cannot assure you, however, that these
agreements will provide adequate protection for our trade secrets, know-how or
other proprietary information in the event of any unauthorized use or
disclosure, or the lawful development by others, of such information and
know-how. Such use, disclosure or development could have a material adverse
affect on our business, financial condition and results of operations.

U.S. and other international sales expose our businesses to a variety of risks
that could result in significant fluctuations in financial results.



| |  |  | Sales from exports and foreign operations in our continuing
businesses accounted for approximately 99% of our net sales in fiscal
2002. As a result, our sales are, and will continue to be, subject to
the risks of international business, including:The general economic
development of our markets;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Fluctuations in foreign currencies;                                                                                                                                                                                                                                                                    
|
| |  |  | Significant changes in interest rates;                                                                                                                                                                                                                                                                 
|
| |  |  | Changes in regulatory requirements, tariffs and other barriers;                                                                                                                                                                                                                                        
|
| |  |  | Timing and availability of import/export licenses; and                                                                                                                                                                                                                                                 
|
| |  |  | Trade disputes.                                                                                                                                                                                                                                                                                        

Business disruption caused by our involvement in business acquisitions.

We may be involved in business acquisitions (as acquirer or target) or in
other strategic business investments. Such transactions involve risks,
including difficulty in assimilating or combining operations or personnel, or
not achieving the desired strategic and operating goals. In particular, in
connection with the GE transaction, we may face possible disruption, including
diversion of management resources in preparing for the combination of
operations and possible deferral of customer orders, in some or all of our
business divisions.

Our operating results are likely to fluctuate which could cause our stock price
to be volatile.

Our quarterly and annual operating results have fluctuated and may
continue to fluctuate. Various factors have and may continue to affect our
operating results, including:



| |  |  | Variations in product mix in orders and sales;
| | - |  | ----------------------------------------------

10



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| |  |  | Ability to ship all components of complex system orders on schedule;          
| | - |  | ------------------------------------------------------------------------------
|
| |  |  | Timing of new product introductions;                                          
|
| |  |  | Timing of budget allocation by customers;                                     
|
| |  |  | Factory utilization rates;                                                    
|
| |  |  | Supply interruptions;                                                         
|
| |  |  | Delays in obtaining regulatory approvals; and                                 
|
| |  |  | Regulatory actions, for example actions taken by the FDA in the United States.

Based on these and other factors, historical performance or
period-to-period comparisons should not be relied upon as indications of future
performance.

Foreign exchange fluctuations may adversely affect our earnings and assets
outside of the euro countries.

Approximately 75% of our net sales in fiscal 2002 were sales from exports
and foreign operations outside of the euro countries. Changes in exchange
rates may affect our costs, earnings and valuation of our assets. Though we
seek to minimize our currency exposure, we cannot predict all changes in
currency and interest rates, inflation or other factors which could have a
material adverse affect on our business, financial condition and results of
operations. See Item 11, Quantitative and Qualitative Disclosures About
Market Risk.




ITEM 4:     INFORMATION ON THE COMPANY




4.A.     History and development of Instrumentarium

We are an international healthcare company based in Finland concentrating
on selected fields of medical technology, development, manufacturing, marketing
and sales and service. We presently operate two business segments: Anesthesia
and Critical Care, and Medical Equipment. Founded in 1900 as an importer of
surgical instruments for the Finnish market, we were incorporated on March 3,
1901 by entry to the Finnish Trade Register. We are a public limited liability
company operating in accord with Finnish law.

Our core business segment is Anesthesia and Critical Care, primarily
represented by Datex-Ohmeda, one of the global leaders within the medical
device industry. Datex-Ohmeda includes the former Ohmeda Medical systems
division of the BOC Group plc., which was acquired in 1998. The main businesses
of Datex-Ohmeda are anesthesia, ventilation and drug delivery, patient
monitoring, supplies and technical service. Also within the Anesthesia and
Critical Care segment are the operations of Spacelabs Medical, acquired in July
2002 and focussing primarily on critical care monitoring in the North American
market; Deio, a clinical information company carved out of Datex-Ohmeda in
January 2001 to specialize in care information solutions; and Instrumed, which
distributes Datex-Ohmeda and Deio products and solutions in Finland along with
a limited, complementary range of operating room equipment manufactured by
others.

The Medical Equipment segment includes the manufacture and sale of
diagnostic X-ray imaging and other special-purpose hospital equipment and
comprises Instrumentarium Imaging and Soredex, Ohmeda Medical and Medko
Medical.

At the beginning of March 2002, we divested our Finnish hospital furniture
business Merivaara. In July 2002, Instrumentarium acquired all the shares of
Spacelabs Medical, Inc., which primarily manufactures critical care patient
monitors. We paid USD 14.25 per share in cash, a total of approximately EUR 142
million. Spacelabs Medical is now primarily responsible for our critical care
monitoring operations in the USA, while outside North America, Spacelabs
Medicals sales companies were integrated into our existing Datex-Ohmeda
companies in the latter half of 2002.

At the beginning of November 2002, we divested our consumer Optical Retail
business to Pearle Europe B.V.

11



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In November 2002, we divested Lifeclinic Holding Corporation, a subsidiary
of Spacelabs Medical, which offered consumer healthcare services, to private
investors.

At the beginning of 2003, we divested our shareholding in Spacelabs
Burdick, Inc. to Quinton Cardiology Systems, Inc.. Burdick was a subsidiary of
Spacelabs Medical and specialized in cardiology diagnostic equipment and
systems. We seek long-term, profitable growth within our current businesses, of
which Datex-Ohmeda, Spacelabs Medical, Deio, Instrumentarium Imaging and
Soredex and Ohmeda Medical, have global operations and leading positions in
their respective businesses. We continue to seek to support growth in these
divisions through acquisitions which we believe will support organic growth and
generate synergies.

Instrumentariums capital expenditure totaled EUR 198.4 million in 2002,
compared to EUR 43.3 million in 2001 and EUR 51.0 in 2000. EUR 22.2 million
was invested in machinery and equipment, EUR 5.0 million in buildings and land,
and EUR 171.2 million in shares and shareholdings and other long-term
expenditure, including the purchase of Spacelabs Medical. Planned depreciation
amounted to EUR 42.8 million in 2002, compared to EUR 39.9 million in 2001 and
EUR 41.9 in 2000. For more information regarding capital expenditures, see
Item 5.A Operating and Financial Review and Prospects  Operating Results and
for a description of capital expenditure by business segment, see note 2 to our
consolidated financial statements included in Item 18 of this Form 20-F.

Our legal home and principal place of business is Instrumentarium
Corporation, Kuortaneenkatu 2, 00510 Helsinki, Finland (Telephone +358 10
39411). Our registered office is P.O. Box 100 Fin-00031 Instrumentarium,
Helsinki Finland (Business ID code 0109222). Our agent in the United States is
Datex-Ohmeda, Inc., 3030 Ohmeda Drive, Madison, Wisconsin 53707-7550
(Telephone: 608 221 1551).

Recent developments

Instrumentarium and General Electric Company entered into a combination
agreement on December 18, 2002 pursuant to which a wholly owned subsidiary of
General Electric has commenced a tender offer for all shares and options of
Instrumentarium. The tender offer was commenced on January 14, 2003 and was
originally scheduled to expire on April 11, 2003. The tender offer has been
extended to expire on August 29, 2003, to allow for the completion of the
regulatory review process. If all conditions of the tender offer are satisfied
or, if permitted, waived before the expiration of the extended offer period, GE
may discontinue the extended offer period and consummate the tender offer. GE
may further extend the tender offer period under certain circumstances in
accordance with the terms and conditions of the tender offer.

The initial offer price for Instrumentarium shares, including shares
represented by ADSs, was EUR 40.00 per share in cash, subject to adjustment in
the event that the aggregate amount of dividends approved by Instrumentarium
shareholders between December 18, 2002 and the date of the consummation of the
tender offer exceeds EUR 0.70 per share. As a result of the Instrumentarium
shareholders approval of the payment of a combined regular and special
dividend of EUR 4.70 per share at Instrumentariums Annual General Meeting on
March 25, 2003, the offer price for Instrumentarium shares was reduced by EUR
4.00 to EUR 36.00 per share in cash.

The tender offer is also made for Instrumentariums 1998 option rights and
2001 option rights that have been granted to holders. The offer price is EUR
52.29 in cash for each 1998A option right, EUR 56.65 in cash for each 1998B
option right, EUR 60.36 in cash for each 1998C option right, EUR 45.46 in cash
for each 2001A option right and EUR 36.92 in cash for each 2001B option right.
The dividend described above does not affect the price offered for
Instrumentarium options.

GEs proposed acquisition of the Company was notified to the European
Commissions Merger Task Force for regulatory approval under the EC Merger
Regulation on February 28, 2003. An in-depth investigation was initiated by
the Commission on April 4, 2003 following the

12



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Commissions finding that the transaction raised serious doubts in relation
to the anesthesia, patient monitoring and imaging sectors. The Commission
continues to consider potential antitrust issues in relation to the proposed
acquisition and must complete its in-depth investigation by September 11, 2003.
By that date, the Commission must determine whether to clear the proposed
acquisition (with or without undertakings) or to prohibit it.

The Company and GE each notified the proposed tender offer in the United
States under the Hart-Scott-Rodino Act on February 24, 2002. On March 3, 2003,
the U.S. Department of Justice (DOJ) issued the Company with a Civil
Investigative Demand (CID) for documents and information concerning the
transaction and on March 11, 2003, the DOJ issued the Company and GE each with
a Second Request for Information and Documentary Material relating to the
anesthesia, patient monitoring and imaging sectors. The Company has complied
with the CID and GE has complied with the Second Request. A decision by the DOJ
as to whether to oppose the proposed acquisition by GE of the Company (with or
without a consent decree) is expected by the end of the third quarter of 2003.

The Company and GE are working constructively with the US Department of
Justice and European Commission in their investigations to help resolve any
antitrust concerns identified by these regulatory authorities in relation to
the transaction. The transaction is also being examined by several other
regulatory authorities, and the Company and GE are working to satisfy the
merger control rules in those jurisdictions as well.

For more information regarding the combination agreement see Item 10.C.
Material Contracts.




4.B.     Business Overview

General

Sales revenue for each of our segments is presented in the chart below:

|                                |  |               |       |      |  |      |       |  |  |  |       | 
|------------------------------- |  | ------------- | ----- | ---- |  | ---- | ----- |  |  |  | ----- | 
|                                |  | 2000          |       | 2001 |  | 2002
|                                |  |               |       |      |  |     
|                                |  | EUR           |       | EUR  |  | EUR 
|                                |  | (in millions)
|Anesthesia and Critical Care(1) |  |               | 645.0 |      |  |      | 718.4 |  |  |  | 815.4 | 
|Medical Equipment(1)            |  |               | 145.0 |      |  |      | 176.3 |  |  |  | 216.8 | 
|Other Operations(2)             |  |               | 27.3  |      |  |      | 26.4  |  |  |  | 6.6   | 
|Discontinued Operations(2)      |  |               | 95.6  |      |  |      | 104.3 |  |  |  | 88.0  | 



---

|(1) |  | In March 2002 the hospital furniture business of Merivaara was divested.
Following the divestment the remaining anesthesia and critical care
related operations within Merivaara division were reclassified for all
periods presented from Medical Equipment segment to the Anesthesia and
Critical Care segment. Divested Merivaara business operations are included
in Other operations for all periods reported.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | See note 2 to the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                               

A geographic breakdown of sales revenue is presented in the chart below:

|               |  |               |       |      |  |      |       |  |  |  |       | 
|-------------- |  | ------------- | ----- | ---- |  | ---- | ----- |  |  |  | ----- | 
|               |  | 2000          |       | 2001 |  | 2002
|               |  |               |       |      |  |     
|               |  | EUR           |       | EUR  |  | EUR 
|               |  | (in millions)
|European Union |  |               | 354.0 |      |  |      | 395.5 |  |  |  | 382.5 | 
|Rest of Europe |  |               | 41.5  |      |  |      | 47.3  |  |  |  | 37.8  | 
|North America  |  |               | 390.1 |      |  |      | 442.7 |  |  |  | 532.2 | 
|AsiaPacific   |  |               | 94.3  |      |  |      | 100.8 |  |  |  | 123.4 | 
|Rest of World  |  |               | 32.8  |      |  |      | 39.0  |  |  |  | 50.7  | 

Anesthesia and Critical Care

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Our core business segment, Anesthesia and Critical Care, accounts for
approximately 70% of net sales. This segment comprises Datex-Ohmeda and
Spacelabs Medical, as well as care information systems company Deio and
domestic sales company Instrumed.

Datex-Ohmeda, one of the global leaders within the medical device
business, operates in the anesthesia, ventilation and drug delivery, patient
monitoring, supplies and technical service businesses. Spacelabs Medical
primarily operates in the patient monitoring, supplies and technical service
businesses.

Approximately one-third of segment sales are derived from sales of
anesthesia machines and ventilators and drug delivery systems, with
approximately one half derived from sales of anesthesia and critical care
monitoring systems, stand-alone monitors, pulse oximeters, accessories and
supplies. The remainder mainly comprises sales of technical service. Almost
all sales are outside Finland. The North American markets account for nearly
half of sales and the Western European markets for over one third.

Instrumentarium has consolidated anesthesia and critical care operations
of Datex-Ohmeda and Spacelabs across all important sectors, and we believe we
have the sales, service and support infrastructure to support existing products
and enable us to introduce new products to anesthesia, critical care and other
hospital and alternate site areas.

Datex-Ohmeda has its manufacturing resources in the worlds two largest
market areas, the United States and the European Union. In the United States,
Datex-Ohmeda has manufacturing facilities in Madison, Wisconsin and in
Louisville, Colorado; in Europe, it primarily has manufacturing facilities in
Finland, and Sweden. We make extensive use of the global contract
manufacturing industry for sourcing electronic circuit boards as well as other
parts and sub-assemblies.

Anesthesia machine, ventilation and drug delivery research and development
are centered in the United States at Madison, Wisconsin. Anesthesia and
critical care monitoring and clinical information management research and
development are centered in Finland. Ventilation research and development is
also carried out in Sweden. Sub-acute monitoring and oximetry development are
centered in Louisville, Colorado.

Spacelabs Medical has manufacturing as well as research and development
facilities in Seattle Washington, USA for its own lines of patient monitors.
The business shares Datex-Ohmedas sales office and distributors organization
as well as its support organizations. In the United States Instrumentarium has
a separate sales channel for critical care, which currently primarily focuses
on sales of Spacelabs Medical products.

Deio has research and development facilities in Finland and additionally
makes use of offshore contract software developers. Deio has solution provider
organizations in the United States, Canada, UK, Germany, France and Italy. In
addition, the company uses Datex-Ohmedas extensive sales office and
distributor organizations in other markets.

Strategy

Our strategic goal is to be the world-leading supplier of equipment and
systems for anesthesia and critical care providers. We believe we possess the
key technologies necessary for leadership in monitoring patients vital signs,
delivering anesthetic agents, ventilating the lungs and managing real-time
distribution of patient information within peri-operative and critical care
areas of the hospital. To grow successfully, we emphasize high research and
development efforts in hardware, software, networked systems and supplies, as
well as continuous development of our global sales, service and marketing
channels. Our strategy is to build on our strong franchise in the anesthesia
market to strengthen our position in the related market for critical care
systems and equipment. Overall, we intend to continue to grow faster than the
market by further strengthening our position as the worlds leading supplier of
anesthesia systems and equipment, and by rapidly expanding into selected areas
of critical care. In addition to offering networked operating room and bedside
products, we aim to further

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develop solutions for the continuity of vital clinical information across all
the acute care areas of the hospital.

In anesthesia, our goal is to strengthen Datex-Ohmedas leading position
as the global supplier of choice for anesthesia machines and monitors. Some of
the worlds largest markets still offer considerable room for increasing market
share, particularly the anesthesia monitor market in the United States and the
anesthesia delivery market in Germany. The division currently services and
maintains what we believe to be the largest installed base of anesthesia
machines in the world, and we aim to become a leading supplier of anesthesia
and respiratory supplies to our equipment customers.

We entered the critical care business with the goal of repeating our
success in the anesthesia business sub-segment. From a clinical point of view,
in addition to the standard hemodynamic parameters we believe Datex-Ohmeda is
able to offer prospective customers innovative solutions for monitoring
oxygenation, ventilation and metabolism, as well as automated gas tonometry.
The introduction of critical care monitoring systems also allows hospitals to
standardize their patient monitoring technology platform to purchase
hospital-wide monitoring solutions from Datex-Ohmeda. By focusing on selected
markets, especially those where the anesthesia department plays a key role in
critical care equipment purchasing decisions, we believe that Datex-Ohmeda can
successfully enter and grow in this large but highly competitive market. In the
United States, following the acquisition of Spacelabs Medical, Datex-Ohmeda now
focuses its patient monitoring sales on the anesthesia market.

We believe that the Spacelabs Medical acquisition fits our strategy
because it gives us a solid market position in critical care monitoring also in
the United States in terms of share of installed base and annual market share,
where previously Instrumentariums positions had been negligible. By focussing
sales on critical care in the US market with a dedicated sales force, we
believe that Spacelabs Medical can successfully compete in this highly
competitive market. In other markets, Spacelabs Medical products are marketed
to selected customer segments primarily through Datex-Ohmedas sales
subsidiaries.

The Critical Care Ventilator, under development, represents a new
generation of Datex-Ohmeda lung ventilators. The development program should
allow us to later develop integrated workstations also for critical care.

We also intend, through our Deio business, to become a world leader in the
management of operating theatre and critical care information by offering
solutions that enable hospitals to better manage the quality and cost of care
provision. In order to be able to offer end-to-end solution expertise, Deio is
developing its own solution provider subsidiaries and strengthen its ties with
strategic business partners in other major markets. We intend to benefit from
Datex-Ohmedas established presence to extend Deios operations globally. To
accelerate growth, Deio plans to actively seek acquisitions as well as
licensing and distribution agreements for information management applications
that complement its own solutions portfolio.

Market

Datex-Ohmeda, Spacelabs and Deio operate in the global market for
anesthesia and critical care equipment, information solutions, supplies and
technical service. Additionally Datex-Ohmeda and Spacelabs target selected
segments of the sub-acute care market in hospitals, alternate care sites and
the home. A few large players, which customers increasingly see as potential
hospital-wide single-source suppliers, share most of the global market for
anesthesia and critical care monitors, anesthesia machines and ventilators.
With Datex-Ohmeda and Spacelabs, Instrumentarium is one of these key players,
and we believe we have the research and development resources required in order
to rapidly introduce innovative solutions which meet the priorities of both
clinicians and administrators.

The overall market for anesthesia and critical care equipment has matured
in the industrialized world and is no longer growing at a very fast rate.
Recurring sales of services, accessories and supplies now comprise
approximately one-third of Datex-Ohmedas revenues.

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However, demand for clinical information management solutions, where Deio
competes, along with the markets for sub-acute monitoring and telemetry systems
are believed to be growing. The main customers for Datex-Ohmeda, Spacelabs and
Deio products are primarily anesthesia and critical care doctors and nurses.
Additionally, biomedical engineers who service hospital equipment, and hospital
administrators influence the purchasing process and price negotiations.
Hospital information technology managers strongly influence the purchase of
Deio care information solutions. We believe that customers choose amongst
competing suppliers based on quality attributes of the product, after-sales
services, price and financing options. Previous experience is believed to
heavily influence selection of suppliers. The business units conduct research
amongst their customers to determine customer satisfaction ratings of its
product and services.

The medical technology sector as a whole continues to be affected by new
legislation, the introduction of new and more restrictive reimbursement schemes
and industry-wide restructuring. These factors result in pressure on medical
equipment purchasers and healthcare providers to contain costs and raise
efficiency. In the United States, in particular, managed care is having an
increasingly wide impact on the industry and is leading to a growing number of
alliances and mergers of healthcare payers, providers and suppliers. These
developments have highlighted the importance to providers of obtaining relevant
information in easily accessible form at the point of care, a trend also
evident in other industrialized countries. Secondly, especially in the United
States, these pressures are driving the trend towards more cost effective forms
of patient care, including better outpatient care, such as independent surgery
centers, thereby increasing demand for light, portable and easy-to-use
equipment.

In the United States, group purchasing organizations also shape the
competitive environment. We believe that our supply agreements give us good
coverage of the GPOs and their hospitals, but we are subject to ongoing price
negotiations for sales via these organizations. GPO agreements can typically
be cancelled following three-month notice by the purchaser. Should a major GPO
cancel its agreement with one of our businesses and subsequently sign a new
sole source agreement with a competitor and further, should a significant
number of its member hospitals comply with the new agreement, our sales in the
United States would be adversely affected.

Datex-Ohmedas Business Areas

Anesthesia, Ventilation and Drug Delivery.The anesthesia, ventilation
and drug delivery business comprises a wide range of anesthesia machines,
ventilators and vaporizers covering most clinical needs. Anesthesia machine
models are available for those customers wishing to freely combine legacy
patient monitors as well as those wishing to advance to an integrated
anesthesia system. In 2002 Datex-Ohmeda launched the new Aespire Anesthesia
Machine to target the lower-end market for anesthesia devices, for example in
ambulatory surgery. Anesthesia-related equipment and systems is the main part
of the business area.

In Drug Delivery, Datex-Ohmeda develops and manufactures the INOvent
delivery system for the administration of the drug INOmax® (nitric oxide gas)
for respiratory therapy and has a global alliance with INO Therapeutics, a
subsidiary of AGA AB, Sweden, on sales and marketing and application areas.

Patient Monitoring.The anesthesia monitoring business chiefly comprises
the modular S/5 Anesthesia Monitor family. The S/5 Anesthesia Monitory
designed for the operating room, is being continually enhanced, most recently
with the introduction of the M-Entropy module. Entropy is a new monitoring
modality that provides information on the electrical activity of the central
nervous system using an application of spectral entropy to acquire and process
raw electroencephalography and frontalis electromyography signals. The features
of the configured monitor, Cardiocap/5, were further enhanced with
neuro-muscular monitoring capability in 2002.

For critical care monitoring, the modular S/5 Critical Care Monitor,
designed for the intensive care unit, is the only system in the world which
integrates monitoring of ventilation, circulation, oxygenation, and metabolism,
the four key monitoring parameters for critical care, as well as EEG for
neuro-monitoring in a single system. A Tonocap gastric air tonometer module
is also

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available for the S/5 Critical Care Monitor, as well as a new 12-lead ECG
module allowing multi-lead ECG and ST-level analysis for monitoring cardiac
ischemia.

For sub-acute monitoring, Datex-Ohmeda offers stand-alone and portable
configured hemodynamic monitors, airway gas monitors, pulse oximeters and
associated disposable sensors. A wide range of products is available, with
parameter configurations to suit virtually any need. Markets include both
those within the hospital, alternate care sites and the home.

Oximetry, Supplies and Accessories Business.Datex-Ohmeda offers
stand-alone pulse oximeters and a wide range of reusable and disposable
sensors. The range of respiratory supplies and accessories cover a large number
of reusable and disposable items, such as filters and probes, which connect
monitoring equipment or ventilators to the patient. The range includes both
proprietary items for Datex-Ohmeda and Spacelabs Medical equipment and generic
products for all types of equipment.

Technical Service.With over 600 employees in technical service and
support, we believe that Datex-Ohmeda has one of the worlds largest technical
service and support organizations serving the global biomedical community, able
to maintain and repair all the products sold by Datex-Ohmeda and Spacelabs
Medical as well as offering spare parts, installation services, customer
support and training.

Spacelabs Medicals business areas

Spacelabs Medical offers products for cardiology, perinatal monitoring and
information management, and is developing leading-edge technologies for
telemetry, wireless and hard-wired networks.

The Ultraview Care Network is a family of patient monitors for critical
care and emergency ward (ER) environments. There are patient monitors for
virtually all applications in the hospital, including neonatal, pediatric and
adult critical and emergency care, as well as anesthesia and sub-acute care.
WinDNA, based on Citrix application server technology, is a feature which
allows clinicians to view and control Microsoft Windows applications right on
the patient monitors display, eliminating the need for separate terminals in
the patients room. Nurses can check laboratory results and other reports,
enter orders, review protocols, and do charting right at the patients bedside.
Input can be done using the mouse, keyboard and touchscreen.

For ECG only or multiparameter monitoring of ambulatory patients Spacelabs
offers a digital telemetry system. The system operates between 608 and 614 MHz,
a band not used for private land mobile radio (PLMR), business radio services
or broadcast analog and digital television (DTV). The Ultraview Digital
Telemetry solution comprises a lightweight and compact transmitter that enables
monitoring of heart rate, ST-segment, arrhythmia and continuous SpO2 (pulse
oximetry). The multiparameter transmitter also integrates with the Spacelabs
Ultralite ambulatory blood pressure (ABP) monitor for the transmission of
non-invasive blood pressure values to a central station or a multi-disclosure
and information system.

For Obstetrics, Spacelabs offers fetal monitors, and an obstetrical data
management system. The Maternal Obstetrical Monitor (MOM) offers integrated
monitoring of fetus and mother. MOM combines the capabilities of the Ultraview
Care Network with the features of Spacelabs fetal monitors  including the
wireless, water-resistant options. All Spacelabs Medical fetal monitors have
ultrasound auto-correlations, wireless monitoring based on infrared technology,
and FECG plot in the event of a fetal heart rate irregularity when using
internal monitoring. Both intrapartum and antepartum models are available.
BirthNet is an obstetrical data management system that combines monitoring,
charting and information storage for the childbirth center or the physicians
office.

Spacelabs Medical is also a world leader in ambulatory blood pressure
(ABP) monitoring, which is a routine procedure in many European countries and
is increasingly be used in the United States. Many physicians are using ABP to
detect white coat hypertension and to adjust drug therapy for their
hypertensive patients.

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Spacelabs products and services complement those of Datex-Ohmeda and the
divisions closely co-operate in sales and marketing world-wide.

In addition to patient monitoring, Spacelabs Medical operates a small
business, Spacelabs Medical Data, which specializes in centralized collection,
analysis and management of 12-lead ECG, ambulatory blood pressure, Holter,
12-lead and 3-channel Holter and event monitoring data for multicenter,
domestic and international clinical trials.

Deios business areas

Deio offers care information services for operating theaters and critical
care areas, enabling hospitals and other care providers to better manage cost
of care and care provision. Care information systems automatically capture the
vital signs and other clinical data generated by medical devices at the
bedside. They also automate the collection of all the relevant planning and
assessments that used to be made by hand. This information is stored for both
real-time and later review, as well as creating departmental reports.
Solutions often include interfacing with hospital information systems,
laboratory and other applications for additional functionality. Care
information systems improve compliance with care guidelines, streamline care
pathways in the hospital and promote continuous improvement.

Deio markets anesthesia and critical care information solutions to select
countries world-wide, although critical care solutions are not offered in the
United States. Significant efforts are being made in research and development
as well as in building solution provider sales companies to support revenue
growth in this business. Deio was carved out of Datex-Ohmeda and separately
incorporated in 2001.

Distribution

Distribution takes place through subsidiaries and independent
distributors. Datex-Ohmeda has companies with direct sales activities in the
United States, Japan, Germany, France, Italy, United Kingdom, Spain, the
Netherlands, Norway, Australia, Canada, Singapore and India. In Japan, the IMI
Co. Limited distributes Datex-Ohmedas products together with the Companys own
distribution subsidiary. In the rest of the world, Datex-Ohmeda operates
through a global network of independent local distributors in more than 100
countries. These are supported by Regional Support Centers in the United
Kingdom, Miami, Singapore, Athens and Dubai. In the United States, the sales
force operates in three channels, one serving new anesthesia product customers,
one dedicated to entering the critical care monitoring market, and one serving
the after-sales and on-going needs of existing customers. Deio has sales
subsidiaries in United States, UK, Germany, France, Canada and Italy, as well
as independent solution provider partners in other selected markets.

Instrumed primarily distributes Datex-Ohmeda and Deio products and
solutions in Finland. Instrumed also represents internationally known
manufacturers Heraeus and Maquet, which produce complementary products for the
operating room.

Medical Equipment

The Medical Equipment segment is comprised of the following business
units: Instrumentarium Imaging and Soredex (both diagnostic imaging), Ohmeda
Medical, and Medko Medical. Activities include the development, manufacture
and sales of diagnostic X-ray imaging equipment, neonatal and other
special-purpose hospital equipment as well as the sale of turnkey projects
involving a broad range of hospital equipment.

Medical Equipment net sales for each of the three fiscal years ended
December 31, 2000, 2001 and 2002, are set out below:

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|                                              |  |      |       |      |  |      |     |   |  |                         |       |  |  |  |     |   |  |  |       |  |  |  |     |  
|--------------------------------------------- |  | ---- | ----- | ---- |  | ---- | --- | - |  | ----------------------- | ----- |  |  |  | --- | - |  |  | ----- |  |  |  | --- | -
|                                              |  |      |       |      |  |      |     |   |  | Year ended December 31, |       |  |  |  |     |   |  | 
|                                              |  | 2000 |       | 2001 |  | 2002
|                                              |  |      |       |      |  |     
|                                              |  |      |       |      |  |      |     |   |  | (EUR, in millions)      |       |  |  |  |     |   |  | 
|Di Diagnostic Imaging                         |  |      | 73.1  |      |  |      | 50  | % |  |                         | 99.9  |  |  |  | 57  | % |  |  | 131.7 |  |  |  | 61  | %
|In Infant Care and Suction and Oxygen
Therapy |  |      | 57.6  |      |  |      | 40  | % |  |                         | 71.4  |  |  |  | 40  | % |  |  | 72.2  |  |  |  | 33  | %
|M Turnkey Hospital Projects                   |  |      | 14.4  |      |  |      | 10  | % |  |                         | 5.0   |  |  |  | 3   | % |  |  | 12.8  |  |  |  | 6   | %
|T Total                                       |  |      | 145.0 |      |  |      | 100 | % |  |                         | 176.3 |  |  |  | 100 | % |  |  | 216.8 |  |  |  | 100 | %

Diagnostic Imaging business(Instrumentarium Imaging and Soredex)

Through Instrumentarium Imaging and Soredex, we develop, manufacture and
market diagnostic X-ray imaging equipment for three business areas:
mammography, dental imaging and surgical imaging. Principal markets are the
United States, Europe and South East Asia. Our strategy is to become a leading
global company in these businesses by developing products to cover those
clinical applications where X-ray imaging is the modality of choice. We
believe that in these areas the demand for digital imaging will increase and
provide good opportunities for the new products developed by this division. In
product development, we emphasize features promoting high quality clinical
images with easy to use imaging systems, and seek to meet the growing need for
system connectivity to hospital and radiology information systems.

Surgical Imaging.Through our Ziehm surgical imaging C-arm business we
believe we are a leading supplier for surgical imaging in Germany and in the
United States with research and development, marketing and manufacturing
capability in Germany and the United States. Unlike traditional X-ray
equipment C-arms are mobile and allow real-time, continuous viewing
(fluoroscopy). The most frequent applications for C-arms are in orthopedics
and general surgery, but are being increasingly used also in urology, pain
management (needle placement), endoscopy, speech pathology, interventional
neuroradiology as well as in a range of vascular and minimally invasive surgery
procedures. Minimally invasive surgery, in particular, is a large and
expanding field, where use of a C-arm is almost always required.

Ziehm launched two new mobile C-arms, the Ziehm Vision and the Ziehm Vista
at the end of 2001. Ziehm Vision is designed to provide exceptional image
quality using Full Frame 1k x 1k pixel technology and intuitive user interface.
The Ziehm Vision is aimed predominantly at the more demanding high-end markets
of vascular and interventional cardiac surgery imaging. The second new mobile
C-arm model, Ziehm Vista, targets the versatile mobile C-arm market for general
surgical, orthopaedic and pain management imaging, but still offers vascular
imaging capability where needed.

At the RSNA exhibition in November 2002, Ziehm showed a new mobile C-arm,
called the Ziehm Vision Flat as a practical demonstration of Instrumentarium
Imagings product strategy to increase functionality, mobility and connectivity
in mobile C-arms. The unit will be the first C-arm to feature a fully digital
video chain and is designed for 3-D imaging and Computer Aided Surgery (CAS),
and other precision applications, where the highest possible image quality is
required.

Dental Imaging. To further our strategy in the dental market, we acquired
Soredex in July 2001. Soredex develops, manufactures and markets a range of
dental X-ray care units and has a sales office in the United States. The
globally marketed Dental X-ray product family comprises Cranex panoramic X-ray
equipment, Cranex TOME and Scanora tomography equipment for
dento-maxillo-facial imaging as well as digital intra-oral and extra-oral
imaging systems, called Digora. In order to target different customer segments,
we operate the Soredex business separately from the existing, larger
Instrumentarium Imaging business in dental imaging.

Interest is growing in digital dental imaging for the high-end segment,
and in particular for more versatile digital dental X-ray systems, for example
the the Instrumentarium Imaging Orthopantomagraph®, the OP100D, a dental
imaging system.

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Instrumentarium Imaging has recently started to offer Focus, an intra-oral
X-ray, and Sigma sensors, digital sensors based on digital technology that
replaces traditional film. In late 2002 we introduced a system called
FocusLink, which integrates our Focus intra-oral X-ray, Sigma direct digital
sensors and CliniView imaging software. Instant exchange of exposure
information between the x-ray source and the sensor provides for a Automatic
Exposure Control (AEC) functionality, which helps ensure a perfect image every
time with minimum patient dose. The user needs only to push the exposure
button, and the AEC computes the minimum dose and sets an optimal exposure time
automatically. All exposure information is recorded simultaneously with each
image through CliniView software.

Mammography. Our new product platform, the Instrumentarium Imaging
Diamond, for mammography is designed for easy addition of digital features.
The interest generated by this product has enabled us to sign multi-year
contracts with important buyer groups for mammography products in the United
States. We continue to develop new mammography products, including those using
the TACT (Tuned Aperture Computed Tomography) technology. The Delta 32 TACT®,
for example, received FDA 510(k) clearance to market in the United States in
2000. We believe we were the first company to start clinical trials of an
amorphous Selenium (a-Se) detector as part of a Diamond full-field digital
mammography device in 2001, and we have now started clinical trials in
preparation for a pre-market approval (PMA) filing to the FDA. Other Imaging.
Instrumentarium Imaging displayed a new-generation mobile X-ray system for
critical care and sub-acute wards at the European Congress of Radiology,
Vienna, Austria 2003. The new unit, called Shuttle, is designed for direct
digital radiography as well as for conventional film and CR plate imaging. The
unit provides an efficient solution for all radiographic procedures, whether in
intensive or cardiac care units, pediatric and neonatal units or emergency
wards. Final development work is being continued in preparation for full
commercial launch.

TACT.In 1997, Instrumentarium Imaging acquired an exclusive worldwide
license to develop, manufacture and market a 3-D image reconstruction method
for medical X-ray imaging. Called TACT and developed at Wake Forest University
in the United States, this method facilitates new diagnostic capabilities in
digital imaging by creating a three-dimensional image of the area of interest.

Distribution of iCADs MammoReader.In 2002 Instrumentarium Imaging
signed an agreement with iCAD, Inc. to become the exclusive distributor for
iCADs MammoReader, an intelligent computer-aided detection system that
searches for all primary signs of breast cancer in order to help detect breast
cancer earlier. The distribution agreement furthers Instrumentarium Imagings
strategy to increase its market share in mammography equipment and systems.

Ohmeda Medicals business areas

We provide an extensive line of infant care systems and suction and oxygen
therapy products worldwide through Ohmeda Medical (the former Specialty
Products Division of Ohmeda), based in Columbia, Maryland. Key products include
the Giraffe Omnibed and Giraffe Incubator, Care Plus 3000 and 4000 Incubators,
Ohio Infant Warmer Systems, Biliblanket Plus Phototherapy Systems. In 2002
Ohmeda Medical introduced the first Panda products, including the Panda Baby
Warmer, for newborns in Labor and Delivery wards. Following the resolution of a
patent dispute sales of Ohmeda Medicals flagship product, the Giraffe Omnibed,
was re-launched in August 2002.

Our principal markets are in the United States, where we have a dedicated
infant care sales force. In international markets Ohmeda Medical co-operates
with the Datex-Ohmeda sales and distribution network supported by a focused
sales and marketing team. Infant care products are manufactured at our
manufacturing facility in Columbia, while all major suction and oxygen therapy
products are outsourced. We believe Ohmeda Medical is a one of the leading
suppliers of infant incubators and infant warmers, both in North America and
worldwide.

Medko Medicals business areas

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Our subsidiary Medko Medical supplies turnkey hospital projects. Turnkey
hospital projects include planning, delivery, installation, training and
warranty responsibilities relating to the equipment. In current tenders, the
majority of the products supplied by Medko Medical are manufactured by the
other business units of Instrumentarium. Medko Medical helps to arrange
financing for turnkey hospital projects since this is proving to be an
increasingly important means of gaining new business in the Russian, Baltic and
central Asian and South American markets. The longer term impact of the
difficult economic situation in Russia and other former soviet republics is
still uncertain.

In November 2002 Medko Medical signed an agreement with the Social
Security Institution of Costa Rica to deliver anesthesia and critical care
equipment, surgical imaging equipment, neonatal care equipment and other
hospital equipment for a total value of USD 32 million. In 2002 equipment to
the value of EUR 8 million was delivered, with the balance to be delivered by
the end of April 2003.

Patents and Trademarks

We seek to protect new and inventive results achieved by research and
development as effectively as possible in the health care equipment field in
its major markets and in the countries where the competitors factories are
situated. As our investments in research and development have been significant
particularly in the field of health care equipment, we have been able to create
new, patentable solutions. We have succeeded in protecting product
improvements by patents thus improving our competitiveness. A substantial
portion of our revenues in 2002 was attributable to products that enjoyed at
least partial patent protection. However, we do not believe that loss or
expiration of patent protection for any one of our products would have a
material adverse impact on our operations.

The following names, some of which appear in this document, are registered
trademarks of Instrumentarium or its subsidiaries in various countries:

|            |  |                  
|----------- |  | -----------------
|Aespire     |  | Orthoceph        
|Aestiva     |  | Orthopantomograph
|Aladin      |  | Soredex          
|BiliBlanket |  | Spacelabs        
|Boyle       |  | Tec              
|Care Plus   |  | Tonocap          
|Clinisoft   |  | Tuffsat          
|Critivent   |  | Ultraview        
|Datex       |  | WinDNA           
|Deio        |  | Ziehm            
|D-lite      |  |                  
|Engstrom    |  |                  
|Excel       |  |                  
|Flexport    |  |                  
|Giraffe     |  |                  
|Inopulse    |  |                  
|Inovent     |  |                  
|Ohio        |  |                  
|Ohmeda      |  |                  
|OmniBed     |  |                  
|Opera       |  |                  

Regulatory Environment

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We operate in a highly regulated environment. In the United States, under
the Food, Drug and Cosmetic Act, or the FDCA, the FDA regulates, among other
things, the testing, manufacturing, labeling, distribution and promotion of
medical devices in the United States. We are also subject in Europe to other
auditing bodies, including notified bodies under the European Unions Medical
Device Directive.

Regulation in the United States

Good Manufacturing Practices

We abide by FDA regulations known as Current Good Manufacturing Practices
for Medical Devices, or GMP, which provide standards for the design,
manufacture, packaging, labeling, storage, installation, device track
record-keeping and servicing of medical devices. Regulations that went into
effect in 1998 permit the FDA to regulate design as well as manufacture of
medical devices, and made a number of other significant changes in regulatory
requirements. Compliance with these regulations is monitored through routine
inspection of manufacturing facilities by the FDA.

In accordance with FDA regulations, our facilities used to manufacture or
assemble products for import to the United States are registered with the FDA
and our medical devices are listed with the FDA. We are also obliged to follow
Medical Device Reporting Regulations. Changes to a medical device that
significantly affect the safety or efficacy of a marketed device are subject to
FDA review and clearance or approval.

Our major manufacturing facilities and the manufacture of our key products
are subject to FDA regulations regarding registration of manufacturing
facilities, compliance with the FDAs Quality System Regulations and reporting
of adverse events. Noncompliance could result in disciplinary action by the
FDA in the form of:



| |  |  | Receipt of a warning letter;                                                     
| | - |  | ---------------------------------------------------------------------------------
|
| |  |  | An injunction;                                                                   
|
| |  |  | Mandate of a product recall;                                                     
|
| |  |  | Total or partial suspension of production;                                       
|
| |  |  | Detention or seizure of products;                                                
|
| |  |  | Refusal or withdrawal of marketing authorizations; and                           
|
| |  |  | Assessment of civil and criminal penalties against us, our officers or employees.

Any such sanctions could have a material adverse effect on our business,
financial condition and results of operations. Approvals may be withdrawn for
failure to comply with regulatory standards, for uncorrected quality problems
or due to the occurrence of unforeseen events. To facilitate compliance with
the FDCA and regulations promulgated thereunder, we may from time to time
institute voluntary compliance actions such as product recalls.

In addition to laws and regulations enforced by the FDA, we are also
subject to regulation under the Occupational Safety and Health Act, the
Environmental Protection Act, the Resource Conservation and Recovery Act and
other present and potential future federal, state and local regulations.

Pre-market Submissions

The FDA regulates the introduction of new medical devices into the U.S.
market. Amendments in 1976 to the Federal Food, Drug and Cosmetic Act (FD&C
Act) FDCA established three regulatory classes for medical devices: class I,
class II and class III. The three classes are based on the degree of control
necessary to ensure that the various types of devices are safe and effective,
with class III the most regulated. Most Class I devices are exempt from the
premarket notification whereas most Class II devices require Premarket
Notification 510(k) clearance (as discussed below) before they can be
marketed.

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The majority of our products are class II devices, or lower, according to
the FDCA. Datex-Ohmedas products containing heart arrhythmia detection from
ECG monitoring are class III devices. For a class III device, a premarket
approval application (PMA) is required unless the device is a preamendment
device (on the market prior to the passage of the medical devices amendments in
1976, or substantially equivalent to such devices). For a preamendment device
510(k) clearance is the preferred route to market.

Premarket approval requirements apply differently to preamendment,
post-amendment and transitional devices. A preamendment device is defined in
the FDCA as one which was legally marketed in the United States prior to May
1976, or to a device that the FDA has found to be substantially equivalent to a
legally marketed pre-1976 device which was on the market prior to the passage
of the medical devices amendments in 1976.

If a manufacturer can establish that a new device is substantially
equivalent to a device that was legally marketed prior to May 1976, or to a
device that the FDA has found to be substantially equivalent to a legally
marketed pre-1976 device, the manufacturer can then seek clearance from the FDA
to market the device in the United States by filing a premarket notification
with the FDA under Section 510(k) of the FDCA. This submission, commonly
referred to as 510(k) clearance, avoids the need for a manufacturer to go
through a more lengthy premarket approval process for the device. A PMA is a
much more complex process than submission of a 510(k). It involves the design
and implementation of high quality clinical studies and a scientific review by
the FDA as well as review by an Advisory Committee selected by the FDA.
Approval is granted by the FDA if the PMA is found to contain valid scientific
evidence that the device is safe and effective for its intended use. In
contrast, the process of obtaining 510(k) clearance can take as little as 30
days, although that period may extend to nine months depending on FDAs request
for additional information, or the need to respond to inquiries on product
labeling. A Section 510(k) normally involves the submission of only a limited
amount of clinical data supporting an application, or none at all.

However, delays in obtaining 510(k) clearances could have an adverse
effect on the introduction of future products. Additionally, 510 (k)
clearances, although granted, may limit the uses for which a product may be
marketed, which could reduce or eliminate the original commercial benefit of
new products and have a material adverse effect on our results of operations
and business. To date, all of our main products, including Datex-Ohmedas class
III devices, have received 510(k) clearance for marketing in the United States
in a timely manner when applied for. However, there can be no assurance that
510(k) clearance for any new product or modification of an existing product
will be granted or that the process will not be unduly lengthy.

Regulation in the European Union

Products and equipment covered by one or more EU directives must carry CE
marking if they are to be sold in the EU. CE marking under the Medical Device
Directive, or MDD, was introduced in 1995 and has been mandatory since June
1998. Under the MDD, medical devices must comply with all essential
requirements. When used as intended the device shall not compromise the safety
of patients, users or other persons and any possible risks must be acceptable
in view of the benefits to the patient. The products are divided into four
different classes: I, IIa, IIb and III (highest risk). The intention is to
adapt the control procedure to the risks of the product. A third party, a
so-called notified body is assigned to assess compliance with the
requirements of the directive. The higher the class, the deeper the
participation by the notified body. Manufacturers may affix the CE-mark to
their products when they are certified to conform to the MDD.

We do not manufacture devices in the highest risk category, category III
under the MDD, and all patient monitoring and ventilation products belong to
class IIb or lower. Certification of conformity to the directive is based on
assessment of our quality assurance systems for each division, with the
notified body determining the necessity for satisfying additional requirements.
The principal notified bodies in Finland are VTT Automaatio and Det Norsk
Veritas; in Sweden, the British Standards Institute; and in the United States,
TUV Rheinland of North America, Inc. (TRNA). All products we market in the EU
are in conformity with the MDD and are CE marked. From a technical

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point of view, the most challenging EU directive is the EMC (electromagnetic
compatibility) Directive 89/336/EEC, which sets the requirements for the
control of emissions and immunity for all electrical and electronic products.
The EMC directive is essentially satisfied as part of the MDD. Datex-Ohmeda has
established its own EMC test laboratory in order to ensure products under
development conform to the EMC directive and thus speed introduction of new
products.

Other Regulation

In some local markets, we rely on our international distributors supported
by our regional support centers, for the receipt of premarket approvals in
those countries that require them. In the event that any of our international
distributors fail to obtain or maintain required premarket approvals or fail to
comply with foreign regulations, foreign regulatory authorities may require us
to cause that distributor to file revised governmental notifications, cease
commercial sales of its products in the applicable countries or otherwise act
so as to stop any ongoing non-compliance in such countries. Such enforcement
action by regulatory authorities could have an adverse effect on our results of
operations.

In some markets, our products are also subject to regulations and approval
by other organizations, such as the Underwriters Laboratories or the Canadian
Standards Association. It is our policy to comply with all applicable
regulations and to produce products that exceed the requirements
of such regulation, where appropriate.




4.C.     Organizational Structure

The parent company of the Group is Instrumentarium Corporation. The
businesses of the Group are presently organized in two segments: the Anesthesia
and Critical Care segment, comprising Datex-Ohmeda, Spacelabs Medical and Deio
and the Medical Equipment Segment comprising Instrumentarium Imaging and
Soredex, Ohmeda Medical and Medko Medical. As to the legal entity organization
of the Group, within the Anesthesia and Critical Care segment the head office
and Finnish operations of Datex-Ohmeda (anesthesia and critical care equipment)
are organized as a division of Instrumentarium Corporation; the head office and
US operations of Spacelabs Medical (critical care monitoring equipment) are
organized as a division of Datex-Ohmeda, Inc.; and Deio Corporation (clinical
information systems) is a separately organized subsidiary of Instrumentarium
Corporation. In the Medical Equipment segment, the head office and Finnish
operations of Instrumentarium Imaging and Soredex (imaging equipment) are
organized as a division of Instrumentarium Corporation; the head office and
operations of Ohmeda Medical (infant care systems) are organized as a division
of Datex-Ohmeda, Inc.; and Medko Medical Ltd (turnkey operations) is a
separately organized subsidiary of Instrumentarium Corporation. Most of the
above businesses, whether in legal terms operating as division of a Group
company or separately incorporated, carry out various businesses of
Instrumentarium internationally through wholly owned subsidiaries, the results
of which are reported in our consolidated financial statements. In the United
States, our major operating subsidiary is Datex-Ohmeda, Inc., which runs the
business of three business divisions in the United States: Datex-Ohmeda,
Spacelabs Medical and Ohmeda Medical.

Our subsidiaries at June 13, 2003 are:

|                              |  |             |  |                |       | 
|----------------------------- |  | ----------- |  | -------------- | ----- | 
|Shares in subsidiaries        |  | Country     |  | Shareholding %
|                              |  |             |  |               
|Bostads Ab Hafnia             |  | Finland     |  |                | 72.96 | 
|Datex-Ohmeda AS               |  | Norway      |  |                | 100   | 
|Datex-Ohmeda (Canada) Inc.    |  | Canada      |  |                | 100   | 
|Datex-Ohmeda (India)Pvt. Ltd. |  | India       |  |                | 100   | 
|Datex-Ohmeda B.V              |  | Netherlands |  |                | 100   | 
|Datex-Ohmeda GmbH             |  | Germany     |  |                | 100   | 
|Datex-Ohmeda, Inc.            |  | USA         |  |                | 100   | 
|Datex-Ohmeda K.K              |  | Japan       |  |                | 100   | 

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|                                                 |  |               |  |                |      | 
|------------------------------------------------ |  | ------------- |  | -------------- | ---- | 
|Shares in subsidiaries                           |  | Country       |  | Shareholding %
|                                                 |  |               |  |               
|Datex-Ohmeda Ltd.                                |  | Great Britain |  |                | 100  | 
|Datex-Ohmeda Pty. Ltd.                           |  | Australia     |  |                | 100  | 
|Datex-Ohmeda Pte. Ltd.                           |  | Singapore     |  |                | 100  | 
|Datex-Ohmeda S.A.S                               |  | France        |  |                | 100  | 
|Datex-Ohmeda S.L                                 |  | Spain         |  |                | 100  | 
|Datex-Ohmeda S.p.A                               |  | Italy         |  |                | 100  | 
|Datia Holdings B.V                               |  | Netherlands   |  |                | 100  | 
|Deio AB                                          |  | Sweden        |  |                | 97.6 | 
|Deio BV                                          |  | Netherlands   |  |                | 97.6 | 
|Deio (Canada) Inc.                               |  | Canada        |  |                | 97.6 | 
|Deio GmbH                                        |  | Germany       |  |                | 97.6 | 
|Deio Holdings, Inc.                              |  | USA           |  |                | 97.6 | 
|Deio, Inc.                                       |  | USA           |  |                | 97.6 | 
|Deio Corporation                                 |  | Finland       |  |                | 97.6 | 
|Deio Ltd.                                        |  | Great Britain |  |                | 97.6 | 
|Deio Pte. Ltd.                                   |  | Singapore     |  |                | 97.6 | 
|Deio S.A.S                                       |  | France        |  |                | 97.6 | 
|Deio S.r.l                                       |  | Italy         |  |                | 97.6 | 
|Deiobox Oy                                       |  | Finland       |  |                | 97.6 | 
|Eksperimentarium Oy                              |  | Finland       |  |                | 100  | 
|Instrumentarium Holdings, Inc.                   |  | USA           |  |                | 100  | 
|Instrumentarium AB                               |  | Sweden        |  |                | 100  | 
|Instrumentarium Dental GmbH                      |  | Germany       |  |                | 100  | 
|Instrumentarium Imaging France SARL              |  | France        |  |                | 100  | 
|Instrumentarium Imaging Italia s.r.l             |  | Italy         |  |                | 100  | 
|Instrumentarium Imaging, Inc.                    |  | USA           |  |                | 100  | 
|Instrumentarium Imaging Ziehm GmbH               |  | Germany       |  |                | 100  | 
|Instrumentarium Imaging Ziehm, Inc.              |  | USA           |  |                | 100  | 
|Urtsni Oy                                        |  | Finland       |  |                | 100  | 
|Instrumentarium Medical OÜ                       |  | Estonia       |  |                | 100  | 
|Instrumentarium UK Ltd.                          |  | Great Britain |  |                | 100  | 
|Kiinteistö Oy Lahti Puustellintie 3              |  | Finland       |  |                | 100  | 
|Litonii Gård Ab                                  |  | Finland       |  |                | 100  | 
|Medko Medical Ltd.                               |  | Finland       |  |                | 100  | 
|Medko Oy                                         |  | Finland       |  |                | 100  | 
|Oy Dentaldepot Ab                                |  | Finland       |  |                | 100  | 
|Oy Metava Ab                                     |  | Finland       |  |                | 100  | 
|SIA Instrumentarium Medical                      |  | Latvia        |  |                | 100  | 
|SMD Software, L.L.C                              |  | USA           |  |                | 55.0 | 
|Sotem Oy                                         |  | Finland       |  |                | 100  | 
|Spacelabs International, Inc.                    |  | USA           |  |                | 100  | 
|Spacelabs Medical AB                             |  | Sweden        |  |                | 100  | 
|Spacelabs Medical Data Corporation               |  | USA           |  |                | 100  | 
|Spacelabs Medical Instruments (Tianjin) Co. Ltd. |  | China         |  |                | 100  | 
|Spacelabs Medical Limited                        |  | Hong Kong     |  |                | 100  | 
|Spacelabs Medical Ltd.                           |  | Taiwan        |  |                | 100  | 
|Spacelabs Medical Ltd                            |  | Great Britain |  |                | 100  | 
|Spacelabs Medical Private Limited                |  | India         |  |                | 100  | 
|Spacelabs Medical Products GmbH                  |  | Austria       |  |                | 100  | 
|Spacelabs Medical Products Pty. Ltd.             |  | Australia     |  |                | 100  | 
|Spacelabs Medical S.A.                           |  | Spain         |  |                | 100  | 
|Spacelabs Medical, S.A. de C.V.                  |  | Mexico        |  |                | 100  | 
|Spacelabs Medical SAS                            |  | France        |  |                | 100  | 
|Spacelabs Medical S.r.l                          |  | Italy         |  |                | 100  | 
|Spacelabs Medical Trading Company                |  | Guam          |  |                | 100  | 
|Spacelabs (Singapore) Pte. Ltd.                  |  | Singapore     |  |                | 100  | 

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|                               |  |         |  |               
|------------------------------ |  | ------- |  | --------------
|                               |  | Country |  | Shareholding %
|                               |  |         |  |               
|Shares in associated companies |  |         |  |               
|Abmin Technologies Oy          |  | Finland |  | 42.5          
|IBD Holdings LLC               |  | USA     |  | 50.0          
|Intensium Oy                   |  | Finland |  | 47.9          
|Sentinel Wireless, Inc.        |  | USA     |  | 30.0          




4.D.     Property, Plants and Equipment

Our principal executive offices are located in Helsinki, Finland. Our
design and research laboratories are located in Finland, Sweden, the United
States and Germany. The location of our major facilities, the principal
activities conducted therein are as follows:

|                     |  |                                                                                                                                                                                                                                                                             |  |                                                               
|-------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------
|                     |  |                                                                                                                                                                                                                                                                             |  | Approximate Size;                                             
|Location             |  | Principal Activities                                                                                                                                                                                                                                                        |  | Ownership                                                     
|Helsinki, Finland    |  | Company headquarters;
anesthesia and
critical care
equipment
manufacturing and
research and
development;
anesthesia and
critical care
software research and
development;
distribution, sales
and marketing;
diagnostic imaging
manufacturing, and
research and
development. |  | 52,498 square metres.
Property partly owned
and partly leased.
|                     |  |                                                                                                                                                                                                                                                                             |  |                                                               
|Issaquah, Washington |  | Critical care patient
monitoring
manufacturing and
research and
development.                                                                                                                                                                                                |  | 202,544 square feet.
Property leased.                         
|                     |  |                                                                                                                                                                                                                                                                             |  |                                                               
|Tuusula, Finland     |  | Diagnostic imaging
manufacturing, and
research and
development.                                                                                                                                                                                                             |  | 12,839 square metres.
Property owned.                         
|                     |  |                                                                                                                                                                                                                                                                             |  |                                                               
|Laurel, Maryland     |  | Infant care systems
manufacturing and
research and
development.                                                                                                                                                                                                             |  | 140,700 square feet.
Property leased.                         
|                     |  |                                                                                                                                                                                                                                                                             |  |                                                               
|Madison, Wisconsin   |  | Headquarters for
Datex-Ohmeda Inc.,
anesthesia equipment
manufacturing,
research and
development, customer
and service support                                                                                                                                              |  | 316,000 square feet.
Property owned.                          
|                     |  |                                                                                                                                                                                                                                                                             |  |                                                               
|Hatfield, U.K        |  | Sales office and
warehouse, anesthesia
and critical care
distributor
management                                                                                                                                                                                             |  | 3,721 square metres.
Property owned.                          
|                     |  |                                                                                                                                                                                                                                                                             |  |                                                               
|Louisville, Colorado |  | Manufacturing and
research and
development for
DatexOhmeda                                                                                                                                                                                                                 |  | 106,570 square feet.
Property leased.                         
|                     |  |                                                                                                                                                                                                                                                                             |  |                                                               
|Bromma, Sweden       |  | Manufacture of
System5 ADU
anesthesia devices,
research and
development on
anesthesia devices
optical retail space,
and local management                                                                                                                                    |  | 7,931 square metres.
Property leased.                         
|                     |  |                                                                                                                                                                                                                                                                             |  |                                                               
|Nürnberg, Germany    |  | Surgical imaging
manufacturing and
research and
development                                                                                                                                                                                                                 |  | 2,646 square metres.
Property leased.                         

We consider our production and other facilities to be in satisfactory
condition, and believe that our plant capacity is generally adequate for the
needs of our current business. There are no material encumbrances on the
property. We are aware of no material environmental concerns at any of our
sites.

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ITEM 5:     OPERATING AND FINANCIAL REVIEW AND PROSPECTS




5.A.     Operating Results

Introduction

General.The following managements discussion and analysis should be
read in conjunction with the consolidated financial statements and the notes
thereto included in Item 18 herein. The consolidated financial statements and
the financial information discussed below have been prepared in accordance with
Finnish GAAP, which differs, in certain significant respects from U.S. GAAP. A
reconciliation of the amounts of net income and shareholders equity reported
under Finnish GAAP to the amounts determined under U.S. GAAP and a discussion
of the principal differences between Finnish GAAP and U.S. GAAP is set out in
note 23 of the notes to the consolidated financial statements.

Exchange rates.Our functional currency is the euro and our revenues are
mainly generated in euro and U.S. dollars. Our manufacturing facilities are
situated in these main currency zones, resulting in a relatively balanced
currency position in terms of revenues and operational costs. To hedge against
risks associated with cash flows in foreign currency and interest rate
fluctuation we use derivative contracts.

Our financial statements and financial information for 1999 have been
restated from Finnish markka into euro using the conversion rate as of January
1, 1999. Our restated euro financial statements depict the same trends as
would have been presented if we had continued to present our consolidated
financial statements in Finnish markka. Our consolidated financial statements
will not be comparable, however, to the euro financial statements of other
companies that previously reported their financial information in a currency
other than Finnish markka.

Impact of Inflation.Inflation in Finland, as measured by the consumer
price index during 2002, 2001 and 2000, was 1.6 percent, 2.6 percent and 3.4
percent, respectively. Inflation in Finland did not have a significant impact
on the Groups operating results. However, a major portion of the Groups
operations is performed in countries with rates of inflation higher or lower
than that of Finland. The effects of inflation on the Groups operations have
not been material in recent years.

Economic conditions.Economic conditions may affect the medical
technology market in which the Group operates. Although we believe a
significant reduction of spending in this area is unlikely, even in
recessionary conditions, if spending in this area was to be reduced
significantly, our results of operations would be adversely affected.

Seasonality. Because of purchasing patterns of our customers, we normally
record relatively strong sales and orders in the fourth quarter of the
financial year. This period normally positively impacts the final fourth
quarter of the reporting year for the Group. A smaller positive effect can also
be sometimes noted in the first quarter of the Groups reporting year as this
coincides with the end of the financial year for some of our customers,
principally UK hospitals. Since profitability is also partly dependent on sales
volume, profitability is also normally positively impacted by higher sales for
any one quarter. Seasonal fluctuations in orders impact factory loading and
working capital, normally resulting in relatively strong cash flow in the first
quarter. However, due to the uneven nature of order and shipment flow, we
consider that, one year is the shortest possible period for analyzing the
development of our business.

Critical Accounting Policies

Our review of our operating results and financial condition is based on
our consolidated financial statements, which are prepared in accordance with
Finnish GAAP. The preparation of the consolidated financial statements in
conformity with Finnish GAAP requires management to make estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities as well as disclosure of contingent assets and
liabilities at the date of the financial

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statements, as well as reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. We believe
the following accounting principles are most critical in understanding
judgments and estimates used in the preparation of our consolidated financial
statements.

Revenue recognition

We recognize revenue from sales of products when persuasive evidence of an
arrangement exists, delivery has occurred or services have been rendered, the
price to the buyer is fixed and determinable, and collectibility is probable.
We recognize revenues received under royalty, licensing and other contractual
agreements based upon performance under the terms of the underlying agreements.
We reduce revenue recognized for estimated future returns and rebates at the
time the related revenue is recorded. The estimates are adjusted periodically
based upon historical evidence. While management believes it can make reliable
estimates for these matters, it is possible that these estimates will change in
the near future or that the actual amounts could vary causing additional
reductions to revenue.

In contract accounting, we apply a percentage-of-completion method in
circumstances in which reasonably dependable estimates can be made and certain
other conditions exist. Recognized revenues and profit are subject to revisions
as the contract progresses to completion. Revisions in profit estimates are
charged to income in the period in which the fact that gives rise to the
revision becomes known.

Valuation of long-lived and intangible assets and goodwill

We assess the carrying value of identifiable intangible assets; long-lived
assets and goodwill annually, or more frequently if events or changes in
circumstances indicate that such carrying value may not be recoverable. Factors
we consider important, which could trigger an impairment review, include the
following:



| |  | significant underperformance relative to expected historical or
projected future results;                        
|- |  | -----------------------------------------------------------------------------------------------------------------
| 
| |  | significant changes in the manner of our use of the acquired assets
or the strategy for our overall business; and
| 
| |  | significant negative industry or economic trends.                                                                

When we determine that the carrying value of intangible assets, long-lived
assets or goodwill may not be recoverable based upon the existence of one or
more of the above indicators of impairment, we measure any impairment based on
a projected discounted cash flow. This review is based upon our projections of
anticipated future cash flows. The most significant variables in determining
cash flows are discount rates, terminal values and the number of years on which
to base the cash flow projections. Management determines discount rates to be
used based on the risk inherent in the related activitys current business
model compared to our internal rate of return and industry comparisons.
Terminal values are based on the expected life of products and forecasted life
cycle and forecasted cash flows over that period. While we believe that our
assumptions are appropriate, such amounts estimated could differ materially
from what will actually occur in the future.

Inventories

We state inventories at the lower of cost, on a first-in-first-out (FIFO)
basis, or net realizable value. Net realizable value is the amount that can be
realized from the sale of the asset in the normal course of business less the
costs of realization. We maintain provisions for our obsolete, slow moving or
excess stocks based on historical information and estimates on product demand.
A review and an adjustment of the provision are made on a quarterly basis for
stocks, including raw materials, work in

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process, and finished goods. If actual market conditions are less favorable
than those projected by management, additional inventory write-downs may be
required.

Pensions

The determination of our pension benefit obligation and expense in
accordance with US GAAP for defined benefit pension plans is dependent on our
selection of certain assumptions used by actuaries in calculating such amounts.
Those assumptions are described in note 23 to our consolidated financial
statements and include, among others, the discount rate, expected long-term
rate of return on plan assets and annual rate of increase in future
compensation levels. A portion of our plan assets is invested in equity
securities. The equity markets have experienced volatility, which has affected
the value of our pension plan assets. This volatility may make it difficult to
estimate the long-term rate of return on plan assets. Actual results that
differ from our assumptions are accumulated and amortized over future periods
and therefore generally affect our recognized expense and recorded obligation
in such future periods. Our assumptions are based on actual historical
experience and external data regarding compensation and discount rate trends.
While we believe that our assumptions are appropriate, significant differences
in our actual experience or significant changes in our assumptions may
materially affect our pension obligation and our future expense.

Product warranty

We engage in extensive product quality programs and processes, including
actively monitoring and evaluating the quality of our component suppliers. We
provide for estimated warranty costs at the time of the sale of a product and
periodically adjust the provisions to reflect actual experience. We calculate
the estimated warranty cost based on historical sales, warranty costs and
warranty times of the products. Should the actual product failure rates differ
from our estimates, revisions to the estimated warranty liability would be
required.

Results of operations

The following table shows the contribution to our net sales and operating
profit by each of our business segments for each of the three fiscal years
ended December 31, 2002:

|                                                      |  |                         |       |      |  |               |         |   |  |  |         |  
|----------------------------------------------------- |  | ----------------------- | ----- | ---- |  | ------------- | ------- | - |  |  | ------- | -
|                                                      |  | Year ended December 31,
|                                                      |  | 2000                    |       | 2001 |  | 2002         
|                                                      |  |                         |       |      |  |              
|                                                      |  | EUR                     |       | EUR  |  | EUR          
|                                                      |  |                         |       |      |  |              
|                                                      |  |                         |       |      |  | (in millions) |         |   |  | 
|NET SALES                                             |  |                         |       |      |  |               |         |   |  |  |         |  
|Anesthesia and Critical Care (1)                      |  |                         | 645.0 |      |  |               | 718.4   |   |  |  | 815.4   |  
|Medical Equipment (1)                                 |  |                         | 145.0 |      |  |               | 176.3   |   |  |  | 216.8   |  
|Other Operations(2)                                   |  |                         | 27.3  |      |  |               | 26.4    |   |  |  | 6.6     |  
|Discontinued Operations(2)                            |  |                         | 95.6  |      |  |               | 104.3   |   |  |  | 88.0    |  
|                                                      |  |                         |       |      |  |               |         |   |  |  |         |  
|                                                      |  |                         | 912.8 |      |  |               | 1,025.4 |   |  |  | 1,126.7 |  
|                                                      |  |                         |       |      |  |               |         |   |  |  |         |  
|OPERATING PROFIT FROM BUSINESSES(3)                   |  |                         |       |      |  |               |         |   |  |  |         |  
|Anesthesia and Critical Care (1)                      |  |                         | 60.3  |      |  |               | 104.8   |   |  |  | 133.6   |  
|Medical Equipment (1)                                 |  |                         | 10.8  |      |  |               | 14.1    |   |  |  | 12.5    |  
|Other Operations(2)                                   |  |                         | 2.9   |      |  |               | 2.6     |   |  |  | (0.1    | )
|Discontinued Operations(2)                            |  |                         | 10.3  |      |  |               | 10.7    |   |  |  | 6.7     |  
|                                                      |  |                         |       |      |  |               |         |   |  |  |         |  
|                                                      |  |                         | 84.4  |      |  |               | 132.2   |   |  |  | 152.7   |  
|                                                      |  |                         |       |      |  |               |         |   |  |  |         |  
|Amortization of Goodwill                              |  |                         | (16.3 | )    |  |               | (16.5   | ) |  |  | (17.4   | )
|General Corporate Expenses and Non-Recurring
Items(4) |  |                         | 11.7  |      |  |               | (0.2    | ) |  |  | (8.9    | )
|                                                      |  |                         |       |      |  |               |         |   |  |  |         |  
|OPERATING PROFIT                                      |  |                         | 79.7  |      |  |               | 115.5   |   |  |  | 126.5   |  
|                                                      |  |                         |       |      |  |               |         |   |  |  |         |  



---

|(1) |  | In March 2002 the hospital furniture business of Merivaara was
divested. Following the divestment the remaining anesthesia and critical
care related operations within Merivaara division were reclassified for
all periods presented from Medical Equipment segment to the Anesthesia
and Critical Care segment. Divested Merivaara business operations are
included in Other operations for all periods reported.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|(2) |  | See note 2 to the consolidated financial statements.                                                                                                                                                                                                                            
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(3) |  | Amounts do not represent, and should not be considered substitutes for,
measures of operating performance.                                                                                                                                                                      
|   
|(4) |  | Consists of income from investments, profit on sale of business
operations and, in 2002, restructuring costs related to the Spacelabs
acquisition and general corporate expenses that are not allocated to
businesses. See also note 3 to the consolidated financial statements.

We present and discuss operating profit of our businesses before general
corporate expenses, non-recurring items, and amortization of goodwill.
Operating profit before general corporate expenses, non-recurring items, and
amortization of goodwill is considered to be a good measure of the operating
performance of the businesses since it reflects the underlying cash expenditure
of the business operations by eliminating goodwill amortization but not
depreciation, which is closely linked to the capital expenditure. Additionally
it excludes non-recurring exceptional items that are predominantly related to
corporate transactions. This measure is not, however, a direct measure of
cash-flow, which is presented at the group-level in the statement of
consolidated cash flows. A reconciliation of operating profit before general
corporate expenses, non-recurring items, and amortization of goodwill is
provided in the table above

Results of operations for the year ended December 31, 2002 compared to the year
ended December 31, 2001

Consolidated net sales and income

Our consolidated net sales for 2002 totaled EUR 1,126.7 million, an
increase of 10 percent compared to EUR 1,025.4 million in the previous year.
Calculated with comparable foreign exchange rates for 2001, the growth in net
sales would have been 4 percentage points higher. The acquisition of Spacelabs
Medical in July was the biggest factor impacting growth in net sales and as a
result, the Anesthesia and Critical Care segment achieved 14 percent growth in
net sales. Without the effect of the acquisition, net sales in the Anesthesia
and Critical Care segment were at the same level as in the previous year. In
relative terms, the increase in sales was highest for the Medical Equipment
segment, in which the combined sales of the business units increased by 23
percent, with organic growth of 17 percent. The net impact of sales of the
businesses divested during 2002 was to reduce Group sales by 4 percent. When
adjusted for both acquisitions and divestments, Group sales increased by 3
percent.

Selling and marketing expenses increased by 5 percent from EUR 244.1
million in 2001 to EUR 257.0 million in 2002. These expenses increased in each
of the business segments. The modest growth in selling and marketing expenses
were related to the divestment of optical retail business at the beginning of
November 2002. Research and development expenses increased by 25 percent and
amounted to EUR 83.4 million in 2002 compared to EUR 66.6 million in 2001.
General and administrative expenses were EUR 106.6 million in 2002, 13 percent
higher than EUR 94.1 million recorded in 2001. R&D and general and
administrative expenses increased in each of the business segments. G&A
expenses increased also in the group administration. The increases in these
expenses were to a large extent related to the Spacelabs Medical acquisition
closed in July 2002.

Other operating income was a net EUR 9.3 million in 2002 compared to EUR
1.3 million in the previous year. Other operating income was EUR 13.0 million
in 2002 compared to EUR 10.5 million in 2001, and primarily comprised gains on
the sale of fixed assets, rental income and other operating income. Other
operating expenses were EUR 3.5 million in 2002 compared to EUR 9.4 million in
the previous year, and consisted mainly of expenses on rented properties and
other expenses. The decrease in other operating expenses was mainly due to EUR
5.5 million of restructuring expenses booked in Datex-Ohmeda for 2001.

Operating profit in 2002 was EUR 126.5 million in 2002, up by 10 percent
compared to EUR 115.5 million in 2001. Operating profit from businesses
amounted to EUR 152.7 million in 2002 compared to EUR 132.2 million in the
previous year, representing growth of 16 percent. The growth in operating
profit was due to improved profitability in the Anesthesia and Critical Care
segment. The operating profit in the Medical Equipment segment was lower than
in the previous year. In addition,

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the divested businesses, hospital furniture business and optical retail
business, had a negative impact on operating profit during the year.
Amortization of goodwill at EUR 17.4 million in 2002 increased by 5 percent
compared to EUR 16.5 million in 2001, and was related to the Spacelabs Medical
acquisition.

Income before extraordinary items was EUR 128.1 million in 2002, up by 24
percent compared to EUR 103.6 million in the previous year. Non-recurring items
were a net EUR 3.3 million negative, in the previous year there were no
non-recurring items. Non-recurring expenses comprised the restructuring and
integration costs related to the Spacelabs Medical acquisition. Non-recurring
income of EUR 3.6 million consisted mainly of gain on sale of the hospital
furniture business. Net financial items were positive at EUR 1.7 million in
2002 compared to a negative EUR 11.9 million in 2001. This was due to positive
foreign exchange rate differences related to hedging foreign currencies in
operations as well as to lower interest expenses.

Income after extraordinary items in 2002 was EUR 197.3 million showing an
increase of 91 percent over EUR 103.6 million in 2001. Extraordinary items
were a net EUR 69.2 million, after tax. Extraordinary income of EUR 76.5
million was due to the gain on sale of the Optical Retail business and
extraordinary expenses of EUR 7.3 million due to professional fees related to
the combination agreement between Instrumentarium and General Electric. In the
previous year there were no extraordinary items.

Income taxes for 2002 were EUR 41.7 million compared to EUR 31.4 million
in 2001. The increase in income taxes was due to both increased income as well
as higher effective tax rate than in the previous year. The increase in the
effective tax rate from 30 percent in 2001 to 33 percent in 2002, was the lower
effect of utilized tax loss carry-forwards as well as adjustments made to the
prior years tax accruals.

Net income was EUR 155.8 million in 2002 compared to EUR 72.1 million in
2001. Net income improved due to increased profitability of the operations, but
the most significant factor behind the increase was the gain on the divestment
of optical retail business.

Earnings per share were EUR 1.80 in 2002 as compared to EUR 1.50 in the
previous year. With the diluting effect of stock options outstanding, earnings
per share for 2002 were EUR 1.74 as compared to EUR 1.50 in 2001. Shareholders
equity per share was EUR 13.48 in 2002 as compared to EUR 10.81 in 2001.

We are exposed to foreign exchange risk on our net investments in foreign
subsidiaries. These net investments are hedged by using currency borrowings.
Changes in the fair values would not affect reported profits as such changes
are recorded against the translation adjustment in the shareholders equity.
See Item 11 Quantitative and Qualitative Disclosures About Market Risk.

Anesthesia and Critical Care

Net sales for the Anesthesia and Critical Care segment totaled EUR 815.4
million in 2002 which is 14 percent higher than EUR 718.4 million in the
previous year. The growth was due to the Spacelabs Medical acquisition in July
2002. Sales for Spacelabs Medical in JulyDecember were EUR 98.4 million, of
which patient monitoring accounted for EUR 74.1 million.

By product area in the Anesthesia and Critical Care segment, highest
growth in sales was in patient monitoring, due to the acquisition. Sales of
service also grew. Sales of both integrated anesthesia workstations and
stand-alone anesthesia machines reached the same level as in the previous year.
By market area, growth in sales was strongest in North America, also due to the
acquisition. Growth in sales in AsiaPacific region was also significant. Sales
in Europe were somewhat higher than in the previous year. For the Anesthesia
and Critical Care segment in 2002, North America

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accounted for 50 percent of sales, Europe for 33 percent, the AsiaPacific
region for 13 percent and the rest of the world for 4 percent.

Operating profit before non-recurring items and amortization of goodwill
for the Anesthesia and Critical Care segment was EUR 133.6 million and EUR
104.8 million, in 2002 and 2001, respectively. The higher operating profit was
primarily due to improved gross margins at Datex-Ohmeda and a reduction in
indirect expenses compared to the previous year. The operating result for
Spacelabs Medical, acquired in July 2002, was positive for the final quarter of
the year, as a result of which the division was slightly profitable for the
JulyDecember period. Efforts to develop Deio went according to plan and
negatively impacted operating profit before non-recurring items and
amortization of goodwill of the Anesthesia and Critical Care segment by EUR 7.9
million and EUR 10.4 million in 2002 and 2001, respectively.

Medical Equipment

Sales in the Medical Equipment segment were EUR 216.8 million, an increase
of 23 percent compared to EUR 176.3 million in the previous year. The growth in
sales was primarily due to the increase in sales of diagnostic imaging
equipment by Instrumentarium Imaging and Soredex. Project sales of Medko
Medical also grew significantly, due to the beginning of deliveries in December
under a contract with the Social Security Institution of Costa Rica including
products manufactured by Datex-Ohmeda, Instrumentarium Imaging and Ohmeda
Medical. At Ohmeda Medical, sales of infant care and suction and oxygen
therapy products were slightly higher than in the previous year.

The combined sales of Instrumentarium Imaging and Soredex were EUR 131.7
million in 2002 compared to EUR 99.9 million in 2001. Of the 32 percent growth
in sales, approximately one-third was due to the acquisition of Soredex in the
middle of 2001. Organic growth was approximately 20 percent. Growth in sales
was recorded in each of the three product areas, mammography, dental and
surgical imaging devices. However, the combined profitability of the diagnostic
imaging divisions was lower than in the previous year. The primary reason for
the lower profitability was lower gross margin achieved, partly due to
additional manufacturing costs and other extra costs associated with
introducing new products to the market.

Ohmeda Medicals net sales of neonatal care products, as well as suction
and oxygen therapy products, were slightly higher than the previous years
level, and were EUR 72.2 million and EUR 71.4 million for 2002 and 2001,
respectively. Sales were hampered during the year by the injunction on the sale
and manufacturing of the Giraffe OmniBed neonatal carestation related to a
patent infringement dispute in the USA brought by plaintiff Hill-Rom, Inc. An
agreement with Hill-Rom was reached on August 19, 2002, after which Ohmeda
Medical has been able to manufacture and sell the Giraffe Omnibed product.
Sales grew strongly in the second half of the year. Operating profit for the
year as a whole was somewhat higher than the year before.

Sales for the project sales unit Medko Medical more than doubled compared
to the previous year and were EUR 12.8 million and EUR 5.0 million for 2002 and
2001, respectively. In November 2002 Medko Medical signed an agreement with the
Social Security Institution of Costa Rica to deliver anesthesia and critical
care equipment, surgical imaging equipment, neonatal care equipment and other
hospital equipment for a total value of USD 32 million. In December 2002
equipment to the value of EUR 8 million were delivered, with the balance to be
delivered by the end of April 2003.

In the Medical Equipment segment, operating profit before non-recurring
items and amortization of goodwill was EUR 12.5 million and EUR 14.1 million in
2002 and 2001, respectively.

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Divested Operations

At the beginning of March 2002, the hospital furniture business Merivaara
was divested. For the JanuaryFebruary 2002 period, sales of the divested
business were EUR 4.0 million (for the previous, full year EUR 26.0 million).
The divestment resulted in a gain of EUR 3.3 million, which is recorded as
non-recurring income.

At the beginning of November 2002, the Optical Retail business was
divested. For the JanuaryOctober period, sales in the Optical Retail segment
were EUR 88.0 million (for the previous, full year EUR 104.3 million). The
divestment resulted in a gain of EUR 76.5 million, net of tax, which is
recorded as an extraordinary item.

In November 2002, Lifeclinic Holding Corporation, a subsidiary of
Spacelabs Medical, which offered consumer healthcare services, was divested.
For the JulyNovember period in 2002 as part of Instrumentarium, sales of the
divested business were EUR 2.3 million.

At the beginning of 2003, the entire shareholding in Spacelabs Burdick,
Inc. was divested. Burdick was a subsidiary of Spacelabs Medical and
specialized in cardiology diagnostic equipment and systems. For the
JulyDecember period in 2002 as part of Instrumentarium, sales of the divested
business were EUR 19.0 million.

Spacelabs Medical acquisition

Instrumentarium acquired all the shares of Spacelabs Medical, Inc., which
primarily manufactures critical care patient monitors, on July 3, 2002.
Instrumentarium paid USD 14.25 in cash per share, a total of approximately EUR
142 million. Spacelabs Medical is responsible for Instrumentariums critical
care operations in the USA, while outside North America Spacelabs Medicals
sales companies were integrated into Datex-Ohmeda in the latter half of 2002.

During 2002, the company provided EUR 14.0 million for costs associated
with the restructuring programme arising as a result of the acquisition of
Spacelabs Medical, Inc. EUR 2.1 million of the provisions were booked through
the income statement and EUR 11.8 million were recorded directly in the balance
sheet. The provision for 2002 comprised of EUR 9.0 million for severance and
related employee termination benefits and EUR 4.9 million of lease termination,
termination of distribution contracts and other exit costs. The severance
charge was associated with the termination of approximately 360 employees
comprising of employees from all business operations of the Company (sales and
marketing personnel, administrative personnel, manufacturing personnel and R&D
personnel).

Results of operations for the year ended December 31, 2001 compared to the year
ended December 31, 2000

Consolidated net sales and income

Our consolidated net sales totaled EUR 1,025.4 million for 2001, an
increase of 12 percent compared to EUR 912.8 million in the previous year. Of
the 12 percent growth, 1 percentage point was derived from changes in the
foreign exchange rates. Sales volumes increased in all business segments.
The Anesthesia and Critical Care segment contributed approximately two-thirds
of the overall net increase in sales. The increase in sales for the Medical
Equipment segment was highest in relative terms. Net sales from exports and
operations outside Finland amounted to EUR 921.1 million in 2001, representing
an increase of 13 percent from EUR 815.6 million in 2000. The share of net
sales from exports and operations outside Finland in relation to the Groups
consolidated net sales was 90 percent and 89 percent in 2001 and 2000
respectively.

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Selling and marketing expenses increased by 2 percent from EUR 240.3
million in 2000 to EUR 244.1 million in 2001. Research and development expenses
increased by 4 percent and amounted to EUR 66.6 million in 2001 compared to EUR
63.8 million in 2000. General and administrative expenses were EUR 94.1 million
in 2001, 9 percent higher than EUR 86.7 million recorded in 2000. The increase
in general and administrative expenses was related to establishing the Deio
group of companies within Anesthesia and Critical Care segment in the beginning
of 2001, the acquisition of Soredex in July 2001, as well as an increase in
legal expenses of Ohmeda Medical, related to a patent lawsuit in the United
States.

Other operating income net of expenses was EUR 1.3 million in 2001
compared to EUR 22.6 million in 2000. The high figure in 2000 was mainly due
to a gain on sale of real estate in Espoo, Finland as well as the amount paid
by Baxter Healthcare Corporation as an adjustment to the purchase price
allocation of the Ohmeda acquisition, which was booked as income. Included in
other operating expenses is EUR 5.5 million in 2001 and in EUR 5.2 million in
2000 of restructuring expenses related mainly to a program aimed at improving
operating efficiencies within the Anesthesia and Critical Care segment.

Operating profit in 2001 was EUR 115.5 million, up by 45 percent compared
to EUR 79.7 million in 2000. Operating profit from businesses increased by 57
percent and amounted to EUR 132.2 million in 2001 compared to EUR 84.4 million
in the previous year. Operating profit increased in all business segments but
was mainly attributable to a significant improvement within the Anesthesia and
Critical Care segment due to increased sales of higher margin products and more
efficient cost management. Amortization of goodwill was EUR 16.5 million in
2001, which is roughly at the same level as EUR 16.3 million in 2000. Income
before extraordinary items was EUR 103.6 million in 2001, up by 56 percent from
EUR 66.6 million in the previous year. Net financing expenses decreased by 10
percent, or EUR 1.3 million, mainly as a result of lower interest expenses due
to a decrease in interest-bearing net debt.

Earnings per share totaled EUR 1.50 in 2001 as compared to EUR 0.90 in the
previous year. With the diluting effect of stock options outstanding, earnings
per share for 2001 were EUR 1.50 as compared to EUR 0.90 in 2000. Shareholders
equity per share was EUR 10.81 in 2001 as compared to EUR 9.79 in 2000.

We are exposed to foreign exchange risk on our net investments in foreign
subsidiaries. These net investments are hedged by using currency borrowings.
Changes in the fair values would not affect reported profits as such changes
are recorded against the translation adjustment in the shareholders equity.
See Item 11 Quantitative and Qualitative Disclosures About Market Risk.

Anesthesia and Critical Care

Net sales for the Anesthesia and Critical Care segment totaled EUR 718.4
million in 2001, which is 11 percent higher than EUR 645.0 million in the
previous year. Datex-Ohmedas sales developed more evenly through 2001,
compared to the previous year, although sales were again stronger in the fourth
quarter relative to the preceding quarters.

Of Datex-Ohmedas business areas, best sales development was seen in the
area of patient monitoring, with sales of the S/5 critical care monitors
improving the most. Sales of anesthesia monitoring developed well, especially
in the United States. Sales in the area of anesthesia, drug delivery and
ventilation also increased over the previous year, with highest sales growth
for integrated anesthesia workstations. Overall, sales of pulse oximetry,
supplies and accessories as well as service increased somewhat.

By market area, Datex-Ohmeda had highest growth in sales to Europe, where
sales increased 15 percent. Sales to North America increased 9 percent, while
sales to Asia-Pacific increased 6

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percent. In 2001, North America accounted for 47 percent of sales of
Datex-Ohmeda, Europe for 36 percent, the Asia-Pacific region for 12 percent and
the rest of the world for 5 percent.

Incorporated as a separate company group from the beginning of 2001, Deio,
which offers care information systems, focussed primarily on putting its
operations on a firm footing, as well as new product development. Deio now has
solution provider subsidiaries in six countries and certified distributors in
an additional eleven. The efforts to develop Deio negatively impacted
profitability of the Anesthesia and Critical Care segment by EUR 10.4 million
during 2001.

Operating profit before non-recurring items and amortization of goodwill
for the Anesthesia and Critical Care segment was EUR 104.8 million and EUR 60.3
million in 2001 and 2000 respectively. The significantly higher operating
profit in 2001 was due to higher sales volume in Datex-Ohmeda and a sales mix
with a higher share of higher margin products. Profitability was also
positively impacted by the program aimed at improving operating efficiencies in
Datex-Ohmeda, as a result of which indirect expenses decreased compared to the
previous year. The program was primarily aimed at consolidating administrative
operations and manufacturing in various countries, as well as on re-aligning
the sales channel in North America. The actions taken resulted in a net
reduction in number of employees by approximately 300, with most cost savings
shown in the second half of 2001. The restructuring expenses related to this
program were EUR 5.5 million and EUR 5.2 million in 2001 and 2000,
respectively.

Medical Equipment

The Medical Equipment segment reported net sales of EUR 176.3 million in
2001, which is 22 percent higher than EUR 145.0 million in the previous year.
All of the business units increased their net sales compared to the previous
year, except for project sales unit Medko Medical.

The combined sales of the diagnostic imaging equipment manufacturing units
Instrumentarium Imaging and Soredex were EUR 99.9 million and EUR 73.1 million
in 2001 and 2000 respectively. Somewhat less than a half of the 37% growth in
net sales was due to the acquisition of Soredex. Strong growth in sales was
recorded for mammography and dental products, although growth in sales of
dental products was primarily due to the acquisition. Sales of surgical imaging
products grew less than sales of other product groups. The profitability of the
division improved significantly, compared to the previous year.

Ohmeda Medicals net sales of infant care as well as suction and oxygen therapy
products amounted to EUR 71.4 million in 2001, an increase of 24 percent
compared to EUR 57.6 million in 2000. The good growth in sales was principally
due to good sales of the Giraffe OmniBed neonatal carestation during the first
half of the year. However, related to a patent dispute in the United States,
there has been an injunction on the sale and manufacturing of the Giraffe
OmniBed neonatal carestation since August 1, 2001, other than for orders on
hand on that date. The profitability of Ohmeda Medical improved in 2001over the
previous year

In the Medical Equipment segment, operating profit before non-recurring
items and amortization of goodwill was EUR 14.1 million in 2001 and EUR 10.8
million in 2000.

Divested operations

In March 2002, we sold Merivaaras hospital furniture business operations
to a company backed by venture capital investor 3i Finland Oy. The annual sales
of the divested businesses amounted to approximately EUR 26 million in 2001.

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At the beginning of November 2002, the Optical Retail business was
divested. Net sales for the Optical Retail segment were EUR 104.3 million in
2001.




5.B.     Liquidity and Capital Resources

Our principal sources of funds have been cash flows from operations and
amounts available under our existing syndicated credit facility. We believe
that we have sufficiently liquid assets and other liquidity reserves to meet
our needs for both on a short-term (less than one year) and a long-term (more
than one year) basis.

The Groups liquid assets amounted to EUR 56.3 million, EUR 23.8 million
and EUR 22.4 million at December 31, 2002, 2001 and 2000, respectively. These
liquid assets consisted of cash and cash equivalents, and were mainly
denominated in euro. At December 31, 2002 we had as a source of liquidity,
unused committed credit lines of EUR 296.0 million. At June 11, 2003, these
unused lines totaled to approximately EUR 145.6 million. The interest rates on
these lines depend on market conditions when the lines are drawn down. The
interest rates are calculated using certain reference rates, for example, U.S.$
LIBOR or the lending banks base or prime rate, plus a pre-agreed margin.

Net cash provided by operating activities amounted to EUR 134.3 million in
2002 compared to EUR 101.4 million in 2001 and EUR 17.7 million in 2000. In
addition to improved cash profits of the operations, also the increase in
working capital at EUR 6.2 million in 2002 was lower than that of EUR 12.5
million in 2001. The main reason behind the increase in working capital in 2002
was the decreased level of accounts payable and higher level of other current
receivables. This was partly offset by increase in other non-interest bearing
liabilities. In 2001, in addition to improved cash profits of the operations,
also the increase in working capital at EUR 12.5 million was lower than the
increase of EUR 27.7 million in 2000. The main reason behind the increase in
working capital in 2001 was the higher level of accounts receivable and
inventories due to increased sales volumes. This was partly offset by increase
in other non-interest bearing liabilities.

Net cash used in investing activities for 2002 totaled EUR 35.5 million as
opposed to EUR 50.0 million in 2001 and EUR 62.7 million provided by investing
activities in 2000. Net cash used in investing activities in 2002 included EUR
128.1 million invested in acquired companies and business operations, mainly
the Spacelabs Medical acquisition, and EUR 137.7 million of proceeds from
disposition of companies and business operations including the divestment of
optical retail and hospital furniture businesses. In 2001, the main components
of net cash used in investing activities were EUR 26.3 million invested in
other non-current assets and EUR 17.0 million invested in acquired companies
and business operations, namely the Soredex dental imaging business. The
positive cash flow in 2000 was mainly related to a payment in September 2000 of
EUR 47.9 million from Baxter Healthcare Corporation as an adjustment to the
purchase price allocation of the Ohmeda acquisition, proceeds from disposition
of companies and businesses of EUR 44.7 million consisting primarily of cash
flow from sales of a real estate in Espoo, Finland as well as proceeds from
sale of other non-current assets comprising mainly of proceeds of sale of
shares in Orion Corporation.

Positive cash flow after investing activities amounted to EUR 98.8 million
in 2002 compared to EUR 51.4 million in 2001 and EUR 80.4 million in 2000. The
cash flow in 2002 and 2001 was used mainly to pay off long-term debt as well as
to pay dividends to the shareholders. Cash and cash equivalents increased by
EUR 33.9 million in 2002 compared to an increase of EUR 1.0 million and EUR 2.0
million in 2001 and 2000, respectively.

The Groups equity ratio (shareholders equity to total assets) at
December 31, 2002 was 59 percent compared to 54 percent in the previous year
and 50 percent in 2000. Interest-bearing debt was EUR 159.5 million, EUR 208.8
million and EUR 247.9 million at December 31, 2002, 2001 and 2000,
respectively. Of the interest-bearing debt outstanding at the year-end 2002,
EUR 31.0 million was long-term debt and EUR 128.5 million short-term debt.
Long-term portion of the interest-bearing

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debt matures as follows: EUR 0.5 million in 2004, EUR 0.3 million in 2005, EUR
0.2 million in 2007 and EUR 39.4 million in 2008 or thereafter. The outstanding
balance of the Groups interest-bearing debt totaled EUR 251.7 million as of
June 11, 2003.

Our main source of debt financing is our syndicated credit facility of
U.S.$ 300 million since 1998. The term of the facility is seven years with
repayment in five semiannual installments beginning at the end of the fifth
year. After the fifth year, the margin on the interest rate will increase from
0.225 percent to 0.250 percent above LIBOR for two remaining years. The
commitment fee for the undrawn balances is 0.10 percent per annum. The terms of
the credit facility contain certain debt covenants including limitations on
indebtedness, liens, change of business, mergers, and disposal of assets.

Our interest expenses decreased in 2002 and totaled EUR 7.1 million
compared to EUR 11.2 million in 2001 and EUR 15.7 million in 2000, while
interest income was EUR 5.0 million, EUR 4.3 million and EUR 2.0 million in
2002, 2001 and 2000, respectively. The positive net impact of foreign exchange
differences on financial income and expenses was 4.0 million in 2002. The
impact was EUR 2.6 million negative and EUR 2.6 million negative in 2001 and
2000, respectively.

At December 31, 2002, total commitments and contingencies of the Group amounted
to EUR 46.5 million compared to EUR 22.5 million at December 31, 2001 and EUR
25.4 million at December 31, 2000. We have given no guarantees of indebtedness
related to our joint venture companies. The following schedules summarize our
contractual obligations and commitments to make future payments as of December
31, 2002.

|                                   |  |                        |      |        |  |           |      |       |  |      |      |  |  |  |     | 
|---------------------------------- |  | ---------------------- | ---- | ------ |  | --------- | ---- | ----- |  | ---- | ---- |  |  |  | --- | 
|                                   |  | Payments due by Period
|Contractual Obligations            |  |                        |      |        |  | Less than |      | 1-3   |  | 4 -5
|mil. EUR                           |  | Total                  |      | 1 year |  | Years     |      | years
|Long-Term Debt 1)                  |  |                        | 40.3 |        |  |           |      |       |  |      | 0.7  |  |  |  | 0.2 | 
|Operating Leases 2)                |  |                        | 38.2 |        |  |           | 14.8 |       |  |      | 21.0 |  |  |  | 1.4 | 
|Other Long-Term Obligations 3)     |  |                        | 0.2  |        |  |           |      |       |  |      |      |  |  |  |     | 
|                                   |  |                        |      |        |  |           |      |       |  |      |      |  |  |  |     | 
|Total Contractual Cash Obligations |  |                        | 78.8 |        |  |           | 14.8 |       |  |      | 21.7 |  |  |  | 1.6 | 

1) EUR 39.4 million after 5 years

2) EUR 1.0 million after 5 years

3) EUR 0.2 million after 5 years

|                                |  |            |       |           |                                            |       |     |       |  |  |     |  |  |  |     | 
|------------------------------- |  | ---------- | ----- | --------- | ------------------------------------------ | ----- | --- | ----- |  |  | --- |  |  |  | --- | 
|                                |  |            | Total |           | Amount of Commitment Expiration Per Period
|Other Commercial Commitments    |  | Amounts    |       | Less than |                                            | 1-3   |     | 4-5  
|mil. EUR                        |  | Committeed |       | 1 year    |                                            | Years |     | years
|Standby Letters of Credit       |  |            | 0.6   |           |                                            |       | 0.1 |       |  |  | 0.3 |  |  |  | 0.2 | 
|Guarantees 1)                   |  |            | 36.2  |           |                                            |       | 4.6 |       |  |  | 1.3 |  |  |  | 0.8 | 
|Other Commercial Commitments 2) |  |            | 9.5   |           |                                            |       | 3.3 |       |  |  | 3.7 |  |  |  | 0.3 | 
|                                |  |            |       |           |                                            |       |     |       |  |  |     |  |  |  |     | 
|Total Commercial Commitments    |  |            | 46.2  |           |                                            |       | 8.0 |       |  |  | 5.3 |  |  |  | 1.3 | 

1) EUR 29.5 million after 5 years or no expiration date

2) EUR 2.3 million after 5 years or no expiration date

Cash dividends for 2001 paid in 2002 on shares were EUR 0.60 per share and
ADS and total of EUR 28.9 million. Cash dividends for 2000 paid in 2001 and for
1999 paid in 2000 were EUR 0.50 per share and per ADS and total of EUR 24.0
million and EUR 0.34 per share and per ADS and total of EUR 16.1 million,
respectively.

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In 2002, the Groups capital expenditure totaled EUR 198.4 million
compared to EUR 43.3 million in the 2001 and EUR 51.0 million in 2000. Such
expenditures included investments in machinery and equipment, buildings and
land, shares, intangible rights and other long-term expenditure as well as
acquired businesses. In 2002, of the EUR 198.4 million total capital
expenditure, EUR 174.8 million was spent in North America, including the
Spacelabs Medical acquisition, EUR 23.0 million in Europe and EUR 0.6 million
in Asia-Pasific. In 2001, of the EUR 43.3 million total capital expenditure,
EUR 7.3 million was spent in North America, EUR 35.6 million in Europe and EUR
0.4 million in Asia-Pacific. In 2000, of the EUR 51.0 million total capital
expenditure, EUR 9.7 million was spent in North America, EUR 40.6 million in
Europe and EUR 0.6 million in Asia-Pacific.




5.C. Research and Development, Patents and Licenses

We believe that successful research and development will be a critical
factor in our future growth, particularly in light of the maturity of many
markets in which we operate and saturation of many of the products we supply.
Total expenses on research and development activities for years 2002, 2001 and
2000, respectively were EUR 83.4 million, EUR 66.6 million and EUR 63.8
million.

Anesthesia machine research and development is centered in Madison,
Wisconsin, with supporting activities in Bromma, Sweden. Anesthesia and
Datex-Ohmeda critical care monitoring and clinical information system research
and development are based in Finland. Spacelabs Medical critical care
monitoring research and development is centered in Seattle, Washington.
Sub-acute monitoring and oximetry research and development are centered in
Louisville, Colorado. Infant care systems research and development is at
Laurel, Maryland. Diagnostic X-ray imaging research and development is in
Finland, Germany and Riverside, California.

We believe that we have developed excellent relations with leading
scientific and medical institutions, such as the Helsinki University of
Technology, the Helsinki University Hospital, the Kuopio University Hospital,
the Oulu University Hospital and the Turku University Hospital in Finland.
Outside Finland, we have relationships with the Sahlgrenska University
Hospital, Gothenburg, the Karolinska Institute, Stockholm, and the Uppsala
University, Uppsala in Sweden; the University Hospital of Bonn, Bonn, the
Georg-August-University Göttengen, Göttingen, and the University of Freiburg,
Freiburg in Germany; the Cochin-Port-Royal Hospital, Paris, France; the Royal
Infirmary of Edinburgh, Edinburgh, UK; the Middlesex Hospital, London, UK; the
University Hospital of Bern, Switzerland; the University Hospital of Arkansas,
Little Rock, Arkansas, and University of Wisconsin Hospitals and Clinics,
Madison, Wisconsin. Under appropriate circumstances, we may conduct joint
research and development with other companies under cross license and royalty
arrangements.

We also maintain a scientific foundation, the Instrumentarium Scientific
Fund that awards grants to leading scientists. We believe that the
Instrumentarium Scientific Fund contributes to our standing within the
scientific community.




5.D. Trend Information

The medical technology sector as a whole continues to be affected by new
legislation, the introduction of new and more restrictive reimbursement schemes
and industry-wide restructuring. These factors result in pressure on medical
equipment purchasers and healthcare providers to contain costs and raise
efficiency. In the United States, in particular, managed care is having an
increasingly wide impact on the industry and is leading to a growing number of
alliances and mergers of healthcare payers, providers and suppliers. These
developments have highlighted the importance to providers of obtaining relevant
information in easily accessible form at the point of care, creating
opportunity for growth in the care information systems that we offer.
Secondly, these pressures are driving the trend towards more cost-effective
forms of patient care, including better outpatient care, such as independent
surgery centers, thereby increasing demand for light, portable and easy to use
equipment.

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The market for anesthesia and critical care equipment in industrialized
countries is mature and increasingly competitive. A few large players, which
customers increasingly see as potential single-source suppliers, account for a
large share of the global market for anesthesia and critical care monitors,
anesthesia machines and ventilators. Innovative products and solutions have,
however, continued to find acceptance in the market. Customers continue to
choose amongst competing suppliers based on quality attributes of the product,
the breadth of the product range offered, experience of after-sales services,
price and financing options.

Overall, the industry players derive substantial and increasing revenues
from recurring sales of services, accessories and supplies, and this trend is
expected to continue. Additionally, demand for digital imaging solutions and
clinical information management solutions are believed to be growing
substantially faster than the overall market.

We believe we have succeeded in the marketplace by focusing on clinicians
needs better than our competitors. Also our know-how in patient monitoring,
ventilation and drug delivery has allowed us to build complete systems for
clinicians and solved many of the problems of combining disparate devices,
especially in the operating room. Our success in entering the critical care
market has been due to our ability to cross-sell these products to our existing
anesthesia customers, as well as due to the wide parameter range we have
developed. There can be no assurance that this positive development will
continue, but we believe that we have superior expertise in developing
anesthesia systems and we believe we expense a significantly larger amount on
R&D in anesthesia system development than most other comparable companies.

The average size of an order has gradually increased each year. In 2001,
there were significantly more large orders of more than EUR 1 million each
compared with the previous year. In 2002 the company received fewer large
orders, but received one very large order in November 2002, from the Social
Security Institution of Costa Rica, of which EUR 8 million were delivered in
2002. The timing or occurrence of large orders cannot be predicted. There have
been no substantial changes in average selling prices over the past year. At
the beginning of 2002, price increases, due to introduction of new versions and
additional features have been implemented on certain products, but the impact
on sales has been somewhat offset by increased discounting.




5.E. New Accounting Standards

In June 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS), No. 146, Accounting for
Costs Associated with Exit or Disposal Activities. SFAS No. 146 addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring). This
Statement requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred and can be
measured at fair value. The provisions of this Statement are effective
prospectively for exit or disposal activities initiated after December 31,
2002. We are currently assessing the impact of this statement on the results of
operations and financial condition.

In November 2002, the FASB issued Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45 expands on the
accounting guidance of SFAS No. 5, Accounting for Contingencies, SFAS No. 57,
Related Party Disclosures, and SFAS No. 107, Disclosures about Fair Value of
Financial Instruments, and incorporates without change the provisions of FIN
34, Disclosure of Indirect Guarantees of Indebtedness of Others, an
interpretation of SFAS No. 5, which is being superseded. FIN 45 elaborates on
the existing disclosure requirements for most guarantees, including loan
guarantees, such as standby letters of credit. It also clarifies that at the
time a company issues a guarantee, the company must recognize an initial
liability for the fair value, or market value, of the obligations it assumes
under that guarantee and must disclose that information in

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its interim and annual financial statements. FIN 45 will be effective to
the Company on a prospective basis to guarantees issued or modified after
December 31, 2002. The disclosure requirements in this Interpretation are
effective for financial statements for periods ending after December 15, 2002.
We are currently evaluating the impact of this statement on our results of
operations or financial position.

In November 2002, the Emerging Issue Task Force (EITF) reached a final
consensus on EITF 00-21, Revenue Arrangements with Multiple Deliverables.
EITF 00-21 addresses certain aspects of the accounting of revenue arrangements
with multiple deliverables by a vendor. The issue outlines an approach to
determine when a revenue arrangement for multiple deliverables should be
divided into separate units of accounting and, if separation is appropriate,
how the arrangement consideration should be allocated to the identified
accounting units. EITF 00-21 is effective for revenue arrangements entered into
in fiscal periods beginning after June 15, 2003. EITF 00-21 also provides for
an alternative to report the change in accounting as a cumulative-effect
adjustment in accordance with APB Opinion No. 20. We have not yet determined
the method of transition we will use.

In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based
Compensation  Transition and Disclosure  An amendment of FASB Statement No.
123. SFAS 148, which is applicable to financial periods ending after December
15, 2002, amends SFAS 123, Accounting for Stock-Based Compensation to provide
alternative methods for transition to SFAS 123 fair value method of accounting
for stock-based employee compensation. This statement also amends the
disclosure provisions to require prominent disclosure about the method of
accounting used for stock-based employee compensation and the effect of the
method used on reported results. We have elected to continue to apply APB
Opinion No. 25 Accounting for Stock Issued to Employees.

Interpretation No. 46, Consolidation of Variable Interest Entities (FIN
46) was issued by the FASB in January 2003. Under the interpretation, certain
entities known as Variable Interest Entities (VIEs), must be consolidated
by the primary beneficiary of the entity. The primary beneficiary is
generally defined as having the majority of the risks and rewards arising from
the VIE. For VIEs in which a significant (but not majority) variable interest
is held, certain disclosures are required. The consolidation requirements apply
to all new VIEs created and on and after February 1, 2003, with transitional
provisions for VIEs that existed prior to that date. We plan to adopt the
initial and transitional consolidation provisions of FIN 46 on February 1, 2003
and January 1, 2004, respectively. We are currently evaluating the impact of
this statement on our results of operations or financial position.

In April 2003, FASB issued SFAS 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. The Statement
changes the accounting for certain financial instruments that, under previous
guidance, issuers could account for as equity. The new Statement requires that
those instruments be classified as liabilities in statements of financial
position. The Statement is effective for interim periods beginning after June
15, 2003. We are currently evaluating the effect of this statement on our
results of operations or financial position.




ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES




6.A. Directors and Senior Management of the Company

Pursuant to the provisions of the Finnish Companies Act and our articles
of association, control and management is divided among the shareholders in
general meeting, the board of directors and the president and CEO.

The general meeting is our ultimate decision making body, deciding
corporate matters as set forth in the in the provisions of the Companies Act
and our articles of association. The annual general meeting is held annually
before the end of April.

The board of directors is responsible for overall administration and
management and the proper organization of our activities, and consists of not
less than five and not more than eight members. The members of the board
choose a chairman from amongst themselves. Under Finnish

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law, the President and at least half of the members of the board of
directors must be residents of the European Economic Area, unless an exemption
from this requirement is granted by the Ministry of Trade and Industry. The
board of directors has ultimate responsibility for our general management,
although the daily management of our affairs is granted to the president and
CEO.

The president and CEO is responsible for the daily administration and
management of our affairs in accordance with the instructions of the board of
directors. According to the Companies Act, the president shall be elected by
the board.

The members of our board of directors, their positions and terms are set forth
below:

|                                        |  |     |    |         |  |            |      |          |  |  |      |  |  |                             |  | 
|--------------------------------------- |  | --- | -- | ------- |  | ---------- | ---- | -------- |  |  | ---- |  |  | --------------------------- |  | 
|                                        |  |     |    |         |  | Year first |      | Term     |  |  |      | 
|Name1                                   |  | Age |    | elected |  | expires    |      | Position
|Timo Peltola, Dr. (Hc.), B. (Econ.)     |  |     | 57 |         |  |            | 2001 |          |  |  | 2004 |  |  | Chairman, director         
|Mika Ihamuotila, Ph.D. (Econ.)          |  |     | 38 |         |  |            | 2002 |          |  |  | 2004 |  |  | Director                   
|Rabbe Klemets, Ph.Lic                   |  |     | 49 |         |  |            | 2002 |          |  |  | 2004 |  |  | Director                   
|Juhani Kuusi, Professor, D. Sc. (Tech.) |  |     | 64 |         |  |            | 1997 |          |  |  | 2004 |  |  | Director                   
|Olli Riikkala, M.Sc. (Tech.), MBA       |  |     | 52 |         |  |            | 1987 |          |  |  | 2004 |  |  | President and CEO, director
|Turo K. J. Tukiainen, LL.B., MBA        |  |     | 66 |         |  |            | 1999 |          |  |  | 2004 |  |  | Director                   



|(1) |  | Jukka Takala was a member of the board of directors until March 25, 2003.
|--- |  | -------------------------------------------------------------------------

Timo Peltola is chief executive officer of Huhtamäki Oyj since 1989. He
is a member of the board of Huhtamäki Oyj, vice chairman of the board of
directors of Nordea Plc, chairman of the supervisory board of Mutual Pension
Insurance Company Ilmarinen Ltd., and a member of the supervisory boards of the
Finnish Cultural Foundation and the Finnish Fair Corporation. Timo Peltola, Dr.
(Hc.), holds a Bachelor degree in economics.

Mika Ihamuotila is executive vice president of Sampo plc and the chairman
of the board of directors of Sampo Bank plc since 2001. He is a board member of
Elisa plc and HYY Group Ltd. He holds a doctoral degree in economics.

Rabbe Klemets is chief executive officer of Raisio Group plc since 2001.
His previous duties in Raisio Group included the position as deputy chief
executive officer and managing director of Raisio Benecol Ltd. Before joining
Raisio he worked as president of the Life Science Division of the EG/G Inc. in
1996-1999 and as chief executive officer of Wallac Oy in 1991-1997. He holds a
licentiate in Philosophy degree in biochemistry.

Juhani Kuusi is senior vice president of Nokia Corporation since 2003. He
acted as Head of Nokia Research Center between 1995 and 2002. Before joining
Nokia, he worked as director general of Technology Development Centre (TEKES),
and as professor and director of the Reactor Laboratory of the Technical
Research Center of Finland (VTT). He holds a doctoral degree in technology.

Olli Riikkala is president and chief executive officer of the Company
since 1997 and has been a member of the board of directors since 1987. He
joined the Company in 1979 and since 1982 has held various general management
positions in the medical technology divisions of the company. He is among
others a board member of Oyj Fiskars Abp and Helvar Merca Oy Ab and a member of
the supervisory board of the Finnish Fair Corporation. He holds a Master of
Science degree in engineering and a Master in Business Administration degree.

Turo K. J. Tukiainen has held several positions in the A. Ahlström
Corporation from 1967 to 1990 and was a member of its board of directors from
1980-1996. He was a member of our supervisory board from 1970 to 1999. He
holds a Bachelor of Laws degree (trained on the bench) and a Master in Business
Administration degree.

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Our senior managers and their positions as of December 31, 2002 are set
forth below:

|                 |  |     |    |          |  |                                                                        
|---------------- |  | --- | -- | -------- |  | -----------------------------------------------------------------------
|Name             |  | Age |    | Position
|Olli Riikkala    |  |     | 52 |          |  | President and Chief Executive Officer (CEO)                            
|Matti Salmivuori |  |     | 52 |          |  | Chief Financial Officer                                                
|Hannu Ahjopalo   |  |     | 54 |          |  | Executive Director                                                     
|Juhani Lassila   |  |     | 41 |          |  | Group Treasurer                                                        
|Timo Koskinen    |  |     | 54 |          |  | Global HR Director                                                     
|Ritva Sotamaa    |  |     | 39 |          |  | General Counsel                                                        
|Arto Kontturi    |  |     | 57 |          |  | Chief Operating Officer, Datex-Ohmeda Division                         
|Richard Atkin    |  |     | 50 |          |  | President and CEO, Datex-Ohmeda North America                          
|Chris Clough     |  |     | 60 |          |  | Managing Director, Distributor Sales, Datex-Ohmeda Division            
|Lori Cross       |  |     | 43 |          |  | President, Anesthesia Delivery and Ventilation, Datex-Ohmeda Division  
|Eero Hautaniemi  |  |     | 37 |          |  | Director, Finance and Administration, Datex-Ohmeda Division            
|Nicholas Ong     |  |     | 38 |          |  | President, Datex-Ohmeda Asia Sales and Service                         
|Antti Ritvos     |  |     | 49 |          |  | President, Patient Monitoring, Nordic Operations, Datex-Ohmeda Division
|Hannu Syrjälä    |  |     | 36 |          |  | President of Oximetry, Supplies and Accessories, Datex-Ohmeda Division 
|Sami Erviö       |  |     | 40 |          |  | President, Deio Corporation                                            
|Andrew Krakauer  |  |     | 48 |          |  | President, Ohmeda Medical Division                                     
|Folke Lindberg   |  |     | 57 |          |  | General Manager, Diagnostic Imaging                                    

Olli Riikkala is the president and chief executive officer. See his
biography above.

Matti Salmivuori has been chief financial officer of Instrumentarium since
1984. After joining in 1973, he held various positions in the financial
department of Instrumentarium Group Administration, and he was a member of the
board of directors years 1992-1999. He holds a Master of Science degree in
economics.

Hannu Ahjopalo has been executive director in charge of corporate
development and new strategic ventures since May 2000. After joining
Instrumentarium in 1977, he held general management positions in our Datex,
Datex-Engstrom and Datex-Ohmeda divisions, most recently president of Patient
Monitoring and Corporate Marketing Director of Datex-Ohmeda. He holds a
masters degree in electronics and telecommunications engineering.

Juhani Lassila, is group treasurer. He first joined Instrumentarium in
1987 as a financial analyst. The following year he joined the Finnish
Postipankki, now Sampo Group, and after a career in corporate banking returned
to Instrumentarium in 1996 as group treasurer responsible for treasury and
investor relations. Since 1999, he has also been responsible for finance, in
which area his responsibilities include external and internal accounting and
reporting, as well as tax planning and insurance matters. He holds a Master of
Science degree in economics.

Timo Koskinen is director, Global Human Resources. He joined
Instrumentarium in June 1999. Before that he was Group Vice President of
Tamrock Corporation (1990 1999) and held various development and managerial
positions in human resources consulting businesses of MPS Finland Oy
(1984-1985) and Psyko Consulting Group (1986-1989) and in the mining equipment
industry of Kone Corporation (1974-1983). He holds Master of Science degree in
Psychology.

Ritva Sotamaa is general counsel. He joined Instrumentarium in 1989 as
legal counsel responsible for international legal matters. She worked in Sisu
Corporation, later a part of Partek Corporation years 1996  1998 and returned
in 1998 to Instrumentarium as General Counsel. She holds a Master of Laws
degree (trained on the bench).

Arto Kontturi has been chief operating officer, Datex Ohmeda Division
since April 2000. He joined Instrumentarium during summer 1997 and
Datex-Engström in September 1997. Before that he was the president of
Labsystems Oy (1989-1997) and held various development and management positions
in Valmet Automation (1970-1989). He holds a Master of Science degree in
engineering.

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Richard Atkin has been president and chief executive officer of
Datex-Ohmeda, North America since 1998. He joined Ohmeda in 1994, and has held
a number of senior management positions in the United Kingdom and the United
States. Previously he worked for GEC Marconi in the United Kingdom. He holds
a Bachelor of Science degree and a Master in Business Administration degree.

Chris Clough is managing director, Europe and Distributors for
Datex-Ohmeda. He has been involved in the medical equipment business since
1975 with Ohmeda, holding various global general management positions. He
holds a Bachelor of Science degree and Doctor of Philosophy degree in civil
engineering. He is a former chairman of the Association of British Healthcare
Industries.

Lori Cross, president, Anesthesia Delivery and Ventilation Business,
Datex-Ohmeda Division has held various positions in general management, product
development, strategic marketing and information management solutions in Europe
and North America since 1989. Previously she held global management positions
with Smith and Nephew, Baxter and American Hospital Supply. She holds a
masters degree in systems engineering, a Bachelors in biomedical engineering
and a Master in Business Administration degree. She also serves as the Vice
President of the Anesthesia Patient Safety Foundation.

Eero Hautaniemi, director of finance and administration, Datex-Ohmeda
Division has held positions in finance management in Instrumentarium Corporate
Administration and Datex-Ohmeda since 1990, most recently chief financial
officer of Datex-Ohmeda Inc. (USA) 1999-2001. He holds a Master of Science
degree in economics.

Nicholas Ong, president, Asia Pacific region for Datex-Ohmeda, joined
Ohmeda in 1995. Previously, he worked for Beckman Instruments and Steris
responsible for the Asia Pacific region. He holds a Bachelor of Science degree
and a Master in Business Administration degree.

Antti Ritvos, president, Patient Monitoring, Nordic Operations,
Datex-Ohmeda Division has held positions in general management, marketing and
business development in Instrumentarium Oyj since 1986. Prior to joining us,
he had wide experience in research and development of laser technologies and
fiber optics. He holds a Diploma Engineering degree , and a Bachelor of
Science degree in theoretical physics and astronomy.

Hannu Syrjälä, president, Oximetry Supplies and Accessories Business Area
has held various positions in finance, sales and marketing management, and
general management in Instrumentarium since 1990. He joined Datex-Engstrom
Division as sales director from the group treasury position in 1996. From 1998
to 2000, he was the managing director of Datex-Ohmeda Pty Ltd in Australia. He
holds a Master of Science degree in economics.

Sami Erviö has been president and chief executive officer of the Deio
Corporation, our information systems company since it was founded in 2000.
Since joining our Datex division in 1987, he has held various management
positions in marketing and new product development. He was our business
development director from 1997 to 1998, and was responsible for Datex-Ohmedas
European sales operations in 1998-2000. He holds a Master of Science degree in
engineering and a Master in Business Administration degree.

Andrew Krakauer has been President of Ohmeda Medical since 1990. He has
held various general management, business development, strategic planning and
financial positions since joining Ohmeda or predecessor companies in 1980. He
holds a Bachelor of Arts degree in economics and a Master in Business
Administration degree.

Folke Lindberg is general manager of our Diagnostic Imaging business.
After joining Instrumentarium in 1969 he has held various management positions
in research and development, production, marketing, business development and
general management. He holds a Master of Science degree in electrical
engineering.

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There are no arrangements or understandings between any director or senior
manager and any major shareholder, customer, supplier or others pursuant to
which such director or senior manager was selected to serve nor are there any
family relationships between any of our directors or senior management.




6.B. Compensation of Directors and Senior Management

For the year ended December 31, 2002, the aggregate compensation of all
directors and senior management as a group (22 persons), paid or accrued, was
EUR 4,080,867.01. Such compensation was mainly in the form of salaries and
individual bonuses in the case of senior management and board member fees in
the case of members of the board of directors. Individual bonuses are
determined annually on a discretionary basis related to performance in respect
of profit and other specified objectives. The guidelines for payment of
bonuses are given by the Compensation Committee. In addition, in 2002, we
contributed an aggregate of approximately EUR 464,275.72 to provide pension,
retirement or similar benefits for members of senior management.

The aggregate amount of stock options granted to directors and senior
management of the company during the year 2002 is as follows:

|       |  |      |        | 
|------ |  | ---- | ------ | 
|1998 A |  | None
|1998 B |  |      | 12,000 | 
|1998 C |  |      | 18,000 | 
|2001 A |  |      | 3,000  | 
|2001 B |  |      | 11,000 | 

For further information regarding these stock options, please see Item 6.E. below.




6.C. Board Practices

The members of the board of directors are elected by the annual general
meeting for a term ending at the close of the annual general meeting next
following their election. A person who is 67 years of age or more may not be
elected a member of the board. Directors do not have service contracts with us.

Members of the board of directors may serve any number of consecutive
terms. Our employees are not entitled to appoint members to the board. The
board of directors currently holds regular meetings six to nine times a year
and may hold special meetings as circumstances require.

The Board of Directors has formed an Audit Committee and a Compensation
Committee, both consisting of three members and have approved written charters
for the Committees. The purpose of the Audit Committee is to assist the Board
in fulfilling its responsibilities to oversee the Companys and the Groups
financial reporting process, including monitoring the integrity of the
Companys financial statements and the independence and performance of the
Companys internal and external auditors. The purpose of the Compensation
Committee is to recommend, review and approve Instrumentarium compensation
policies and programs as well as individual executive compensation to retain
and attract individuals who are needed for ensuring the competitiveness and
long-term success of the Company. Members of the Audit Committee are Mika
Ihamuotila (chair), Rabbe Klemets and Turo K.J. Tukiainen. Members of the
Compensation Committee are Timo Peltola (chair), Juhani Kuusi and Olli
Riikkala.




6.D. Employees

During each of 2002, 2001 and 2000, we employed an average of 5,650, 5,317
and 5,205 employees, respectively. On December 31, 2002, the Group had 5,325
employees, of which 4,014 were employed outside Finland. This compares to
5,386 employees on December 31, 2001, of which 3,320 worked outside Finland and
to 5,217 employees on December 31, 2000, of which 3,329 worked outside of
Finland.

44



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The majority of our Finnish employees belong to unions affiliated with the
Finnish Metalworkers Union or the Union of Salaried Employees in Industry.
While under certain circumstances we negotiate directly with unions, wage and
salary levels as well as general working conditions are generally governed by
nation-wide contracts negotiated by the association of Finnish employers. In
December 2002, these national contracts were renewed and extended until
February 15, 2005. These contracts also cover our industrial workers.

In the United States, the manufacturing employees at the Madison,
Wisconsin plant belong to the Lodge 1406 of the International Association of
Machinists & Aerospace Workers, AFL-CIO, and are covered by a collective
bargaining agreement effective to June 15, 2006. The majority of our Swedish
employees belong to unions affiliated with the Swedish Metalworkers Union
(Metall), the Swedish Association of Graduate Engineers (CF) and the Union of
Salaried Employees in Industry (SIF). While under certain circumstances we
negotiate directly with local unions, wage and salary levels as well as general
working conditions are generally governed by nation-wide contracts negotiated
by the association of Swedish employers. The existing contracts cover a
three-year period ending March 31, 2004. We believe that labor relations are
good at all our manufacturing sites.




6.E. Share Ownership

The combined interests of the directors and senior management, assuming
that options held had been exercised, would constitute less than one percent
of the shares and voting rights in Instrumentarium as of June 16, 2003. No
director or senior manager has beneficial holdings that would constitute more
than one percent of the shares and voting rights. As at June 16, 2003, shares
and options held by members of our board of directors are set forth below:

|                    |  |                  |  |                         
|------------------- |  | ---------------- |  | ------------------------
|Name                |  | Number of Shares |  | Number of Options       
|                    |  |                  |  |                         
|Timo Peltola        |  | None             |  | None                    
|                    |  |                  |  |                         
|Mika Ihamuotila     |  | None             |  | None                    
|                    |  |                  |  |                         
|Rabbe Klemets       |  | None             |  | None                    
|                    |  |                  |  |                         
|Juhani Kuusi        |  | None             |  | 2400 of 1998 A options  
|                    |  |                  |  |                         
|                    |  |                  |  | 2400 of 1998 B options  
|                    |  |                  |  |                         
|                    |  |                  |  | 3200 of 1998 C options  
|                    |  |                  |  |                         
|Olli Riikkala       |  | 74               |  | 12,000 of 1998 C options
|                    |  |                  |  |                         
|                    |  |                  |  | 20,000 of 2001 A options
|                    |  |                  |  |                         
|                    |  |                  |  | 20,000 of 2001 B options
|                    |  |                  |  |                         
|Turo K.J. Tukiainen |  | 120,004          |  | 2400 of 1998 A options  
|                    |  |                  |  |                         
|                    |  |                  |  | 2400 of 1998 B options  
|                    |  |                  |  |                         
|                    |  |                  |  | 3200 of 1998 C options  

Options to Purchase Securities from Company or Subsidiaries

Employee Option Plans

We have two stock option plans, the 1998 Plan and the 2001 Plan,
pursuant to which key personnel and in case of the 1998 Plan, members of our
board of directors are eligible to receive stock options as part of an
incentive program. Since 2001, stock options have not been granted to members
of the Board. The options are granted free of any purchase price.

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The maximum number of stock options under the 1998 Plan is 1,090,987, of
which 324,600 are designated A options, 324,600 are designated B options, and
441,787 are designated C options. After the bonus issue approved by the annual
general meeting on March 25, 2002 the total number of shares available under
the 1998 Plan is 2,609,860.

The maximum number of stock options under the 2001 Plan is 860,000, of
which 430,000 are designated A options and 430,000 B options. After the bonus
issue approved by the annual general meeting on March 25, 2002, the total
number of shares available under the 2001 Plan is 1,720,000.

The following table sets forth the subscription period, exercise price,
and number of options granted as of June 16, 2003 to key personnel and members
of the board of directors under the 1998 Plan. The remainder have been given to
Eksperimentarium Oy, a subsidiary, for possible later disbursement to key
personnel at the decision of the board of directors. Eksperimentarium Oy is
not entitled to subscribe for shares.

|                   |  |         |           |                        |  |                |  |            |  |  |         |         |  |  |           | 
|------------------ |  | ------- | --------- | ---------------------- |  | -------------- |  | ---------- |  |  | ------- | ------- |  |  | --------- | 
|                   |  | Options |           |                        |  |                |  |            |  |  |         | Options
|Option certificate |  | issued  |           | Subscription period(2) |  | Exercise price |  | granted(1)
|                   |  |         |           |                        |  |                |  |           
|1998 A             |  |         | 324,600   |                        |  | June 1, 2001 - |  | EUR 18.14  |  |  | 315,000 |        
|                   |  |         |           |                        |  | June 30, 2006  |  |            |  |  |         |         |  | 
|1998 B             |  |         | 324,600   |                        |  | June 1, 2002 - |  | EUR 16.32  |  |  | 316,100 |        
|                   |  |         |           |                        |  | June 30, 2006  |  |            |  |  |         |         |  | 
|1998 C             |  |         | 441,787   |                        |  | June 1, 2003 - |  | EUR 14.77  |  |  | 429,800 |        
|                   |  |         |           |                        |  | June 30, 2006  |  |            |  |  |         |         |  | 
|Total              |  |         | 1,090,987 |                        |  |                |  |            |  |  |         |         |  |  | 1,060,900 | 



|(1) |  | Holders are entitled to 2.3922 shares per option.        
|--- |  | ---------------------------------------------------------
|   
|(2) |  | The options expire at the end of the subscription period.

The following table sets forth the subscription period, exercise price,
and number of options granted as of June 16, 2003 to key personnel under the
2001 Plan.. The remainder has been given to Eksperimentarium Oy for possible
later disbursement to key personnel at the decision of the board of directors.
Eksperimentarium Oy is not entitled to subscribe for shares.

|                   |  |         |         |                        |  |                   |  |            |  |  |         |         |  |  |         | 
|------------------ |  | ------- | ------- | ---------------------- |  | ----------------- |  | ---------- |  |  | ------- | ------- |  |  | ------- | 
|                   |  | Options |         |                        |  |                   |  |            |  |  |         | Options
|Option certificate |  | issued  |         | Subscription period(2) |  | Exercise price(3) |  | granted(1)
|                   |  |         |         |                        |  |                   |  |           
|2001 A             |  |         | 430,000 |                        |  | Dec. 1, 2003-     |  | EUR 13.27  |  |  | 397,800 |        
|                   |  |         |         |                        |  | June 30, 2007     |  |            |  |  |         |         |  | 
|2001 B             |  |         | 430,000 |                        |  | Dec. 1, 2004-     |  | EUR 17.54  |  |  | 171,000 |        
|                   |  |         |         |                        |  | June 30, 2007     |  |            |  |  |         |         |  | 
|Total              |  |         | 860,000 |                        |  |                   |  |            |  |  |         |         |  |  | 568,800 | 



|(1) |  | Holders are entitled to 2 shares per option.                                                                                                                                                                                                                                    
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The options expire at the end of the subscription period.                                                                                                                                                                                                                       
|   
|(3) |  | The special dividend in the amount of EUR 4 distributed for the fiscal year
2002, which differs from the Companys normal dividend distribution policy, has
been deducted from the subscription prices in accordance of with the terms and
conditions of the stock option terms.

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If all stock options issued were granted and exercised, our share capital
would increase by EUR 7,922,482 to EUR 104,997,204.

If a stock option holder (with the exception of a member of the board of
directors who is not employed by us or in our service on a full time basis)
ceases to be employed by us or in our service for any reason other than
retirement or death, such person must return any option certificates for which
the share subscription period has not commenced, and forfeit those options.




ITEM 7: MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS




7.A. Major Shareholders

We are not directly or indirectly owned or controlled by another
corporation or by any government. See Item 4.A. History and development of
Instrumentarium  Recent developments for a description of the GE tender offer
for all shares and options of Instrumentarium.

As of June 12, 2003, there were no persons known to us to hold 5% or more
of our voting securities.

The following is a list of our principal shareholders as of June 12, 2003:

|                          |                                                   |                                          |            |             |         |  |       |     |     | 
|------------------------- | ------------------------------------------------- | ---------------------------------------- | ---------- | ----------- | ------- |  | ----- | --- | --- | 
|                          |                                                   |                                          |            | Number of   |         |  |       |    
|Shareholder               |                                                   | shares                                   |            | % of shares
|                          |                                                   |                                          |            |            
|                          | 1 Sampo Life Insurance Company Limited            |                                          |            | 1,209,400   |         |  |       | 2.5 |    
|                          | 2 Varma-Sampo Mutual Pension Insurance Company    |                                          |            | 1,113,818   |         |  |       | 2.3 |    
|                          | 3 Tapiola Insurance Group                         |                                          |            | 1,111,298   |         |  |       | 2.3 |    
|                          |                                                   | Tapiola Mutual Pension Insurance Company |            |             | 454,530 |  |       |     | 0.9 | 
|                          |                                                   | Tapiola General Mutual Insurance Company |            |             | 405,778 |  |       |     | 0.8 | 
|                          |                                                   | Tapiola Mutual Life Assurance Company    |            |             | 187,216 |  |       |     | 0.4 | 
|                          |                                                   | Tapiola Corporate Life Insurance Company |            |             | 63,774  |  |       |     | 0.1 | 
|                          | 4 Mutual Pension Insurance Company Ilmarinen Ltd. |                                          |            | 906,992     |         |  |       | 1.9 |    
|                          | 5 The Local Government Pensions Fund              |                                          |            | 606,948     |         |  |       | 1.3 |    
|                          | 6 Medical Investment Trust Oy                     |                                          |            | 583,300     |         |  |       | 1.2 |    
|                          | 7 Folkhälsan                                      |                                          |            | 558,000     |         |  |       | 1.1 |    
|                          | 8 The Social Insurance Institution                |                                          |            | 420,470     |         |  |       | 0.9 |    
|                          | 9 The Finnish Medical Society Duodecim            |                                          |            | 400,732     |         |  |       | 0.8 |    
|                          | 10 H. Kuningas & Co Oy Ab                         |                                          |            | 400,396     |         |  |       | 0.8 |    
|                          | 11 Instrumentarium Scientific Fund                |                                          |            | 361,438     |         |  |       | 0.7 |    
|                          | 12 State Pension Fund                             |                                          |            | 310,000     |         |  |       | 0.6 |    
|                          | 13 BNP Arbitrage                                  |                                          |            | 295,804     |         |  |       | 0.6 |    
|                          | 14 Etra-Invest Oy                                 |                                          |            | 290,550     |         |  |       | 0.6 |    
|                          | 15 The Finnish Cultural Foundation                |                                          |            | 280,648     |         |  |       | 0.6 |    
|                          | 16 Inez and Julius Polins Foundation              |                                          |            | 262,690     |         |  |       | 0.5 |    
|                          | 17 Jenny and Antti Wihuri Foundation              |                                          |            | 230,022     |         |  |       | 0.5 |    
|                          | 18 Pensionfund Polaris                            |                                          |            | 226,816     |         |  |       | 0.5 |    
|                          | 19 Medko Oy (1)                                   |                                          |            | 217,592     |         |  |       | 0.4 |    
|                          | 20 Sigrid Jusélius Foundation                     |                                          |            | 215,138     |         |  |       | 0.4 |    
|                          |                                                   |                                          |            |             |         |  |       |     |    
|                          |                                                   |                                          | 10,002,052 |             |         |  | 20.6  |    
|Nominee registered shares |                                                   |                                          | 16,213,751 |             |         |  | 33.4  |    
|Other shareholders        |                                                   |                                          | 22,321,558 |             |         |  | 46.0  |    
|                          |                                                   |                                          |            |             |         |  |       |     |    
|Total                     |                                                   |                                          | 48,537,361 |             |         |  | 100.0 |    



|(1) |  | part of Instrumentarium Group, not entitled to vote at the General Meeting
|--- |  | --------------------------------------------------------------------------

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According to information provided by JPMorgan Chase Bank, as of June 11,
2003, there were 20 U.S. record holders of 247,891 ADSs, representing 247,891
shares. In the aggregate, such holdings constituted [0.5] percent of total
outstanding shares at such date. Because some of the shares and ADSs are held
by brokers and other nominees, the above numbers may not be representative of
the actual number of U.S. beneficial holders or of the number of shares or ADSs
beneficially held by U.S. persons.




7.B. Related Party Transactions

None.




7.C. Interests of Experts and Counsel

Not applicable.




ITEM 8: FINANCIAL INFORMATION




8.A. Consolidated Statements and Other Financial Information

8.A.1See Item 18.

8.A.2See Item 18.

8.A.3See Report of Independent Accountants, page F-1.

8.A.4Not applicable.

8.A.5Not applicable.

8.A.6See note 2 to the consolidated financial statements.

8.A.7 Litigation

We and our subsidiaries are party to routine litigation, incidental to the
normal conduct of our business. Part of the expenses incurred in connection
with such litigation are covered by insurance. Management does not believe
that liabilities related to such proceedings, in the aggregate, before
insurance recoveries, if any, are likely to be material to the Groups or our
financial condition or results of operations.

Ohmeda Medical was named defendant in the United States District Court for
the Southern District of Indiana in a patent lawsuit filed by Hill-Rom, Inc. in
September 2000, and became in May 2001 subject to preliminary injunction
enjoining the sale of its Giraffe® OmniBed product. In July 2001 and in October
2001, Ohmeda Medical filed lawsuits against Hill-Rom in the United States
District Court for the District of Delaware. In October 2001, Hill-Rom filed a
lawsuit against Ohmeda Medical in the United States District Court for the
Southern District of Indiana. All the lawsuits were settled in August, 2002,
and Ohmeda Medical is now free to market and sell its Giraffe® OmniBed.

8.A.8Dividend Policy

We pay annual dividends to our shareholders based on the long-term trends
for consolidated profitability and our financial position. Our objective is to
pay regular annual dividends, based upon, and in relation to, profits. Any
dividend to be paid in the future years, their amount and the time of payment
will depend on our future earnings, financial condition, results of operations,
cash flows, working capital requirements, the business cycle, balance sheet
ratio targets and such other factors that our board of directors consider
relevant.

For companies domiciled in Finland and incorporated under Finnish law,
dividends on shares are generally only paid annually after shareholder approval
of both a companys results and of the amount of the dividend proposed by the
board of directors. Under Finnish law, the amount of any

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dividend is limited to the amount of profits and distributable equity
available at the end of the preceding fiscal year for the Company or for the
Group on a consolidated basis, whichever is lower. As of December 31, 2002,
the amount of the Companys and the Groups distributable equity was EUR 432.2
million and EUR 459.8 million, respectively. The difference between the
Companys distributable equity of EUR 432.2 million and the Groups
distributable equity of EUR 459.8 million is caused by earnings related to our
subsidiaries that are reflected in the consolidated accounts but not in the
Companys accounts. Subject to certain exceptions relating to the right of
minority shareholders to request otherwise, the dividend may not exceed an
amount recommended by the board of directors.

At the annual general meeting held on March 25, 2003, we declared a
dividend of EUR 4.70 per share in respect of the fiscal year 2002. This
represents a dividend of EUR 4.70 per ADS. The dividend was paid on April 4,
2003 to shareholders entered in the register of shareholders on March 28, 2003.

The following table sets forth the aggregate amounts of dividends paid in
respect of our shares and the amounts paid per share in euros and U.S. dollars
in respect of the periods shown:

|                        |  |                            |         |                  |  |                        |      |  |  |  |      | 
|----------------------- |  | -------------------------- | ------- | ---------------- |  | ---------------------- | ---- |  |  |  | ---- | 
|                        |  | Aggregate amount of        |         |                  |  |                        |      |  |  | 
|                        |  | dividends (in thousands of |         |                  |  |                        |      |  |  | 
|Year ended December 31, |  | EUR)                       |         | EUR per share(1) |  | U.S.$ per share(1) (2)
|1998                    |  |                            | 14,177  |                  |  |                        | 0.30 |  |  |  | 0.32 | 
|1999                    |  |                            | 16,143  |                  |  |                        | 0.34 |  |  |  | 0.33 | 
|2000 (3)                |  |                            | 23,974  |                  |  |                        | 0.50 |  |  |  | 0.45 | 
|2001                    |  |                            | 28,899  |                  |  |                        | 0.60 |  |  |  | 0.53 | 
|2002                    |  |                            | 228,107 |                  |  |                        | 4.70 |  |  |  | 5.03 | 



|(1) |  | Adjusted for the 1998 share issue and for the 2002 bonus issue.                                                       
|--- |  | ----------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Based on the noon buying rate in effect at the respective dates on which
dividends first became available for payment.
|   
|(3) |  | Includes a 100-year anniversary bonus dividend of EUR 0.10 per share.                                                 

Dividends paid to shareholders who are non-residents of Finland are
generally subject to Finnish withholding tax. The tax rate for 2002 was 29
percent, which rate may be reduced pursuant to an applicable tax treaty to
which Finland is a party.




8.B Significant Changes

No significant changes have occurred since the date of our consolidated
financial statements included in this Form 20-F. See Item 5.D. Trend
Information.




ITEM 9: THE OFFER AND LISTING




9.A. Offer and Listing Details

We have one listed share series. The principal trading market for the
shares is the Helsinki Exchanges, where the shares have been quoted since 1971.
In addition, shares in the form of American depositary shares evidenced by
American depositary receipts have been listed on the Nasdaq Small Cap Market in
the United States since 1983. Each share was represented by two ADRs during
2001. As of April 3, 2002, the ratio of shares to ADRs changed to one to one.

The tables below set forth, for the periods indicated, the reported high
and low quoted prices for A and B Shares through 1999, and for combined shares
thereafter, on the HEX Helsinki Exchanges, as reported by the HEX Helsinki
Exchanges together with the highs and lows of the HEX general index, a leading
index of trading in all equity securities on the HEX Helsinki Exchanges. In
addition, the tables set forth the high and low quoted prices for the B Shares
(in the form of ADSs) on the National Association of Securities Dealers, Inc.,
(NASD) Monthly Statistical Report. Price information regarding B Shares
includes price information after combination of the share series. The
quotations represent prices between dealers without adjustment for actual
mark-ups, mark-downs or

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commissions and may not represent retail transactions. To make prices
comparable, historical values have been adjusted for share issues.





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|                    |  |                    |       |           |  |       |       |     |  |      |       |            |  |           |       |     |  |                       |           |              |  |  |          |  |  |  |       |  |  |  |       | 
|------------------- |  | ------------------ | ----- | --------- |  | ----- | ----- | --- |  | ---- | ----- | ---------- |  | --------- | ----- | --- |  | --------------------- | --------- | ------------ |  |  | -------- |  |  |  | ----- |  |  |  | ----- | 
|                    |  |                    |       |           |  |       |       |     |  |      |       |            |  |           |       |     |  | HEX General Index (a) |           | Nasdaq Small
|                    |  |                    |       |           |  |       |       |     |  |      |       |            |  |           |       |     |  |                       |           |             
|                    |  | Helsinki Exchanges |       |           |  |       |       |     |  |      |       | Cap Market
|                    |  |                    |       |           |  |       |       |     |  |      |       |           
|                    |  | Price Per          |       | Price Per |  |       |       |     |  |      |       |            |  | Price Per
|                    |  | A Share            |       | B Share   |  |       |       |     |  |      |       |            |  | ADS      
|                    |  |                    |       |           |  |       |       |     |  |      |       |            |  |          
|                    |  | High               |       | Low       |  | High  |       | Low |  | High |       | Low        |  | High      |       | Low
|                    |  |                    |       |           |  |       |       |     |  |      |       |            |  |           |       |    
|                    |  |                    |       |           |  | (EUR) |       |     |  |      |       | (EUR)      |  | (U.S.$)  
|1998                |  |                    | 31.60 |           |  |       | 13.77 |     |  |      | 32.28 |            |  |           | 13.77 |     |  |                       | 5,725.30  |              |  |  | 3,198.33 |  |  |  | 33.96 |  |  |  | 16.38 | 
|1999                |  |                    | 20.50 |           |  |       | 12.55 |     |  |      | 20.25 |            |  |           | 13.20 |     |  |                       | 14,818.06 |              |  |  | 5,565.27 |  |  |  | 21.75 |  |  |  | 14.50 | 
|2000                |  |                    |       |           |  |       |       |     |  |      | 18.42 |            |  |           | 9.93  |     |  |                       | 18,408.44 |              |  |  | 9,818.48 |  |  |  | 18.50 |  |  |  | 8.75  | 
|2001                |  |                    |       |           |  |       |       |     |  |      |       |            |  |           |       |     |  |                       |           |              |  |  |          |  |  |  |       |  |  |  |       | 
|First Quarter       |  |                    |       |           |  |       |       |     |  |      | 16.60 |            |  |           | 10.45 |     |  |                       | 13,233.95 |              |  |  | 7,666.59 |  |  |  | 15.50 |  |  |  | 9.50  | 
|Second Quarter      |  |                    |       |           |  |       |       |     |  |      | 18.65 |            |  |           | 15.00 |     |  |                       | 11,029.50 |              |  |  | 7,571.88 |  |  |  | 16.22 |  |  |  | 13.00 | 
|Third Quarter       |  |                    |       |           |  |       |       |     |  |      | 19.75 |            |  |           | 16.75 |     |  |                       | 8,521.85  |              |  |  | 5,372.48 |  |  |  | 18.25 |  |  |  | 14.30 | 
|Fourth Quarter      |  |                    |       |           |  |       |       |     |  |      | 23.75 |            |  |           | 18.85 |     |  |                       | 8,891.06  |              |  |  | 5,743.28 |  |  |  | 22.20 |  |  |  | 17.15 | 
|2002                |  |                    |       |           |  |       |       |     |  |      |       |            |  |           |       |     |  |                       |           |              |  |  |          |  |  |  |       |  |  |  |       | 
|First Quarter       |  |                    |       |           |  |       |       |     |  |      | 29.40 |            |  |           | 23.30 |     |  |                       | 9,224.39  |              |  |  | 7,661.83 |  |  |  | 26.65 |  |  |  | 20.74 | 
|Second Quarter      |  |                    |       |           |  |       |       |     |  |      | 32.00 |            |  |           | 23.50 |     |  |                       | 8,225.85  |              |  |  | 5,369.92 |  |  |  | 28.13 |  |  |  | 22.39 | 
|Third Quarter       |  |                    |       |           |  |       |       |     |  |      | 26.50 |            |  |           | 20.50 |     |  |                       | 6,297.25  |              |  |  | 4,711.09 |  |  |  | 26.06 |  |  |  | 20.14 | 
|Fourth Quarter      |  |                    |       |           |  |       |       |     |  |      | 39.00 |            |  |           | 24.50 |     |  |                       | 7,082.17  |              |  |  | 4,989.49 |  |  |  | 39.75 |  |  |  | 24.00 | 
|Previous Six Months |  |                    |       |           |  |       |       |     |  |      |       |            |  |           |       |     |  |                       |           |              |  |  |          |  |  |  |       |  |  |  |       | 
|December            |  |                    |       |           |  |       |       |     |  |      | 39.00 |            |  |           | 26.00 |     |  |                       | 7,082.17  |              |  |  | 5,649.48 |  |  |  | 39.75 |  |  |  | 26.31 | 
|January             |  |                    |       |           |  |       |       |     |  |      | 38.40 |            |  |           | 37.01 |     |  |                       | 6,224.23  |              |  |  | 5,144.26 |  |  |  | 40.99 |  |  |  | 39.00 | 
|February            |  |                    |       |           |  |       |       |     |  |      | 38.00 |            |  |           | 37.07 |     |  |                       | 5,349.34  |              |  |  | 4,783.58 |  |  |  | 40.60 |  |  |  | 39.60 | 
|March               |  |                    |       |           |  |       |       |     |  |      | 38.50 |            |  |           | 32.50 |     |  |                       | 5,545.38  |              |  |  | 4,517.41 |  |  |  | 41.75 |  |  |  | 34.71 | 
|April               |  |                    |       |           |  |       |       |     |  |      | 33.60 |            |  |           | 32.10 |     |  |                       | 5,727.49  |              |  |  | 4,918.30 |  |  |  | 37.25 |  |  |  | 34.20 | 
|May                 |  |                    |       |           |  |       |       |     |  |      | 34.00 |            |  |           | 33.00 |     |  |                       | 5,745.60  |              |  |  | 5,221.61 |  |  |  | 39.95 |  |  |  | 36.55 | 
|June (b)            |  |                    |       |           |  |       |       |     |  |      | 33.80 |            |  |           | 33.39 |     |  |                       | 5,767.32  |              |  |  | 5,572.21 |  |  |  | 39.96 |  |  |  | 39.00 | 



---

|(a) |  | The HEX General Index is a market capitalization -weighted index based on
all stocks traded on the Helsinki Exchanges Main List.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Through June 11, 2003                                                                                                           

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The table below sets forth, for the periods indicated, certain information
with respect to the volume of trading of our A Shares, B Shares and ADSs on the
Helsinki Exchanges and the Nasdaq SmallCap Market, respectively. Trading
volume of B Shares includes trading volume after combination of the share
series.

|     |  |                    |   |                        |  |             |   |             |  |        |            |             |  |  |      |  |  |             |         |  |  |  |       | 
|---- |  | ------------------ | - | ---------------------- |  | ----------- | - | ----------- |  | ------ | ---------- | ----------- |  |  | ---- |  |  | ----------- | ------- |  |  |  | ----- | 
|     |  | Helsinki Exchanges |   | Nasdaq SmallCap Market
|     |  |                    |   |                       
|     |  | A Shares           |   | B Shares               |  | ADSs       
|     |  |                    |   |                        |  |            
|     |  |                    |   |                        |  | % of shares |   |             |  |        |            | % of shares |  |  |      |  |  | % of shares
|     |  | Volume             |   | outstanding            |  | Volume      |   | outstanding |  | Volume |            | outstanding
|2000 |  |                    | # |                        |  |             | # |             |  |        | 11,055,904 |             |  |  | 23.0 |  |  |             | 55,960  |  |  |  | 29.8  | 
|2001 |  |                    | # |                        |  |             | # |             |  |        | 18,287,722 |             |  |  | 38.0 |  |  |             | 144,595 |  |  |  | 69.4  | 
|2002 |  |                    | # |                        |  |             | # |             |  |        | 40,003,887 |             |  |  | 83.3 |  |  |             | 553,591 |  |  |  | 173.8 | 




9.B. Plan of Distribution

Not applicable




9.C. Markets



| |                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our shares are listed on the HEX Helsinki Exchanges under the symbol
INS1V and ADRs representing shares are quoted on the Nasdaq SmallCap
Market under the symbol INMRY.




9.D. Selling Shareholders

Not applicable




9.E. Dilution

Not applicable




9.F. Expenses of the Issue

Not applicable




ITEM 10: ADDITIONAL INFORMATION




10.A. Share Capital

Not applicable.




10.B. Memorandum and Articles of Association

Instrumentarium Corporation is registered in the Finnish Trade Register
with the business identification code 0109222-6. Our articles of association
have not been amended since the year 2001.

According to our articles of association, we engage in the manufacture and
sale of health care, electronic, electrical, metal, and information processing
products, pharmaceutical raw materials and

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products and optical products and
materials, and in other related industrial and commercial activities. We may
engage in these operations directly or via our subsidiaries or joint
enterprises.

The members to the Board of Directors are elected annually in the Annual
General Meeting and the term of the Board members shall end at the end of the
meeting of shareholders following their election. The members of the Board of
Directors choose a chairman from amongst themselves. The articles of
association stipulate that the Annual General Meeting, which must be held
annually by the end of April, shall decide the compensation payable to the
Board members, the amount of members to be elected to the Board, which as per
the articles is between 5 and 8 members, and finally elect the Board members.
In case more candidates are nominated to serve in the Board than what the
number of decided directorships is, the candidates who receive the most votes
will be elected.

Pursuant to our articles of association, our issued share capital may not
be less than EUR 35 million nor more than EUR 140 million. Our issued share
capital may be increased or decreased within these limits without amendment to
our articles of association. The shares have no nominal value. The total number
of shares may not exceed 80,000,000. As of the date hereof, our paid-in share
capital amounted to EUR 97,074,722 consisting of 48,537,361 shares with a
book-equivalent value of EUR 2 each. In general meetings of shareholders, each
share entitles to one vote.

For companies domiciled in Finland and incorporated under Finnish law,
dividends on shares are generally only paid annually after shareholder approval
of both a companys results and of the amount of the divided proposed by the
board of directors. Under Finnish law, the amount of any dividend is limited
to the amount of profits and distributable equity available at the end of the
preceding fiscal year for the Company or for the Group on a consolidated basis,
whichever is lower. Subject to certain exceptions relating to the right of
minority shareholders to request otherwise, the dividend may not exceed an
amount recommended by the board of directors.

At a shareholders meeting, resolutions generally require the approval of a
majority of votes cast. However, certain resolutions, such as a resolution to
amend the articles of association, the resolution to issue shares by deviation
from shareholders preferential subscription rights and, in certain cases, a
resolution regarding a merger or liquidation of the company, require the
majority of 2/3 of the votes cast and shares represented at the shareholders
meeting.

Our share capital has been increased ten times during the three most
recent fiscal years. In the bonus issue approved by the annual general meeting
on March 25, 2001, our share capital was doubled to EUR 96,337,484. Due to
subscriptions with option rights, our share capital has increased twice in
April 2002, once in June 2002, once in August 2002, once in September 2002,
twice in November 2002 and twice in January 2003, and since January 16, 2003
our share capital is EUR 97,074,722.

The articles of association contain a redemption obligation, which
requires a shareholder to redeem the shares of each other shareholder at their
request, should the shareholders holding reach or exceed one third or one half
of our shares.

Presently, the Board of Directors does not have an authority to purchase
or dispose of the companys own shares or to increase the share capital through
a rights issue.

Voting

Each share confers the right to one vote. Under Finnish law, shareholders
may attend and vote at a general meeting in person or by proxy. However, in
accordance with Finnish practice, we do not issue forms of proxy to each
shareholder. Shareholders wishing to vote by proxy may submit their own forms
of proxy to us in favor of a person of their choice.

In order to attend and vote at a general meeting of shareholders, a
shareholder generally must be registered in our list of shareholders kept by
the Finnish Central Securities Depositary Ltd. in accordance with the Finnish
Companies Act and the Book-Entry Securities System of 1991 Act, as

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amended, no later than 10 days prior to the general meeting. In addition, in order to
attend and vote at a meeting, a shareholder must notify us of its intention to
do so no later than the date specified in the notice concerning the meeting,
which may not be earlier than 10 days before the meeting.

A shareholder whose shareholdings are registered in the name of a nominee
(including the depositary of ADRs) may not attend and vote at a general
meeting. A beneficial owner wishing to exercise such rights must cancel the
nominee arrangement and seek individual registration not later than 10 days
prior to the relevant general meeting.

Control of Foreign Ownership

Although the former restrictions on foreign ownership in Finnish companies
have been abolished as of January 1, 1993, under the Control of Foreigners
Acquisition of Finnish Companies Act of 1992, clearance by the Ministry of
Trade and Industry is required for a non-resident of Finland, directly or
indirectly, to acquire one-third or more of our voting power. The Ministry of
Trade and Industry may refuse such clearance where the acquisition would
jeopardize important national interests, in which case the matter is referred
to the Council of State. These clearance requirements do not apply to
residents of countries forming the European Economic Area or countries that
have ratified the Convention on the Organization for Economic Cooperation and
Development.




10.C. Material Contracts

On March 22, 2002, we entered into an Agreement and Plan of Reorganization
and an Agreement and Plan of Merger with Spacelabs Medical, Inc. and Boxer
Acquisition Corp, together constituting a merger agreement that provided for
the merger of Boxer with and into Spacelabs. Spacelabs, a U.S.-based company in
the critical care segment, survived the merger as our wholly owned subsidiary.
The transaction was closed on July 3, 2002. We paid USD 14.25 in cash per share
to Spacelabs stockholders, for a total of approximately EUR 142 million.

On December 18, 2002 General Electric Company and Instrumentarium
announced that the companies had entered into a definitive combination
agreement pursuant to which and subject to the terms and conditions set forth
therein, GE would acquire Instrumentarium. On January 14, 2003, General
Electric Finland Oy, a wholly owned Finnish subsidiary of GE, commenced a
tender offer for all outstanding Instrumentarium shares, including shares
represented by ADSs, for EUR 40.00 per share in cash, subject to adjustment in
the event that the aggregate amount of dividends approved by Instrumentarium
shareholders between December 18, 2002 and the date of the consummation of the
tender offer exceeds EUR 0.70 per share. As a result of the Instrumentarium
shareholders approval of the payment of a combined regular and special
dividend of EUR 4.70 per share at Instrumentariums Annual General Meeting on
March 25, 2003, the offer price for shares was reduced by EUR 4.00 to EUR 36.00
per share in cash.

The tender offer is also made for the 1998 option rights and 2001 option
rights that have been granted by Instrumentarium. The offer price is EUR 52.29
in cash for each 1998A option right, EUR 56.65 in cash for each 1998B option
right, EUR 60.36 in cash for each 1998C option right, EUR 45.46 in cash for
each 2001A option right and EUR 36.92 in cash for each 2001B option right. The
dividend described above does not affect the price offered for Instrumentarium
options.

If the conditions to the tender offer (including a minimum condition of
80% and receipt of antitrust clearances) are satisfied or, if permitted,
waived, the tender offer is expected to be consummated in 2003. Each party may
terminate the combination agreement prior to consummation of the tender offer
under certain circumstances set forth in the combination agreement.

If Instrumentarium or GE terminates the combination agreement as a result
of (i) failure to consummate the tender offer prior to December 18, 2003 and if
prior to the date of termination merger control regulatory approvals have not
been obtained or (ii) the entry of a final and non-appealable
order preventing consummation of the tender offer by or upon application
of specified merger control authorities, GE will reimburse Instrumentarium for
all out-of-pocket fees and expenses, pay to Instrumentarium a termination fee,
and may be required to make certain other contingent payments.

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If Instrumentarium terminates the combination agreement to accept a more
favourable acquisition proposal or under other circumstances specified in the
combination agreement, Instrumentarium will reimburse GE for all out-of-pocket
fees and expenses and pay a termination fee to GE. Instrumentarium will also
reimburse GE for all out-of-pocket fees and expenses and pay a termination fee
to GE if GE terminates the combination agreement upon the Boards modification
or withdrawal of its support of the tender offer in connection with a pending
acquisition proposal.

The tender offer period commenced on January 14, 2003 and was initially
set to expire on April 11, 2003. On April 3, 2003, GE announced extension of
the expiration of the tender offer to 5:00 p.m. Finnish time (10 a.m. New York
City time) on August 29, 2003 to allow for the completion of the regulatory
review process. If all conditions of the tender offer are satisfied or, if
permitted, waived before the expiration of the extended offer period, GE may
discontinue the extended offer period and consummate the tender offer. GE may
further extend the tender offer period under certain circumstances in
accordance with the terms and conditions of the tender offer.




10.D. Exchange Controls

Our shares may be bought by non-residents of Finland (non-residents) on
the HEX Helsinki Exchanges without any separate Finnish exchange control
consent. Non-residents may receive dividends without separate Finnish exchange
control consent through a Finnish bank, as the transfer out of Finland is
subject to payment of withholding taxes by us. Non-residents having acquired
shares may receive further shares pursuant to a bonus issue or through
participation in a new issue without a separate Finnish exchange control
consent. Shares may be sold in Finland by non-residents, inter alia, through a
Finnish bank or securities broker, and the proceeds of such sale may be
transferred out of Finland in any convertible currency. There are no Finnish
exchange control regulations applying to the sale of shares by non-residents to
other non-residents.




10.E. Taxation

General

The taxation discussion set forth below is intended only as a descriptive
summary of the material Finnish and United States federal income tax
consequences to U.S. Holders (as defined below) and does not purport to be a
complete analysis or listing of all potential tax effects relevant to ownership
of our shares or shares represented by ADRs (evidencing ADSs). This summary is
based upon United States tax laws, including the United States Internal Revenue
Code of 1986, as amended (the Code), final, temporary and proposed Treasury
Regulations, rulings, judicial decisions, administrative pronouncements,
Finnish tax law, and the Convention Between the Government of the United States
of America and the Government of the Republic of Finland for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion With Respect to Taxes on
Income and on Capital, signed September 21, 1989 (the Treaty), all as
currently in effect, and all of which are subject to change or changes in
interpretation, possibly with retroactive effect. For purposes of the summary,
a U.S. Holder is a beneficial owner of our shares or ADSs who: (a) holds the
shares or ADSs as capital assets, (b) owns, directly, indirectly or by
attribution, less than 10 percent of our share capital or voting power, (c) is
either (i) a citizen or individual resident of the United States for U.S.
federal income tax purposes, (ii) a corporation or certain other entities
created or organized in or under the laws of the United States or any state
thereof (including the District of Columbia), (iii) an estate, the income of
which is subject to U.S. federal income taxation regardless of its source, or
(iv) a trust if a U.S. court can exercise primary supervision over the
administration of the trust and one or more U.S. persons are authorized to
control all substantial decisions of the trust, (d) is entitled to the benefits
of the Treaty under the Limitation on Benefits provisions contained in the
Treaty, and (e) is not a citizen of Finland. Special rules apply to U.S.
Holders that are also residents of Finland, and to citizens or green card
holders that do not maintain a substantial presence, permanent home, or
habitual abode in the United States. For purposes of this discussion, it is
assumed that the depositary will perform all actions as required by the Deposit
Agreement and other related agreements between the depositary and the Company.

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If a partnership holds shares or ADSs, the tax treatment of a partner
generally will depend upon the status of the partner and the activities of the
partnership. If a U.S. Holder is a partner in a partnership that holds shares
or ADSs, the Holder is urged to consult its own tax advisor regarding the
specific tax consequences of owning and disposing of the shares or ADSs.

Because this summary is not exhaustive of all possible tax considerations
(such as but not limited to, situations involving persons who are
broker-dealers and certain other financial institutions, U.S. expatriates,
tax-exempt organizations, insurance companies, persons subject to the
alternative minimum tax, persons who acquired their shares or ADSs pursuant to
the exercise of employee stock options or otherwise as compensation, persons
holding shares or ADSs in a hedging transaction or as part of a straddle or
conversion transaction or holders whose functional currency is not the U.S.
dollar), U.S. Holders of our shares or ADSs should consult their own tax
advisors as to the overall U.S. federal, state and local tax consequences, as
well as to the overall Finnish tax consequences, of their ownership of the
shares or ADSs. In particular, U.S. Holders are urged to consult their own tax
advisors concerning whether they are eligible for benefits under Treaty. This
summary does not discuss the treatment of our shares or ADSs that are held in
connection with a permanent establishment or fixed base in Finland.

For the purposes of the Treaty and the Code, U.S. Holders of ADSs will be
treated as the owners of the underlying shares that are represented by such
ADSs. Accordingly, except as noted, the U.S. federal income tax consequences
to U.S. Holders of ADSs, as discussed below, apply as well to U.S. Holders of
shares.

The U.S. Holders of ADSs will, for Finnish tax purposes, be treated as the
owners of our shares that are represented by such ADSs. The Finnish tax
consequences to the Holders of shares, as discussed below, also apply to the
Holders of ADSs.

Taxation of Dividends

For U.S. federal income tax purposes, the gross amount of any distribution
made by us with respect to our shares (including the amount of any Finnish
withholding tax imposed thereon) generally will be treated as a dividend and
will be includible in income by a U.S. Holder as foreign source ordinary income
when received by the U.S. Holder, to the extent that the distribution is paid
out of our current or accumulated earnings and profits as determined under U.S.
federal income tax principles. Such dividends will not be eligible for the
dividends received deduction allowed to corporations under Section 243 of the
Code. To the extent, if any, that the amount of any distribution by us exceeds
our current and accumulated earnings and profits as determined under U.S.
federal income tax principles, it will be treated first as a tax-free return of
capital, causing a reduction in the U.S. Holders adjusted tax basis in the
shares, and thereafter as capital gain. The amount includible in income will
be the U.S. dollar value of the payment (determined at the time such payment is
received by the depositary, in the case of ADSs, or the U.S. Holder, in the
case of a U.S. Holder that holds our shares directly) regardless of whether the
payment is in fact converted into U.S. dollars. Generally, any gain or loss
resulting from currency exchange rate fluctuations during the period between
the time such payment is received and the date the dividend payment is
converted into U.S. dollars will be treated as U.S. source ordinary income or
loss to such holder.

Under Finnish Act on Taxation of Non-residents Income and Wealth,
non-residents of Finland generally are subject to a withholding tax on
dividends paid by the Company at a rate of 29 percent. However, pursuant to
the Treaty, dividends we pay to U.S. Holders will generally be subject to
Finnish withholding tax at a reduced rate of 15 percent of the gross amount of
such dividend.

Subject to certain conditions and limitations, such withholding taxes will
be treated as foreign taxes eligible for credit against such U.S. Holders U.S.
federal income tax liability. Dividends received with respect to our shares or
ADSs generally will constitute foreign source passive income
for foreign tax credit purposes or, in the case of certain U.S. Holders,
financial services income. In lieu of claiming a credit, a U.S. Holder of
our shares or ADSs may elect to deduct all of such U.S. Holders foreign taxes
in the particular taxable year.

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The United States Treasury has expressed concern that parties to whom ADSs
are released may be taking actions that are inconsistent with the claiming of
foreign tax credits for U.S. Holders of ADSs. Accordingly, the analysis of the
creditability of Finnish withholding taxes could be affected by future actions
that may be taken by the United States Treasury.

Tax on Sale or Exchange

A U.S. Holder will recognize taxable capital gain or loss on any sale or
exchange of our shares or ADSs. Any such gain or loss, for foreign tax credit
purposes, generally will constitute U.S. source income or loss, and will be
treated as long-term capital gain or loss if the shares or ADS are held for
more than one year. In the case of a U.S. Holder who is an individual, any
capital gain generally will be subject to U.S. federal income tax at
preferential rates if specified minimum holding periods are met. The
deductibility of capital losses is subject to significant limitations.

The sale by a U.S. Holder of shares or ADSs will generally, in accordance
with Finnish tax law and the Treaty, not be subject to income tax in Finland.

Recent U.S. Tax Law Changes Applicable to Individuals

Recent U.S. tax legislation generally has reduced the rates of tax payable
by individuals (as well as certain trusts and estates) on many items of income.
Under the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the 2003
Act), the marginal tax rates applicable to ordinary income generally have been
lowered effective January 1, 2003. Furthermore, for capital assets held for
over one year and sold or exchanged on or after May 6, 2003 but in taxable
years beginning before January 1, 2009, the maximum rate of tax generally will
be 15 % (rather than the higher rates of tax generally applicable to items of
ordinary income). Finally, qualified dividend income received in taxable
years beginning after December 31, 2002 and beginning before January 1, 2009,
generally will be taxed at the rates applicable to these capital gains (i.e., a
maximum rate of 15 %) rather than the rates applicable to other items of
ordinary income. For this purpose, qualified dividend income generally
includes dividends received from U.S. corporations as well as from certain
non-U.S. corporations. The exact extent to which dividends paid by non-U.S.
corporations will constitute qualified dividend income and the effect of such
status on the ability of a taxpayer to utilize associated foreign tax credits
is not entirely clear at present, but it is anticipated that a number of
uncertainties will be clarified through administrative pronouncements
throughout the remainder of 2003. In the meantime, investors are urged to
consult their own tax advisors regarding the impact on their particular
situations of the provisions of the 2003 Act.

Finnish Capital Taxes

Under the Treaty, the holding of ADSs or the underlying shares by a U.S.
Holder will generally not subject such U.S. Holder to the Finnish tax on net
capital.

Finnish Transfer Tax

Transfers of our shares will be, and transfers of ADSs may be, subject to
the Finnish transfer tax only when one of the parties to the transfer is
subject to Finnish taxation under the Finnish Income Tax Act by virtue of being
a resident of Finland or a Finnish branch of a non-Finnish credit institution.
In case the Finnish Transfer Tax Act is applicable, transfer tax would,
however, not be payable to the case of stock exchange transfers. Otherwise the
transfer tax would be payable at the rate of 1.6 percent of the transfer value
of the security traded.

Finnish Inheritance and Gift Taxes

A transfer of an underlying share by gift or by reason of the death of a
United States Holder and the transfer of an ADS are not subject to Finnish gift
or inheritance tax provided that neither the deceased person or the donator nor the beneficiary of the deceased person
or the recipient of the gift are resident in Finland.

U.S. Information Reporting and Backup Withholding

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Dividend payments made with respect to shares or ADSs and proceeds paid
from the sale, exchange or disposal of shares or ADSs may be subject to
information reporting to the Internal Revenue Service and possible backup
withholding tax at a current rate of 28 percent. Certain exempt recipients
(such as corporations) are not subject to these information reporting
requirements. Backup withholding will not apply to a Holder who furnishes a
correct taxpayer identification number and makes any other required
certification, or who is otherwise exempt from backup withholding. U.S.
persons who are required to establish their exempt status generally must
provide Internal Revenue Service Form W-9 (Request for Taxpayer Identification
Number and Certification). Non-U.S. persons generally will not be subject to
United States information reporting or backup withholding. However, such
holders may be required to provide certification of non-U.S. status in
connection with payments received in the United States or through certain
U.S.-related financial intermediaries. Backup withholding is not an additional
tax. Amounts withheld as backup withholding may be credited against a Holders
U.S. federal income tax liability. A Holder may obtain a refund of any excess
amounts withheld under the backup withholding rules by filing the appropriate
claim for refund with the Internal Revenue Service and furnishing any required
information.




10.F. Dividends and paying agents

Not applicable.




10.G. Statement by experts

Not applicable.




10.H. Documents on display

All reports and other information that we file with the U.S. Securities
and Exchange Commission may be inspected at the SECs public reference
facilities at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. The
reports may be accessed via the SECs website at www.sec.gov.




10.I. Subsidiary Information

Not applicable.




ITEM 11: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Financial risk management

We have market risk exposures to foreign exchange rates, interest rates
and marketable equity securities, together with liquidity and credit risks. Our
financial risks are managed by the Group Treasury according to a financial risk
management policy set and approved by our Board of Directors. The objective of
the financial risk management policy is to identify and analyze risk positions,
to measure the risks and to hedge against them using appropriate and
cost-effective means. In order to manage our exposure to market risks, we
continually assess our market exposures and hedge such risks through financial
operations to reduce the potentially adverse effects caused by fluctuations in
the financial markets on the cash flows and our profitability.

We use a variety of derivative financial instruments, principally foreign
exchange forward contracts, foreign exchange options, interest rate futures,
interest rate swaps, forward rate agreements and interest rate options. Hedge
accounting is only applied to net investments in foreign subsidiaries. We have
adopted Financial Account Standards No. 133. Foreign exchange and interest rate
related instruments are used to reduce exposures to market risk resulting from
fluctuations in foreign exchange rates and interest rates by creating offsetting exposures.
Derivative instruments are used for hedging purposes only. We are not a party
to leveraged financial instruments. We transact derivatives only with
counterparties with a good credit standing.

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We use sensitivity analysis techniques as a method to measure and assess
market risk assuming certain adverse market conditions to occur. The following
discussion about our risk-management activities includes forward-looking
statements that involve risks and uncertainties. Actual results could differ
materially from those projected in the forward-looking statements. This
analysis presents the hypothetical loss in fair values of the financial
instruments and derivative instruments which are held at December 31, 2002 and
are sensitive to changes in interest rates, foreign exchange rates and prices
for marketable equity securities. To give a better picture of the risks we are
exposed to, we also present Value-at-Risk (VaR) figures for certain
commercial assets and the loan portfolio and on anticipated cash flows
denominated in foreign currencies in addition to our interest rate position.

In the normal course of business, we also face risks that are either
non-financial or non-quantifiable. Such risks principally include country and
legal risks and other operational risks in addition to credit and liquidity
risks of which other than credit and liquidity risks are not represented in the
following analyses.

Interest-Rate Risk

We are exposed to interest rate risk through market value fluctuations of
balance sheet items or changes in the interest expense. Our interest rate
exposure is monitored and managed by the Group Treasury.

Our loan liability portfolios are benchmarked against market rates in
order to facilitate internal performance measurement. We manage our interest
rate exposure by altering the duration of our loan portfolio through the use of
interest rate swaps, interest rate futures, forward rate agreements and
interest rate options.

This analysis presents the hypothetical loss in fair values of those
financial instruments and derivative instruments we held at December 31, 2002
which are sensitive to changes in interest rates.

This analysis assumes an instantaneous parallel decrease of one percent in
interest rate levels of all maturities from their levels as of December 31,
2002. The aggregate hypothetical loss in fair values on all such financial
instruments and derivative instruments would be EUR 0.1 million (as of December
31, 2001, EUR 0.2 million), comprising primarily of EUR position of EUR 0.1.

We also use VaR to assess the interest rate risk. The VaR figure
represents the potential losses for a portfolio from adverse changes in market
factors, for a specified time period and confidence level based on historical
data. To correctly take into account the non-linear value changes of certain
derivative instruments, we use Monte Carlo simulation. Volatilities and
correlations are calculated from one year set of daily data. The interest rate
risk VaR figure with one day horizon and 95% confidence level was insignificant
at December 31, 2002 and 2001. The average VaR figure in 2002 was not
significant.

Foreign-Exchange Risk

We are exposed to foreign exchange risk on certain commercial assets
(accounts receivable) and commercial liabilities (accounts payable) and the
loan portfolio and on anticipated cash flows denominated in foreign currency
due to the international nature of our operations. We are also exposed to
foreign exchange risk on our net investments in foreign subsidiaries. Foreign
exchange exposure is monitored and managed by the Group Treasury.

We use foreign exchange forwards and option contracts to hedge our net
foreign exchange exposure on commercial assets and liabilities, the loan
portfolio and anticipated sales and purchases up to 9 months forward. Included
in the sensitivity analysis are anticipated transactions that are not
required by relevant standards. This analysis presents the hypothetical
loss in such fair values at December 31, 2002.

The hypothetical loss in fair values of these foreign exchange positions
is estimated to be EUR 1.3 million (as of December 31, 2001, EUR 2.3 million).
This hypothetical loss was modeled on

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the assumption that there was an instantaneous 10 (ten) percent increase in the value of euro against other
currencies.

The hypothetical loss in the fair values of foreign exchange positions
relating to net investments is estimated to be EUR 5.4 million (as of December
31, 2001, EUR 6.5 million). Changes in the fair values would not affect
reported profits as such changes are recorded against the translation
adjustment in the shareholders equity. This hypothetical loss was modeled on
the assumption that there was an instantaneous 10 (ten) percent increase in the
value of euro against other currencies.

The relevant parameters used to calculate the hypothetical losses
discussed above are the notional foreign currency contract amounts, the
contractual forward exchange strike rates, implied market volatilities and
other relevant market data at December 31, 2002. The change factor used has
been the ten percent change in the value of euro against other currencies while
keeping the other variables constant. Anticipated sales and purchase amounts in
the analysis are based on estimates prepared quarterly by the individual
business units.

We also use VaR to assess the foreign-exchange risk. The VaR figure
represents the potential losses for a portfolio from adverse changes in market
factors, for a specified time period and confidence level based on historical
data. To correctly take into account the non-linear value changes of certain
derivative instruments, we use Monte Carlo simulation. Volatilities and
correlations are calculated from one year set of daily data. The
foreign-exchange VaR figure based on net amount of certain commercial assets
and the loan portfolio and on anticipated cash flows denominated in foreign
currencies figure after hedging transactions by the Company with one day
horizon and 95% confidence level was EUR 0.2 million at December 31, 2002 (as
of December 31, 2001, EUR 0.2 million). The average VaR figure in 2002 was EUR
0.2 million. The VaR figure fluctuated between EUR 0.1 million and EUR 0.3
million.

Equity Price Risk

We have certain investments in publicly traded companies. We do not hedge
price risk related to our portfolio of these marketable equity securities.

This analysis assumes an instantaneous decrease of ten (10) percent in
share prices as of December 31, 2002. The hypothetical loss in fair values
would be EUR 0.1 million (as of December 31, 2001, EUR 0.3 million).

Liquidity risk

Our goal is to maintain liquidity at an appropriate level in relation to
our business activities at all times. We have unused credit lines at our
disposal in addition to the liquid funds in the balance sheet.

Credit risk

Credit risks arising from financial operations are managed by entering
into contracts only with counterparties with a good credit standing. We set
cash and maturity limits on these approved counterparties and monitor their
credit positions and ratings continuously.




ITEM 12: DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.




ITEM 13: DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

60



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##### Table of Contents



None.




ITEM 14: MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.




ITEM 15: CONTROLS AND PROCEDURES

Our President and Chief Executive Officer and our Chief Financial Officer,
after evaluating the effectiveness of Instrumentariums disclosure controls and
procedures (as defined in US Exchange Act Rule 13a-14(c)) within 90 days of the
date of this Form 20-F, have concluded that, as of such date, Instrumentariums
disclosure controls and procedures were effective to ensure that material
information relating to Instrumentarium was made known to them by others within
Instrumentarium particularly during the period in which this Form 20-F was
being prepared.

There were no significant changes in Instrumentariums internal controls
or in other factors that could significantly affect these controls subsequent
to the date our President and Chief Executive Officer and our Chief Financial
Officer completed their evaluation, nor were there any significant deficiencies
or material weaknesses in Instrumentariums internal controls requiring
corrective actions.




ITEM 16: [RESERVED]




ITEM 17: FINANCIAL STATEMENTS

Not applicable.




ITEM 18: FINANCIAL STATEMENTS

The following financial statements are filed as part of this Annual Report
on Form 20-F:

|                                                          |  |      |     | 
|--------------------------------------------------------- |  | ---- | --- | 
|                                                          |  | Page
|                                                          |  |     
|Index to Consolidated Financial Statements                |  |      | F-1 | 
|Report of Independent Accountants                         |  |      | F-2 | 
|Consolidated Income Statements                            |  |      | F-3 | 
|Consolidated Balance Sheets                               |  |      | F-4 | 
|Consolidated Cash Flow Statements                         |  |      | F-6 | 
|Consolidated Statements of Changes in Shareholders Equity |  |      | F-7 | 
|Notes to the Consolidated Financial Statements            |  |      | F-8 | 




ITEM 19: EXHIBITS

|    |  |                                                                                                                                                                                                                                                                                                                                  
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1 |  | Articles of Association as amended on March 26, 2001, in English
translation (incorporated by reference from the Annual Report on Form
20-F for the fiscal year ended December 31, 2000 (Commission file
number 0-12009)).                                                                                                       
|    |  |                                                                                                                                                                                                                                                                                                                                  
|1.2 |  | Amended and Restated Deposit Agreement dated as of April 3, 2002
among Instrumentarium Corporation, JP Morgan Chase Bank, as Depositary
and Holders of American Depositary Receipts (incorporated by reference from the Annual
Report on Form 20-F for the fiscal year ended December 31, 2001
(Commission file number 0-12009)).
|    |  |                                                                                                                                                                                                                                                                                                                                  
|4.1 |  | Agreement and Plan of Reorganization, dated as of March 22, 2002,
between Spacelabs Medical, Inc., Instrumentarium Corporation and Boxer
Acquisition Corp. (incorporated by                                                                                                                                                      

61



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|    |  |                                                                                                                                                                                                                                                                                                 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | reference from the Annual Report on
Form 20-F for the fiscal year ended December 31, 2001 (Commission file
number 0-12009)).                                                                                                                                                                    
|4.2 |  | Agreement and Plan of Merger, dated as of March 22, 2002, between
Spacelabs Medical, Inc., Instrumentarium Corporation and Boxer
Acquisition Corp. (incorporated by reference from the Annual Report on
Form 20-F for the fiscal year ended December 31, 2001 (Commission file
number 0-12009)).
|    |  |                                                                                                                                                                                                                                                                                                 
|4.3 |  | Combination Agreement dated December 18, 2002 between General
Electric Company and Instrumentarium Corporation.                                                                                                                                                                                 
|    |  |                                                                                                                                                                                                                                                                                                 
|6.  |  | See note 8# to our financial statements included in Item 18 of this
Form 20-F for information on how earnings per share information was
calculated.                                                                                                                                             
|    |  |                                                                                                                                                                                                                                                                                                 
|8.1 |  | For a list of our subsidiaries, please see note 21 to our
consolidated financial statements.                                                                                                                                                                                                    
|    |  |                                                                                                                                                                                                                                                                                                 
|10. |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.                                                                                                                                                                                                                        

62



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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.

| |  |                             |  | 
| |  | --------------------------- |  | 
| |  | INSTRUMENTARIUM CORPORATION

Date: June 30, 2003

| |  |     |  |                                                    
| |  | --- |  | ---------------------------------------------------
| |  |     |  |                                                    
| |  | By: |  | /S/ Olli Riikkala                                  
| |  |     |  |                                                    
| |  |     |  | Olli Riikkala
President and
Chief Executive Officer
| |  |     |  |                                                    
| |  | By: |  | /S/ Matti Salmivuori                               
| |  |     |  |                                                    
| |  |     |  | Matti Salmivuori,
Chief Financial Officer          

63



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CERTIFICATIONS

I, Olli Riikkala, certify that:

1.     I have reviewed this annual report on Form 20-F of Instrumentarium
Corporation;

2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)      designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

b)      evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the Evaluation Date); and

c)      presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent
function):

a)      all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b)      any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: 26 June 2003

|    |  |                                                    
|--- |  | ---------------------------------------------------
|By: |  | /S/ Olli Riikkala                                  
|    |  |                                                    
|    |  | Olli Riikkala
President and Chief Executive Officer





---



##### Table of Contents



CERTIFICATIONS

I, Matti Salmivuori, certify that:

1.     I have reviewed this annual report on Form 20-F of Instrumentarium
Corporation;

2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)      designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

b)      evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the Evaluation Date); and

c)      presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent
function):

a)      all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b)      any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: 26 June 2003

|    |  |                                         
|--- |  | ----------------------------------------
|By: |  | /S/ Matti Salmivuori                    
|    |  |                                         
|    |  | Matti Salmivuori
Chief Financial Officer





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INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                  |  |      |     | 
|------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                  |  | Page
|                                                                                                  |  |     
|Report of Independent Accountants                                                                 |  |      | F-2 | 
|Consolidated Income Statements for the Years
Ended December 31, 2000, 2001 and 2002               |  |      | F-3 | 
|Consolidated Balance Sheets as at December 31, 2001 and 2002                                      |  |      | F-4 | 
|Consolidated Cash Flow Statements for the Years
Ended December 31, 2000, 2001 and 2002            |  |      | F-6 | 
|Consolidated Statements of Changes in Shareholders Equity
as at December 31, 2000, 2001 and 2002 |  |      | F-7 | 
|Notes to the Consolidated Financial Statements                                                    |  |      | F-8 | 

F-1



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##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
INSTRUMENTARIUM CORPORATION

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, statements of cash flows and statements of
changes in shareholders equity, present fairly, in all material respects, the
financial position of Instrumentarium Corporation and its subsidiaries
(Instrumentarium) at December 31, 2001 and 2002, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2002, in conformity with accounting principles generally accepted
in Finland. These financial statements are the responsibility of
Instrumentariums management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in
the United States of America and in Finland, which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

Accounting principles generally accepted in Finland vary in certain important
respects from accounting principles generally accepted in the United States of
America. The application of the latter would have affected the determination
of consolidated net income for each of the three years in the period ended
December 31, 2002 and the determination of consolidated shareholders equity at
December 31, 2002 and 2001 to the extent summarized in Note 23 to the
consolidated financial statements.

Helsinki, Finland

February 10, 2003, except for Note 24,
as to which the date is June 23, 2003

PricewaterhouseCoopers Oy
Authorized Public Accountants

F-2



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES

Consolidated Income Statements
(in thousands, except for per share amounts)

|                                                                         |  |      |    |      |  |                         |          |      |  |     |           |   |  |  |           |  
|------------------------------------------------------------------------ |  | ---- | -- | ---- |  | ----------------------- | -------- | ---- |  | --- | --------- | - |  |  | --------- | -
|                                                                         |  |      |    |      |  | Year ended December 31,
|                                                                         |  |      |    |      |  |                        
|                                                                         |  | Note |    | 2000 |  | 2001                    |          | 2002
|                                                                         |  |      |    |      |  |                         |          |     
|                                                                         |  |      |    |      |  | EUR                     |          | EUR  |  | EUR
|Net sales                                                                |  |      | (2 | )    |  |                         | 912,843  |      |  |     | 1,025,361 |   |  |  | 1,126,671 |  
|Cost of goods sold                                                       |  |      |    |      |  |                         | (454,756 | )    |  |     | (489,894  | ) |  |  | (541,890  | )
|                                                                         |  |      |    |      |  |                         |          |      |  |     |           |   |  |  |           |  
|Gross profit                                                             |  |      |    |      |  |                         | 458,088  |      |  |     | 535,466   |   |  |  | 584,781   |  
|Selling and marketing expenses                                           |  |      |    |      |  |                         | (240,306 | )    |  |     | (244,080  | ) |  |  | (256,982  | )
|Research and development expenses                                        |  |      |    |      |  |                         | (63,816  | )    |  |     | (66,627   | ) |  |  | (83,366   | )
|General and administrative expenses                                      |  |      |    |      |  |                         | (86,714  | )    |  |     | (94,092   | ) |  |  | (106,610  | )
|Other operating income and expenses, net                                 |  |      | (3 | )    |  |                         | 22,643   |      |  |     | 1,311     |   |  |  | 9,289     |  
|                                                                         |  |      |    |      |  |                         |          |      |  |     |           |   |  |  |           |  
|Operating profit before non-recurring
items and amortization of goodwill |  |      |    |      |  |                         | 89,896   |      |  |     | 131,978   |   |  |  | 147,113   |  
|Non-recurring operating income and
expenses, net                         |  |      | (3 | )    |  |                         | 6,177    |      |  |     |          |   |  |  | (3,264    | )
|Amortization of goodwill                                                 |  |      | (4 | )    |  |                         | (16,344  | )    |  |     | (16,501   | ) |  |  | (17,383   | )
|                                                                         |  |      |    |      |  |                         |          |      |  |     |           |   |  |  |           |  
|Operating profit                                                         |  |      |    |      |  |                         | 79,729   |      |  |     | 115,477   |   |  |  | 126,466   |  
|Financing income and expenses, net                                       |  |      | (5 | )    |  |                         | (13,177  | )    |  |     | (11,899   | ) |  |  | 1,661     |  
|                                                                         |  |      |    |      |  |                         |          |      |  |     |           |   |  |  |           |  
|Income before extraordinary items                                        |  |      |    |      |  |                         | 66,552   |      |  |     | 103,578   |   |  |  | 128,127   |  
|Extraordinary income and expenses, net                                   |  |      | (6 | )    |  |                         | 3,520    |      |  |     |          |   |  |  | 69,222    |  
|                                                                         |  |      |    |      |  |                         |          |      |  |     |           |   |  |  |           |  
|Income after extraordinary items                                         |  |      |    |      |  |                         | 70,072   |      |  |     | 103,578   |   |  |  | 197,349   |  
|Income taxes                                                             |  |      | (7 | )    |  |                         | (23,465  | )    |  |     | (31,438   | ) |  |  | (41,720   | )
|                                                                         |  |      |    |      |  |                         |          |      |  |     |           |   |  |  |           |  
|Income before minority interests                                         |  |      |    |      |  |                         | 46,607   |      |  |     | 72,140    |   |  |  | 155,629   |  
|Minority interests                                                       |  |      |    |      |  |                         | (29      | )    |  |     | (4        | ) |  |  | 128       |  
|                                                                         |  |      |    |      |  |                         |          |      |  |     |           |   |  |  |           |  
|Net income                                                               |  |      |    |      |  |                         | 46,579   |      |  |     | 72,136    |   |  |  | 155,757   |  
|                                                                         |  |      |    |      |  |                         |          |      |  |     |           |   |  |  |           |  
|Earnings per share                                                       |  |      | (8 | )    |  |                         | 0.90     |      |  |     | 1.50      |   |  |  | 1.80      |  
|                                                                         |  |      |    |      |  |                         |          |      |  |     |           |   |  |  |           |  
|Diluted earnings per share                                               |  |      | (8 | )    |  |                         | 0.90     |      |  |     | 1.50      |   |  |  | 1.74      |  
|                                                                         |  |      |    |      |  |                         |          |      |  |     |           |   |  |  |           |  

See Notes to the Consolidated Financial Statements

F-3



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INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets
(in thousands)

|                                               |  |      |     |      |  |                         |         |     |  |  |           | 
|---------------------------------------------- |  | ---- | --- | ---- |  | ----------------------- | ------- | --- |  |  | --------- | 
|                                               |  |      |     |      |  | Year ended December 31,
|                                               |  |      |     |      |  |                        
|                                               |  | Note |     | 2001 |  | 2002                   
|                                               |  |      |     |      |  |                        
|                                               |  |      |     |      |  | EUR                     |         | EUR
|ASSETS                                         |  |      |     |      |  |                         |         |     |  |  |           | 
|Non-current assets                             |  |      |     |      |  |                         |         |     |  |  |           | 
|Intangible assets                              |  |      | (10 | )    |  |                         |         |     |  |  |           | 
|Intangible rights                              |  |      |     |      |  |                         | 4,545   |     |  |  | 15,539    | 
|Goodwill                                       |  |      |     |      |  |                         | 255,640 |     |  |  | 278,703   | 
|Other capitalized expenditures                 |  |      |     |      |  |                         | 5,763   |     |  |  | 4,524     | 
|                                               |  |      |     |      |  |                         |         |     |  |  |           | 
|                                               |  |      |     |      |  |                         | 265,948 |     |  |  | 298,767   | 
|Tangible assets                                |  |      | (10 | )    |  |                         |         |     |  |  |           | 
|Land and water areas                           |  |      |     |      |  |                         | 6,083   |     |  |  | 5,131     | 
|Buildings                                      |  |      |     |      |  |                         | 62,794  |     |  |  | 56,430    | 
|Machinery and equipment                        |  |      |     |      |  |                         | 43,775  |     |  |  | 42,332    | 
|Advance payments and assets under
construction |  |      |     |      |  |                         | 3,127   |     |  |  | 2,792     | 
|                                               |  |      |     |      |  |                         |         |     |  |  |           | 
|                                               |  |      |     |      |  |                         | 115,779 |     |  |  | 106,685   | 
|Investments                                    |  |      |     |      |  |                         |         |     |  |  |           | 
|Shares and holdings in associated
companies    |  |      | (11 | )    |  |                         | 75      |     |  |  | 167       | 
|Other shares and holdings                      |  |      | (11 | )    |  |                         | 15,152  |     |  |  | 15,969    | 
|Receivables from associated companies          |  |      | (12 | )    |  |                         | 85      |     |  |  | 131       | 
|Loans receivables                              |  |      | (12 | )    |  |                         | 19,129  |     |  |  | 17,918    | 
|Treasury shares                                |  |      | (13 | )    |  |                         | 4,062   |     |  |  | 4,062     | 
|                                               |  |      |     |      |  |                         |         |     |  |  |           | 
|                                               |  |      |     |      |  |                         | 38,503  |     |  |  | 38,248    | 
|Current assets                                 |  |      |     |      |  |                         |         |     |  |  |           | 
|Inventories                                    |  |      |     |      |  |                         |         |     |  |  |           | 
|Raw material and supplies                      |  |      |     |      |  |                         | 70,129  |     |  |  | 59,688    | 
|Work-in-progress                               |  |      |     |      |  |                         | 25,535  |     |  |  | 18,756    | 
|Finished goods                                 |  |      |     |      |  |                         | 79,745  |     |  |  | 108,224   | 
|                                               |  |      |     |      |  |                         |         |     |  |  |           | 
|                                               |  |      |     |      |  |                         | 175,408 |     |  |  | 186,668   | 
|Deferred tax assets                            |  |      | (14 | )    |  |                         | 14,411  |     |  |  | 41,018    | 
|Receivables                                    |  |      | (12 | )    |  |                         |         |     |  |  |           | 
|Accounts receivable                            |  |      |     |      |  |                         | 292,027 |     |  |  | 312,790   | 
|Loans receivable                               |  |      |     |      |  |                         | 1,523   |     |  |  | 1,238     | 
|Other receivables                              |  |      |     |      |  |                         | 19,754  |     |  |  | 23,503    | 
|Prepaid expenses and accrued income            |  |      |     |      |  |                         | 18,530  |     |  |  | 41,878    | 
|                                               |  |      |     |      |  |                         |         |     |  |  |           | 
|                                               |  |      |     |      |  |                         | 331,834 |     |  |  | 379,410   | 
|Cash and cash equivalents                      |  |      |     |      |  |                         | 23,753  |     |  |  | 56,325    | 
|                                               |  |      |     |      |  |                         |         |     |  |  |           | 
|Total assets                                   |  |      |     |      |  |                         | 965,637 |     |  |  | 1,107,121 | 
|                                               |  |      |     |      |  |                         |         |     |  |  |           | 

See Notes to the Consolidated Financial Statements

F-4



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)

|                                           |  |      |     |      |  |                         |         |     |  |  |           | 
|------------------------------------------ |  | ---- | --- | ---- |  | ----------------------- | ------- | --- |  |  | --------- | 
|                                           |  |      |     |      |  | Year ended December 31,
|                                           |  |      |     |      |  |                        
|                                           |  | Note |     | 2001 |  | 2002                   
|                                           |  |      |     |      |  |                        
|                                           |  |      |     |      |  | EUR                     |         | EUR
|SHAREHOLDERS EQUITY AND LIABILITIES       |  |      |     |      |  |                         |         |     |  |  |           | 
|Shareholders equity                       |  |      | (13 | )    |  |                         |         |     |  |  |           | 
|Share capital                              |  |      |     |      |  |                         | 48,169  |     |  |  | 97,075    | 
|Share premium account                      |  |      |     |      |  |                         | 108,001 |     |  |  | 65,519    | 
|Reserve for treasury shares                |  |      |     |      |  |                         | 4,062   |     |  |  | 4,062     | 
|Other reserves                             |  |      |     |      |  |                         | 4,923   |     |  |  | 3,559     | 
|Retained earnings                          |  |      |     |      |  |                         | 285,084 |     |  |  | 325,493   | 
|Net income                                 |  |      |     |      |  |                         | 72,136  |     |  |  | 155,757   | 
|                                           |  |      |     |      |  |                         |         |     |  |  |           | 
|                                           |  |      |     |      |  |                         | 522,376 |     |  |  | 651,465   | 
|Minority interests                         |  |      |     |      |  |                         | 245     |     |  |  | 1,606     | 
|Commitments and contingencies              |  |      | (17 | )    |  |                         |         |     |  |  |           | 
|Liabilities                                |  |      |     |      |  |                         |         |     |  |  |           | 
|Provisions                                 |  |      | (3  | )    |  |                         |        |     |  |  | 9,652     | 
|Deferred tax liabilities                   |  |      | (14 | )    |  |                         | 22,556  |     |  |  | 14,048    | 
|Long-term liabilities                      |  |      | (15 | )    |  |                         |         |     |  |  |           | 
|Loans from financial institutions          |  |      |     |      |  |                         | 130,036 |     |  |  | 30,953    | 
|Other long-term liabilities                |  |      |     |      |  |                         | 7,084   |     |  |  | 9,395     | 
|                                           |  |      |     |      |  |                         |         |     |  |  |           | 
|                                           |  |      |     |      |  |                         | 137,120 |     |  |  | 40,348    | 
|Short-term liabilities                     |  |      | (16 | )    |  |                         |         |     |  |  |           | 
|Loans from financial institutions          |  |      |     |      |  |                         | 78,201  |     |  |  | 126,852   | 
|Advance payments                           |  |      |     |      |  |                         | 3,836   |     |  |  | 8,295     | 
|Accounts payable                           |  |      |     |      |  |                         | 58,673  |     |  |  | 59,954    | 
|Other short-term liabilities               |  |      |     |      |  |                         | 17,011  |     |  |  | 18,209    | 
|Accrued liabilities                        |  |      |     |      |  |                         | 125,619 |     |  |  | 176,691   | 
|                                           |  |      |     |      |  |                         |         |     |  |  |           | 
|                                           |  |      |     |      |  |                         | 283,340 |     |  |  | 390,001   | 
|Total liabilities                          |  |      |     |      |  |                         | 443,016 |     |  |  | 444,398   | 
|Total shareholders equity and liabilities |  |      |     |      |  |                         | 965,637 |     |  |  | 1,107,121 | 
|                                           |  |      |     |      |  |                         |         |     |  |  |           | 

See Notes to the Consolidated Financial Statements

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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES

Consolidated Cash Flow Statements
(in thousands)

|                                                                     |  |  |    |   |  |                         |          |      |  |      |         |   |  |  |          |  
|-------------------------------------------------------------------- |  |  | -- | - |  | ----------------------- | -------- | ---- |  | ---- | ------- | - |  |  | -------- | -
|                                                                     |  |  |    |   |  | Year ended December 31,
|                                                                     |  |  |    |   |  |                        
|                                                                     |  |  |    |   |  | 2000                    |          | 2001 |  | 2002
|                                                                     |  |  |    |   |  |                         |          |      |  |     
|                                                                     |  |  |    |   |  | EUR                     |          | EUR  |  | EUR 
|Cash flow from operating activities                                  |  |  |    |   |  |                         |          |      |  |      |         |   |  |  |          |  
|Net income                                                           |  |  |    |   |  |                         | 46,579   |      |  |      | 72,136  |   |  |  | 155,757  |  
|Adjustments to net income                                            |  |  | (9 | ) |  |                         | 45,275   |      |  |      | 79,678  |   |  |  | 18,740   |  
|Change in working capital                                            |  |  | (9 | ) |  |                         | (29,615  | )    |  |      | (12,471 | ) |  |  | (6,246   | )
|                                                                     |  |  |    |   |  |                         |          |      |  |      |         |   |  |  |          |  
|Net cash provided by operating activities before
interests and taxes |  |  |    |   |  |                         | 62,238   |      |  |      | 139,344 |   |  |  | 168,252  |  
|Interests paid                                                       |  |  |    |   |  |                         | (20,456  | )    |  |      | (11,145 | ) |  |  | (7,599   | )
|Taxes paid                                                           |  |  |    |   |  |                         | (24,105  | )    |  |      | (26,800 | ) |  |  | (26,345  |  
|                                                                     |  |  |    |   |  |                         |          |      |  |      |         |   |  |  |          |  
|Net cash provided by (used in) operating activities                  |  |  |    |   |  |                         | 17,677   |      |  |      | 101,399 |   |  |  | 134,308  |  
|Cash flow from investing activities                                  |  |  |    |   |  |                         |          |      |  |      |         |   |  |  |          |  
|Acquired companies and businesses, net of cash
acquired              |  |  | (9 | ) |  |                         | (20,594  | )    |  |      | (16,980 | ) |  |  | (128,061 | )
|Investments in other non-current assets                              |  |  |    |   |  |                         | (27,976  | )    |  |      | (26,278 | ) |  |  | (49,215  | )
|Proceeds from disposition of companies and businesses                |  |  |    |   |  |                         | 44,170   |      |  |      |        |   |  |  | 137,655  |  
|Proceeds from sale of other non-current assets                       |  |  |    |   |  |                         | 27,304   |      |  |      | 3,393   |   |  |  | 5,692    |  
|Increase (-) decrease (+) in short-term investments                  |  |  |    |   |  |                         | (402     | )    |  |      | (224    | ) |  |  | 207      |  
|Proceeds from other long-term investments                            |  |  |    |   |  |                         | 1,243    |      |  |      | 1,701   |   |  |  | 1,164    |  
|Investments in other long-term investments                           |  |  |    |   |  |                         | (8,914   | )    |  |      | (11,651 | ) |  |  | (94      | )
|Professional fees related to the combination agreement               |  |  |    |   |  |                         |         |      |  |      |        |   |  |  | (2,819   | )
|Ohmeda acquisition (1)                                               |  |  |    |   |  |                         | 47,913   |      |  |      |        |   |  |  |         |  
|                                                                     |  |  |    |   |  |                         |          |      |  |      |         |   |  |  |          |  
|Net cash provided by (used in) investing activities                  |  |  |    |   |  |                         | 62,743   |      |  |      | (50,039 | ) |  |  | (35,471  | )
|Cash flow after investing activities                                 |  |  |    |   |  |                         | 80,420   |      |  |      | 51,360  |   |  |  | 98,837   |  
|Cash flow from financing activities                                 
|Dividends
paid                                                       |  |  |    |   |  |                         | (16,143  | )    |  |      | (23,999 | ) |  |  | (28,899  | )
|Proceeds from issuance of common shares                              |  |  |    |   |  |                         |         |      |  |      |        |   |  |  | 6,424    |  
|Increase (+) decrease (-) in short-term debt                         |  |  |    |   |  |                         | (31,067  | )    |  |      | (9,629  | ) |  |  | 53,084   |  
|Proceeds from long-term debt                                         |  |  |    |   |  |                         | 92,266   |      |  |      | 2,614   |   |  |  | 171,229  |  
|Principal payments on long-term debt                                 |  |  |    |   |  |                         | (123,525 | )    |  |      | (19,355 | ) |  |  | (266,731 | )
|                                                                     |  |  |    |   |  |                         |          |      |  |      |         |   |  |  |          |  
|Net cash provided by (used in) financing activities                  |  |  |    |   |  |                         | (78,469  | )    |  |      | (50,368 | ) |  |  | (64,893  | )
|Net increase (+) decrease (-) in cash and cash
equivalents           |  |  |    |   |  |                         | 1,952    |      |  |      | 991     |   |  |  | 33,944   |  
|Cash and cash equivalents at beginning of year                       |  |  |    |   |  |                         | 20,366   |      |  |      | 22,419  |   |  |  | 23,753   |  
|Effect of exchange rate changes on cash                              |  |  |    |   |  |                         | 102      |      |  |      | 342     |   |  |  | (1,372   | )
|                                                                     |  |  |    |   |  |                         |          |      |  |      |         |   |  |  |          |  
|Cash and cash equivalents at end of year                             |  |  |    |   |  |                         | 22,419   |      |  |      | 23,753  |   |  |  | 56,325   |  

1) The payment in September 2000 from Baxter Healthcare Corporation related to Ohmeda acquisition

Consolidated cash flow statement has been prepared in accordance with
requirements of SFAS No.95

See Notes to the Consolidated Financial Statements

F-6



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders Equity
(in thousands)

|                                                  |  |             |        |         |  |         |        |          |  |          |         |             |  |  |  |  |  |             |       |       |  |            |        |   |  |  |        |   |  |  |  |  |  |  |         |   |  |  |         |  
|------------------------------------------------- |  | ----------- | ------ | ------- |  | ------- | ------ | -------- |  | -------- | ------- | ----------- |  |  |  |  |  | ----------- | ----- | ----- |  | ---------- | ------ | - |  |  | ------ | - |  |  |  |  |  |  | ------- | - |  |  | ------- | -
|                                                  |  | Number of   |        |         |  |         |        | Share    |  |          |         |             |  |  |  |  |  |             |       |       |  | Cumulative |        |   |  |  |        |   |  |  |  |  |  | 
|                                                  |  | shares      |        | Share   |  | premium |        | Treasury |  | Other    |         | translation |  |  |  |  |  | Retained    |       |       |  |           
|                                                  |  | outstanding |        | capital |  | account |        | shares   |  | reserves |         | adjustments |  |  |  |  |  | earnings(1) |       | Total
|                                                  |  |             |        |         |  |         |        |          |  |          |         |             |  |  |  |  |  |             |       |      
|                                                  |  | (thousand)  |        | EUR     |  | EUR     |        | EUR      |  | EUR      |         | EUR         |  |  |  |  |  | EUR         |       | EUR  
|                                                 
|Balance at
December 31, 1999                      |  |             | 23,996 |         |  |         | 48,169 |          |  |          | 108,001 |             |  |  |  |  |  |             | 3,423 |       |  |            | 6,616  |   |  |  | 247    |   |  |  |  |  |  |  | 279,166 |   |  |  | 445,622 |  
|Transfer to reserve for
treasury shares           |  |             | (22    | )       |  |         |       |          |  |          |        |             |  |  |  |  |  |             | 613   |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  | (613    | ) |  |  |        |  
|Transfer to other reserves                        |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            | (1,309 | ) |  |  |       |   |  |  |  |  |  |  | 1,309   |   |  |  |        |  
|Reverse of revaluation                            |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  | (467    | ) |  |  | (467    | )
|Dividend paid, EUR 0.67
per share                 |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  | (16,143 | ) |  |  | (16,143 | )
|Donation                                          |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  | (50     | ) |  |  | (50     | )
|Translation adjustment                            |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  | (2,286 | ) |  |  |  |  |  |  |        |   |  |  | (2,286  | )
|Net income                                        |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  | 46,579  |   |  |  | 46,579  |  
|Balance at
December 31, 2000                      |  |             | 23,974 |         |  |         | 48,169 |          |  |          | 108,001 |             |  |  |  |  |  |             | 4,035 |       |  |            | 5,307  |   |  |  | (2,038 | ) |  |  |  |  |  |  | 309,781 |   |  |  | 473,255 |  
|Transfer to reserve for
treasury shares           |  |             | (1     | )       |  |         |       |          |  |          |        |             |  |  |  |  |  |             | 27    |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  | (27     | ) |  |  |        |  
|Transfer to other reserves                        |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            | (384   | ) |  |  |       |   |  |  |  |  |  |  | 384     |   |  |  |        |  
|Reverse of revaluation                            |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  |        |   |  |  |        |  
|Dividend paid, EUR 1.00
per share                 |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  | (23,974 | ) |  |  | (23,974 | )
|Donation                                          |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  | (25     | ) |  |  | (25     | )
|Translation adjustment                            |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  | 984    |   |  |  |  |  |  |  |        |   |  |  | 984     |  
|Net income                                        |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  | 72,136  |   |  |  | 72,136  |  
|Balance at
December 31, 2001                      |  |             | 23,973 |         |  |         | 48,169 |          |  |          | 108,001 |             |  |  |  |  |  |             | 4,062 |       |  |            | 4,923  |   |  |  | (1,054 | ) |  |  |  |  |  |  | 358,275 |   |  |  | 522,376 |  
|Bonus issue(3)                                    |  |             | 23,973 |         |  |         | 48,169 |          |  |          | (48,169 | )           |  |  |  |  |  |             |      |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  |        |   |  |  |        |  
|Shares subscribed with
warrants, registered       |  |             | 93     |         |  |         | 187    |          |  |          | 1,436   |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  |        |   |  |  | 1,623   |  
|Shares subscribed with
warrants, unregistered
(2) |  |             |        |         |  |         | 550    |          |  |          | 4,251   |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  |        |   |  |  | 4,802   |  
|Transfer to other reserve                         |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            | (1,364 | ) |  |  |       |   |  |  |  |  |  |  | 1,364   |   |  |  |        |  
|Reverse of revaluation                            |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  |        |   |  |  |        |  
|Dividend paid, EUR 0.60
per share                 |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  | (28,899 | ) |  |  | (28,899 | )
|Donation                                          |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  | (25     | ) |  |  | (25     | )
|Translation adjustment                            |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  | (4,168 | ) |  |  |  |  |  |  |        |   |  |  | (4,168  | )
|Net income                                        |  |             |        |         |  |         |       |          |  |          |        |             |  |  |  |  |  |             |      |       |  |            |       |   |  |  |       |   |  |  |  |  |  |  | 155,757 |   |  |  | 155,757 |  
|Balance at
December 31,2002                       |  |             | 48,039 |         |  |         | 97,075 |          |  |          | 65,519  |             |  |  |  |  |  |             | 4,062 |       |  |            | 3,559  |   |  |  | (5,223 | ) |  |  |  |  |  |  | 486,473 |   |  |  | 651,465 |  



---

|(1) |  | Retained earnings includes equity share of untaxed reserves of EUR 21,431
thousand as of December 31, 2002, which are not distributable.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | registered on January 16, 2003                                                                                                          
|   
|(3) |  | excluding treasury shares                                                                                                               

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See Notes to the Consolidated Financial Statement

Accounting Principles

Description of business

Instrumentarium Corporation and its subsidiaries (together,
Instrumentarium, the Company or the Group) is an international healthcare
company based in Finland. Instrumentarium focuses on manufacturing, marketing
and distributing medical equipment. Instrumentariums business is divided into
two segments: Anesthesia and Critical Care and Medical Equipment.

Basis of presentation and reclassifications

The consolidated financial statements of Instrumentarium Corporation and
subsidiaries are prepared in accordance with generally accepted accounting
principles in Finland.

Certain prior year balances and notes thereto have been reclassified to
conform to the current year presentation.

The consolidated financial statements are presented in thousands of euro
(EUR), except for share and per share data and are prepared under the
historical cost convention.

Use of estimates

The preparation of the consolidated financial statements in conformity
with generally accepted accounting principles in Finland requires management to
make estimates and assumptions. These estimates affect the reported amounts of
assets and liabilities as well as disclosure of contingent assets and
liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Principles of consolidation

The consolidated financial statements include the accounts of the parent
company Instrumentarium Corporation, and all companies in which it holds,
directly or indirectly through subsidiaries, over 50 percent of the voting
rights or controls through management agreements with majority shareholders.

Companies acquired during the accounting period are consolidated from the
date of acquisition. Companies sold during the accounting period are
consolidated until the date of sale.

The acquisitions of companies are accounted for under the purchase method.
Excess over the cost of net assets of the acquired companies is allocated to
the fair value of acquired fixed assets, if applicable. The remaining
difference is carried as goodwill and is amortized on a straight-line basis
over its expected useful life not exceeding 20 years. These principles are also
applied where appropriate in the case of mergers or liquidations of Group
companies.

Assets held for sale are valued at lower of carrying amount or fair value
less costs to sell. Amortization and depreciation related to assets held for
sale is ceased.

All inter-company transactions, receivables, liabilities and unrealized
profits as well as distribution of profits within the Group, are eliminated at
the consolidation. Minority interests are presented separately after taxes in
the income statement and they are also presented separately from shareholders
equity in the consolidated balance sheet.

The Groups share of profits and losses in associated companies, in which
the Group holds 20 to 50 percent of the voting rights, is included in the
consolidated profit and loss account in accordance with the equity method of
accounting.

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INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

The share of result of the associated companies whose activity is
closely connected with the business areas of Instrumentarium, is recorded in
other income and expenses, net. The share of result of the other associated
companies is recorded in financing income and expenses, net. The share of
post-acquisition retained profits and losses of associated companies is
reported as part of investments in associated companies in the consolidated
balance sheet.

Foreign currency translation

Transactions in foreign currencies are recorded at the rates of exchange
prevailing at the date of the transactions. For practical reasons, a rate that
approximates the actual rate at the date of the transaction is often used. At
the balance sheet date foreign currency denominated receivables and liabilities
are translated using the rates of exchange prevailing at the balance sheet
date. Foreign exchange gains and losses related to normal business operations
and foreign exchange gains and losses associated with financing are entered
under financial income and expenses.

The income statements of foreign subsidiaries are translated into euro at
the average monthly exchange rates for the year. The balance sheet items except
net income are translated into euro at the exchange rate of the balance sheet
date. Differences arising from the translation of shareholders equity and
income statement and balance sheet are recorded under shareholders equity.
Exchange differences that result from loans and financial instruments
designated as hedges of net investments in foreign subsidiaries are recorded
against the translation differences in the consolidated shareholders equity,
net of taxes.

Exchange rates used in consolidation

|    |  |                        |        |                                      |  |      |         |      |  |      |         |  |  |  |         |  |  |  |         | 
|--- |  | ---------------------- | ------ | ------------------------------------ |  | ---- | ------- | ---- |  | ---- | ------- |  |  |  | ------- |  |  |  | ------- | 
|    |  | Average exchange rates |        | Exchange rates at balance sheet date
|    |  |                        |        |                                     
|    |  | 2000                   |        | 2001                                 |  | 2002 |         | 2001 |  | 2002
|    |  |                        |        |                                      |  |      |         |      |  |     
|USD |  |                        | 0.924  |                                      |  |      | 0.896   |      |  |      | 0.945   |  |  |  | 0.881   |  |  |  | 1.049   | 
|SEK |  |                        | 8.446  |                                      |  |      | 9.256   |      |  |      | 9.159   |  |  |  | 9.301   |  |  |  | 9.153   | 
|NOK |  |                        | 8.114  |                                      |  |      | 8.049   |      |  |      | 7.510   |  |  |  | 7.952   |  |  |  | 7.276   | 
|GBP |  |                        | 0.609  |                                      |  |      | 0.622   |      |  |      | 0.629   |  |  |  | 0.609   |  |  |  | 0.651   | 
|CAD |  |                        | 1.371  |                                      |  |      | 1.387   |      |  |      | 1.483   |  |  |  | 1.408   |  |  |  | 1.655   | 
|JPY |  |                        | 99.530 |                                      |  |      | 108.734 |      |  |      | 118.066 |  |  |  | 115.330 |  |  |  | 124.390 | 
|AUD |  |                        | 1.589  |                                      |  |      | 1.732   |      |  |      | 1.737   |  |  |  | 1.728   |  |  |  | 1.856   | 

Revenue recognition

Sales are recognized when persuasive evidence of an arrangement exists,
delivery has occurred or services have been rendered, the fee is fixed and
determinable, and collectibility is probable.

Revenues and profits on long-term contracts are recorded using the stage
of completion method, provided that the outcome of the contract can be assessed
with reasonable certainty. Sales are recognised over the contract period based
on the progress to completion as determined by the cost-to-cost method of
accounting. Any anticipated losses on contracts are charged to operations as
soon as they are determinable.

Revenues received under royalty, licensing and other contractual
agreements are recognized based upon performance under the terms of the
underlying agreements. Shipping and handling costs are included in selling and
marketing expenses.

Advertising and sales promotion costs

Advertising and sales promotion costs are expensed as incurred.

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INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Research and development costs

Research and development costs are expensed as incurred.

Pensions and coverage of pension liabilities

The pension schemes of Finnish Group companies are covered by pension
insurance companies. Non-Finnish subsidiaries make their own pension
arrangements in accordance with local practice and legislation. Instrumentarium
has met minimum funding requirements for the countries in which it maintains
pension schemes.

Non-current assets

Intangible and tangible assets are stated at historical cost less
accumulated depreciation. Land areas are not depreciated. Depreciation is
recorded by using the straight-line method based on estimated useful lives of
the assets. The estimated useful lives of the assets are as follows:

|                        |  |  |       |  |  |       |  | 
|----------------------- |  |  | ----- |  |  | ----- |  | 
|Buildings               |  |  | 20-40 |  |  | years
|Machinery and equipment |  |  | 4-10  |  |  | years
|Intangibles             |  |  | 3-10  |  |  | years
|Goodwill                |  |  | 5-20  |  |  | years

The Company reviews long-lived assets and certain intangibles to be held
and used by the Company for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. When such events or changes in circumstances indicate an asset may
not be recoverable, the Company estimates the future cash flows expected to
result from the use of the asset and its eventual disposition. If the sum of
such expected future cash flows (undiscounted and without interest charges) is
less than the carrying amount of the asset, an impairment loss is required to
be recognized in an amount by which the assets net book value exceeds its fair
market value.

Inventories

Inventories are stated at the lower of cost, on a first-in-first-out
(FIFO) basis, or net realizable value. Net realizable value is the amount that
can be realized from the sale of the asset in the normal course of business
less the costs of realization. In the case of products manufactured by the
Company itself, inventory values in the consolidated accounts include an
appropriate proportion of production overheads in addition to the direct cost
of purchase.

Cash and cash equivalents

Cash and cash equivalents include cash on hand and unrestricted deposits
with banks with original maturities of three months or less.

Taxes on extraordinary items

Taxes on extraordinary income and expenses are included in extraordinary
items in consolidated income statement.

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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Untaxed reserves

In Finland and certain other countries, companies are permitted to reduce
or increase taxable income by net charges or by income representing adjustments
to untaxed reserve accounts, provided that such amounts are reflected in the
companys financial statements and accumulated on the balance sheet. Such
amounts are included, net of taxes, in retained earnings in the consolidated
balance sheet.

Income taxes

Income taxes presented in the income statement consist of current and
deferred taxes. Current taxes include estimated taxes corresponding to the
result for the financial year of the Group, and adjustments of taxes for
previous years.

A deferred tax liability or asset has been determined for temporary
differences between tax bases of assets and liabilities and their amounts in
financial reporting, using enacted tax rates effective for the future years.
The deferred tax liabilities are recognized in the balance sheet in full, and
the deferred tax assets at their estimated realizable amounts. Deferred tax
assets are reduced by a valuation allowance if, based on the weight of
available evidence, it is more likely than not that some portion or all of the
deferred tax assets will not be realized.

No deferred tax liability has been recognized for undistributed earnings
of domestic subsidiaries since, in most cases, such earnings can be transferred
to the parent company without tax consequences. The Company does not provide
deferred income taxes on undistributed earnings of foreign subsidiaries because
such earnings are intended to be permanently reinvested in those operations. A
deferred tax liability will be recognized if circumstances change and it
becomes apparent that some or all of the undistributed earnings of a subsidiary
will be recovered in a taxable manner, such as through dividends or sale of the
investment.

Warranty

Provision for estimated warranty costs is recorded at the time of the sale
and periodically adjusted to reflect actual experience.

Derivative Financial Instruments

The Company uses a variety of derivative financial instruments,
principally foreign exchange forward contracts, foreign exchange options,
interest rate futures, forward rate agreements, interest rate options and
interest rate swaps for hedging purposes. Foreign exchange and interest rate
related instruments are used to reduce exposures to market risk resulting from
fluctuations in foreign exchange and interest rates by creating offsetting
exposures. The Company is not a party to leveraged financial instruments.

As a main principle, interest rate and foreign exchange related contracts
are recorded at fair values with unrealized gains and losses recognized through
current period net income. Deferral (hedge) accounting is applied only if the
derivative reduces the risk of the underlying hedged item and is designated at
inception as a hedge with respect to the hedged item. If a derivative financial
instrument ceases to meet the criteria for hedge accounting, any subsequent
gains or losses are recognized through current period net income. If an
anticipated transaction does not occur, the related hedge is restated at fair
value and any gains or losses are recognized in net income. If a hedging
instrument is sold or terminated prior to maturity, gains or losses are
deferred until the hedged item is recognized in net income.

Derivatives are designated at inception as a hedge with respect to the
hedged item or group of items with similar characteristics. Derivatives are
measured for effectiveness both at inception of the hedge relationship and on
an ongoing basis.

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INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Stock options

Instrumentarium Oyj has granted stock options to key personnel of the
group as a part of the compensation structure (Stock option plans 1998 and
2001). The options are granted with a fixed exercise price set on a date
outlined in the plan. When the options are exercised, the proceeds received
(less possible transaction costs) are credited to share capital (the
countervalue of the shares for accounting purposes) and share premium account.

The group has recognized a provision for social security costs on
unexercised stock options granted to employees.

Earnings per share

Earnings per share is based on profit before extraordinary items and
income taxes adjusted for minority interests and taxes relating to normal
business operations. This amount is then divided by the weighted average
number of shares outstanding during each period. According to Finnish GAAP, in
calculating the weighted average number of shares outstanding, the subscribed
shares have been included from their payment date. The own shares owned by the
Group have been deducted from the amount of shares outstanding from the date
they have been received.

In calculating the dilution effect, the number of shares which would be
issued on conversion of all stock options into shares, has been added to the
weighted average number of shares. The proceeds from this conversion have been
assumed to have been used for purchasing own shares at fair values and the
number of these shares has been deducted from the calculation.

F-12



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

2 Segment and geographic information

Instrumentarium adopted SFAS 131, Disclosures about Segments of an
Enterprise and Related Information, in 1998 which changed the way the Company
reports information about its operating segments.

Instrumentariums reportable segments are comprised of strategic business
units that offer different products and services. They are managed separately
because each segment requires different technology and marketing strategies.
Operating segments exhibiting similar long-term financial performance and
fulfilling all the requirements of SFAS 131 have been aggregated. The Company
has two reportable segments: Anesthesia and critical care and Medical
equipment.

Anesthesia and critical care.Anesthesia and critical care segment
represents Instrumentariums core business. The division manufactures and
markets anesthesia and critical care products including patient monitors and
monitoring systems for operating rooms, recovery rooms and intensive care
units, anesthesia machines for anesthesia delivery and mechanical ventilation,
clinical information systems, and supplies and accessories.

In July 2002 Instrumentarium acquired all the shares of Spacelabs Medical,
Inc., which primarily manufactures critical care patient monitors. The acquired
Spacelabs business operations are reported under Anesthesia and Critical Care
segment.

Medical equipment.The Medical equipment segment consists of business
units that specialize either in niche healthcare markets or distribution of
healthcare products.

In March 2002 the hospital furniture business of Merivaara was divested.
Following the divestment the remaining anesthesia and critical care related
operations within Merivaara division were reclassified for all periods
presented from Medical Equipment segment to the Anesthesia and Critical Care
segment. Divested Merivaara business operations are included in Other
operations for all periods reported.

The Other operations line includes corporate related items, the results
of minor operations comprised of leasing operation units not allocated to
reportable segments and the items relating to such divested operations that are
not categorized as Discontinued operations.

The Discontinued operations represents Optical retail business that was
divested at the beginning of November 2002 and is included in Discontinued
operations for all periods reported.

The accounting policies of the reportable segments are the same as those
described in Note 1 to the Consolidated Financial Statements. All intersegment
sales are market based. The Company evaluates the performance of its operating
segments and allocates resources to them based on operating profit. No single
customer represents more than 10 percent of the Groups net sales.

Information about Instrumentariums reportable segments as of and for the
years ended December 31, 2000, 2001 and 2002, is shown in the following tables.

F-13



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Business segment information

|                                                                                                                                                                                                                                                                  |  |                                           |         |      |  |      |           |   |  |  |           |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------- | ------- | ---- |  | ---- | --------- | - |  |  | --------- | -
|                                                                                                                                                                                                                                                                  |  | As at and for the Year Ended December 31,
|                                                                                                                                                                                                                                                                  |  |                                          
|                                                                                                                                                                                                                                                                  |  | 2000                                      |         | 2001 |  | 2002
|                                                                                                                                                                                                                                                                  |  |                                           |         |      |  |     
|                                                                                                                                                                                                                                                                  |  | EUR                                       |         | EUR  |  | EUR 
|Net sales                                                                                                                                                                                                                                                         |  |                                           |         |      |  |      |           |   |  |  |           |  
|Anesthesia and critical care                                                                                                                                                                                                                                      |  |                                           | 644,977 |      |  |      | 718,354   |   |  |  | 815,396   |  
|Medical equipment                                                                                                                                                                                                                                                 |  |                                           | 145,014 |      |  |      | 176,305   |   |  |  | 216,754   |  
|Other operations                                                                                                                                                                                                                                                  |  |                                           | 27,296  |      |  |      | 26,388    |   |  |  | 6,550     |  
|Discontinued operations                                                                                                                                                                                                                                           |  |                                           | 95,556  |      |  |      | 104,314   |   |  |  | 87,972    |  
|                                                                                                                                                                                                                                                                  |  |                                           |         |      |  |      |           |   |  |  |           |  
|Net sales                                                                                                                                                                                                                                                         |  |                                           | 912,843 |      |  |      | 1,025,361 |   |  |  | 1,126,671 |  
|                                                                                                                                                                                                                                                                  |  |                                           |         |      |  |      |           |   |  |  |           |  
|Revenues recognized on long-term
contracts according to stage of
completion method during 2002
amounted to EUR 11
million (1 % of net sales)
Revenue that will be recognized
on these long-term contracts during
2003 will amount
approximately to EUR 23 million |  |                                           |         |      |  |      |           |   |  |  |           |  
|                                                                                                                                                                                                                                                                 
|Operating profit (loss)                                                                                                                                                                                                                                           |  |                                           |         |      |  |      |           |   |  |  |           |  
|Anesthesia and critical care                                                                                                                                                                                                                                      |  |                                           | 60,342  |      |  |      | 104,814   |   |  |  | 133,593   |  
|Medical equipment                                                                                                                                                                                                                                                 |  |                                           | 10,849  |      |  |      | 14,120    |   |  |  | 12,519    |  
|Other operations                                                                                                                                                                                                                                                  |  |                                           | 2,947   |      |  |      | 2,583     |   |  |  | (133      | )
|Discontinued operations                                                                                                                                                                                                                                           |  |                                           | 10,284  |      |  |      | 10,661    |   |  |  | 6,732     |  
|                                                                                                                                                                                                                                                                  |  |                                           |         |      |  |      |           |   |  |  |           |  
|Operating profit from businesses                                                                                                                                                                                                                                  |  |                                           | 84,422  |      |  |      | 132,178   |   |  |  | 152,712   |  
|General corporate expenses and
non-recurring operating income
and expenses, net                                                                                                                                                                                   |  |                                           | 11,651  |      |  |      | (200      | ) |  |  | (8,864    | )
|Amortization of goodwill (1)                                                                                                                                                                                                                                      |  |                                           | (16,344 | )    |  |      | (16,501   | ) |  |  | (17,383   | )
|                                                                                                                                                                                                                                                                  |  |                                           |         |      |  |      |           |   |  |  |           |  
|Operating profit                                                                                                                                                                                                                                                  |  |                                           | 79,729  |      |  |      | 115,477   |   |  |  | 126,466   |  
|                                                                                                                                                                                                                                                                  |  |                                           |         |      |  |      |           |   |  |  |           |  

|                                 |  |                    |         |      |  |  |           | 
|-------------------------------- |  | ------------------ | ------- | ---- |  |  | --------- | 
|                                 |  | As at December 31,
|                                 |  |                   
|                                 |  | 2001               |         | 2002
|                                 |  |                    |         |     
|                                 |  | EUR                |         | EUR 
|Net operating assets(2)          |  |                    |         |      |  |  |           | 
|Anesthesia and critical care     |  |                    | 482,272 |      |  |  | 517,657   | 
|Medical equipment                |  |                    | 132,865 |      |  |  | 139,652   | 
|Other operations                 |  |                    | 6,503   |      |  |  | 33        | 
|Discontinued operations          |  |                    | 24,895  |      |  |  | 10,771    | 
|                                 |  |                    |         |      |  |  |           | 
|Net operating assets             |  |                    | 646,535 |      |  |  | 668,113   | 
|Non-interest bearing liabilities |  |                    | 234,248 |      |  |  | 294,582   | 
|Corporate headquarters asset    |  |                    | 84,854  |      |  |  | 144,425   | 
|                                 |  |                    |         |      |  |  |           | 
|Total assets                     |  |                    | 965,637 |      |  |  | 1,107,121 | 
|                                 |  |                    |         |      |  |  |           | 



---

|1) |  | Includes amortization of goodwill on consolidation and on business acquisitions.                                                                                                                                                                                                                                                          
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2) |  | Includes non-current assets, inventories, non-interest bearing short-term receivables (excluding accrued
interest and tax related receivables), other long-term non-interest bearing liabilities and short-term
non-interest bearing liabilities (excluding accrued interests and tax related liabilities) allocated to business
segments.

|                             |  |                         |        |      |  |      |        |  |  |  |         | 
|---------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------ |  |  |  | ------- | 
|                             |  | Year Ended December 31,
|                             |  |                        
|                             |  | 2000                    |        | 2001 |  | 2002
|                             |  |                         |        |      |  |     
|                             |  | EUR                     |        | EUR  |  | EUR 
|Capital expenditure          |  |                         |        |      |  |      |        |  |  |  |         | 
|Anesthesia and critical care |  |                         | 10,848 |      |  |      | 9,284  |  |  |  | 169,093 | 
|Medical equipment            |  |                         | 27,164 |      |  |      | 18,557 |  |  |  | 14,851  | 
|Other operations             |  |                         | 495    |      |  |      | 277    |  |  |  | 1,070   | 
|Discontinued operations      |  |                         | 3,697  |      |  |      | 7,325  |  |  |  | 2,982   | 
|Corporate headquarters       |  |                         | 8,797  |      |  |      | 7,815  |  |  |  | 10,375  | 
|                             |  |                         |        |      |  |      |        |  |  |  |         | 
|Capital expenditure          |  |                         | 51,001 |      |  |      | 43,258 |  |  |  | 198,370 | 
|                             |  |                         |        |      |  |      |        |  |  |  |         | 

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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

|                              |  |                         |        |      |  |      |        |  |  |  |        | 
|----------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                              |  | Year Ended December 31,
|                              |  |                        
|                              |  | 2000                    |        | 2001 |  | 2002
|                              |  | EUR                     |        | EUR  |  | EUR 
|                              |  |                         |        |      |  |     
|Depreciation and amortization |  |                         |        |      |  |      |        |  |  |  |        | 
|Anesthesia and critical care  |  |                         | 15,887 |      |  |      | 14,193 |  |  |  | 15,036 | 
|Medical equipment             |  |                         | 2,154  |      |  |      | 2,888  |  |  |  | 4,505  | 
|Other operations              |  |                         | 713    |      |  |      | 631    |  |  |  | 328    | 
|Discontinued operations       |  |                         | 2,622  |      |  |      | 3,018  |  |  |  | 2,836  | 
|Corporate headquarters        |  |                         | 4,151  |      |  |      | 2,630  |  |  |  | 2,756  | 
|Amortization of goodwill (1)  |  |                         | 16,344 |      |  |      | 16,501 |  |  |  | 17,383 | 
|                              |  |                         |        |      |  |      |        |  |  |  |        | 
|Depreciation and amortization |  |                         | 41,871 |      |  |      | 39,861 |  |  |  | 42,844 | 
|                              |  |                         |        |      |  |      |        |  |  |  |        | 



---

|1) |  | Includes amortization of goodwill on consolidation and on business
acquisitions.
|-- |  | --------------------------------------------------------------------------------

|                                        |  |                         |       |      |  |      |       |  |  |  |       | 
|--------------------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ----- |  |  |  | ----- | 
|                                        |  | Year Ended December 31,
|                                        |  |                        
|                                        |  | 2000                    |       | 2001 |  | 2002
|Average number of personnel
(unaudited) |  |                         |       |      |  |      |       |  |  |  |       | 
|Anesthesia and critical care            |  |                         | 3,477 |      |  |      | 3,355 |  |  |  | 3,779 | 
|Medical equipment                       |  |                         | 710   |      |  |      | 863   |  |  |  | 1,028 | 
|Other operations                        |  |                         | 137   |      |  |      | 143   |  |  |  | 36    | 
|Discontinued operations                 |  |                         | 811   |      |  |      | 889   |  |  |  | 734   | 
|Corporate headquarters                  |  |                         | 71    |      |  |      | 67    |  |  |  | 73    | 
|                                        |  |                         |       |      |  |      |       |  |  |  |       | 
|Average number of personnel             |  |                         | 5,205 |      |  |      | 5,317 |  |  |  | 5,650 | 
|                                        |  |                         |       |      |  |      |       |  |  |  |       | 

Geographical segment information

Information about Instrumentariums operations in different geographic
areas as of and for the years ended December 31, 2000, 2001 and 2002 are as
follows:

|                  |  |                         |         |      |  |      |           |  |  |  |           | 
|----------------- |  | ----------------------- | ------- | ---- |  | ---- | --------- |  |  |  | --------- | 
|                  |  | Year Ended December 31,
|                  |  |                        
|                  |  | 2000                    |         | 2001 |  | 2002
|                  |  |                         |         |      |  |     
|                  |  | EUR                     |         | EUR  |  | EUR 
|Net sales         |  |                         |         |      |  |      |           |  |  |  |           | 
|European Union    |  |                         | 353,992 |      |  |      | 395,539   |  |  |  | 382,461   | 
|of which Finland  |  |                         | 97,230  |      |  |      | 104,292   |  |  |  | 82,074    | 
|Rest of Europe    |  |                         | 41,549  |      |  |      | 47,264    |  |  |  | 37,822    | 
|North America     |  |                         | 390,142 |      |  |      | 442,712   |  |  |  | 532,211   | 
|Asia-Pacific      |  |                         | 94,314  |      |  |      | 100,821   |  |  |  | 123,431   | 
|Rest of the world |  |                         | 32,847  |      |  |      | 39,024    |  |  |  | 50,746    | 
|                  |  |                         |         |      |  |      |           |  |  |  |           | 
|Net sales         |  |                         | 912,843 |      |  |      | 1,025,361 |  |  |  | 1,126,671 | 
|                  |  |                         |         |      |  |      |           |  |  |  |           | 

F-15



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

|                     |  |                         |         |      |  |  |           | 
|-------------------- |  | ----------------------- | ------- | ---- |  |  | --------- | 
|                     |  | Year Ended December 31,
|                     |  |                        
|                     |  | 2001                    |         | 2002
|                     |  |                         |         |     
|                     |  | EUR                     |         | EUR 
|Net operating assets |  |                         |         |      |  |  |           | 
|European Union       |  |                         | 387,498 |      |  |  | 377,964   | 
|of which Finland     |  |                         | 214,556 |      |  |  | 197,743   | 
|Rest of Europe       |  |                         | 3,945   |      |  |  | 1,843     | 
|North America        |  |                         | 480,617 |      |  |  | 565,763   | 
|Asia-Pacific         |  |                         | 51,446  |      |  |  | 53,839    | 
|Unallocated assets   |  |                         | 42,131  |      |  |  | 107,711   | 
|                     |  |                         |         |      |  |  |           | 
|Net operating assets |  |                         | 965,637 |      |  |  | 1,107,121 | 
|                     |  |                         |         |      |  |  |           | 

|                    |  |                         |        |      |  |      |        |     |  |  |         | 
|------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------ | --- |  |  | ------- | 
|                    |  | Year Ended December 31,
|                    |  |                        
|                    |  | 2000                    |        | 2001 |  | 2002
|                    |  |                         |        |      |  |     
|                    |  |                         |        |      |  | EUR  |        | EUR
|Capital expenditure |  |                         |        |      |  |      |        |     |  |  |         | 
|European Union      |  |                         | 40,229 |      |  |      | 35,452 |     |  |  | 22,882  | 
|of which Finland    |  |                         | 31,327 |      |  |      | 28,700 |     |  |  | 17,673  | 
|Rest of Europe      |  |                         | 393    |      |  |      | 113    |     |  |  | 121     | 
|North America       |  |                         | 9,736  |      |  |      | 7,270  |     |  |  | 174,769 | 
|Asia-Pacific        |  |                         | 644    |      |  |      | 423    |     |  |  | 598     | 
|                    |  |                         |        |      |  |      |        |     |  |  |         | 
|Capital expenditure |  |                         | 51,001 |      |  |      | 43,258 |     |  |  | 198,370 | 
|                    |  |                         |        |      |  |      |        |     |  |  |         | 

|                                       |  |                         |       |      |  |      |       |  |  |  |       | 
|-------------------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ----- |  |  |  | ----- | 
|                                       |  | Year Ended December 31,
|                                       |  |                        
|                                       |  | 2000                    |       | 2001 |  | 2002
|                                       |  |                         |       |      |  |     
|                                       |  | EUR                     |       | EUR  |  | EUR 
|Average number of
personnel(unaudited) |  |                         |       |      |  |      |       |  |  |  |       | 
|European Union                         |  |                         | 3,085 |      |  |      | 3,166 |  |  |  | 3,085 | 
|of which Finland                       |  |                         | 1,931 |      |  |      | 1,990 |  |  |  | 1,886 | 
|Rest of Europe                         |  |                         | 109   |      |  |      | 139   |  |  |  | 96    | 
|North America                          |  |                         | 1,733 |      |  |      | 1,729 |  |  |  | 2,166 | 
|Asia-Pacific                           |  |                         | 278   |      |  |      | 283   |  |  |  | 303   | 
|                                       |  |                         |       |      |  |      |       |  |  |  |       | 
|Average number of personnel            |  |                         | 5,205 |      |  |      | 5,317 |  |  |  | 5,650 | 
|                                       |  |                         |       |      |  |      |       |  |  |  |       | 

Net sales are allocated based on the country in which customers are
located.

Assets, capital expenditures and number of personnel are allocated based
on the country in which the Group company is located.

F-16



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

3 Other operating income and expenses, net

Other operating income and expenses, net consist of the following:

|                                                       |  |                         |         |      |  |      |        |   |  |  |        |  
|------------------------------------------------------ |  | ----------------------- | ------- | ---- |  | ---- | ------ | - |  |  | ------ | -
|                                                       |  | Year ended December 31,
|                                                       |  |                        
|                                                       |  | 2000                    |         | 2001 |  | 2002
|                                                       |  |                         |         |      |  |     
|                                                       |  | EUR                     |         | EUR  |  | EUR 
|Other operating income                                 |  |                         |         |      |  |      |        |   |  |  |        |  
|Rental income                                          |  |                         | 4,654   |      |  |      | 2,711  |   |  |  | 3,071  |  
|Agency fees and profit sharing                         |  |                         | 6,155   |      |  |      | 646    |   |  |  | 603    |  
|Gain on sale of assets                                 |  |                         | 12,509  |      |  |      | 3,911  |   |  |  | 4,212  |  
|Ohmeda acquisition (1)                                 |  |                         | 3,008   |      |  |      |       |   |  |  |       |  
|Other income                                           |  |                         | 5,252   |      |  |      | 3,219  |   |  |  | 5,134  |  
|                                                       |  |                         |         |      |  |      |        |   |  |  |        |  
|                                                       |  |                         | 31,577  |      |  |      | 10,487 |   |  |  | 13,020 |  
|Other operating expenses
Expenses on rented properties |  |                         | (2,680  | )    |  |      | (901   | ) |  |  | (1,103 | )
|Restructuring expenses (2)                             |  |                         | (5,219  | )    |  |      | (5,525 | ) |  |  | (22    | )
|Loss on sale of assets                                 |  |                         | (762    | )    |  |      | (577   | ) |  |  | (851   | )
|Other expenses                                         |  |                         | (2,080  | )    |  |      | (2,426 | ) |  |  | (1,486 | )
|                                                       |  |                         |         |      |  |      |        |   |  |  |        |  
|                                                       |  |                         | (10,741 | )    |  |      | (9,429 | ) |  |  | (3,463 | )
|Share in result of associated companies                |  |                         | 1,807   |      |  |      | 253    |   |  |  | (268   | )
|Other operating income and expenses, net               |  |                         | 22,643  |      |  |      | 1,311  |   |  |  | 9,289  |  
|                                                       |  |                         |         |      |  |      |        |   |  |  |        |  



---

|(1) |  | The share of the amount paid by Baxter Healthcare Corporation in September
2000 related to Ohmeda acquisition, which was booked as income.                                                                                                     
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The restructuring expenses in 2000 totaling EUR 5,219 thousand and 2001
totaling EUR 5,525 thousand are related to program aimed at improving operating
efficiencies in Datex-Ohmeda. The program was launched in 2000 and implemented
in 2001.

|                                                                            |  |                         |       |      |  |      |   |  |  |  |        |  
|--------------------------------------------------------------------------- |  | ----------------------- | ----- | ---- |  | ---- | - |  |  |  | ------ | -
|                                                                            |  | Year ended December 31,
|                                                                            |  |                        
|                                                                            |  | 2000                    |       | 2001 |  | 2002
|                                                                            |  |                         |       |      |  |     
|                                                                            |  | EUR                     |       | EUR  |  | EUR 
|Non-recurring operating income and expenses, net                            |  |                         |       |      |  |      |   |  |  |  |        |  
|Gain on sale of non-current marketable securities                           |  |                         | 4,851 |      |  |      |  |  |  |  |       |  
|Disposal of business operations                                             |  |                         | 1,327 |      |  |      |  |  |  |  | 3,558  |  
|Restructuring and integration expenses related to the
Spacelabs acquisition |  |                         |      |      |  |      |  |  |  |  | (6,822 | )
|                                                                            |  |                         |       |      |  |      |   |  |  |  |        |  
|Non-recurring operating income and expenses, net                            |  |                         | 6,177 |      |  |      |  |  |  |  | (3,264 | )
|                                                                            |  |                         |       |      |  |      |   |  |  |  |        |  
|Provisions
Restructuring provision related to Spacelabs acquisition         |  |                         |      |      |  |      |  |  |  |  | 9,652  |  
|                                                                            |  |                         |       |      |  |      |   |  |  |  |        |  
|Provisions                                                                  |  |                         |      |      |  |      |  |  |  |  | 9,652  |  
|                                                                            |  |                         |       |      |  |      |   |  |  |  |        |  

F-17



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)



|4 |  | Depreciation and amortization
|- |  | -----------------------------

Depreciation and amortization according to plan by asset category are as
follows:

|                               |  |                         |        |      |  |      |        |  |  |  |        | 
|------------------------------ |  | ----------------------- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                               |  | Year ended December 31,
|                               |  |                        
|                               |  | 2000                    |        | 2001 |  | 2002
|                               |  |                         |        |      |  |     
|                               |  | EUR                     |        | EUR  |  | EUR 
|Intangible rights              |  |                         | 1,972  |      |  |      | 1,837  |  |  |  | 2,728  | 
|Goodwill                       |  |                         | 16,344 |      |  |      | 16,501 |  |  |  | 17,383 | 
|Other capitalized expenditures |  |                         | 1,792  |      |  |      | 1,591  |  |  |  | 1,825  | 
|Buildings                      |  |                         | 5,265  |      |  |      | 3,697  |  |  |  | 3,847  | 
|Machinery and equipment        |  |                         | 16,498 |      |  |      | 16,236 |  |  |  | 17,062 | 
|                               |  |                         |        |      |  |      |        |  |  |  |        | 
|                               |  |                         | 41,871 |      |  |      | 39,861 |  |  |  | 42,844 | 
|                               |  |                         |        |      |  |      |        |  |  |  |        | 

Depreciation and amortization charged against operations by function are
as follows:

|                                    |  |                         |        |      |  |      |        |  |  |  |        | 
|----------------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                                    |  | Year ended December 31,
|                                    |  |                        
|                                    |  | 2000                    |        | 2001 |  | 2002
|                                    |  |                         |        |      |  |     
|                                    |  | EUR                     |        | EUR  |  | EUR 
|Cost of goods sold                  |  |                         | 7,037  |      |  |      | 8,397  |  |  |  | 9,093  | 
|Selling and marketing expenses      |  |                         | 4,400  |      |  |      | 3,921  |  |  |  | 4,272  | 
|Research and development expenses   |  |                         | 1,523  |      |  |      | 1,429  |  |  |  | 1,880  | 
|General and administrative expenses |  |                         | 10,990 |      |  |      | 9,350  |  |  |  | 9,090  | 
|Other operating expenses            |  |                         | 1,577  |      |  |      | 263    |  |  |  | 1,126  | 
|Amortization of goodwill            |  |                         | 16,344 |      |  |      | 16,501 |  |  |  | 17,383 | 
|                                    |  |                         |        |      |  |      |        |  |  |  |        | 
|                                    |  |                         | 41,871 |      |  |      | 39,861 |  |  |  | 42,844 | 
|                                    |  |                         |        |      |  |      |        |  |  |  |        | 



|5 |  | Financing income and expenses, net
|- |  | ----------------------------------

The components of financing income and expenses, net are as follows:

|                                      |  |                         |         |      |  |      |         |   |  |  |        |  
|------------------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- | - |  |  | ------ | -
|                                      |  | Year ended December 31,
|                                      |  |                        
|                                      |  | 2000                    |         | 2001 |  | 2002
|                                      |  | EUR                     |         | EUR  |  | EUR 
|                                      |  |                         |         |      |  |     
|Dividend income(1)                    |  |                         | 2,859   |      |  |      | 372     |   |  |  | 267    |  
|Interest and other financial income   |  |                         |         |      |  |      |         |   |  |  |        |  
|Interest income                       |  |                         | 2,026   |      |  |      | 4,285   |   |  |  | 5,027  |  
|Foreign exchange gains (2)            |  |                         | 36,406  |      |  |      | 29,288  |   |  |  | 30,413 |  
|Other financial income                |  |                         | 477     |      |  |      | 4       |   |  |  | 37     |  
|                                      |  |                         |         |      |  |      |         |   |  |  |       
|Total                                 |  |                         | 38,909  |      |  |      | 33,577  |   |  |  | 35,477 |  
|Write-down of long-term investments   |  |                         |        |      |  |      | (2,356  | ) |  |  |       |  
|Interest and other financing expenses |  |                         |         |      |  |      |         |   |  |  |        |  
|Interest expenses                     |  |                         | (15,746 | )    |  |      | (11,161 | ) |  |  | (7,135 | )

F-18



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

|                                         |  |  |         |   |  |  |         |   |  |  |         |  
|---------------------------------------- |  |  | ------- | - |  |  | ------- | - |  |  | ------- | -
|Foreign exchange losses (2)              |  |  | (38,969 | ) |  |  | (31,904 | ) |  |  | (26,433 | )
|Other financing expenses                 |  |  | (229    | ) |  |  | (343    | ) |  |  | (468    | )
|                                         |  |  |         |   |  |  |         |   |  |  |         |  
|Total                                    |  |  | (54,944 | ) |  |  | (43,409 | ) |  |  | (34,036 | )
|Share in result of associated companies  |  |  | (1      | ) |  |  | (84     | ) |  |  | (46     | )
|                                         |  |  |         |   |  |  |         |   |  |  |         |  
|Total financing income and expenses, net |  |  | (13,177 | ) |  |  | (11,899 | ) |  |  | 1,661   |  
|                                         |  |  |         |   |  |  |         |   |  |  |         |  



|(1) |  | Dividend income including related avoir fiscal includes in 2000 EUR 851
thousand, in 2001 EUR 38 thousand dividends received in the form of
Instrumentarium Corporation shares.                   
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Foreign exchange gains and losses related to commercial assets and
liabilities and hedging these assets and liabilities as well as hedging
anticipated cash flows denominated in foreign currency.
|   
|6   |  | Extraordinary income and expenses                                                                                                                                                                 

|                                                                                                                 |  |                         |       |      |  |      |   |  |  |  |         |  
|---------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ----- | ---- |  | ---- | - |  |  |  | ------- | -
|                                                                                                                 |  | Year ended December 31,
|                                                                                                                 |  |                        
|                                                                                                                 |  | 2000                    |       | 2001 |  | 2002
|                                                                                                                 |  |                         |       |      |  |     
|                                                                                                                 |  | EUR                     |       | EUR  |  | EUR 
|Extraordinary income                                                                                             |  |                         |       |      |  |      |   |  |  |  |         |  
|Amortization of goodwill for the
years 1998 and 1999 triggered by the
payment from Baxter Healthcare
Corporation |  |                         | 3,520 |      |  |      |  |  |  |  |        |  
|Gain on sale of the optical retail
businesses, net of expenses related
to the sale                               |  |                         |      |      |  |      |  |  |  |  | 97,537  |  
|Taxes                                                                                                            |  |                         |      |      |  |      |  |  |  |  | (20,988 | )
|                                                                                                                 |  |                         |       |      |  |      |   |  |  |  |         |  
|Extraordinary income                                                                                             |  |                         | 3,520 |      |  |      |  |  |  |  | 76,549  |  
|Extraordinary expenses                                                                                           |  |                         |       |      |  |      |   |  |  |  |         |  
|Professional fees related to the
combination between Instrumentarium
and GE                                      |  |                         |      |      |  |      |  |  |  |  | (10,320 | )
|Taxes                                                                                                            |  |                         |      |      |  |      |  |  |  |  | 2,993   |  
|                                                                                                                 |  |                         |       |      |  |      |   |  |  |  |         |  
|Extraordinary expenses                                                                                           |  |                         |      |      |  |      |  |  |  |  | (7,327  | )
|Extraordinary income and expenses, net                                                                           |  |                         | 3,520 |      |  |      |  |  |  |  | 69,222  |  
|                                                                                                                 |  |                         |       |      |  |      |   |  |  |  |         |  



|7 |  | Income taxes
|- |  | ------------

The domestic and foreign components of income before taxes and minority
interests are as follows:

|                |  |                         |        |      |  |      |         |  |  |  |         | 
|--------------- |  | ----------------------- | ------ | ---- |  | ---- | ------- |  |  |  | ------- | 
|                |  | Year ended December 31,
|                |  |                        
|                |  | 2000                    |        | 2001 |  | 2002
|                |  |                         |        |      |  |     
|                |  | EUR                     |        | EUR  |  | EUR 
|Finland         |  |                         | 50,219 |      |  |      | 59,760  |  |  |  | 55,275  | 
|Other countries |  |                         | 16,334 |      |  |      | 43,818  |  |  |  | 72,852  | 
|                |  |                         |        |      |  |      |         |  |  |  |         | 
|                |  |                         | 66,552 |      |  |      | 103,578 |  |  |  | 128,127 | 
|                |  |                         |        |      |  |      |         |  |  |  |         | 

F-19



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

The components of income taxes are as follows:

|                    |  |                         |        |      |  |      |        |  |  |  |        | 
|------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                    |  | Year ended December 31,
|                    |  |                        
|                    |  | 2000                    |        | 2001 |  | 2002
|                    |  |                         |        |      |  |     
|                    |  | EUR                     |        | EUR  |  | EUR 
|Current taxes       |  |                         |        |      |  |      |        |  |  |  |        | 
|Finland             |  |                         | 19,581 |      |  |      | 20,806 |  |  |  | 14,007 | 
|Other countries     |  |                         | 12,560 |      |  |      | 5,663  |  |  |  | 20,971 | 
|                    |  |                         |        |      |  |      |        |  |  |  |        | 
|                    |  |                         | 32,141 |      |  |      | 26,469 |  |  |  | 34,977 | 
|Deferred taxes      |  |                         |        |      |  |      |        |  |  |  |        | 
|Finland             |  |                         | (8,954 | )    |  |      | 366    |  |  |  | 4,597  | 
|Other countries     |  |                         | 278    |      |  |      | 4,603  |  |  |  | 2,146  | 
|                    |  |                         |        |      |  |      |        |  |  |  |        | 
|                    |  |                         | (8,676 | )    |  |      | 4,970  |  |  |  | 6,742  | 
|Income taxes, total |  |                         | 23,465 |      |  |      | 31,438 |  |  |  | 41,720 | 
|                    |  |                         |        |      |  |      |        |  |  |  |        | 

The principal reasons for the difference between income tax at Finnish
statutory rate and effective tax rate in relation to income before
extraordinary items:

|                                                                       |  |                         |    |      |  |      |    |    |  |  |    |   
|---------------------------------------------------------------------- |  | ----------------------- | -- | ---- |  | ---- | -- | -- |  |  | -- | --
|                                                                       |  | Year ended December 31,
|                                                                       |  |                        
|                                                                       |  | 2000                    |    | 2001 |  | 2002
|                                                                       |  |                         |    |      |  |     
|                                                                       |  | EUR                     |    | EUR  |  | EUR 
|Income tax at Finnish statutory rate                                   |  |                         | 29 | %    |  |      | 29 | %  |  |  | 29 | % 
|Amortization of goodwill on consolidation                              |  |                         | 6  | %    |  |      | 4  | %  |  |  | 3  | % 
|Operating losses with no current tax benefit                           |  |                         | 3  | %    |  |      | 1  | %  |  |  | 0  | % 
|Adjustment of prior years tax accruals                                 |  |                         | (8 | %)   |  |      | (1 | %) |  |  | 2  | % 
|Taxes of foreign subsidiaries, which exceed the Finnish statutory rate |  |                         | 6  | %    |  |      | 2  | %  |  |  | 2  | % 
|Utilized tax loss carry forwards, no deferred tax asset recognized     |  |                         | (1 | %)   |  |      | (5 | %) |  |  | (3 | %)
|                                                                       |  |                         |    |      |  |      |    |    |  |  |    |   
|Effective tax rate on income before extraordinary items                |  |                         | 35 | %    |  |      | 30 | %  |  |  | 33 | % 
|                                                                       |  |                         |    |      |  |      |    |    |  |  |    |   

F-20



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)



|8 |  | Earnings per share
|- |  | ------------------

Basic earnings per share and diluted earnings per share in accordance with
Finnish GAAP are calculated as follows:

|                                                             |  |                         |         |      |  |      |         |   |  |  |         |  
|------------------------------------------------------------ |  | ----------------------- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                                                             |  | Year ended December 31,
|                                                             |  |                        
|                                                             |  | 2000                    |         | 2001 |  | 2002
|                                                             |  |                         |         |      |  |     
|                                                             |  | EUR                     |         | EUR  |  | EUR 
|Basic earnings per share                                     |  |                         |         |      |  |      |         |   |  |  |         |  
|Income before extraordinary items                            |  |                         | 66,552  |      |  |      | 103,578 |   |  |  | 128,127 |  
|Minority interests                                           |  |                         | (29     | )    |  |      | (4      | ) |  |  | 128     |  
|Income taxes                                                 |  |                         | (23,465 | )    |  |      | (31,438 | ) |  |  | (41,720 | )
|                                                             |  |                         |         |      |  |      |         |   |  |  |         |  
|                                                             |  |                         | 43,059  |      |  |      | 72,136  |   |  |  | 86,535  |  
|                                                             |  |                         |         |      |  |      |         |   |  |  |         |  
|Weighted average number of shares outstanding (in thousands) |  |                         | 47,960  |      |  |      | 47,946  |   |  |  | 47,980  |  
|Earnings per share                                           |  |                         | 0.90    |      |  |      | 1.50    |   |  |  | 1.80    |  
|                                                             |  |                         |         |      |  |      |         |   |  |  |         |  

|                                                                     |  |                         |         |      |  |      |         |   |  |  |         |  
|-------------------------------------------------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                                                                     |  | Year ended December 31,
|                                                                     |  |                        
|                                                                     |  | 2000                    |         | 2001 |  | 2002
|                                                                     |  |                         |         |      |  |     
|                                                                     |  | EUR                     |         | EUR  |  | EUR 
|Diluted earnings per share                                           |  |                         |         |      |  |      |         |   |  |  |         |  
|Income before extraordinary items                                    |  |                         | 66,552  |      |  |      | 103,578 |   |  |  | 128,127 |  
|Minority interests                                                   |  |                         | (29     | )    |  |      | (4      | ) |  |  | 128     |  
|Income taxes                                                         |  |                         | (23,465 | )    |  |      | (31,438 | ) |  |  | (41,720 | )
|                                                                     |  |                         |         |      |  |      |         |   |  |  |         |  
|                                                                     |  |                         | 43,059  |      |  |      | 72,136  |   |  |  | 86,535  |  
|                                                                     |  |                         |         |      |  |      |         |   |  |  |         |  
|Weighted average diluted number of shares outstanding (in
thousands) |  |                         | 47,960  |      |  |      | 48,170  |   |  |  | 49,744  |  
|Diluted earnings per share                                           |  |                         | 0.90    |      |  |      | 1.50    |   |  |  | 1.74    |  
|                                                                     |  |                         |         |      |  |      |         |   |  |  |         |  

F-21



---



##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)



|9 |  | Consolidated cash flow statement
|- |  | --------------------------------

Following adjustments are made to convert net income on an accrual
basis to a cash basis and to remove the effects of items associated with
cash flows elsewhere in the cash flow statement:

|                                                                                          |  |                         |         |      |  |      |         |   |  |  |         |  
|----------------------------------------------------------------------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                                                                                          |  | Year ended December 31,
|                                                                                          |  |                        
|                                                                                          |  | 2000                    |         | 2001 |  | 2002
|                                                                                          |  |                         |         |      |  |     
|                                                                                          |  | EUR                     |         | EUR  |  | EUR 
|Adjustments to net income                                                                 |  |                         |         |      |  |      |         |   |  |  |         |  
|Depreciation and amortization                                                             |  |                         | 41,871  |      |  |      | 39,861  |   |  |  | 42,844  |  
|Write-down of inventories                                                                 |  |                         | 9,154   |      |  |      | 9,730   |   |  |  | 7,211   |  
|Write-down of receivables and non-current assets                                          |  |                         | 1,697   |      |  |      | 1,815   |   |  |  | (769    | )
|Gain (-) loss (+) on sale of companies and businesses                                     |  |                         | (9,829  | )    |  |      |        |   |  |  | (81,802 | )
|Gain (-) loss (+) on sale of other non-current assets                                     |  |                         | (6,752  | )    |  |      | (967    | ) |  |  | (1,434  | )
|Unrealized exchange gains (-) exchange losses (+)                                         |  |                         | (22,939 | )    |  |      | (13,789 | ) |  |  | (3,663  | )
|Income taxes                                                                              |  |                         | 23,465  |      |  |      | 31,438  |   |  |  | 41,720  |  
|Interest expenses                                                                         |  |                         | 15,746  |      |  |      | 11,161  |   |  |  | 7,135   |  
|Treasury shares received as dividend                                                      |  |                         | (613    | )    |  |      | (27     | ) |  |  |        |  
|Ohmeda
acquisition(1)                                                                     |  |                         | (6,528  | )    |  |      |        |   |  |  |        |  
|Professional fees related to combination agreement                                        |  |                         |        |      |  |      |        |   |  |  | 7,327   |  
|Other adjustments                                                                         |  |                         | 3       |      |  |      | 456     |   |  |  | 172     |  
|                                                                                          |  |                         |         |      |  |      |         |   |  |  |         |  
|Total adjustments                                                                         |  |                         | 45,275  |      |  |      | 79,678  |   |  |  | 18,740  |  
|                                                                                          |  |                         |         |      |  |      |         |   |  |  |         |  
|Change in working capital                                                                 |  |                         |         |      |  |      |         |   |  |  |         |  
|Increase (-) decrease (+) in inventories                                                  |  |                         | (5,712  | )    |  |      | (8,040  | ) |  |  | (2,261  | )
|Increase (-) decrease (+) in accounts receivable                                          |  |                         | (36,247 | )    |  |      | (20,868 | ) |  |  | (2,335  | )
|Increase (-) decrease (+) in other current receivable                                     |  |                         | (8,654  | )    |  |      | 5,365   |   |  |  | (5,785  | )
|Increase (+) decrease (-) in accounts payable                                             |  |                         | 5,846   |      |  |      | (1,180  | ) |  |  | (8,381  | )
|Increase (+) decrease (-) in other non-interest bearing liabilities                       |  |                         | 15,152  |      |  |      | 12,252  |   |  |  | 12,517  |  
|                                                                                          |  |                         |         |      |  |      |         |   |  |  |         |  
|Change in working capital                                                                 |  |                         | (29,615 | )    |  |      | (12,471 | ) |  |  | (6,246  | )
|                                                                                          |  |                         |         |      |  |      |         |   |  |  |         |  
|Details of acquired companies and business operations are as follows:                     |  |                         |         |      |  |      |         |   |  |  |         |  
|Acquired companies and businesses                                                         |  |                         |         |      |  |      |         |   |  |  |         |  
|Non-current assets                                                                        |  |                         | 1,165   |      |  |      | 2,645   |   |  |  | 10,671  |  
|Current assets, other than cash and cash equivalents                                      |  |                         | 9,793   |      |  |      | 9,638   |   |  |  | 146,073 |  
|Liabilities assumed                                                                       |  |                         | (9,463  | )    |  |      | (3,475  | ) |  |  | (69,706 | )
|Goodwill                                                                                  |  |                         | 19,100  |      |  |      | 8,172   |   |  |  | 41,023  |  
|                                                                                          |  |                         |         |      |  |      |         |   |  |  |         |  
|Cash outflow on acquisition(2)                                                            |  |                         | 20,594  |      |  |      | 16,980  |   |  |  | 128,061 |  
|                                                                                          |  |                         |         |      |  |      |         |   |  |  |         |  
|Details of proceeds from disposition of companies and
business operations are as follows: |  |                         |         |      |  |      |         |   |  |  |         |  
|Proceeds from disposition of companies and business operations                            |  |                         |         |      |  |      |         |   |  |  |         |  
|Non-current assets                                                                        |  |                         | 35,257  |      |  |      |        |   |  |  | 23,973  |  
|Current assets, other than cash and cash equivalents                                      |  |                         | 1,837   |      |  |      |        |   |  |  | 28,613  |  
|Liabilities                                                                               |  |                         | (295    | )    |  |      |        |   |  |  | (10,244 | )
|Gain on sale                                                                              |  |                         | 7,371   |      |  |      |        |   |  |  | 80,462  |  
|Adjustment for consideration receivable and income tax payable                            |  |                         |        |      |  |      |        |   |  |  | 14,850  |  
|                                                                                          |  |                         |         |      |  |      |         |   |  |  |         |  
|Proceeds from disposition of companies and business
operations(3)                         |  |                         | 44,170  |      |  |      |        |   |  |  | 137,655 |  
|                                                                                          |  |                         |         |      |  |      |         |   |  |  |         |  



---

|(1) |  | The portion of the amount paid by Baxter Healthcare Corporation in September 2000 related to Ohmeda acquisition which
was recorded in other operating income and extraordinary income
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Net of cash acquired                                                                                                                                                                 
|   
|(3) |  | Net of cash disposed and taxes and disposal costs paid                                                                                                                               

F-22



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)



|10 |  | Intangible and tangible assets
|-- |  | ------------------------------

Intangible and tangible assets and the changes therein include the
following at December 31:

|                                                                              |  |                    |         |      |  |  |         |  
|----------------------------------------------------------------------------- |  | ------------------ | ------- | ---- |  |  | ------- | -
|                                                                              |  | As at December 31,
|                                                                              |  |                   
|                                                                              |  | 2001               |         | 2002
|                                                                              |  |                    |         |     
|                                                                              |  | EUR                |         | EUR 
|Intangible rights                                                             |  |                    |         |      |  |  |         |  
|Acquisition cost at beginning of year                                         |  |                    | 26,047  |      |  |  | 9,341   |  
|Capital expenditure                                                           |  |                    | 946     |      |  |  | 12,032  |  
|Business acquisitions                                                         |  |                    | 353     |      |  |  | 7       |  
|Dispositions of companies and business operations                             |  |                    |        |      |  |  | (711    | )
|Disposals and transfers between line items                                    |  |                    | (19,050 | )    |  |  | 4,512   |  
|Translation differences                                                       |  |                    | 1,044   |      |  |  | (1,153  | )
|                                                                              |  |                    |         |      |  |  |         |  
|Acquisition cost at end of year                                               |  |                    | 9,341   |      |  |  | 24,026  |  
|Accumulated amortization at beginning of year                                 |  |                    | 21,000  |      |  |  | 4,795   |  
|Amortization during the year                                                  |  |                    | 1,837   |      |  |  | 2,728   |  
|Accumulated amortization of business acquisitions                             |  |                    |        |      |  |  | 5       |  
|Accumulated amortization of dispositions of
companies and business operations |  |                    |        |      |  |  | (400    | )
|Accumulated amortization of sold / disposed assets                            |  |                    | (19,023 | )    |  |  | 1,658   |  
|Translation differences                                                       |  |                    | 982     |      |  |  | (300    | )
|                                                                              |  |                    |         |      |  |  |         |  
|Accumulated amortization at end of year                                       |  |                    | 4,795   |      |  |  | 8,487   |  
|                                                                              |  |                    |         |      |  |  |         |  
|Net book value at end of year                                                 |  |                    | 4,545   |      |  |  | 15,539  |  
|                                                                              |  |                    |         |      |  |  |         |  
|Goodwill                                                                      |  |                    |         |      |  |  |         |  
|Acquisition cost at beginning of year                                         |  |                    | 340,531 |      |  |  | 346,993 |  
|Capital expenditure                                                           |  |                    | 1,601   |      |  |  |        |  
|Business acquisition                                                          |  |                    | 6,723   |      |  |  | 41,023  |  
|Dispositions of companies and business operations                             |  |                    |        |      |  |  | (8,892  | )
|Disposals and transfers between line items                                    |  |                    | (1,179  | )    |  |  | (835    | )
|Translation differences                                                       |  |                    | (682    | )    |  |  | (1,204  | )
|                                                                              |  |                    |         |      |  |  |         |  
|Acquisition cost at end of year                                               |  |                    | 346,993 |      |  |  | 377,085 |  
|Accumulated amortization at beginning of year                                 |  |                    | 75,841  |      |  |  | 91,353  |  
|Amortization during the year                                                  |  |                    | 16,501  |      |  |  | 17,383  |  
|Accumulated amortization of business acquisition                              |  |                    | 148     |      |  |  |        |  
|Accumulated amortization of dispositions of
companies and business operations |  |                    |        |      |  |  | (7,611  | )
|Accumulated amortization of sold / disposed assets                            |  |                    | (1,180  | )    |  |  | (2,557  | )
|Translation differences                                                       |  |                    | 43      |      |  |  | (186    | )
|                                                                              |  |                    |         |      |  |  |         |  
|Accumulated amortization at end of year                                       |  |                    | 91,353  |      |  |  | 98,382  |  
|                                                                              |  |                    |         |      |  |  |         |  
|Net book value at end of year                                                 |  |                    | 255,640 |      |  |  | 278,703 |  
|                                                                              |  |                    |         |      |  |  |         |  
|Other capitalized expenditures                                                |  |                    |         |      |  |  |         |  
|Acquisition cost at beginning of year                                         |  |                    | 10,916  |      |  |  | 15,849  |  
|Capital expenditure                                                           |  |                    | 1,973   |      |  |  | 3,146   |  
|Business acquisitions                                                         |  |                    | 333     |      |  |  | 552     |  
|Dispositions of companies and business operations                             |  |                    |        |      |  |  | (4,744  | )
|Disposals and transfers between line items                                    |  |                    | 2,565   |      |  |  | (2,362  | )
|Translation differences                                                       |  |                    | 63      |      |  |  | (507    | )
|                                                                              |  |                    |         |      |  |  |         |  
|Acquisition cost at end of year                                               |  |                    | 15,849  |      |  |  | 11,935  |  

F-23



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

|                                                                              |  |                    |         |      |  |  |         |  
|----------------------------------------------------------------------------- |  | ------------------ | ------- | ---- |  |  | ------- | -
|                                                                              |  | As at December 31,
|                                                                              |  |                   
|                                                                              |  | 2001               |         | 2002
|                                                                              |  |                    |         |     
|                                                                              |  | EUR                |         | EUR 
|Accumulated depreciation at beginning of year                                 |  |                    | 6,664   |      |  |  | 10,087  |  
|Depreciation during the year                                                  |  |                    | 1,591   |      |  |  | 1,825   |  
|Accumulated depreciation of business acquisitions                             |  |                    |        |      |  |  | 205     |  
|Accumulated amortization of dispositions of
companies and business operations |  |                    |        |      |  |  | (2,459  | )
|Accumulated depreciation of sold / disposed assets                            |  |                    | 1,800   |      |  |  | (1,994  | )
|Translation differences                                                       |  |                    | 31      |      |  |  | (254    | )
|                                                                              |  |                    |         |      |  |  |         |  
|Accumulated depreciation at end of year                                       |  |                    | 10,087  |      |  |  | 7,410   |  
|                                                                              |  |                    |         |      |  |  |         |  
|Net book value at end of year                                                 |  |                    | 5,763   |      |  |  | 4,524   |  
|                                                                              |  |                    |         |      |  |  |         |  
|Tangible assets                                                               |  |                    |         |      |  |  |         |  
|Land and water areas                                                          |  |                    |         |      |  |  |         |  
|Acquisition cost at beginning of year                                         |  |                    | 6,012   |      |  |  | 6,083   |  
|Capital expenditure                                                           |  |                    | 35      |      |  |  |        |  
|Business acquisitions                                                         |  |                    | 4       |      |  |  |        |  
|Dispositions of companies and business operations                             |  |                    |        |      |  |  | (446    | )
|Disposals and transfers between line items                                    |  |                    |        |      |  |  | (412    | )
|Translation differences                                                       |  |                    | 31      |      |  |  | (94     | )
|                                                                              |  |                    |         |      |  |  |         |  
|Acquisition cost at end of year                                               |  |                    | 6,083   |      |  |  | 5,131   |  
|                                                                              |  |                    |         |      |  |  |         |  
|Net book value at end of year                                                 |  |                    | 6,083   |      |  |  | 5,131   |  
|                                                                              |  |                    |         |      |  |  |         |  
|Buildings                                                                     |  |                    |         |      |  |  |         |  
|Acquisition cost at beginning of year                                         |  |                    | 90,146  |      |  |  | 97,939  |  
|Capital expenditure                                                           |  |                    | 7,903   |      |  |  | 4,101   |  
|Business acquisitions                                                         |  |                    | 206     |      |  |  |        |  
|Dispositions of companies and business operations                             |  |                    |        |      |  |  | (5,862  | )
|Disposals and transfers between line items                                    |  |                    | (1,448  | )    |  |  | 344     |  
|Translation differences                                                       |  |                    | 1,132   |      |  |  | (3,869  | )
|                                                                              |  |                    |         |      |  |  |         |  
|Acquisition cost at end of year                                               |  |                    | 97,939  |      |  |  | 92,653  |  
|Accumulated depreciation at beginning of year                                 |  |                    | 31,725  |      |  |  | 35,144  |  
|Depreciation during the year                                                  |  |                    | 3,697   |      |  |  | 3,847   |  
|Accumulated amortization of dispositions of
companies and business operations |  |                    |        |      |  |  | (643    | )
|Accumulated depreciation of sold / disposed assets                            |  |                    | (832    | )    |  |  | (259    | )
|Translation differences                                                       |  |                    | 555     |      |  |  | (1,867  | )
|                                                                              |  |                    |         |      |  |  |         |  
|Accumulated depreciation at end of year                                       |  |                    | 35,144  |      |  |  | 36,223  |  
|                                                                              |  |                    |         |      |  |  |         |  
|Net book value at end of year                                                 |  |                    | 62,794  |      |  |  | 56,430  |  
|                                                                              |  |                    |         |      |  |  |         |  
|Machinery and equipment                                                       |  |                    |         |      |  |  |         |  
|Acquisition cost at beginning of year                                         |  |                    | 148,332 |      |  |  | 150,196 |  
|Capital expenditure                                                           |  |                    | 10,638  |      |  |  | 14,363  |  
|Business acquisitions                                                         |  |                    | 1,457   |      |  |  | 71,315  |  
|Dispositions of companies and business operations                             |  |                    |        |      |  |  | (18,986 | )
|Disposals and transfers between line items                                    |  |                    | (13,889 | )    |  |  | (20,221 | )
|Translation differences                                                       |  |                    | 3,658   |      |  |  | (16,859 | )
|                                                                              |  |                    |         |      |  |  |         |  
|Acquisition cost at end of year                                               |  |                    | 150,196 |      |  |  | 179,808 |  

F-24



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

|                                                                              |  |                    |         |      |  |  |         |  
|----------------------------------------------------------------------------- |  | ------------------ | ------- | ---- |  |  | ------- | -
|                                                                              |  | As at December 31,
|                                                                              |  |                   
|                                                                              |  | 2001               |         | 2002
|                                                                              |  |                    |         |     
|                                                                              |  | EUR                |         | EUR 
|Accumulated depreciation at beginning of year                                 |  |                    | 103,642 |      |  |  | 106,420 |  
|Depreciation during the year                                                  |  |                    | 16,236  |      |  |  | 17,062  |  
|Accumulated depreciation of business acquisitions                             |  |                    |        |      |  |  | 62,169  |  
|Accumulated amortization of dispositions of
companies and business operations |  |                    |        |      |  |  | (8,579  | )
|Accumulated depreciation of sold / disposed assets                            |  |                    | (16,305 | )    |  |  | (25,526 | )
|Translation differences                                                       |  |                    | 2,847   |      |  |  | (14,070 | )
|                                                                              |  |                    |         |      |  |  |         |  
|Accumulated depreciation at end of year                                       |  |                    | 106,420 |      |  |  | 137,476 |  
|                                                                              |  |                    |         |      |  |  |         |  
|Net book value at end of year                                                 |  |                    | 43,775  |      |  |  | 42,332  |  
|                                                                              |  |                    |         |      |  |  |         |  
|Advance payments and assets under construction                                |  |                    |         |      |  |  |         |  
|Acquisition cost at beginning of year                                         |  |                    | 2,748   |      |  |  | 3,127   |  
|Capital expenditure                                                           |  |                    | 5,049   |      |  |  | 9,179   |  
|Disposals and transfers between line items                                    |  |                    | (5,039  | )    |  |  | (8,173  | )
|Translation differences                                                       |  |                    | 369     |      |  |  | (1,342  | )
|                                                                              |  |                    |         |      |  |  |         |  
|Net book value at end of year                                                 |  |                    | 3,127   |      |  |  | 2,792   |  
|                                                                              |  |                    |         |      |  |  |         |  

F-25



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)



|11 |  | Investments
|-- |  | -----------

|                                                   |  |                    |        |      |  |  |        |  
|-------------------------------------------------- |  | ------------------ | ------ | ---- |  |  | ------ | -
|                                                   |  | As at December 31,
|                                                   |  |                   
|                                                   |  | 2001               |        | 2002
|                                                   |  |                    |        |     
|                                                   |  | EUR                |        | EUR 
|Shares and holdings in associated companies        |  |                    |        |      |  |  |        |  
|Acquisition cost at beginning of year              |  |                    | 1,609  |      |  |  | 1,904  |  
|Capital expenditure                                |  |                    | 217    |      |  |  | 360    |  
|Translation differences                            |  |                    | 77     |      |  |  | 234    |  
|                                                   |  |                    |        |      |  |  |        |  
|Acquisition cost at end of year                    |  |                    | 1,904  |      |  |  | 2,497  |  
|Accumulated equity adjustment at beginning of year |  |                    | (1,572 | )    |  |  | (1,828 | )
|Share of result of associated companies            |  |                    | 169    |      |  |  | (314   | )
|Dividends received                                 |  |                    | (472   | )    |  |  |       |  
|Sales and disposals                                |  |                    | 125    |      |  |  | 46     |  
|Translation differences                            |  |                    | (77    | )    |  |  | (234   | )
|                                                   |  |                    |        |      |  |  |        |  
|Accumulated equity adjustment at end of year       |  |                    | (1,828 | )    |  |  | (2,330 | )
|                                                   |  |                    |        |      |  |  |        |  
|Net book value at end of year                      |  |                    | 75     |      |  |  | 167    |  
|                                                   |  |                    |        |      |  |  |        |  

Shares and holdings in associated companies include
unamortized goodwill balance EUR 93 thousand.

|                                                 |  |  |        |   |  |  |        |  
|------------------------------------------------ |  |  | ------ | - |  |  | ------ | -
|Other shares and holdings                        |  |  |        |   |  |  |        |  
|Acquisition cost at beginning of year            |  |  | 18,664 |   |  |  | 15,152 |  
|Capital expenditure                              |  |  | 6      |   |  |  | 6,035  |  
|Business acquisitions                            |  |  | 2      |   |  |  | 1177   |  
|Business disposals                               |  |  |       |   |  |  | (4,024 | )
|Other sales and disposals                        |  |  | (3,643 | ) |  |  | (2,276 | )
|Translation differences                          |  |  | 123    |   |  |  | (94    | )
|                                                 |  |  |        |   |  |  |        |  
|Net book value at end of year                    |  |  | 15,152 |   |  |  | 15,969 |  
|                                                 |  |  |        |   |  |  |        |  
|Other shares and holdings include the following: |  |  |        |   |  |  |        |  
|Non-current marketable equity securities         |  |  | 805    |   |  |  | 153    |  
|Real estate shares                               |  |  | 10,442 |   |  |  | 8,903  |  
|Other shares and holdings                        |  |  | 3,904  |   |  |  | 6,913  |  
|                                                 |  |  |        |   |  |  |        |  
|                                                 |  |  | 15,152 |   |  |  | 15,969 |  
|                                                 |  |  |        |   |  |  |        |  

The investments in non-current marketable equity securities are carried at
the lower of acquisition cost or market. The market value of the non-current
marketable equity securities at December 31, 2001 and 2002 was EUR 3,303
thousand and EUR 1,245 thousand, respectively. Proceeds from sales of
investments in non-current marketable equity securities were EUR 24,826
thousand, EUR 1,316 thousand and EUR 1,661 thousand during 2000, 2001 and 2002,
respectively. Gross gains of EUR 7,142 thousand, EUR 1,308 thousand and EUR
1,008 thousand for 2000, 2001 and 2002, respectively, were realized on those
sales.

F-26



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)



| |  | 12 Receivables
| |  | --------------

Interest bearing and non-interest bearing assets are as follows:

|                                            |  |                    |         |      |  |  |         | 
|------------------------------------------- |  | ------------------ | ------- | ---- |  |  | ------- | 
|                                            |  | As at December 31,
|                                            |  |                   
|                                            |  | 2001               |         | 2002
|                                            |  |                    |         |     
|                                            |  | EUR                |         | EUR 
|Long-term interest bearing receivables      |  |                    |         |      |  |  |         | 
|Loans receivable                            |  |                    | 19,129  |      |  |  | 17,918  | 
|                                            |  |                    |         |      |  |  |         | 
|Long-term non-interest bearing receivables  |  |                    |         |      |  |  |         | 
|Loans receivable from associated companies  |  |                    | 85      |      |  |  | 131     | 
|Long-term accounts receivable               |  |                    | 3,921   |      |  |  | 4,279   | 
|                                            |  |                    | 4,006   |      |  |  | 4,410   | 
|                                            |  |                    |         |      |  |  |         | 
|Short-term interest bearing receivables     |  |                    |         |      |  |  |         | 
|Loans receivable                            |  |                    | 1,389   |      |  |  | 1,238   | 
|                                            |  |                    |         |      |  |  |         | 
|Short-term non-interest bearing receivables |  |                    |         |      |  |  |         | 
|Accounts receivable                         |  |                    | 288,106 |      |  |  | 308,511 | 
|Loans receivable                            |  |                    | 134     |      |  |  |        | 
|Other receivables                           |  |                    | 19,754  |      |  |  | 23,503  | 
|Prepaid expenses and accrued income         |  |                    | 18,530  |      |  |  | 41,878  | 
|                                            |  |                    |         |      |  |  |         | 
|                                            |  |                    | 326,524 |      |  |  | 373,892 | 
|                                            |  |                    |         |      |  |  |         | 

Receivables falling due after one year are included in long-term receivables.

|                                                     |  |                    |        |      |  |  |        | 
|---------------------------------------------------- |  | ------------------ | ------ | ---- |  |  | ------ | 
|                                                     |  | As at December 31,
|                                                     |  |                   
|                                                     |  | 2001               |        | 2002
|                                                     |  |                    |        |     
|                                                     |  | EUR                |        | EUR 
|Prepaid expenses and accrued income are as follows:  |  |                    |        |      |  |  |        | 
|Accrued interest and exchange gains for derivatives  |  |                    | 1,510  |      |  |  | 12,635 | 
|Tax receivable                                       |  |                    | 3,483  |      |  |  | 8,432  | 
|Receivables relating to acquired and sold businesses |  |                    | 669    |      |  |  | 359    | 
|Receivables relating to long term contracts          |  |                    |       |      |  |  | 8,105  | 
|Other                                                |  |                    | 12,867 |      |  |  | 12,347 | 
|                                                     |  |                    |        |      |  |  |        | 
|                                                     |  |                    | 18,530 |      |  |  | 41,878 | 
|                                                     |  |                    |        |      |  |  |        | 

F-27



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

13     Shareholders equity

Share capital

The share capital of Instrumentarium Corporation at December 31, 2002 was
EUR 96,524,276 and it was divided into 48,262,138 shares. All shares have an
equal voting right and they confer on their holders the same rights to Company
assets and profit distribution.

Under its Articles of Association, the Companys minimum amount of share
capital is EUR 35 million and the maximum amount is EUR 140 million.

Treasury shares

At December 31, 2002 the Group owned 222,722 Instrumentarium Corporation
shares which have been received as dividend during 1999, 2000 and 2001. The
shares have been recorded as a long-term investment on the balance sheet at
acquisition cost of EUR 4,062 thousand. The shares correspond to 0.46 % of the
Companys shares and voting rights.

|          |         |                       |           |                  |  |                   |       |       |  |  |       |       |  | 
|--------- | ------- | --------------------- | --------- | ---------------- |  | ----------------- | ----- | ----- |  |  | ----- | ----- |  | 
|Amount of |         | Received as dividend, |           | Average
price(1) |  | Acquisition cost,
|shares    |         | date                  |           | EUR              |  | EUR thousands    
|          |         |                       |           |                  |  |                   |      
|175,656   |         |                       | 6.8.1999  |                  |  |                   | 19,36 |       |  |  | 3,401 |      
|1,368     |         |                       | 30.9.1999 |                  |  |                   | 15.93 |       |  |  | 22    |      
|2,052     |         |                       | 21.3.2000 |                  |  |                   | 16.03 |       |  |  | 33    |      
|          | 41,936  |                       |           | 14.4.2000        |  |                   |       | 13.83 |  |  |       | 580   | 
|1,710     |         |                       | 9.4.2001  |                  |  |                   | 15.58 |       |  |  | 27    |      
|          |         |                       |           |                  |  |                   |       |       |  | 
|          | 222,722 |                       |           |                  |  |                   |       |       |  |  |       | 4,062
|          |         |                       |           |                  |  |                   |       |      



|(1) |  | The average price is based on the trade volume weighted average price on the
day dividend was paid
|--- |  | --------------------------------------------------------------------------------------------------

F-28



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Stock options

Stock Option Plan 1998

According to the Stock Option Plan approved by the Extraordinary
Shareholders meeting on June 17, 1998, key personnel and members of the Board
of Directors of the Company have been issued stock options as a part of an
incentive program. According to the terms of the Stock Option Plan the maximum
number of stock options to be issued is 1,300,000, of which 390,000 are marked
with a letter A, 390,000 with a letter B, and 520,000 with a letter C. As a
part of the Stock Option Plan 2001, 1998 stock options, which were in the
possession of a wholly owned subsidiary of Instrumentarium Corporation, and
entitled to subscription for 500,000 shares, were not used and were cancelled
by the Company. The outstanding stock options entitle to subscription of a
total 2,516,449 shares of the Company. The amount of shares that can be
subscribed with the stock options has been adjusted by multiplying it by 2.3922
due to a rights issue made in December 1998 and a bonus issue made in 2002.

|              |       |                      |                    |            |              |                     |           |                         |  |  |                         |  |  |  |       |  | 
|------------- | ----- | -------------------- | ------------------ | ---------- | ------------ | ------------------- | --------- | ----------------------- |  |  | ----------------------- |  |  |  | ----- |  | 
|              |       |                      | Options granted at |            | Shares to be |                     |           |                         |  |  | Exercise price adjusted
|Stock options |       | December
31, 2002(1) |                    | subscribed |              | Subscription period |           | for share
issue, EUR(2)
|1998A         |       |                      | 292,500            |            |              |                     | 699,718   |                         |  |  | 1.6.2001-30.6.2006      |  |  |  | 18.14 | 
|1998B         |       |                      | 299,553            |            |              |                     | 716,590   |                         |  |  | 1.6.2002-30.6.2006      |  |  |  | 16.32 | 
|1998C         |       |                      | 430,200            |            |              |                     | 1,029,124 |                         |  |  | 1.6.2003-30.6.2006      |  |  |  | 14.77 | 
|              |       |                      |                    |            |              |                     |           |                         |  |  |                         |  |  |  |       | 
|              | Total |                      |                    | 1,022,253  |              |                     |           | 2,445,432               |  |  |                         |  |  |  |       |  | 
|              |       |                      |                    |            |              |                     |           |                         |  |  |                         |  |  |  |       | 



|(1) |  | Excluding options that have been cancelled or exercised                                                                                                                                                                                                                                                                        
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The exercise price is based on the trade volume weighted average price of
the Companys previous Letter B share during a period determined in the
terms of the option program. The period for Letter A options is Aug 1, -
Oct 31, 1998, Letter B options Nov 1, 1998  Jan 1, 1999 and Letter C
options Feb 1,  Apr 30, 1999.

Stock Option Plan 2001

According to the Stock Option Plan approved by the Annual General Meeting
on March 26, 2001, key personnel of the Company have been issued stock options
as a part of an incentive program. The maximum number of stock options to be
issued is 860,000, of which 430,000 are marked with a letter A and 430,000 with
a letter B, entitling to subscription of a total of 1,720,000 shares of the
Company. The amount of shares that can be subscribed with the stock options has
been adjusted by multiplying it by 2.00 due to a bonus issue made in 2002. From
the share subscription price of stock options 2001A and 2001B shall, as per the
dividend record date, be deducted the amount of the special dividend, which
differs from the Companys normal dividend policy and is determined by the
Board of Directors, distributed after the beginning of the period for
determination of the subscription price but before the date of subscription for
shares.

|              |       |                   |                    |            |              |                     |         |                         |  |  |                         |  |  |  |       |  | 
|------------- | ----- | ----------------- | ------------------ | ---------- | ------------ | ------------------- | ------- | ----------------------- |  |  | ----------------------- |  |  |  | ----- |  | 
|              |       |                   | Options granted at |            | Shares to be |                     |         |                         |  |  | Exercise price adjusted
|Stock options |       | December 31, 2002 |                    | subscribed |              | Subscription period |         | for share
issue, EUR(1)
|2001A         |       |                   | 399,800            |            |              |                     | 799,600 |                         |  |  | 1.12.2003-30.6.2007     |  |  |  | 17.27 | 
|2001B         |       |                   | 171,000            |            |              |                     | 342,000 |                         |  |  | 1.12.2004-30.6.2007     |  |  |  | 21.54 | 
|              |       |                   |                    |            |              |                     |         |                         |  |  |                         |  |  |  |       | 
|              | Total |                   |                    | 570,800    |              |                     |         | 1,141,600               |  |  |                         |  |  |  |       |  | 
|              |       |                   |                    |            |              |                     |         |                         |  |  |                         |  |  |  |       | 



|(1) |  | The exercise price is based on the trade volume weighted average price
of the Companys share during a period determined in the terms of the option
program. The period for Letter A options is Apr 1,  Jun 3, 2001 Letter B
options Oct 1,  Dec 31, 2001.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If a stock option holder ceases to be employed by or in the service of the
Company for any other reason than retirement or death, then such person shall
without delay offer to the Company free of charge such option certificates for
which the share subscription period has not commenced. In Stock Option Plan
1998 there is an exception for this for a member of the Board of Directors who
is not employed by or in the service of a company on a full time basis.

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INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Distributable funds

Total distributable funds are as follows:

|                                 |  |                    |         |      |  |  |         |  
|-------------------------------- |  | ------------------ | ------- | ---- |  |  | ------- | -
|                                 |  | As at December 31,
|                                 |  |                   
|                                 |  | 2001               |         | 2002
|                                 |  |                    |         |     
|                                 |  | EUR                |         | EUR 
|Retained earnings                |  |                    | 285,084 |      |  |  | 325,493 |  
|Net income                       |  |                    | 72,136  |      |  |  | 155,757 |  
|Equity share of untaxed reserves |  |                    | (21,998 | )    |  |  | (21,431 | )
|                                 |  |                    |         |      |  |  |         |  
|Total distributable funds        |  |                    | 335,223 |      |  |  | 459,820 |  
|                                 |  |                    |         |      |  |  |         |  

Total distributable funds of the Parent company on December 31, 2002 were EUR
432,177 thousand.

The Combination Agreement between Instrumentarium and GE

According to the Combination Agreement between Instrumentarium and GE,
signed on December 18,2002, GE will make an offer for all outstanding options
of Instrumentarium. The offer price for the stock options is EUR 52.29 per
1998A options, EUR 56.65 per 1998B option, EUR 60.36 per 1998C option, EUR
45.46 per 2001A option and EUR 36.92 per 2001B option. Additionally,
Instrumentarium has undertaken not to distribute or grant any of the stock
options issued or held by the Company  ́s subsidiaries, except for options that
have been previously granted and delivered to an employee, and having been
forfeited by such employee.

14     Deferred tax assets and liabilities

The components of deferred tax assets and liabilities at December 31, 2001
and 2002 are as follows:

|                                       |  |                    |         |      |  |  |        |  
|-------------------------------------- |  | ------------------ | ------- | ---- |  |  | ------ | -
|                                       |  | As at December 31,
|                                       |  |                   
|                                       |  | 2001               |         | 2002
|                                       |  |                    |         |     
|                                       |  | EUR                |         | EUR 
|Deferred tax assets                    |  |                    |         |      |  |  |        |  
|Internal margin on inventories         |  |                    | 10,538  |      |  |  | 8,835  |  
|Differences between book and tax basis |  |                    | 15,899  |      |  |  | 37,901 |  
|Valuation allowance                    |  |                    | (12,026 | )    |  |  | (5,718 | )
|                                       |  |                    |         |      |  |  |        |  
|                                       |  |                    | 14,411  |      |  |  | 41,018 |  
|                                       |  |                    |         |      |  |  |        |  
|Deferred tax liabilities               |  |                    |         |      |  |  |        |  
|Accelerated depreciation and reserves  |  |                    | 8,985   |      |  |  | 8,753  |  
|Differences between book and tax basis |  |                    | 13,571  |      |  |  | 5,295  |  
|                                       |  |                    |         |      |  |  |        |  
|                                       |  |                    | 22,556  |      |  |  | 14,048 |  
|                                       |  |                    |         |      |  |  |        |  

At December 31, 2002 accumulated tax loss carryforwards, mainly
attributable to foreign subsidiaries amounted to EUR 7,700 thousand, of which
approximately EUR 670 have no expiration date. The remaining loss carryforwards
expire during 2002-2019. At December 31, 2001 accumulated tax loss
carryforwards amounted to EUR 25,480 thousand. The net operating loss benefits
for the years ended December 31, 2001 and 2002 amounted approximately to EUR
19,300 thousand and EUR 16,200 thousand, respectively.

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INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

15     Long-term liabilities

Long-term debt consist of the following at December 31,

|                                                 |  |                    |         |      |  |  |        | 
|------------------------------------------------ |  | ------------------ | ------- | ---- |  |  | ------ | 
|                                                 |  | As at December 31,
|                                                 |  |                   
|                                                 |  | 2001               |         | 2002
|                                                 |  |                    |         |     
|                                                 |  | EUR                |         | EUR 
|Long-term interest bearing liabilities           |  |                    |         |      |  |  |        | 
|Loans from financial institutions                |  |                    | 130,036 |      |  |  | 30,953 | 
|Other long-term interest bearing liabilities     |  |                    | 84      |      |  |  | 8      | 
|                                                 |  |                    |         |      |  |  |        | 
|                                                 |  |                    | 130,120 |      |  |  | 30,961 | 
|Long-term non-interest bearing liabilities       |  |                    |         |      |  |  |        | 
|Other long-term non-interest bearing liabilities |  |                    | 7,000   |      |  |  | 9,387  | 
|                                                 |  |                    |         |      |  |  |        | 
|                                                 |  |                    | 7,000   |      |  |  | 9,387  | 
|Total long-term liabilities                      |  |                    | 137,120 |      |  |  | 40,348 | 
|                                                 |  |                    |         |      |  |  |        | 

Maturities of long-term liabilities as of December 31, 2002, were as
follows:

|           |  |     |        | 
|---------- |  | --- | ------ | 
|           |  |     |        | 
|Year       |  | EUR
|2004       |  |     | 481    | 
|2005       |  |     | 271    | 
|2006       |  |     | 17     | 
|2007       |  |     | 181    | 
|2008       |  |     | 2      | 
|Thereafter |  |     | 39,395 | 
|           |  |     |        | 
|           |  |     | 40,348 | 

The Company has had a syndicated credit facility of USD 300 million (EUR
286 million) since July 1998. The term of the syndicated credit facility is
seven years with repayment in five semiannual installments beginning at the end
of the fifth year. The facility is a multi-currency facility. There is no
balance presently outstanding. The average interest rate is based on LIBOR.
After the fifth year, the margin on the interest rate will increase from 0.225
percent to 0.25 percent for the two remaining years. The commitment fee for the
undrawn balances is 0.10 percent per annum. The terms of the credit facility
contain certain debt covenants including limitations on indebtedness, liens,
change of business, mergers, and disposal of assets.

The Company has had a loan of EUR 30 million from Nordic Investment Bank
since December 2002. The term of the loan is approximately ten years and it
will be prepaid in one instalment at the end of the loan term. The interest
rate is based on EURIBOR with the margin of 0.45 percent. The interest rate was
3.39 percent at December 31, 2002. The terms of the loan contain certain debt
covenants including limitations on indebtedness, liens, change of business,
mergers and disposal of assets.

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INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

16     Short-term liabilities

Short-term liabilities consists of the following at December 31:

Short-term interest bearing liabilities

|                                        |  |                    |  |      |  |     |        |     |  |  |         | 
|--------------------------------------- |  | ------------------ |  | ---- |  | --- | ------ | --- |  |  | ------- | 
|                                        |  | As at December 31,
|                                        |  |                   
|                                        |  | 2001               |  | 2002
|                                        |  |                    |  |     
|                                        |  |                    |  |      |  | EUR |        | EUR
|Loans from financial institutions       |  |                    |  |      |  |     | 14,518 |     |  |  | 15,021  | 
|Commercial papers                       |  |                    |  |      |  |     | 63,683 |     |  |  | 111,831 | 
|Other loans                             |  |                    |  |      |  |     | 448    |     |  |  | 1,654   | 
|                                        |  |                    |  |      |  |     |        |     |  |  |         | 
|Short-term interest bearing liabilities |  |                    |  |      |  |     | 78,649 |     |  |  | 128,507 | 

The weighted average interest rate for short-term interest bearing liabilities
at December 31, 2002 and 2001 was approximately 3.1 % and 4.0 %, respectively.

Instrumentarium maintains lines of credit and overdraft arrangements with
certain banks. The unused portion of lines of credit aggregated to EUR 9,940
thousand at December 31, 2002. Overdrafts are included in Loans from financial
institutions.

Short-term non-interest bearing liabilities

|                                            |  |                    |         |      |  |  |         | 
|------------------------------------------- |  | ------------------ | ------- | ---- |  |  | ------- | 
|                                            |  | As at December 31,
|                                            |  |                   
|                                            |  | 2001               |         | 2002
|                                            |  |                    |         |     
|                                            |  | EUR                |         | EUR 
|Advance payments                            |  |                    | 3,836   |      |  |  | 8,295   | 
|Accounts payable                            |  |                    | 58,673  |      |  |  | 59,954  | 
|Other short-term liabilities                |  |                    | 16,563  |      |  |  | 16,555  | 
|Accrued liabilities                         |  |                    | 125,619 |      |  |  | 176,691 | 
|                                            |  |                    |         |      |  |  |         | 
|Short-term non-interest bearing liabilities |  |                    | 204,691 |      |  |  | 261,495 | 
|Total short-term liabilities                |  |                    | 283,340 |      |  |  | 390,001 | 
|                                            |  |                    |         |      |  |  |         | 

Accrued liabilities
Accrued liabilities consist of following at December 31:

|                               |  |                    |         |      |  |  |         |  |  |  |  | 
|------------------------------ |  | ------------------ | ------- | ---- |  |  | ------- |  |  |  |  | 
|                               |  | As at December 31,
|                               |  |                   
|                               |  | 2001               |         | 2002 |  |  |         | 
|                               |  |                    |         |      |  |  |         | 
|                               |  | EUR                |         | EUR  |  |  |         | 
|                               |  |                    |         |      |  |  |         | 
|Accrued payroll                |  |                    | 39,542  |      |  |  | 50,023  | 
|Accrued income taxes           |  |                    | 18,288  |      |  |  | 41,096  | 
|Other post-retirement benefits |  |                    | 28,731  |      |  |  | 29,044  | 
|Accrued warranty expense       |  |                    | 7,591   |      |  |  | 11,389  | 
|Other                          |  |                    | 31,468  |      |  |  | 45,140  | 
|                               |  |                    |         |      |  |  |         | 
|Accrued liabilities            |  |                    | 125,619 |      |  |  | 176,691 | 
|                               |  |                    |         |      |  |  |         | 

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INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

17     Commitments and contingencies

Commitments and contingencies consist of the following at December 31:

|                                     |  |                    |        |      |  |  |        | 
|------------------------------------ |  | ------------------ | ------ | ---- |  |  | ------ | 
|                                     |  | As at December 31,
|                                     |  |                   
|                                     |  | 2001               |        | 2002
|                                     |  |                    |        |     
|                                     |  | EUR                |        | EUR 
|On behalf of Instrumentarium         |  |                    |        |      |  |  |        | 
|Securities pledged for commitments   |  |                    |       |      |  |  |       | 
|Mortgages for bank guarantees        |  |                    | 3,364  |      |  |  |       | 
|Guarantees                           |  |                    | 10,207 |      |  |  | 36,167 | 
|Other commitments                    |  |                    | 8,642  |      |  |  | 10,047 | 
|                                     |  |                    |        |      |  |  |        | 
|                                     |  |                    | 22,213 |      |  |  | 46,214 | 
|Pension commitments                  |  |                    |        |      |  |  |        | 
|Other pension commitments            |  |                    | 249    |      |  |  | 250    | 
|                                     |  |                    |        |      |  |  |        | 
|                                     |  |                    | 249    |      |  |  | 250    | 
|Commitments and contingencies, total |  |                    | 22,462 |      |  |  | 46,464 | 
|                                     |  |                    |        |      |  |  |        | 

At December 31, 2001 and 2002, the Group was contingently liable for
approximately EUR 405 thousand and EUR 82 thousand, respectively, relating to
repurchase obligations.

18      Leasing contracts

The Company leases tangible assets, including buildings and machinery and
equipment under long-term arrangements.

Future minimum annual lease-payments at December 31, 2002, principally for
non-cancelable operating leases, that have initial or remaining non-cancelable
lease terms in excess of one year, were as follows:

|                             |  |                 |     |                 |  |       |        |  |  |  |        | 
|---------------------------- |  | --------------- | --- | --------------- |  | ----- | ------ |  |  |  | ------ | 
|                             |  | Financial lease |     | Operating lease |  | Total
|                             |  |                 |     |                 |  |      
|                             |  | EUR             |     | EUR             |  | EUR  
|Fiscal:                      |  |                 |     |                 |  |       |        |  |  |  |        | 
|2003                         |  |                 | 328 |                 |  |       | 14,805 |  |  |  | 15,134 | 
|2004                         |  |                 | 248 |                 |  |       | 11,916 |  |  |  | 12,164 | 
|2005                         |  |                 | 138 |                 |  |       | 9,042  |  |  |  | 9,180  | 
|2006                         |  |                 | 10  |                 |  |       | 974    |  |  |  | 984    | 
|2007                         |  |                 |    |                 |  |       | 485    |  |  |  | 485    | 
|Thereafter                   |  |                 |    |                 |  |       | 1,000  |  |  |  | 1,000  | 
|                             |  |                 |     |                 |  |       |        |  |  |  |        | 
|Total minimum lease payments |  |                 | 725 |                 |  |       | 38,221 |  |  |  | 38,946 | 
|                             |  |                 |     |                 |  |       |        |  |  |  |        | 

Total rental expenses amounted to EUR 12,644 thousand, EUR 15,177 thousand
and EUR 16,626 thousand in the years ended December 31, 2000,
2001 and 2002,
respectively.

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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

19     Financial instruments

Financial risk management and derivative financial instruments

The Companys financial risks are managed according to a financial risk
management policy set and approved by the Board of Directors of Instrumentarium
Corporation. The objective of the financial risk management policy is to
identify and analyze risk positions, to measure the risks and to hedge against
them using appropriate and cost-effective means. The Company has market risk
exposures to foreign exchange rates, interest rates and marketable equity
securities, together with liquidity and credit risks.

Market risk

Variety of derivative financial instruments are used, principally foreign
exchange forward contracts, foreign exchange options, interest rate futures,
forward rate agreements, interest rate options and interest rate swaps for
hedging purposes. Foreign exchange and interest rate related instruments are
used to reduce exposures to market risk resulting from fluctuations in foreign
exchange and interest rates by creating offsetting exposures. Leveraged
financial instruments are not used.

The foreign exchange position of the Company is managed centrally. Foreign
exchange related contracts are held on a fair value basis and unrealized gains
and losses are recognized through current period net income. Foreign exchange
forward contracts and foreign exchange options are used to hedge the foreign
exchange risk on certain commercial assets (accounts receivable) and
liabilities (accounts payable) and a proportion of related anticipated cash
flows denominated in foreign currencies up to 9 months forward. The principal
foreign currency to which the Company is exposed is the U.S. dollar. Loans are
used to hedge part of net equity investments of the Company in foreign
subsidiaries.

The interest rate position of the Company is managed centrally. Interest
rate related contracts are held on a fair value basis and unrealized gains and
losses are recognized through current period net income.

Derivatives are designated at inception as a hedge with respect to the
hedged item or group of items with similar characteristics. Derivatives are
measured for effectiveness both at inception and on an ongoing basis. Deferral
(hedge) accounting is applied only if the derivative reduces the risk of the
underlying hedged item and is designated at inception as a hedge with respect
to the hedged item. If a derivative financial instrument ceases to meet the
criteria for hedge accounting, any subsequent gains or losses are recognized
through current period net income. If an anticipated transaction does not
occur, the related hedge is restated at fair value and any gains or losses are
recognized in net income. If a hedging instrument is sold or terminated prior
to maturity, gains or losses are deferred until the hedged item is recognized
in net income. Currently the Company does not apply hedge accounting.

Marketable equity securities holdings are minor. Price risk of these
marketable equity securities is not hedged.

Liquidity risk

The Companys goal is to maintain liquidity at an appropriate level in
relation to its business activities at all times. The Company has unused credit
lines at its disposal in addition to the liquid funds in the balance sheet.

Credit risk

Credit risks arising from financial operations are managed by entering
into contracts only with counter-parties with a good credit standing. The
Company sets cash and maturity limits on these approved counter-parties and
monitors their credit positions and ratings continuously.

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INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Carrying amount, notional and fair value

The table below shows the notional principal, fair value and credit risk
amounts of the Companys foreign currency instruments and interest rate
derivatives at December 31, 2001 and 2002. The notional principal amount for
off-balance-sheet instruments provide one measure of the transaction volume
outstanding as of year-end, and does not represent the amount of Companys
exposure to credit risk or market loss. The credit risk amount in the table
below represents the Companys gross exposure to potential accounting loss on
these transactions if all counter-parties failed to perform according to the
terms of the contract. The Companys exposure to credit loss and market risk
will vary over time as a function of interest rates and currency exchange
rates. The estimates of fair value are based on applicable and commonly used
pricing models using prevailing financial market information as of December 31,
2001 and 2002. Although the table below reflects the notional principal, fair
value, and credit risk amounts of the Companys foreign exchange and interest
rates instruments, it does not reflect the gains or losses associated with the
exposures and transactions that the foreign exchange and interest rate
instruments are intended to hedge. The gains and losses ultimately realized
upon settlement of these financial instruments, together with the gains and
losses on the underlying exposures, will depend on actual market conditions
during the remaining life of the instruments.

|                             |  |                         |         |            |  |      |        |        |  |          |        |  |  |  |        |  
|---------------------------- |  | ----------------------- | ------- | ---------- |  | ---- | ------ | ------ |  | -------- | ------ |  |  |  | ------ | -
|                             |  | As at December 31, 2002
|                             |  |                        
|                             |  | Notional                |         |            |  |      |        | Credit |  | Carrying
|                             |  | amount                  |         | Fair value |  | risk |        | amount
|                             |  |                         |         |            |  |      |        |       
|                             |  | EUR                     |         | EUR        |  | EUR  |        | EUR   
|Foreign exchange instruments |  |                         |         |            |  |      |        |        |  |          |        |  |  |  |        |  
|Forwards to buy              |  |                         | 74,660  |            |  |      | (716   | )      |  |          |       |  |  |  | (716   | )
|Forwards to sell             |  |                         | 286,923 |            |  |      | 12,254 |        |  |          | 12,254 |  |  |  | 12,254 |  
|Options purchased            |  |                         | 40,362  |            |  |      | 97     |        |  |          | 97     |  |  |  | 97     |  
|Options written              |  |                         | 39,227  |            |  |      | (25    | )      |  |          |       |  |  |  | (25    | )

|                             |  |                         |        |       |  |        |        |          |  |  |       |  |  |  |        |  
|---------------------------- |  | ----------------------- | ------ | ----- |  | ------ | ------ | -------- |  |  | ----- |  |  |  | ------ | -
|                             |  | As at December 31, 2001
|                             |  |                        
|                             |  | Notional                |        | Fair  |  | Credit |        | Carrying
|                             |  | amount                  |        | value |  | risk   |        | amount  
|                             |  |                         |        |       |  |        |        |         
|                             |  | EUR                     |        | EUR   |  | EUR    |        | EUR     
|Foreign exchange instruments |  |                         |        |       |  |        |        |          |  |  |       |  |  |  |        |  
|Forwards to buy              |  |                         | 55,018 |       |  |        | 1,333  |          |  |  | 1,333 |  |  |  | 1,333  |  
|Forwards to sell             |  |                         | 90,233 |       |  |        | (1,162 | )        |  |  |      |  |  |  | (1,162 | )
|Options purchased            |  |                         | 20,240 |       |  |        | 124    |          |  |  | 124   |  |  |  | 124    |  
|Options written              |  |                         | 20,378 |       |  |        | (47    | )        |  |  |      |  |  |  | (47    | )
|Interest rate instruments    |  |                         |        |       |  |        |        |          |  |  |       |  |  |  |        |  
|Futures                      |  |                         | 50,000 |       |  |        | (16    | )        |  |  |      |  |  |  | (16    | )
|Options purchased            |  |                         | 1,491  |       |  |        |       |          |  |  |      |  |  |  |       |  

Fair value of other financial instruments

The carrying amounts reflected in the consolidated balance sheets for
short-term financial instruments approximate fair value.

The fair value of Companys long-term loans (both receivables and
payables) is estimated based on quoted market prices for the same or similar
issues or on current rates offered to the Company for loans of the same
remaining maturities. The fair value of long-term liabilities, long-term
receivables and loans receivable and payable is not significantly different
from their carrying value.

F-35



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INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

20 Personnel expenses and number of personnel

Instrumentariums personnel expenses and number of personnel are as
follows:

|                                                                               |  |                         |         |      |  |      |         |  |  |  |         | 
|------------------------------------------------------------------------------ |  | ----------------------- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|                                                                               |  | Year ended December 31,
|                                                                               |  |                        
|                                                                               |  | 2000                    |         | 2001 |  | 2002
|                                                                               |  |                         |         |      |  |     
|                                                                               |  | EUR                     |         | EUR  |  | EUR 
|Salaries, bonuses and fees to the
members of Board of Directors and
Presidents |  |                         | 3,671   |      |  |      | 4,163   |  |  |  | 5,589   | 
|Total wages and salaries                                                       |  |                         | 245,069 |      |  |      | 258,973 |  |  |  | 285,938 | 
|Pension expenses                                                               |  |                         | 19,822  |      |  |      | 29,289  |  |  |  | 29,274  | 
|Other personnel expenses                                                       |  |                         | 29,089  |      |  |      | 30,768  |  |  |  | 44,716  | 
|                                                                               |  |                         |         |      |  |      |         |  |  |  |         | 
|                                                                               |  |                         | 293,980 |      |  |      | 319,030 |  |  |  | 359,928 | 
|                                                                               |  |                         |         |      |  |      |         |  |  |  |         | 

|                                |  |      |       |      |  |      |       |  |  |  |       | 
|------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  |  | ----- | 
|                                |  | 2000 |       | 2001 |  | 2002
|                                |  |      |       |      |  |     
|Number of personnel (unaudited) |  |      |       |      |  |      |       |  |  |  |       | 
|Personnel, average              |  |      | 5,205 |      |  |      | 5,317 |  |  |  | 5,650 | 
|Personnel, at year end          |  |      | 5,217 |      |  |      | 5,386 |  |  |  | 5,325 | 

Pension arrangements for management

The members of Board of Directors of Instrumentarium Corporation employed
by the Company may retire at the age of 60. The retirement age of the managing
directors of the group companies is determined according to local standards in
respective countries.

21     Shareholdings in subsidiaries and associated companies

|                                                 |  |               |  |                |     |                      |  | 
|------------------------------------------------ |  | ------------- |  | -------------- | --- | -------------------- |  | 
|                                                 |  |               |  |                |     | At December 31, 2002
|Shares in subsidiaries                           |  | Country       |  | Shareholding %
|                                                 |  |               |  |               
|Anestesia and Critical Care                      |  |               |  |                |     |                      |  | 
|Datex-Ohmeda Pty. Ltd.                           |  | Australia     |  |                | 100 |                     
|Datex-Ohmeda S.L.                                |  | Spain         |  |                | 100 |                     
|Datex-Ohmeda B.V.                                |  | Netherlands   |  |                | 100 |                     
|Datex-Ohmeda (India)Pvt. Ltd                     |  | India         |  |                | 100 |                     
|Datex-Ohmeda Ltd.                                |  | Great Britain |  |                | 100 |                     
|Instrumentarium UK Ltd.                          |  | Great Britain |  |                | 100 |                     
|Datex-Ohmeda S.p.A.                              |  | Italy         |  |                | 100 |                     
|Datex-Ohmeda K.K.                                |  | Japan         |  |                | 100 |                     
|Datex-Ohmeda (Canada) Inc.                       |  | Canada        |  |                | 100 |                     
|Datex-Ohmeda A/S                                 |  | Norway        |  |                | 100 |                     
|Datex-Ohmeda S.A.S                               |  | France        |  |                | 100 |                     
|Instrumentarium AB                               |  | Sweden        |  |                | 100 |                     
|Datex-Ohmeda GmbH                                |  | Germany       |  |                | 100 |                     
|Datex-Ohmeda Pte. Ltd.                           |  | Singapore     |  |                | 100 |                     
|Datex-Ohmeda, Inc.                               |  | USA           |  |                | 100 |                     
|Spacelabs Medical Products Pty. Ltd              |  | Australia     |  |                | 100 |                     
|Spacelabs Medical S.A.                           |  | Spain         |  |                | 100 |                     
|Spacelabs Medical Trading Co.                    |  | Guam          |  |                | 100 |                     
|Spacelabs Medical Limited                        |  | Hong Kong     |  |                | 100 |                     
|Spacelabs Medical Private Ltd.                   |  | India         |  |                | 100 |                     
|Spacelabs Medical Ltd.                           |  | Great Britain |  |                | 100 |                     
|Spacelabs Medical s.r.l.                         |  | Italy         |  |                | 100 |                     
|Spacelabs Medical Products GmbH                  |  | Austria       |  |                | 100 |                     
|Spacelabs Medical Instruments (Tianjin) Co. Ltd. |  | China         |  |                | 100 |                     

F-36



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INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

|                                             |  |               |  |                |       |                      |  | 
|-------------------------------------------- |  | ------------- |  | -------------- | ----- | -------------------- |  | 
|                                             |  |               |  |                |       | At December 31, 2002
|Shares in subsidiaries                       |  | Country       |  | Shareholding %
|                                             |  |               |  |               
|Shanghai Burdick Medical Instrument Co., Ltd |  | China         |  |                | 56.0  |                     
|Spacelabs Medical S.A. De C.V.               |  | Mexico        |  |                | 100   |                     
|Spacelabs Medical S.A.S                      |  | France        |  |                | 100   |                     
|Spacelabs Medical AB                         |  | Sweden        |  |                | 100   |                     
|Spacelabs Medical GmbH                       |  | Germany       |  |                | 100   |                     
|Spacelabs Pte. Ltd.                          |  | Singapore     |  |                | 100   |                     
|Spacelabs Medical Ltd.                       |  | Taiwan        |  |                | 100   |                     
|Spacelabs International, Inc. Delaware       |  | USA           |  |                | 100   |                     
|Spacelabs Medical Data Corporation           |  | USA           |  |                | 100   |                     
|SMD Software, L.L.C. Washington              |  | USA           |  |                | 55.0  |                     
|Spacelabs Burdic, Inc. Delaware              |  | USA           |  |                | 100   |                     
|Deio B.V.                                    |  | Netherlands   |  |                | 100   |                     
|Deio Ltd.                                    |  | Great Britain |  |                | 100   |                     
|Deio s.r.l.                                  |  | Italy         |  |                | 100   |                     
|Deio (Canada) Inc.                           |  | Canada        |  |                | 100   |                     
|Deio S.A.S                                   |  | France        |  |                | 100   |                     
|Deio AB                                      |  | Sweden        |  |                | 100   |                     
|Deio GmbH                                    |  | Germany       |  |                | 100   |                     
|Deio Pte. Ltd.                               |  | Singapore     |  |                | 100   |                     
|Deio Corporation                             |  | Finland       |  |                | 97.6  |                     
|Deiobox Oy                                   |  | Finland       |  |                | 100   |                     
|Deio Holdings, Inc.                          |  | USA           |  |                | 100   |                     
|Deio, Inc.                                   |  | USA           |  |                | 100   |                     
|Medical Equipment                            |  |               |  |                |       |                      |  | 
|Instrumentarium Imaging Italia s.r.l.        |  | Italy         |  |                | 100   |                     
|Instrumentarium Imaging France S.A.R.L.      |  | France        |  |                | 100   |                     
|Instrumentarium Dental GmbH                  |  | Germany       |  |                | 100   |                     
|Instrumentarium Imaging Ziehm GmbH           |  | Germany       |  |                | 100   |                     
|Instrumentarium Imaging Inc.                 |  | USA           |  |                | 100   |                     
|Instrumentarium Imaging Ziehm, Inc.          |  | USA           |  |                | 100   |                     
|Soredex, Inc.                                |  | USA           |  |                | 100   |                     
|SIA Instrumentarium Medical                  |  | Latvia        |  |                | 100   |                     
|Medko Medical Ltd.                           |  | Finland       |  |                | 100   |                     
|Instrumentarium Medical OÜ                   |  | Estonia       |  |                | 100   |                     
|Other                                        |  |               |  |                |       |                      |  | 
|Datia Holdings, Inc.                         |  | Netherlands   |  |                | 100   |                     
|Eksperimentarium Oy                          |  | Finland       |  |                | 100   |                     
|Oy Dentaldepot Ab                            |  | Finland       |  |                | 99.97 |                     
|Oy Metava Ab                                 |  | Finland       |  |                | 100   |                     
|Medko Oy                                     |  | Finland       |  |                | 100   |                     
|Sotem Oy                                     |  | Finland       |  |                | 100   |                     
|Urtsni Oy                                    |  | Finland       |  |                | 100   |                     
|Kiinteistö Oy Lahti Puustellintie 3          |  | Finland       |  |                | 100   |                     
|Litonii Gård Ab                              |  | Finland       |  |                | 90.0  |                     
|Bostads Ab Hafnia                            |  | Finland       |  |                | 73.0  |                     
|Instrumentarium Holdings, Inc.               |  | USA           |  |                | 100   |                     
|Shares in associated companies               |  |               |  |                |       |                      |  | 
|Abmin Technologies Oy                        |  | Finland       |  |                | 42.5  |                     
|IBD Holdings LLC                             |  | USA           |  |                | 50.0  |                     
|Intensium Oy                                 |  | Finland       |  |                | 48.0  |                     
|Sentinel Wireless Incorporated               |  | USA           |  |                | 30.0  |                     

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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

22     Significant Acquisition

Spacelabs-acquisition 2002

In July 3, 2002, the Company acquired all the shares of Spacelabs Medical,
Inc., which primarily manufactures critical care patient monitors. In total,
the businesses acquired had 1,200 employees. Spacelabs Medical is now primarily
responsible for Companys critical care monitoring operations in the USA, while
outside North America Spacelabs Medicals sales companies were integrated into
Companys existing Datex-Ohmeda companies in the latter half of 2002.

The acquisition has been accounted for as a purchase and the results of
Spacelabs have been included in the accompanying consolidated financial
statements since the date of acquisition. The company paid USD 14.25 per share
in cash, a total of EUR 142,485.

Ziehm-acquisition in 2000

On January 1, 2000 the Company completed the acquisition of the Ziehm
surgical imaging C-arm companies. Ziehm believes it is the market leader in
Germany for surgical imaging and is a leading supplier in the USA. Ziehm
develops, manufactures and distributes surgical C-arm imaging products and has
research and development, marketing and manufacturing capability in Germany and
in the United States.

The acquired businesses include shares in Ziehm GmbH, in Germany and Ziehm
International, Inc. in the United States. The acquisition has been accounted
for as a purchase and the results of Ziehm have been included in the
accompanying consolidated financial statements since the date of acquisition.
The total cash payment on acquisition amounted to EUR 20,594 and the net assets
acquired to EUR 1,495. The excess purchase price over fair market value of the
underlying assets of EUR 19,100 was allocated to goodwill, which is amortized
over 20 years.

23     Differences between Generally Accepted Accounting Principles in Finland and
the United States

Instrumentariums consolidated financial statements are prepared in
accordance with Finnish Generally Accepted Accounting Principles (Finnish
GAAP), which differ in certain respects from the accounting principles
generally accepted in the United States (U.S. GAAP). The principal differences
between Finnish GAAP and U.S. GAAP are presented and described below, together
with explanations of the adjustments that affect consolidated net income and
total shareholders equity as of and for the periods indicated.

|                                                   |  |                    |        |      |  |      |        |   |  |  |         |  
|-------------------------------------------------- |  | ------------------ | ------ | ---- |  | ---- | ------ | - |  |  | ------- | -
|                                                   |  | As at December 31,
|                                                   |  |                   
|                                                   |  | 2000               |        | 2001 |  | 2002
|                                                   |  |                    |        |      |  |     
|                                                   |  | EUR                |        | EUR  |  | EUR 
|Reconciliation of net income                       |  |                    |        |      |  |      |        |   |  |  |         |  
|Net income in accordance with Finnish GAAP         |  |                    | 46,579 |      |  |      | 72,136 |   |  |  | 155,757 |  
|U.S. GAAP adjustments:                             |  |                    |        |      |  |      |        |   |  |  |         |  
|a) Pension income (expense)                        |  |                    | 11     |      |  |      | (3,352 | ) |  |  | 9,416   |  
|b) Property and equipment, net                     |  |                    | 6,692  |      |  |      | 1,072  |   |  |  | 6,049   |  
|d) Purchase accounting                             |  |                    | 19,835 |      |  |      | (648   | ) |  |  | 1,701   |  
|e) Goodwill amortization                           |  |                    |       |      |  |      |       |   |  |  | 3,277   |  
|f) Stock compensation expense                      |  |                    | (410   | )    |  |      | (29    | ) |  |  | 959     |  
|g) SPP refund                                      |  |                    | (780   | )    |  |      | 603    |   |  |  | 177     |  
|i) Software development expense                    |  |                    |       |      |  |      | 211    |   |  |  | (61     | )
|j) Minimum pension liability                       |  |                    |       |      |  |      | 5,388  |   |  |  | 5,415   |  
|k) Embedded derivatives                            |  |                    |       |      |  |      |       |   |  |  | (1,118  | )
|                                                   |  |                    |        |      |  |      |        |   |  |  |         |  
|l) Deferred income taxes for U.S. GAAP adjustments |  |                    | 8,605  |      |  |      | (4,109 | ) |  |  | (11,249 | )
|                                                   |  |                    |        |      |  |      |        |   |  |  |         |  
|Net income in accordance with U.S. GAAP            |  |                    | 80,533 |      |  |      | 71,272 |   |  |  | 170,323 |  
|                                                   |  |                    |        |      |  |      |        |   |  |  |         |  

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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Presentation of net income and earnings per share in accordance with U.S.
GAAP for the years ended December 31:

|                                        |                                                                                                             |  |                    |        |      |  |        |       |  |  |         |        | 
|--------------------------------------- | ----------------------------------------------------------------------------------------------------------- |  | ------------------ | ------ | ---- |  | ------ | ----- |  |  | ------- | ------ | 
|                                        |                                                                                                             |  | As at December 31,
|                                        |                                                                                                             |  |                   
|                                        |                                                                                                             |  | 2000               |        | 2001 |  | 2002  
|                                        |                                                                                                             |  |                    |        |      |  |       
|                                        |                                                                                                             |  | EUR                |        | EUR  |  | EUR   
|Income from continuing operations       |                                                                                                             |  | 65,896             |        |      |  | 63,107 |       |  |  | 79,606  |       
|n) Discontinued operations:             |                                                                                                             |  |                    |        |      |  |        |       |  |  |         |       
|                                        | Income from discontinued operations,
net of taxes of EUR (1,947), EUR
(1,717) and EUR (2,308), respectively |  |                    | 14,636 |      |  |        | 8,165 |  |  |         | 4,381  | 
|                                        | Gain on disposal of discontinued
operations, net of taxes of EUR
(25,143)                                   |  |                    |       |      |  |        |      |  |  |         | 86,336 | 
|                                        |                                                                                                             |  |                    |        |      |  |        |       |  |  |         |       
|Net income in accordance with U.S. GAAP |                                                                                                             |  | 80,533             |        |      |  | 71,272 |       |  |  | 170,323 |       
|                                        |                                                                                                             |  |                    |        |      |  |        |       |  |  |         |       
|                                       
|                                        | Basic and diluted earnings per share                                                                        |  |                    |        |      |  |        |       |  |  |         |        | 

|                                                            |                                          |                          |  |      |      |      |  |      |      |  |  |      |      | 
|----------------------------------------------------------- | ---------------------------------------- | ------------------------ |  | ---- | ---- | ---- |  | ---- | ---- |  |  | ---- | ---- | 
|                                                            |                                          |                          |  | 2000 |      | 2001 |  | 2002
|                                                            |                                          |                          |  |      |      |      |  |     
|                                                            |                                          |                          |  | EUR  |      | EUR  |  | EUR 
|m) Earnings per share and ADS in accordance with
U.S. GAAP: |                                          |                          |  |      |      |      |  |      |      |  |  |     
|                                                            | Basic earnings per share and ADS:        |                          |  |      |      |      |  |      |      |  |  |      |     
|                                                            |                                          | Continuing operations    |  |      | 1.37 |      |  |      | 1.32 |  |  |      | 1.66 | 
|                                                            |                                          | Discontinuing operations |  |      | 0.31 |      |  |      | 0.17 |  |  |      | 1.89 | 
|                                                            |                                          |                          |  |      |      |      |  |      |      |  |  |      |      | 
|                                                            | Total basic earnings per share and ADS   |                          |  | 1.68 |      |      |  | 1.49 |      |  |  | 3.55 |     
|                                                            |                                          |                          |  |      |      |      |  |      |      |  |  |      |      | 
|                                                            | Diluted earnings per share and ADS:      |                          |  |      |      |      |  |      |      |  |  |      |     
|                                                            |                                          | Continuing operations    |  |      | 1.37 |      |  |      | 1.31 |  |  |      | 1.60 | 
|                                                            |                                          | Discontinuing operations |  |      | 0.31 |      |  |      | 0.17 |  |  |      | 1.82 | 
|                                                            |                                          |                          |  |      |      |      |  |      |      |  |  |      |      | 
|                                                            | Total diluted earnings per share and ADS |                          |  | 1.68 |      |      |  | 1.48 |      |  |  | 3.42 |     
|                                                            |                                          |                          |  |      |      |      |  |      |      |  |  |      |      | 

The Annual General Meeting on March 25, 2002 has decided to increase the
Corporations share capital through a bonus issue by issuing for one old share
in Instrumentarium, one new share without consideration. Due to this decision
the share capital and number of shares of the Corporation has doubled. In
addition to the bonus issue, the number of the companys ADRs listed on the
Nasdaq Stock Market in the United States has been adjusted so that one ADR
would equal one share in Instrumentarium Corporation, whereas previously two
ADRs equaled one share.

Basic and diluted earnings per share and ADS amounts in the tables above
have been adjusted to give effect to the bonus issue retroactively for all
periods. The weighted average number of shares used in calculating basic
earnings per share at December 31, 2000, 2001 and 2002 were 47,960, 47,946 and
47,980 thousand, respectively. The weighted average number of shares used in
calculating diluted earnings per share at December 31, 2000, 2001 and 2002 was
47,960, 48,170 and 49,744 thousand, respectively.

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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Consolidated Statement of Comprehensive Income

The Company has chosen to present comprehensive income in accordance with
U.S. GAAP. Components of comprehensive income for the periods ended December
31, consist of the following:

|                                  |                                   |                                                                   |                                                                                                            |        |                         |        |        |        |        |      |         |         |        |        |  
|--------------------------------- | --------------------------------- | ----------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | ------ | ----------------------- | ------ | ------ | ------ | ------ | ---- | ------- | ------- | ------ | ------ | -
|                                  |                                   |                                                                   |                                                                                                            |        | Year ended December 31,
|                                  |                                   |                                                                   |                                                                                                            |        |                        
|                                  |                                   |                                                                   |                                                                                                            |        | 2000                    |        | 2001   |        | 2002  
|                                  |                                   |                                                                   |                                                                                                            |        |                         |        |        |        |       
|                                  |                                   |                                                                   |                                                                                                            |        | EUR                     |        | EUR    |        | EUR   
|                                  |                                   |                                                                   |                                                                                                            |        |                         |        |        |        |       
|Comprehensive income              |                                   |                                                                   |                                                                                                            |        |                         |        |        |        |        |      |         |        
|                                  | Net income                        |                                                                   |                                                                                                            | 80,533 |                         |        |        | 71,272 |        |      |         | 170,323 |       
|                                  | Other comprehensive income (loss) |                                                                   |                                                                                                            |        |                         |        |        |        |        |      |         |         |       
|                                  |                                   | Foreign currency translation adjustment                           |                                                                                                            |        | (2,286                  | )      |        |        | (434   | )    |         |         | 415    |       
|                                  |                                   | Unrealized gains (losses) from
marketable securities, net of tax: |                                                                                                            |        |                         |        |        |        |        |      |         |         |        |       
|                                  |                                   |                                                                   | Unrealized holding gains during the
year, less tax of EUR (65) and EUR
(152)                               |        |                         |       |        |        |        | 159  |         |         |        | 524    |  
|                                  |                                   |                                                                   | Unrealized holding losses during
the year, less tax of EUR 480, EUR
241 and EUR 114                        |        |                         | (1,175 | )      |        |        | (589 | )       |         |        | (393   | )
|                                  |                                   |                                                                   | Less: Reclassification adjustment
for gains included in income, less
tax of EUR 1,865, EUR 324 and EUR
294 |        |                         | (4,566 | )      |        |        | (792 | )       |         |        | (1,015 | )
|                                  |                                   | Minimum pension liability, less tax of
EUR 2,107 and EUR 2,118    |                                                                                                            |        |                        |        |        |        | (3,281 | )    |         |         | (3,297 | )     
|                                  |                                   |                                                                   |                                                                                                            |        |                         |        |        |        |        |      |         |         |       
|Other comprehensive income (loss) |                                   |                                                                   | (8,027                                                                                                     | )      |                         |        | (4,937 | )      |        |      | (3,766  | )      
|                                  |                                   |                                                                   |                                                                                                            |        |                         |        |        |        |        |      |         |         |       
|Comprehensive income              |                                   |                                                                   | 72,506                                                                                                     |        |                         |        | 66,335 |        |        |      | 166,557 |        
|                                  |                                   |                                                                   |                                                                                                            |        |                         |        |        |        |        |      |         |         |       

It is not practical to present the components of the accumulated balance
of other comprehensive income items.

|                                                     |  |                    |         |      |  |  |         |  
|---------------------------------------------------- |  | ------------------ | ------- | ---- |  |  | ------- | -
|                                                     |  | As at December 31,
|                                                     |  |                   
|                                                     |  | 2001               |         | 2002
|                                                     |  |                    |         |     
|                                                     |  | EUR                |         | EUR 
|Reconciliation of shareholders equity               |  |                    |         |      |  |  |         |  
|Shareholders equity in accordance with Finnish GAAP |  |                    | 522,376 |      |  |  | 651,465 |  
|U.S. GAAP adjustments:                               |  |                    |         |      |  |  |         |  
|a) Pension expense                                   |  |                    | (23,559 | )    |  |  | (14,143 | )
|b) Property and equipment, net                       |  |                    | (6,049  | )    |  |  |        |  
|c) Marketable securities                             |  |                    | 1,977   |      |  |  | 1,094   |  
|d) Purchase accounting                               |  |                    | (4,400  | )    |  |  | (2,699  | )
|e) Goodwill amortization                             |  |                    |        |      |  |  | 3,277   |  
|f) Stock compensation expense                        |  |                    | (1,068  | )    |  |  | 3,983   |  
|g) SPP refund                                        |  |                    | (177    | )    |  |  |        |  
|h) Treasury shares                                   |  |                    | (4,062  | )    |  |  | (4,062  | )
|i) Software development expense                      |  |                    | 211     |      |  |  | 150     |  
|k) Embedded derivatives                              |  |                    |        |      |  |  | (1,118  | )
|                                                     |  |                    |         |      |  |  |         |  
|l) Deferred income taxes for U.S. GAAP adjustments   |  |                    | 17,063  |      |  |  | 12,769  |  
|                                                     |  |                    |         |      |  |  |         |  
|Shareholders equity in accordance with U.S. GAAP    |  |                    | 502,312 |      |  |  | 650,717 |  
|                                                     |  |                    |         |      |  |  |         |  

a) Pension expense

Pensions

Instrumentarium generally records pension expense in accordance with local
accounting practices in the countries in which employees are provided with such
benefits. Accordingly, the determination of pension expense for defined
benefits plans in accordance with Finnish GAAP differs from the methodology set
in SFAS No. 87, Employers Accounting for Pensions.

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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Under U.S. GAAP, pension expense is recorded on a full accrual basis and
reflected in the statements of operations over the working lives of the
employees provided with such benefits. The economic and demographic
assumptions used in calculating pension expense are required to be reviewed and
updated periodically to the extent that local market economic conditions and
demographics change. Under U.S. GAAP, Instrumentarium has estimated the effect
on net income and shareholders equity assuming the adoption of SFAS No. 87 as
of January 1, 1989.

Refer to j) for minimum pension liability adjustment.

The cost components of the pension expense computed in accordance with the
requirements of SFAS No. 87 for the years ended December 31, were as follows:

|                                                           |                           |  |                            |       |                           |  |       |       |      |  |         |        |      |  |        |       |  |  |        |       |  |  |        |       | 
|---------------------------------------------------------- | ------------------------- |  | -------------------------- | ----- | ------------------------- |  | ----- | ----- | ---- |  | ------- | ------ | ---- |  | ------ | ----- |  |  | ------ | ----- |  |  | ------ | ----- | 
|                                                           |                           |  | Pension benefits, domestic |       | Pension benefits, foreign
|                                                           |                           |  |                            |       |                          
|                                                           |                           |  | 2000                       |       | 2001                      |  | 2002  |       | 2000 |  | 2001    |        | 2002
|                                                           |                           |  |                            |       |                           |  |       |       |      |  |         |        |     
|                                                           |                           |  | EUR                        |       | EUR                       |  | EUR   |       | EUR  |  | EUR     |        | EUR 
|Components of net periodic benefit
cost                    |                           |  |                            |       |                           |  |       |       |      |  |         |        |      |  |        |       |  |  |        |       |  |  |        |      
|Service cost  benefits earned
during the year             |                           |  | 2,009                      |       |                           |  | 2,125 |       |      |  | 2,053   |        |      |  | 5,318  |       |  |  | 6,323  |       |  |  | 6,260  |      
|Interest cost on projected benefit
obligations             |                           |  | 1,308                      |       |                           |  | 1,368 |       |      |  | 1,563   |        |      |  | 1,927  |       |  |  | 2,537  |       |  |  | 3,326  |      
|Expected return on plan assets                             |                           |  | (471                       | )     |                           |  | (461  | )     |      |  | (423    | )      |      |  | (2,552 | )     |  |  | (2,945 | )     |  |  | (3,801 | )    
|Amortization of unrecognized
transition (asset) obligation |                           |  | (298                       | )     |                           |  | (298  | )     |      |  | (257    | )      |      |  | 2      |       |  |  | 300    |       |  |  | 2      |      
|Amortization of prior service cost                         |                           |  | (866                       | )     |                           |  | (866  | )     |      |  | (766    | )      |      |  | 38     |       |  |  | 133    |       |  |  | 165    |      
|Recognized net actuarial (gain) loss                       |                           |  | 289                        |       |                           |  | 223   |       |      |  | 169     |        |      |  | (14    | )     |  |  |       |       |  |  |       |      
|                                                           |                           |  |                            |       |                           |  |       |       |      |  |         |        |      |  |        |       |  |  |        |       |  |  |        |      
|Subtotal                                                   |                           |  | 1,972                      |       |                           |  | 2,091 |       |      |  | 2,339   |        |      |  | 4,720  |       |  |  | 6,347  |       |  |  | 5,951  |      
|Divestments(1)                                             |                           |  |                           |       |                           |  |      |       |      |  | (10,991 | )      |      |  |       |       |  |  |       |       |  |  |       |      
|                                                           | Net periodic benefit cost |  |                            | 1,972 |                           |  |       | 2,091 |      |  |         | (8,652 | )    |  |        | 4,720 |  |  |        | 6,347 |  |  |        | 5,951 | 
|                                                           |                           |  |                            |       |                           |  |       |       |      |  |         |        |      |  |        |       |  |  |        |       |  |  |        |      

|                                        |                                   |  |                   |        |                   |  |         |        |      |  |        |        |  |  |         |        |  |  |  |  | 
|--------------------------------------- | --------------------------------- |  | ----------------- | ------ | ----------------- |  | ------- | ------ | ---- |  | ------ | ------ |  |  | ------- | ------ |  |  |  |  | 
|                                        |                                   |  | Pension benefits, |        | Pension benefits,
|                                        |                                   |  | domestic          |        | foreign          
|                                        |                                   |  |                   |        |                  
|                                        |                                   |  | 2001              |        | 2002              |  | 2001    |        | 2002 |  |        |        | 
|                                        |                                   |  |                   |        |                   |  |         |        |      |  |        |        | 
|                                        |                                   |  | EUR               |        | EUR               |  | EUR     |        | EUR  |  |        |        | 
|Change in benefit obligation            |                                   |  |                   |        |                   |  |         |        |      |  |        |        |  |  |         |       
|Benefit obligation at beginning of year |                                   |  | 22,266            |        |                   |  | 28,413  |        |      |  | 32,996 |        |  |  | 44,702  |       
|Acquisitions                            |                                   |  |                  |        |                   |  |        |        |      |  |       |        |  |  | 31,669  |       
|Service cost                            |                                   |  | 2,125             |        |                   |  | 2,054   |        |      |  | 6,323  |        |  |  | 6,260   |       
|Interest cost                           |                                   |  | 1,368             |        |                   |  | 1,564   |        |      |  | 2,537  |        |  |  | 3,326   |       
|Plan amendments                         |                                   |  |                  |        |                   |  |        |        |      |  |       |        |  |  | 59      |       
|Actuarial (gain) loss                   |                                   |  | 3,028             |        |                   |  | (5,241  | )      |      |  | 178    |        |  |  | 1,289   |       
|Divestments(1)                          |                                   |  |                  |        |                   |  | (13,202 | )      |      |  |       |        |  |  |        |       
|Benefits paid                           |                                   |  | (376              | )      |                   |  | (446    | )      |      |  | (1,979 | )      |  |  | (1,831  | )     
|Currency effect                         |                                   |  |                  |        |                   |  |        |        |      |  | 4,647  |        |  |  | (12,493 | )     
|                                        |                                   |  |                   |        |                   |  |         |        |      |  |        |        |  |  |         |       
|                                        | Benefit obligation at end of year |  |                   | 28,413 |                   |  |         | 13,142 |      |  |        | 44,702 |  |  |         | 72,981 | 
|                                        |                                   |  |                   |        |                   |  |         |        |      |  |        |        |  |  |         |       



|(1) |  | Divestments related to the disposition of the Optical Retail division.
|--- |  | ----------------------------------------------------------------------

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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

|                                               |                                          |  |       |       |      |  |        |       |      |  |        |        |  |  |        |        | 
|---------------------------------------------- | ---------------------------------------- |  | ----- | ----- | ---- |  | ------ | ----- | ---- |  | ------ | ------ |  |  | ------ | ------ | 
|                                               |                                          |  | 2001  |       | 2002 |  | 2001   |       | 2002
|                                               |                                          |  |       |       |      |  |        |       |     
|                                               |                                          |  | EUR   |       | EUR  |  | EUR    |       | EUR 
|Change in plan assets                          |                                          |  |       |       |      |  |        |       |      |  |        |        |  |  |        |       
|Fair value of plan assets at beginning of year |                                          |  | 6,650 |       |      |  | 8,690  |       |      |  | 28,035 |        |  |  | 29,755 |       
|Acquisitions                                   |                                          |  |      |       |      |  |       |       |      |  |       |        |  |  | 24,521 |       
|Actual return on plan assets                   |                                          |  | 1,943 |       |      |  | 581    |       |      |  | (2,770 | )      |  |  | (2,740 | )     
|Employer contribution                          |                                          |  | 475   |       |      |  | 769    |       |      |  | 4,549  |        |  |  | 5,997  |       
|Divestments                                    |                                          |  |      |       |      |  | (5,845 | )     |      |  |       |        |  |  |       |       
|Benefits paid                                  |                                          |  | (376  | )     |      |  | (446   | )     |      |  | (1,627 | )      |  |  | (1,830 | )     
|Currency effect                                |                                          |  |      |       |      |  |       |       |      |  | 1,568  |        |  |  | (6,544 | )     
|                                               |                                          |  |       |       |      |  |        |       |      |  |        |        |  |  |        |       
|                                               | Fair value of plan assets at end of year |  |       | 8,692 |      |  |        | 3,749 |      |  |        | 29,755 |  |  |        | 49,160 | 
|                                               |                                          |  |       |       |      |  |        |       |      |  |        |        |  |  |        |       

|                                           |                                   |  |                   |         |                   |  |        |         |      |  |         |        |   |  |         |        |  
|------------------------------------------ | --------------------------------- |  | ----------------- | ------- | ----------------- |  | ------ | ------- | ---- |  | ------- | ------ | - |  | ------- | ------ | -
|                                           |                                   |  | Pension benefits, |         | Pension benefits,
|                                           |                                   |  | domestic          |         | foreign          
|                                           |                                   |  |                   |         |                  
|                                           |                                   |  | 2001              |         | 2002              |  | 2001   |         | 2002
|                                           |                                   |  |                   |         |                   |  |        |         |     
|                                           |                                   |  | EUR               |         | EUR               |  | EUR    |         | EUR 
|Funded status reconciliation               |                                   |  |                   |         |                   |  |        |         |      |  |         |        |   |  |         |       
|Funded status                              |                                   |  | (19,719           | )       |                   |  | (9,393 | )       |      |  | (14,947 | )      |   |  | (23,821 | )     
|Unrecognized actuarial (gain) loss         |                                   |  | 6,325             |         |                   |  | 330    |         |      |  | 8,331   |        |   |  | 14,058  |       
|Unrecognized transition (asset) obligation |                                   |  | (890              | )       |                   |  | (302   | )       |      |  | 23      |        |   |  | 17      |       
|Unrecognized prior service cost            |                                   |  | (9,275            | )       |                   |  | (4,778 | )       |      |  | 916     |        |   |  | 673     |       
|                                           |                                   |  |                   |         |                   |  |        |         |      |  |         |        |   |  |         |       
|                                           | Net amount recognized at year end |  |                   | (23,559 | )                 |  |        | (14,143 | )    |  |         | (5,678 | ) |  |         | (9,072 | )
|                                           |                                   |  |                   |         |                   |  |        |         |      |  |         |        |   |  |         |       

Amounts recognized in the statement of financial position consists of:

|                                                           |                                   |  |                   |         |                   |  |         |         |      |  |         |        |   |  |         |        |  
|---------------------------------------------------------- | --------------------------------- |  | ----------------- | ------- | ----------------- |  | ------- | ------- | ---- |  | ------- | ------ | - |  | ------- | ------ | -
|                                                           |                                   |  | Pension benefits, |         | Pension benefits,
|                                                           |                                   |  | domestic          |         | foreign          
|                                                           |                                   |  |                   |         |                  
|                                                           |                                   |  | 2001              |         | 2002              |  | 2001    |         | 2002
|                                                           |                                   |  |                   |         |                   |  |         |         |     
|                                                           |                                   |  | EUR               |         | EUR               |  | EUR     |         | EUR 
|Prepaid benefit cost                                       |                                   |  |                  |         |                   |  |        |         |      |  |        |        |   |  |        |       
|Accrued benefit liability                                  |                                   |  | (23,559           | )       |                   |  | (14,143 | )       |      |  | (13,332 | )      |   |  | (20,191 | )     
|Intangible asset relating to the minimum pension liability |                                   |  |                  |         |                   |  |        |         |      |  | 2,179   |        |   |  | 1,626   |       
|Accumulated other comprehensive (income)                   |                                   |  |                  |         |                   |  |        |         |      |  | 5,476   |        |   |  | 9,493   |       
|                                                           |                                   |  |                   |         |                   |  |         |         |      |  |         |        |   |  |         |       
|                                                           | Net amount recognized at year end |  |                   | (23,559 | )                 |  |         | (14,143 | )    |  |         | (5,678 | ) |  |         | (9,072 | )
|                                                           |                                   |  |                   |         |                   |  |         |         |      |  |         |        |   |  |         |       

For plans where accumulated benefit obligation (ABO) exceeds the fair
value of plan assets under U.S.GAAP, the ABO, projected benefit obligation
(PBO) and the fair value of plan assets at December 31, is as follows:

|                     |  |                   |        |      |  |  |        | 
|-------------------- |  | ----------------- | ------ | ---- |  |  | ------ | 
|                     |  | Pension benefits,
|                     |  | foreign          
|                     |  |                  
|                     |  | 2001              |        | 2002
|                     |  |                   |        |     
|                     |  | EUR               |        | EUR 
|ABO                  |  |                   | 44,702 |      |  |  | 72,981 | 
|PBO                  |  |                   | 42,855 |      |  |  | 69,351 | 
|Fair value of assets |  |                   | 29,755 |      |  |  | 49,160 | 

Weighted average assumptions used in the calculation of pension
obligations were as follows:

|                               |  |                            |                           |      |  |      |      |   |  |  |      |      |  |      |  |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |  | 
|------------------------------ |  | -------------------------- | ------------------------- | ---- |  | ---- | ---- | - |  |  | ---- | ---- |  | ---- |  | ---- |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  |  | 
|                               |  | Pension benefits, domestic | Pension benefits, foreign
|                               |  |                            |                          
|                               |  | 2000                       |                           | 2001 |  | 2002 |      |   |  |  |      | 2000 |  | 2001 |  | 2002 |  |  |      |  
|                               |  |                            |                           |      |  |      |      |   |  |  |      |      |  |      |  |      |  |  |      |  
|Discount rate                  |  |                            | 5.80                      | %    |  |      | 5.80 | % |  |  | 5.50 | %    |  |      |  |      |  |  | 7.50 | % |  |  | 6.75 | % |  |  | 6.75 | %
|Rate of compensation increase  |  |                            | 4.00                      | %    |  |      | 4.00 | % |  |  | 4.40 | %    |  |      |  |      |  |  | 5.00 | % |  |  | 5.00 | % |  |  | 5.00 | %
|Expected return on plan assets |  |                            | 5.80                      | %    |  |      | 5.80 | % |  |  | 5.50 | %    |  |      |  |      |  |  | 9.00 | % |  |  | 9.00 | % |  |  | 8.00 | %

See j) for minimum pension liability adjustment.

F-42



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Other post-retirement benefits

Instrumentarium provides certain health care and life insurance benefits
for retired employees. Substantially all U.S. and Canadian employees are
provided these benefits. As a result of the 1998 Ohmeda acquisition SFAS No.
106, Employers Accounting for Post-retirement Benefits Other than Pensions
became material. Under SFAS No. 106 Instrumentarium is required to accrue the
estimated cost of post-retirement benefit payments during the years the
employee provides services.

Net periodic post-retirement benefit cost includes the following components:

|                                     |                           |  |                         |       |      |  |       |       |  |  |      |       | 
|------------------------------------ | ------------------------- |  | ----------------------- | ----- | ---- |  | ----- | ----- |  |  | ---- | ----- | 
|                                     |                           |  | Year ended December 31,
|                                     |                           |  |                        
|                                     |                           |  | 2000                    |       | 2001 |  | 2002 
|                                     |                           |  |                         |       |      |  |      
|                                     |                           |  | EUR                     |       | EUR  |  | EUR  
|Service cost                         |                           |  | 806                     |       |      |  | 898   |       |  |  | 454  |      
|Interest costs                       |                           |  | 978                     |       |      |  | 1,119 |       |  |  | 900  |      
|Amortization of prior service cost   |                           |  |                        |       |      |  | (40   | )     |  |  | (419 | )    
|Recognized net actuarial loss (gain) |                           |  | (1                      | )     |      |  |      |       |  |  | 108  |      
|                                     |                           |  |                         |       |      |  |       |       |  |  |      |      
|                                     | Net periodic benefit cost |  |                         | 1,783 |      |  |       | 1,976 |  |  |      | 1,043 | 
|                                     |                           |  |                         |       |      |  |       |       |  |  |      |      

The following tables set forth the change in post-retirement benefit
obligation and the amounts recognized in the statement of financial position at
December 31:

|                                        |  |                 |        |      |  |  |        |  
|--------------------------------------- |  | --------------- | ------ | ---- |  |  | ------ | -
|                                        |  | At December 31,
|                                        |  |                
|                                        |  | 2001            |        | 2002
|                                        |  |                 |        |     
|                                        |  | EUR             |        | EUR 
|Benefit obligation at beginning of year |  |                 | 14,841 |      |  |  | 11,611 |  
|Acquisition                             |  |                 |       |      |  |  | 2,128  |  
|Service cost                            |  |                 | 898    |      |  |  | 454    |  
|Interest cost                           |  |                 | 1,119  |      |  |  | 900    |  
|Plan amendments                         |  |                 | (7,559 | )    |  |  |       |  
|Actuarial (gain) or loss                |  |                 | 1,694  |      |  |  | 2,026  |  
|Benefits paid                           |  |                 | (145   | )    |  |  | (238   | )
|Currency effect                         |  |                 | 764    |      |  |  | (2,307 | )
|                                        |  |                 |        |      |  |  |        |  
|Benefit obligation at end of year       |  |                 | 11,611 |      |  |  | 14,574 |  
|                                        |  |                 |        |      |  |  |        |  

|                                                           |                                   |  |                 |         |      |  |         |         |  
|---------------------------------------------------------- | --------------------------------- |  | --------------- | ------- | ---- |  | ------- | ------- | -
|                                                           |                                   |  | At December 31,
|                                                           |                                   |  |                
|                                                           |                                   |  | 2001            |         | 2002
|                                                           |                                   |  |                 |         |     
|                                                           |                                   |  | EUR             |         | EUR 
|Funded status reconciliation                               |                                   |  |                 |         |      |  |         |        
|Funded status                                              |                                   |  | (11,611         | )       |      |  | (14,574 | )      
|Unrecognized actuarial (gain) loss                         |                                   |  | 1,011           |         |      |  | 2,579   |        
|Unrecognized prior service cost                            |                                   |  | (7,641          | )       |      |  | (6,044  | )      
|Contributions between measurement date and fiscal year-end |                                   |  |                |         |      |  | 35      |        
|                                                           |                                   |  |                 |         |      |  |         |        
|                                                           | Net amount recognized at year end |  |                 | (18,241 | )    |  |         | (18,003 | )
|                                                           |                                   |  |                 |         |      |  |         |        

Amounts recognized in the statement of financial position consists of:

|                          |                                   |  |                 |         |      |  |         |         |  
|------------------------- | --------------------------------- |  | --------------- | ------- | ---- |  | ------- | ------- | -
|                          |                                   |  | At December 31,
|                          |                                   |  |                
|                          |                                   |  | 2001            |         | 2002
|                          |                                   |  |                 |         |     
|                          |                                   |  | EUR             |         | EUR 
|Accrued benefit liability |                                   |  | (18,241         | )       |      |  | (18,003 | )      
|                          |                                   |  |                 |         |      |  |         |        
|                          | Net amount recognized at year end |  |                 | (18,241 | )    |  |         | (18,003 | )
|                          |                                   |  |                 |         |      |  |         |        

F-43



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Weighted average assumptions used in the calculations of post-retirement
benefit obligations as of December 31 are as follows:

|                              |  |                 |      |      |  |      |      |   |  |  |      |  
|----------------------------- |  | --------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                              |  | At December 31,
|                              |  |                
|                              |  | 2000            |      | 2001 |  | 2002
|                              |  |                 |      |      |  |     
|Discount rate                 |  |                 | 7.50 | %    |  |      | 6.75 | % |  |  | 6.75 | %
|Rate of compensation increase |  |                 | 5.0  | %    |  |      | 5.0  | % |  |  | n/a  |  

For measurement purposes, a 7.0%, 6.5% and 14.0 % annual rate of increase
in the per capita cost of covered health care benefits was assumed for 2000,
2001 and 2002, respectively. The rate is assumed to decrease gradually to 5%
for 2011 and remain at that level thereafter.

A one percent point increase in the assumed health care cost trend would
increase the accumulated post-retirement benefit obligation by EUR 1,328 at
December 31, 2001 and by EUR 848 at December 31, 2002. It would increase the
net periodic cost by EUR 408 for 2000, by EUR 428 for 2001 and by EUR 60 for
2002.

A one percent decrease in the assumed health care cost trend would decrease the
accumulated post-retirement benefit obligation by EUR 1,039 at December 31,
2001 and by EUR 723 at December 31, 2002. It would decrease the net periodic
cost by EUR 317 for 2000, by EUR 351 for 2001 and by EUR 50 for 2002.



|b) |  | Property and equipment, net
|-- |  | ---------------------------

The gross balance sheet effect of the adjustment on property and equipment
is to decrease equity by EUR 7,741 in 2000 and EUR 7,657 in 2001. The net
balance sheet effect of this adjustment is to decrease equity by EUR 7,121 in
2000 and EUR 6,049 in 2001. The adjustment is mainly due to differences in
accounting for capitalized interest, which are expensed under Finnish GAAP and
required to be capitalized under U.S. GAAP and to a transaction in 2000, in
which the Company sold a building, but still leases a part of the space for
Companys own use. A portion of the gain resulting from the transaction, EUR
5,370 is under U.S. GAAP deferred and amortized over the life of the lease
contract. The difference relating to capitalized interest is amortized over the
useful lives of the related assets, as appropriate.

These properties that the U.S. GAAP adjustments relate to have been
employed by the Optical Retail Division that was disposed of during 2002.
Accordingly, the balance for these adjustments as at the disposal date has been
included in the determination of the gain for sale under U.S. GAAP for
discontinued operations.



|c) |  | Marketable securities
|-- |  | ---------------------

Under Finnish GAAP, marketable securities are reflected at the lower of
individual acquisition cost or market. Securities written down to a new cost
basis can be written up for subsequent recoveries in market value.

Under U.S. GAAP, the Companys investment securities are classified as
available-for-sale and are recorded at fair value, with unrealized gains and
losses excluded from the determination of income and reported as a separate
component of shareholders equity, net of tax.

F-44



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)



|d) |  | Purchase accounting
|-- |  | -------------------

Under both Finnish GAAP and U.S. GAAP, the cost of a company acquired in a
purchase business combination includes the direct costs of acquisition and the
excess of the cost of the acquired company over the sum of the amounts assigned
to identifiable assets, based upon an appraisal of the fair value of the
assets, acquired less liabilities assumed should be recorded as goodwill.
However, the concept of fair value in assigning amounts to assets acquired
and liabilities assumed is less comprehensive under Finnish GAAP. Under U.S.
GAAP purchase accounting principles, the acquiring company is required to
allocate the fair value of the purchase consideration to the value of all
tangible and intangible assets and liabilities acquired and accordingly, the
assets and liabilities have been recorded at their estimated fair values at the
date of the acquisition. The excess of purchase price over the estimated fair
values of the net assets acquired has been recorded as goodwill. The Company
adopted SFAS 142, Goodwill and Other Intangible Assets, on January 1, 2002
and goodwill and other intangible assets with indefinite lives are no longer
amortized. Goodwill and intangible assets acquired in business combinations
completed before July 1, 2001 have continued to be amortized until the adoption
of SFAS 142.

Acquisition of Ohmeda

The following is a reconciliation of the total consideration for Ohmeda
and the allocation of the excess of purchase consideration over the net assets
acquired to the U.S. GAAP final purchase accounting adjustment.

|                                                              |  |     |         |  
|------------------------------------------------------------- |  | --- | ------- | -
|                                                              |  | EUR
|Cash paid                                                     |  |     | 449,729 |  
|Reimbursement of purchase price                               |  |     | (13,567 | )
|                                                              |  |     |         |  
|Net cash paid                                                 |  |     | 436,162 |  
|Direct acquisition costs                                      |  |     | 5,487   |  
|Liabilities recognized pursuant to EITF 95-3                  |  |     | 8,200   |  
|                                                              |  |     |         |  
|Total consideration                                           |  |     | 449,850 |  
|Baxter settlement                                             |  |     | (11,399 | )
|Net assets acquired                                           |  |     | 156,178 |  
|                                                              |  |     |         |  
|Excess of purchase consideration over the net assets acquired |  |     | 282,273 |  
|                                                              |  |     |         |  

U.S. GAAP final purchase accounting adjustments:

|                                                              |  |  |         |   |  |     |  | 
|------------------------------------------------------------- |  |  | ------- | - |  | --- |  | 
|                                                              |  |  |         |   |  | EUR
|Goodwill                                                      |  |  | 152,134 |  
|Land and buildings                                            |  |  | 6,068   |  
|Other tangible assets                                         |  |  | 21,075  |  
|Patented technology                                           |  |  | 50,094  |  
|Trademarks                                                    |  |  | 99,903  |  
|Inventories                                                   |  |  | 14,250  |  
|Acquired R&D                                                  |  |  | 6,831   |  
|Deferred taxation on the above adjustments                    |  |  | (68,082 | )
|                                                              |  |  |         |   |  |     |  | 
|Excess of purchase consideration over the net assets acquired |  |  | 282,273 |  
|                                                              |  |  |         |   |  |     |  | 

In 2000, under Finnish GAAP, the Company reduced goodwill by EUR 40,226 in
connection with the payment from Baxter Healthcare Corporation relating to the
acquisition of Ohmeda. Under U.S. GAAP, EUR 11,399 was recorded as a reduction
of goodwill with the difference of EUR 28,887 being recorded through the income
statement.

F-45



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

The following table summarizes the Finnish GAAP to U.S. GAAP differences
related to the acquisition of Ohmeda:

|                                  |  |  |        |   |  |             |          |          |  |             |        |          |  |             |          |          |  |  |        |   |  |  |          |   |  |  |  | 
|--------------------------------- |  |  | ------ | - |  | ----------- | -------- | -------- |  | ----------- | ------ | -------- |  | ----------- | -------- | -------- |  |  | ------ | - |  |  | -------- | - |  |  |  | 
|                                  |  |  |        |   |  | Income      |          |          |  |             |        | Income   |  | Income      |          |          |  |  |        |   |  | 
|                                  |  |  |        |   |  | statement   |          | Balance  |  | statement   |        | Balance  |  | statement   |          | Balance 
|                                  |  |  |        |   |  | January 1  |          | sheet    |  | January 1  |        | sheet    |  | January 1  |          | sheet   
|                                  |  |  |        |   |  | December    |          | December |  | December    |        | December |  | December    |          | December
|                                  |  |  |        |   |  | 31, 2000    |          | 31, 2000 |  | 31, 2001    |        | 31, 2001 |  | 31, 2002    |          | 31, 2002
|                                  |  |  |        |   |  |             |          |          |  |             |        |          |  |             |          |         
|                                  |  |  |        |   |  | EUR         |          | EUR      |  | EUR         |        | EUR      |  | EUR         |          | EUR     
|Goodwill                          |  |  |        |   |  |             | (104,792 | )        |  |             |        |          |  |             | (104,792 | )        |  |  |        |   |  |  | (104,792 | )
|Accumulated amortization          |  |  | 2,527  |   |  |             | 14,090   |          |  |             | 5,258  |          |  |             | 19,348   |          |  |  | 12,628 |   |  |  | 31,976   |  
|Land and buildings                |  |  |        |   |  |             | 2,498    |          |  |             |        |          |  |             | 2,498    |          |  |  |        |   |  |  | 2,498    |  
|Accumulated depreciation          |  |  | (991   | ) |  |             | (1,365   | )        |  |             | (107   | )        |  |             | (1,472   | )        |  |  | (105   | ) |  |  | (1,577   | )
|Other tangible assets             |  |  |        |   |  |             | 21,075   |          |  |             |        |          |  |             | 21,075   |          |  |  |        |   |  |  | 21,075   |  
|Accumulated depreciation          |  |  | (6,487 | ) |  |             | (19,914  | )        |  |             | (249   | )        |  |             | (20,163  | )        |  |  | (146   | ) |  |  | (20,309  | )
|Patented technology               |  |  |        |   |  |             | 50,094   |          |  |             |        |          |  |             | 50,094   |          |  |  |        |   |  |  | 50,094   |  
|Accumulated depreciation          |  |  | (3,578 | ) |  |             | (9,840   | )        |  |             | (3,578 | )        |  |             | (13,418  | )        |  |  | (3,578 | ) |  |  | (16,996  | )
|Trademarks                        |  |  |        |   |  |             | 99,903   |          |  |             |        |          |  |             | 99,903   |          |  |  |        |   |  |  | 99,903   |  
|Accumulated depreciation          |  |  | (4,990 | ) |  |             | (13,727  | )        |  |             | (4,990 | )        |  |             | (18,717  | )        |  |  | (3,699 | ) |  |  | (22,415  | )
|Baxter
settlement                 |  |  | 28,827 |   |  |             |          |          |  |             |        |          |  |             |          |          |  |  |        |   |  |  |          |  
|Deferred taxation on the above    |  |  | 4,527  |   |  |             | (52,027  | )        |  |             | 3,582  |          |  |             | (50,445  | )        |  |  | 3,260  |   |  |  | (47,185  | )
|                                  |  |  |        |   |  |             |          |          |  |             |        |          |  |             |          |          |  |  |        |   |  |  |          |  
|Total income statement adjustment |  |  | 19,835 |   |  |             |          |          |  |             | (84    | )        |  |             |          |          |  |  | 8,360  |   |  |  |          |  
|                                  |  |  |        |   |  |             |          |          |  |             |        |          |  |             |          |          |  |  |        |   |  |  |          |  

The Company received an appraisal of the acquired intangible assets, which
indicated that EUR 6,831 of the acquired intangible assets represented acquired
research and development. As the feasibility of the acquired research and
development has not yet been established and the technology had no alternative
future use, the amount allocated to this technology was charged to operations
during the year ended December 31, 1998 for U.S. GAAP reporting purposes. The
amount was allocable to three technologies acquired as follows; EUR 3,795 for
ongoing research and development; EUR 2,562 for technology 1 and EUR 474 for
technology 2. Total costs to develop project 1 further that have been incurred
as of the balance sheet date amounted to EUR 7,593 and the costs estimated in
2003 amount to EUR 2,503.

Acquisition of Soredex

The Company acquired the net assets of Soredex on July 1, 2001. Under
Finnish GAAP, in addition to the fair value concept, goodwill is amortized over
its estimated useful life. Under U.S. GAAP, the Group adopted the transition
provisions with effect from this acquisition. As a result, goodwill and other
intangible assets with indefinite lives are not amortized. Goodwill and
intangible assets acquired in business combinations completed before July 1,
2001 have continued to be amortized until the adoption of FAS 142 on January 1,
2002.

The following is a reconciliation of the total consideration for Soredex
and the allocation of the excess of purchase consideration over the net assets
acquired to the U.S. GAAP final purchase accounting adjustment:

|                                                              |  |     |        | 
|------------------------------------------------------------- |  | --- | ------ | 
|                                                              |  | EUR
|Cash paid                                                     |  |     | 13,289 | 
|Net assets acquired                                           |  |     | 6,898  | 
|                                                              |  |     |        | 
|Excess of purchase consideration over the net assets acquired |  |     | 6,391  | 
|                                                              |  |     |        | 

F-46



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

U.S. GAAP final purchase accounting adjustments:

|                                                              |  |  |       |   |  |     |  | 
|------------------------------------------------------------- |  |  | ----- | - |  | --- |  | 
|                                                              |  |  |       |   |  | EUR
|Goodwill                                                      |  |  | 4,147 |  
|Other tangible assets                                         |  |  | 312   |  
|Trademarks                                                    |  |  | 1,869 |  
|Inventories                                                   |  |  | 980   |  
|Deferred taxation on the above adjustments                    |  |  | (917  | )
|                                                              |  |  |       |   |  |     |  | 
|Excess of purchase consideration over the net assets acquired |  |  | 6,391 |  
|                                                              |  |  |       |   |  |     |  | 

The following table summarizes the Finnish GAAP to U.S. GAAP differences
related to the acquisition of Soredex:

|                                  |  |  |        |   |  |               |      |              |  |             |        |              |  |              |     |               |  |  |        |   |  |  |  | 
|--------------------------------- |  |  | ------ | - |  | ------------- | ---- | ------------ |  | ----------- | ------ | ------------ |  | ------------ | --- | ------------- |  |  | ------ | - |  |  |  | 
|                                  |  |  |        |   |  |               |      |              |  | Income      |        |              |  |              |     | Income        |  |  |        |  
|                                  |  |  |        |   |  |               |      |              |  | statement   |        | Balance      |  | statement    |     |               |  | 
|                                  |  |  |        |   |  |               |      |              |  | January 1  |        | sheet        |  | January 1   |     | Balance sheet
|                                  |  |  |        |   |  | Balance sheet |      | December 31, |  | December    |        | December 31, |  | December 31,
|                                  |  |  |        |   |  | July 1, 2001  |      | 2001         |  | 31, 2001    |        | 2002         |  | 2002        
|                                  |  |  |        |   |  |               |      |              |  |             |        |              |  |             
|                                  |  |  |        |   |  | EUR           |      | EUR          |  | EUR         |        | EUR          |  | EUR         
|Goodwill                          |  |  | (2,244 | ) |  |               |     |              |  |             | (2,244 | )            |  |              |    |               |  |  | (2,244 | )
|Accumulated
amortization(1)       |  |  |       |   |  |               | 160  |              |  |             | 160    |              |  |              | 320 |               |  |  | 480    |  
|Other tangible assets             |  |  | 312    |   |  |               |     |              |  |             | 312    |              |  |              |    |               |  |  | 312    |  
|Accumulated depreciation          |  |  |       |   |  |               | (39  | )            |  |             | (39    | )            |  |              | (39 | )             |  |  | (78    | )
|Trademarks                        |  |  | 1,869  |   |  |               |     |              |  |             | 1,869  |              |  |              |    |               |  |  | 1,869  |  
|Accumulated depreciation          |  |  |       |   |  |               |     |              |  |             |       |              |  |              |    |               |  |  |       |  
|Inventories                       |  |  | 980    |   |  |               | (980 | )            |  |             |       |              |  |              |    |               |  |  |       |  
|Deferred taxation on the above    |  |  | (917   | ) |  |               | 296  |              |  |             | (621   | )            |  |              | 11  |               |  |  | (610   | )
|                                  |  |  |        |   |  |               |      |              |  |             |        |              |  |              |     |               |  |  |        |  
|Total income statement adjustment |  |  |        |   |  |               | (563 | )            |  |             |        |              |  |              | 292 |               |  |  |        |  
|                                  |  |  |        |   |  |               |      |              |  |             |        |              |  |              |     |               |  |  |        |  



|(1) |  | The accumulated amortization represents the reversal of goodwill
amortization recorded for Finnish GAAP purposes.
|--- |  | -----------------------------------------------------------------------------------------------------------------

Acquisition of Spacelabs Medical, Inc.

The Company acquired all the shares of Spacelabs Medical, Inc. on July 3,
2002. The Company paid $14.25 in cash per share to Spacelabs stockholders,
for a total of EUR 142,485 thousand. Instrumentarium funded the acquisition
from cash on hand and existing credit facilities. The main reason for the
acquisition of the Spacelabs Medical was to enter the critical care patient
monitoring market in the US.

The following is a reconciliation of the total consideration for Spacelabs
and the allocation of the excess of purchase consideration over the net assets
acquired to the U.S. GAAP final purchase accounting adjustment:

|                                                              |  |     |         | 
|------------------------------------------------------------- |  | --- | ------- | 
|                                                              |  | EUR
|Cash paid                                                     |  |     | 142,485 | 
|Direct acquisition costs                                      |  |     | 6,136   | 
|Fair value of warrants                                        |  |     | 456     | 
|Liabilities recognized pursuant of EITF 95-3                  |  |     | 11,842  | 
|                                                              |  |     |         | 
|Total purchase consideration                                  |  |     | 160,919 | 
|                                                              |  |     |         | 
|Net assets acquired                                           |  |     | 126,938 | 
|                                                              |  |     |         | 
|Excess of purchase consideration over the net assets acquired |  |     | 33,981  | 
|                                                              |  |     |         | 

F-47



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INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Direct acquisition costs of EUR 6,136 that have been capitalized to the
purchase price consist of finders fees and professional and legal fees
directly related to the acquisition. The liabilities assumed included employee
termination costs for Spacelabs personnel that have been terminated as a result
of the acquisition, costs to terminate distribution contracts and product
support contracts for product lines that have been discontinued and costs
incurred for lease termination benefits that relate to amounts to be paid in
the future related to leases for property and equipment.

The restructuring costs of EUR 11,842 that have been included in the
acquisition cost consist of the following:

|                                       |  |     |        | 
|-------------------------------------- |  | --- | ------ | 
|                                       |  | EUR
|Contract and project termination costs |  |     | 2,947  | 
|Lease termination costs                |  |     | 1,823  | 
|Termination benefits                   |  |     | 7,072  | 
|                                       |  |     |        | 
|Total                                  |  |     | 11,842 | 
|                                       |  |     |        | 

U.S. GAAP final purchase accounting adjustments:

U.S. GAAP final purchase accounting adjustments:

|                                                              |  |  |         |   |  |     |  | 
|------------------------------------------------------------- |  |  | ------- | - |  | --- |  | 
|                                                              |  |  |         |   |  | EUR
|Corporate trade name                                          |  |  | 5,726   |  
|Corporate products                                            |  |  | 31,697  |  
|Product backlog                                               |  |  | 1,207   |  
|Other tangible assets                                         |  |  | (1,424  | )
|Inventories                                                   |  |  | 12,689  |  
|Assets-held-for sale                                          |  |  | 3,597   |  
|Deferred taxation on the above adjustments                    |  |  | (19,511 | )
|                                                              |  |  |         |  
|Excess of purchase consideration over the net assets acquired |  |  | 33,981  |  
|                                                              |  |  |         |  

The following table summarizes the Finnish GAAP to U.S. GAAP differences
related to the acquisition of Spacelabs:

|                                  |  |  |         |   |  |                       |        |                      |  |                   |         |   |  |  |  | 
|--------------------------------- |  |  | ------- | - |  | --------------------- | ------ | -------------------- |  | ----------------- | ------- | - |  |  |  | 
|                                  |  |  |         |   |  |                       |        |                      |  | Income statement  |         |   |  | 
|                                  |  |  |         |   |  | Balance sheet July 3, |        | January 1  December |  | Balance sheet    
|                                  |  |  |         |   |  | 2002                  |        | 31, 2002             |  | December 31, 2002
|                                  |  |  |         |   |  |                       |        |                      |  |                  
|                                  |  |  |         |   |  | EUR                   |        | EUR                  |  | EUR              
|Goodwill                          |  |  | (30,849 | ) |  |                       |       |                      |  |                   | (30,849 | )
|Accumulated
amortization(1)       |  |  |        |   |  |                       | 771    |                      |  |                   | 771     |  
|Inventory                         |  |  | 12,689  |   |  |                       |       |                      |  |                   | 12,689  |  
|Accumulated depreciation          |  |  |        |   |  |                       | (7,017 | )                    |  |                   | (7,017  | )
|Corporate trade name              |  |  | 5,726   |   |  |                       |       |                      |  |                   | 5,726   |  
|Accumulated depreciation          |  |  |        |   |  |                       |       |                      |  |                   |        |  
|Corporate products                |  |  | 31,697  |   |  |                       |       |                      |  |                   | 31,697  |  
|Accumulated depreciation          |  |  |        |   |  |                       | (3,605 | )                    |  |                   | (3,605  | )
|Product backlog                   |  |  | 1,207   |   |  |                       |       |                      |  |                   | 1,207   |  
|Accumulated depreciation          |  |  |        |   |  |                       | (1,207 | )                    |  |                   | (1,207  | )
|Other tangible assets             |  |  | (268    | ) |  |                       |       |                      |  |                   | (268    | )
|Accumulated depreciation          |  |  |        |   |  |                       | 268    |                      |  |                   | 268     |  
|Deferred taxation on the above    |  |  | (19,974 | ) |  |                       | 4,629  |                      |  |                   | (15,345 | )
|                                  |  |  |         |   |  |                       |        |                      |  |                   |         |  
|Total income statement adjustment |  |  |         |   |  |                       | (6,160 | )                    |  |                   |         |  
|                                  |  |  |         |   |  |                       |        |                      |  |                   |         |  

(1) The accumulated amortization represents the reversal of goodwill
amortization recorded for Finnish GAAP purposes.

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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Following are the Companys unaudited pro forma results for the 2001 and
2002 assuming the acquisition had occurred on January 1, 2001:

|                           |  |                         |           |      |  |  |           | 
|-------------------------- |  | ----------------------- | --------- | ---- |  |  | --------- | 
|                           |  | Year ended December 31,
|                           |  |                        
|                           |  | 2001                    |           | 2002
|                           |  |                         |           |     
|                           |  | Unaudited              
|                           |  |                        
|                           |  | EUR                     |           | EUR 
|Net sales                  |  |                         | 1,147,659 |      |  |  | 1,128,011 | 
|Net income                 |  |                         | 53,628    |      |  |  | 64,948    | 
|Basic earnings per share   |  |                         | 1.12      |      |  |  | 1.35      | 
|Diluted earnings per share |  |                         | 1.11      |      |  |  | 1.31      | 

These unaudited pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of the results of operations,
which actually would have resulted, had the acquisition and the related
financing occurred on the date indicated, or which may result in the future.



|e) |  | Amortization of goodwill and indefinite lived intangibles
|-- |  | ---------------------------------------------------------

Amortization of goodwill

In accordance with Finnish GAAP the Company amortizes all intangible
assets including goodwill on a straight-line basis over the expected useful
lives of the assets. In accordance with the provisions of SFAS 142, Goodwill
and Other Intangible Assets, goodwill and intangible assets with indefinite
lives are no longer amortized but subject to an annual impairment test. The new
standard was applicable for acquisitions that took place after July 1, 2001 and
starting from January 1, 2002, it had to be applied to all existing goodwill
balances and acquired intangible assets.

The U.S. GAAP adjustment reverses the amortization expense recorded under
Finnish GAAP and also reverses the movement in accumulated amortization under
Finnish GAAP subsequent to the adoption of SFAS 141 and SFAS 142.

The following table shows the results of operations as if SFAS 142 were
applied to prior periods:

|                                       |                        |  |                         |      |      |  |        |      |  |  |         |      | 
|-------------------------------------- | ---------------------- |  | ----------------------- | ---- | ---- |  | ------ | ---- |  |  | ------- | ---- | 
|                                       |                        |  | Year ended December 31,
|                                       |                        |  |                        
|                                       |                        |  | 2000                    |      | 2001 |  | 2002  
|                                       |                        |  |                         |      |      |  |       
|                                       |                        |  | EUR                     |      | EUR  |  | EUR   
|Net income as reported under U.S. GAAP |                        |  | 80,533                  |      |      |  | 71,272 |      |  |  | 170,323 |     
|Add back: Goodwill amortization        |                        |  | 13,817                  |      |      |  | 11,083 |      |  |  |        |     
|Add back: Trademark amortization       |                        |  | 4,990                   |      |      |  | 4,990  |      |  |  |        |     
|                                       |                        |  |                         |      |      |  |       
|Adjusted net income                    |                        |  | 99,340                  |      |      |  | 87,345 |      |  |  | 170,323 |     
|                                       |                        |  |                         |      |      |  |       
|Basic earning per share                |                        |  |                         |      |      |  |        |      |  |  |         |     
|                                       | Net income as reported |  |                         | 1.68 |      |  |        | 1.49 |  |  |         | 3.55 | 
|                                       | Goodwill amortization  |  |                         | 0.29 |      |  |        | 0.23 |  |  |         |     | 
|                                       | Trademark amortization |  |                         | 0.10 |      |  |        | 0.10 |  |  |         |     | 
|                                       | Adjusted net income    |  |                         | 2.07 |      |  |        | 1.82 |  |  |         | 3.55 | 
|Diluted earning per share              |                        |  |                         |      |      |  |        |      |  |  |         |     
|                                       | Net income as reported |  |                         | 1.68 |      |  |        | 1.48 |  |  |         | 3.42 | 
|                                       | Goodwill amortization  |  |                         | 0.29 |      |  |        | 0.23 |  |  |         |     | 
|                                       | Trademark amortization |  |                         | 0.10 |      |  |        | 0.10 |  |  |         |     | 
|                                       | Adjusted net income    |  |                         | 2.07 |      |  |        | 1.81 |  |  |         | 3.42 | 

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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Impairment of Goodwill

The Company has evaluated its existing goodwill relating to prior business
combinations and has determined that an adjustment or reclassification to
intangible assets as of January 1, 2002 was not required in order to conform to
the new requirements of SFAS 142. The company has also reassessed the useful
lives and carrying values of other intangible assets, and will continue to
amortize these over their remaining useful lives.

As of January 1, 2002, the Company performed the transitional impairment
test under FAS 142 and compared the carrying value for each reporting unit to
its fair value, which was determined based on discounted cash flows. Upon
completion of the transitional impairment test, the Company determined that
there was no impairment as of January 1, 2002, as the carrying value of each
reporting unit did not exceed its fair value. The Company also completed its
annual impairment test required by SFAS 142 during the fourth quarter of 2002,
which was also performed by comparing the carrying value of each reporting unit
to its fair value based on discounted cash flow. No impairment was recognized.

Below is a roll forward of U.S. GAAP goodwill during 2002:

|                                      |  |              |         |           |  |              |        |              |  |  |        |   |  |  |       | 
|------------------------------------- |  | ------------ | ------- | --------- |  | ------------ | ------ | ------------ |  |  | ------ | - |  |  | ----- | 
|                                      |  | Anesthesia   |         |           |  |              |        |              |  |  |        |   |  | 
|                                      |  | and Critical |         | Medical   |  | Discontinued |        | Corporate   
|                                      |  | Care         |         | Equipment |  | operations   |        | headquarters
|                                      |  |              |         |           |  |              |        |             
|                                      |  | EUR          |         | EUR       |  | EUR          |        | EUR         
|Balance as of January 1, 2002         |  |              | 129,974 |           |  |              | 36,329 |              |  |  | 1,776  |   |  |  | 32    | 
|Goodwill acquired                     |  |              |        |           |  |              | 110    |              |  |  | 3,806  |   |  |  | 1,828 | 
|Goodwill disposed of                  |  |              |        |           |  |              |       |              |  |  | (1,676 | ) |  |  |      | 
|Goodwill written off due to
disposals |  |              |        |           |  |              |       |              |  |  | (101   | ) |  |  |      | 
|Translation adjustment                |  |              | (1,018  | )         |  |              |       |              |  |  |       |   |  |  |      | 
|                                      |  |              |         |           |  |              |        |              |  |  |        |   |  |  |       | 
|Balance as of December 31, 2002       |  |              | 128,956 |           |  |              | 36,439 |              |  |  | 3,806  |   |  |  | 1,860 | 
|                                      |  |              |         |           |  |              |        |              |  |  |        |   |  |  |       | 

Amortization of identifiable intangible assets acquired

The following table sets forth the gross carrying amount and accumulated
amortization of acquired intangible assets for continuing operations under U.S.
GAAP:

|                              |  |                         |         |              |  |  |         |  
|----------------------------- |  | ----------------------- | ------- | ------------ |  |  | ------- | -
|                              |  | As of December 31, 2002
|                              |  |                        
|                              |  | Gross carrying          |         | Accumulated 
|                              |  | amount                  |         | amortization
|                              |  |                         |         |             
|                              |  | EUR                     |         | EUR         
|Amortized intangible assets   |  |                         |         |              |  |  |         |  
|Trademarks                    |  |                         | 7,354   |              |  |  | (5,089  | )
|Patents and current products  |  |                         | 87,460  |              |  |  | (23,522 | )
|Other                         |  |                         | 31,043  |              |  |  | (14,015 | )
|                              |  |                         |         |              |  |  |         |  
|Total                         |  |                         | 125,858 |              |  |  | (42,625 | )
|Unamortized intangible assets |  |                         |         |              |  |  |         |  
|Trademarks                    |  |                         | 100,383 |              |  |  | (17,398 | )
|                              |  |                         |         |              |  |  |         |  
|Total                         |  |                         | 100,383 |              |  |  | (17,398 | )

F-50



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

Intangible assets are amortized over 3 to 10 years. The amortization
expense for the year ended December 31, 2002 is EUR 16,722. Amortization
expense on intangible assets is estimated to be as follows:

|                            |  |     |        | 
|--------------------------- |  | --- | ------ | 
|                            |  | EUR
|For year ended December 31: |  |     |        | 
|2003                        |  |     | 14,630 | 
|2004                        |  |     | 14,293 | 
|2005                        |  |     | 11,586 | 
|2006                        |  |     | 8,773  | 
|2007                        |  |     | 7,427  | 



|f) |  | Stock compensation
|-- |  | ------------------

As allowed by the Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation,  (FAS 123), under U.S. GAAP, the
Company has elected to continue to apply Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees, (APB 25) and related
interpretations in accounting for its schemes. Under the intrinsic value
method of APB 25, when the exercise price of employee stock options equals or
exceeds the market price of the underlying stock on the measurement date, no
compensation is recognized. However, if the measurement date is not
determinable, estimation has to be used to record compensation cost each period
from the grant date to the measurement date. Total stock compensation under APB
25 as of December 31, 2002 amounted to EUR 6,664 (EUR 1,925 as of December 31,
2001) of which EUR 2,571 (EUR 488) was unearned.

Had compensation cost for the options issued been determined based on the
fair value at the grant date consistent with the provisions of FAS 123, the
Companys net income and earnings per share for the periods ended December 31,
2000, 2001 and 2002 would have been reduced to the pro forma amounts indicated
below:

|                           |                                                                                                                       |  |                         |        |      |  |        |        |   |  |         |         |  
|-------------------------- | --------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------ | ---- |  | ------ | ------ | - |  | ------- | ------- | -
|                           |                                                                                                                       |  | Year ended December 31,
|                           |                                                                                                                       |  |                        
|                           |                                                                                                                       |  | 2000                    |        | 2001 |  | 2002  
|                           |                                                                                                                       |  |                         |        |      |  |       
|                           |                                                                                                                       |  | EUR                     |        | EUR  |  | EUR   
|Net income                 |                                                                                                                       |  |                         |        |      |  |        |        |   |  |         |        
|                           | As reported                                                                                                           |  |                         | 80,533 |      |  |        | 71,272 |   |  |         | 170,323 |  
|                           | Add: Stock-based employee
compensation expense included in
reported net income under U.S. GAAP,
net of tax            |  |                         | 410    |      |  |        | 398    |   |  |         | 2,655   |  
|                           | Deduct: Total stock-based employee
compensation expense determined
under fair value method for all
awards, net of tax |  |                         | (4,779 | )    |  |        | (4,826 | ) |  |         | (5,424  | )
|                           |                                                                                                                       |  |                         |        |      |  |        |        |   |  |         |         |  
|Pro forma                  |                                                                                                                       |  | 76,164                  |        |      |  | 66,844 |        |   |  | 167,554 |        
|Basic earnings per share   |                                                                                                                       |  |                         |        |      |  |        |        |   |  |         |        
|                           | As reported                                                                                                           |  |                         | 1.68   |      |  |        | 1.49   |   |  |         | 3.55    |  
|                           | Pro forma                                                                                                             |  |                         | 1.59   |      |  |        | 1.39   |   |  |         | 3.49    |  
|Diluted earnings per share |                                                                                                                       |  |                         |        |      |  |        |        |   |  |         |        
|                           | As reported                                                                                                           |  |                         | 1.68   |      |  |        | 1.48   |   |  |         | 3.42    |  
|                           | Pro forma                                                                                                             |  |                         | 1.59   |      |  |        | 1.39   |   |  |         | 3.36    |  

F-51



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

The Company has two Option plans, the 1998 stock option plan and the 2001
stock option plan. The following table summarizes information about stock
options outstanding at December 31, 2002.

|                                            |  |              |           |              |  |                |       |     |  |  |       | 
|------------------------------------------- |  | ------------ | --------- | ------------ |  | -------------- | ----- | --- |  |  | ----- | 
|                                            |  | Number of    |           | Weighted     |  | Weighted      
|                                            |  | Shares to be |           | Average Fair |  | Average       
|                                            |  | subscribed   |           | Value        |  | Exercise Price
|                                            |  |              |           |              |  |               
|1998 Stock Option Plan                      |  |              |           |              |  | EUR            |       | EUR
|Options outstanding at December 31, 1999    |  |              | 2,361,102 |              |  |                |       |     |  |  | 16.25 | 
|Granted                                     |  |              | 440,164   |              |  |                | 6.53  |     |  |  | 16.25 | 
|Canceled                                    |  |              | (191,376  | )            |  |                |       |     |  |  | 16.25 | 
|                                            |  |              |           |              |  |                |       |     |  |  |       | 
|Options outstanding at December 31, 2000    |  |              | 2,609,890 |              |  |                |       |     |  |  | 16.25 | 
|Granted                                     |  |              | 24,400    |              |  |                | 5.51  |     |  |  | 15.91 | 
|Exercised                                   |  |              |          |              |  |                |       |     |  |  |      | 
|Canceled                                    |  |              | (181,092  | )            |  |                |       |     |  |  | 15.95 | 
|                                            |  |              |           |              |  |                |       |     |  |  |       | 
|Options outstanding at December 31, 2001    |  |              | 2,453,198 |              |  |                |       |     |  |  | 16.27 | 
|Granted                                     |  |              | 133,963   |              |  |                | 13.88 |     |  |  | 15.30 | 
|Exercised
(1)                               |  |              | (93,396   | )            |  |                |       |     |  |  | 17.43 | 
|Canceled                                    |  |              | (48,333   | )            |  |                |       |     |  |  | 15.30 | 
|                                            |  |              |           |              |  |                |       |     |  |  |       | 
|Options outstanding at December 31, 2002    |  |              | 2,445,432 |              |  |                |       |     |  |  | 16.03 | 
|                                            |  |              |           |              |  |                |       |     |  |  |       | 
|Options exercisable at December 31, 2001    |  |              | 753,542   |              |  |                |       |     |  |  | 18.14 | 
|Options exercisable at December 31,
2002(1) |  |              | 1,416,320 |              |  |                |       |     |  |  | 17.16 | 

(1)   The amount of options exercised during year 2002 does not include those
options that were exercised but not registered during 2002. Correspondingly,
these options are also not deducted from the amount of options exercisable at
December 31, 2002. In December 2002, additional 275,223 shares were subscribed
with options and the subscriptions were registered in January 2003.

|                                         |  |              |           |              |  |                |       |  |  |  |       | 
|---------------------------------------- |  | ------------ | --------- | ------------ |  | -------------- | ----- |  |  |  | ----- | 
|                                         |  | Number of    |           | Weighted     |  | Weighted      
|                                         |  | Shares to be |           | Average Fair |  | Average       
|2001 Stock Option Plan                   |  | subscribed   |           | Value        |  | Exercise Price
|                                         |  |              |           |              |  |               
|Options outstanding at December 31, 2000 |  |              | -         |              |  |                |       |  |  |  |       | 
|Granted                                  |  |              | 732,600   |              |  |                | 11.92 |  |  |  | 17.50 | 
|Canceled                                 |  |              | (9,000    | )            |  |                |       |  |  |  | 17.27 | 
|                                         |  |              |           |              |  |                |       |  |  |  |       | 
|Options outstanding at December 31, 2001 |  |              | 723,600   |              |  |                |       |  |  |  | 17.51 | 
|Granted                                  |  |              | 463,000   |              |  |                | 11.23 |  |  |  | 20.09 | 
|Canceled                                 |  |              | (45,000   | )            |  |                |       |  |  |  | 17.65 | 
|                                         |  |              |           |              |  |                |       |  |  |  |       | 
|Options outstanding at December 31, 2002 |  |              | 1,141,600 |              |  |                |       |  |  |  | 18.55 | 
|                                         |  |              |           |              |  |                |       |  |  |  |       | 

The information in the tables above has been adjusted for the bonus issue
that occurred in April 2002.

The fair value of option grants are estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions:

|                        |  |                 |      |      |  |      |      |   |  |  |      |  
|----------------------- |  | --------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                        |  | At December 31,
|                        |  |                
|                        |  | 2000            |      | 2001 |  | 2002
|                        |  |                 |      |      |  |     
|1998 Stock Option Plan  |  |                 |      |      |  |      |      |   |  |  |      |  
|Dividend yield          |  |                 | 3.07 | %    |  |      | 3.11 | % |  |  | 2.55 | %
|Expected volatility     |  |                 | 41   | %    |  |      | 39   | % |  |  | 39   | %
|Risk-free interest rate |  |                 | 5.17 | %    |  |      | 4.43 | % |  |  | 4.08 | %
|Expected life (years)   |  |                 | 3    |      |  |      | 2    |   |  |  | 2    |  
|2001 Stock Option Plan  |  |                 |      |      |  |      |      |   |  |  |      |  
|Dividend yield          |  |                 |     |      |  |      | 2.74 | % |  |  | 2.55 | %
|Expected volatility     |  |                 |     |      |  |      | 41   | % |  |  | 41   | %
|Risk-free interest rate |  |                 |     |      |  |      | 4.75 | % |  |  | 4.53 | %
|Expected life (years)   |  |                 |     |      |  |      | 4    |   |  |  | 4    |  

F-52



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

The first of the 1998 stock option plan options became exercisable on June
1, 2001. No options were exercised during the financial year 2001. The 2001
stock option plan options are not exercisable yet.

Under Finnish GAAP, social charges relating to the issued options
considered favorable to the holder are reserved. Under U.S. GAAP, social
charges are expensed when the options are exercised. Social charges of EUR 369
and EUR 3,614 are reversed from net income for the periods ending December 31,
2001 and 2002, respectively.



|g) |  | SPP refund
|-- |  | ----------

During 2000, the Company received a refund from the Swedish pension
insurer, SPP. This refund was partly received in cash with the remaining
balance recorded as receivable and utilizable against future pension premiums.
During 2001 the Company has utilized part of the remaining receivable. Under
Finnish GAAP, the total refund has been recognized in income in 2000. Under
U.S. GAAP, only the portion received in cash and the portion utilized during
the year can be recognized as income.



|h) |  | Treasury shares
|-- |  | ---------------

Under Finnish GAAP, treasury shares are allowed to be presented as assets.
Under U.S. GAAP, treasury shares need to be shown as a deduction of the
consolidated shareholders equity.



|i) |  | Software development expenses
|-- |  | -----------------------------

In accordance with Finnish GAAP development costs can be expensed as
incurred or capitalized. In accordance with the Statement of Financial
Accounting Standards No. 86, Accounting for the Costs of Computer Software to
be Sold, Leased, or Otherwise Marketed, under U.S. GAAP, software development
costs associated with new products and enhancements to existing software
products are expensed as incurred until technological feasibility has been
established. The Company believes it has achieved technological feasibility
when a detail program design has been established. Thereafter, software
development costs are capitalized and subsequently reported at the lower of
unamortized cost or net realizable value. The Company makes ongoing
evaluations of the recoverability of its capitalized software projects by
comparing the amount capitalized for each product to the estimated net
realizable value of the product. Capitalization ceases upon the general
release of the software product to customers. Capitalized computer software
development costs are amortized, using the straight-line method, on a
product-by-product basis over the estimated life, which is generally between
two and five years. During the year 2002 EUR 21 (EUR 217 in 2001) of software
costs were capitalized. Amortization for the year 2002 was EUR 81 (EUR 7 in
2001).



|j) |  | Minimum pension liability
|-- |  | -------------------------

Under Finnish GAAP all pension expenses are recognized through the income
statement. Under U.S. GAAP, the employer should recognize an additional
pension liability directly against shareholders equity when the accumulated
benefit obligation exceeds the fair value of the plan assets.



|k) |  | Embedded derivatives
|-- |  | --------------------

Finnish GAAP does not define embedded instruments nor does it address
accounting for embedded derivatives. Under SFAS 133 Accounting for Derivative
Instruments and Hedging Activities, an embedded foreign currency derivative
instrument shall be separated from the host contract and fair valued through
earnings if certain criteria are met.

F-53



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)



|l) |  | Deferred income taxes
|-- |  | ---------------------

Deferred income taxes have been adjusted to give effect to the differences
between Finnish GAAP and U.S. GAAP.



|m) |  | Earnings per share
|-- |  | ------------------

Earnings per share as presented is not based on net income, but rather on
a calculation specified by the Financial Accounting Board of the Finnish
Ministry of Trade and Finance. U.S. GAAP requires that net income be utilized
in the computation of earnings per share.

Earnings per share is computed by dividing net income by the weighted
average number of shares outstanding during each period adjusted for the rights
issue that occurred in 1998 and for the bonus issue in March 2002.



|n) |  | Discontinued operations
|-- |  | -----------------------

At the beginning of November 2002 Instrumentarium divested its Optical
Retail business. The Spacelabs Burdick segment is classified as
assets-held-for-sale. Finnish GAAP does not require separate income statement
presentation for discontinued operations. The gain on disposal of Optical
Retail is recorded under extraordinary items. Under U.S. GAAP, when certain
criteria in SFAS 144, Accounting for the Impairment or Disposal of Long-lived
Assets, are fulfilled, income from continuing and discontinued operations and
gain or loss on sale shall be presented separately. All prior period
information are restated to conform to the current year presentation. The net
sales of the discontinued operations in 2002 were EUR 106,964.



|o) |  | Product warranties
|-- |  | ------------------

The warranty period for the Companys products is generally one year from
installation. The Company records a provision for estimated product warranty
and related costs, based on historical experience and periodically adjusts
these provisions to reflect actual experience.

Changes in the product warranty liability for the period are as follows:

|                                                       |  |                 |         |  
|------------------------------------------------------ |  | --------------- | ------- | -
|                                                       |  | At December 31,
|                                                       |  |                
|                                                       |  | 2002           
|                                                       |  |                
|                                                       |  | EUR            
|Balance at the beginning of year                       |  |                 | 7,591   |  
|Additions due to acquisitions                          |  |                 | 4,138   |  
|Warranties issued                                      |  |                 | 12,085  |  
|Accruals/reversals relating to pre-existing warranties |  |                 | 4,191   |  
|Warranty claims                                        |  |                 | (15,631 | )
|Translation difference                                 |  |                 | (985    | )
|                                                       |  |                 |         |  
|Balance at end of year                                 |  |                 | 11,389  |  
|                                                       |  |                 |         |  



|p) |  | Classification differences
|-- |  | --------------------------

Consolidated Statement of Income

In accordance with Finnish GAAP, the Company classifies gains on sale of
fixed assets as a component of operating profit. Under U.S. GAAP, these items
would be classified as a component of non-operating profit.

In accordance with Finnish GAAP, income and expenses from non-recurring
but significant transactions arising otherwise than in the ordinary course of
business are recorded as extraordinary income and expenses and are stated after
deduction of tax. Such items are shown in a separate caption below income from
operations. Items classified as extraordinary under Finnish GAAP generally do
not meet the definition of extraordinary under U.S. GAAP. Accordingly, under
U.S. GAAP, such items would be classified as operating income and expenses,
gross of any related tax.

F-54



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##### Table of Contents



INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)



|q) |  | Valuation and qualifying accounts
|-- |  | ---------------------------------

|     |                         |  |                   |        |           |  |            |        |           |  |             |         |   |  |  |        |            |  |  |        | 
|---- | ----------------------- |  | ----------------- | ------ | --------- |  | ---------- | ------ | --------- |  | ----------- | ------- | - |  |  | ------ | ---------- |  |  | ------ | 
|     |                         |  | Balance at        |        |           |  |            |        |           |  |             |         |   |  |  |        | Balance at
|     |                         |  | beginning of year |        | Additions |  | Deductions |        | Other (1) |  | end of year
|     |                         |  |                   |        |           |  |            |        |           |  |            
|     |                         |  | EUR               |        | EUR       |  | EUR        |        | EUR       |  | EUR        
|2002 |                         |  |                   |        |           |  |            |        |           |  |             |         |   |  |  |        |            |  |  |       
|     | Obsolescence provision  |  |                   | 58,647 |           |  |            | 24,367 |           |  |             | (20,286 | ) |  |  | 23,024 |            |  |  | 85,752 | 
|     | Allowance for bad debts |  |                   | 13,934 |           |  |            | 4,080  |           |  |             | (4,336  | ) |  |  | 5,567  |            |  |  | 19,245 | 
|     | Valuation allowance     |  |                   | 12,026 |           |  |            | 2,525  |           |  |             | (8,004  | ) |  |  | (828   | )          |  |  | 5,718  | 
|2001 |                         |  |                   |        |           |  |            |        |           |  |             |         |   |  |  |        |            |  |  |       
|     | Obsolescence provision  |  |                   | 52,169 |           |  |            | 18,016 |           |  |             | (12,408 | ) |  |  | 869    |            |  |  | 58,647 | 
|     | Allowance for bad debts |  |                   | 14,710 |           |  |            | 4,163  |           |  |             | (4,724  | ) |  |  | (215   | )          |  |  | 13,934 | 
|     | Valuation allowance     |  |                   | 12,843 |           |  |            | 959    |           |  |             | (1,793  | ) |  |  | 16     |            |  |  | 12,026 | 
|2000 |                         |  |                   |        |           |  |            |        |           |  |             |         |   |  |  |        |            |  |  |       
|     | Obsolescence provision  |  |                   | 42,007 |           |  |            | 14,637 |           |  |             | (7,399  | ) |  |  | 2,924  |            |  |  | 52,169 | 
|     | Allowance for bad debts |  |                   | 11,120 |           |  |            | 6,354  |           |  |             | (4,024  | ) |  |  | 1,260  |            |  |  | 14,710 | 
|     | Valuation allowance     |  |                   | 18,044 |           |  |            | 2,152  |           |  |             | (7,413  | ) |  |  | 59     |            |  |  | 12,843 | 



|(1) |  | Includes translation differences and effects of business acquisitions.
|--- |  | ----------------------------------------------------------------------

r) Restructuring provision

During 2002, the company provided EUR 13,955 for costs associated with the
restructuring programme arising as a result of the acquisition of Spacelabs
Medical, Inc.

The provision for 2002 comprised of EUR 9,023 for severance and related
employee termination benefits and EUR 4,932 of lease termination, termination
of distribution contracts and other exit costs. The severance charge was
associated with the termination of approximately 360 employees comprising of
employees from all business operations of the Company (sales and marketing
personnel, administrative personnel, manufacturing personnel and R&D
personnel).

Balances remaining in the reserves as of the balance sheet date include
provisions for current year restructuring actions only. The balance of
restructuring reserve and movements within these separate components during
2002 were as follows:

|                                    |  |             |        |            |  |       |       |   |  |  |        |  
|----------------------------------- |  | ----------- | ------ | ---------- |  | ----- | ----- | - |  |  | ------ | -
|                                    |  | Termination |        | Other      |  |       |       |  
|                                    |  | Benefits    |        | Exit costs |  | Total
|                                    |  | EUR         |        | EUR        |  | EUR  
|Opening Balance                     |  |             |       |            |  |       |      |   |  |  |       |  
|Provisions through income statement |  |             | 1,951  |            |  |       | 162   |   |  |  | 2,113  |  
|Acquisitions                        |  |             | 7,072  |            |  |       | 4,770 |   |  |  | 11,842 |  
|Payments made                       |  |             | (3,369 | )          |  |       | (497  | ) |  |  | (3,866 | )
|Other movements 1)                  |  |             | (308   | )          |  |       | (129  | ) |  |  | (437   | )
|                                    |  |             |        |            |  |       |       |   |  |  |        |  
|Closing Balance                     |  |             | 5,346  |            |  |       | 4,306 |   |  |  | 9,652  |  
|                                    |  |             |        |            |  |       |       |   |  |  |        |  

|    |  |                                 
|--- |  | --------------------------------
|(1) |  | Includes translation adjustments

During 2002, payments of EUR 3,369 were made related to the termination of
approximately 220 employees.
F-55Table of Contents

INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)



|s) |  | New accounting standards
|-- |  | ------------------------

In June 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS), No. 146, Accounting for
Costs Associated with Exit or Disposal Activities. SFAS No. 146 addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring). This
Statement requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred and can be
measured at fair value. The provisions of this Statement are effective
prospectively for exit or disposal activities initiated after December 31,
2002. We are currently assessing the impact of this statement on the results of
operations and financial condition.

In November 2002, the FASB issued Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45 expands on the
accounting guidance of SFAS No. 5, Accounting for Contingencies, SFAS No. 57,
Related Party Disclosures, and SFAS No. 107, Disclosures about Fair Value of
Financial Instruments, and incorporates without change the provisions of FIN
34, Disclosure of Indirect Guarantees of Indebtedness of Others, an
interpretation of SFAS No. 5, which is being superseded. FIN 45 elaborates on
the existing disclosure requirements for most guarantees, including loan
guarantees, such as standby letters of credit. It also clarifies that at the
time a company issues a guarantee, the company must recognize an initial
liability for the fair value, or market value, of the obligations it assumes
under that guarantee and must disclose that information in its interim and
annual financial statements. FIN 45 will be effective to the Company on a
prospective basis to guarantees issued or modified after December 31, 2002. The
disclosure requirements in this Interpretation are effective for financial
statements for periods ending after December 15, 2002. We are currently
evaluating the impact of this statement on our results of operations or
financial position.

In November 2002, the Emerging Issue Task Force (EITF) reached a final
consensus on EITF 00-21, Revenue Arrangements with Multiple Deliverables.
EITF 00-21 addresses certain aspects of the accounting of revenue arrangements
with multiple deliverables by a vendor. The issue outlines an approach to
determine when a revenue arrangement for multiple deliverables should be
divided into separate units of accounting and, if separation is appropriate,
how the arrangement consideration should be allocated to the identified
accounting units. EITF 00-21 is effective for revenue arrangements entered into
in fiscal periods beginning after June 15, 2003. EITF 00-21 also provides for
an alternative to report the change in accounting as a cumulative-effect
adjustment in accordance with APB Opinion No. 20. We have not yet determined
the method of transition we will use.

In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based
Compensation  Transition and Disclosure  An amendment of FASB Statement No.
123. SFAS 148, which is applicable to financial periods ending after December
15, 2002, amends SFAS 123, Accounting for Stock-Based Compensation to provide
alternative methods for transition to SFAS 123 fair value method of accounting
for stock-based employee compensation. This statement also amends the
disclosure provisions to require prominent disclosure about the method of
accounting used for stock-based employee compensation and the effect of the
method used on reported results. We have elected to continue to apply APB
Opinion No. 25 Accounting for Stock Issued to Employees.

Interpretation No. 46, Consolidation of Variable Interest Entities (FIN
46) was issued by the FASB in January 2003. Under the interpretation, certain
entities known as Variable Interest Entities (VIEs), must be consolidated
by the primary beneficiary of the entity. The primary beneficiary is
generally defined as having the majority of the risks and rewards arising from
the VIE. For VIEs in which a significant (but not majority) variable interest
is held, certain disclosures are required. The consolidation requirements apply
to all new VIEs created and on and after February 1, 2003, with transitional
provisions for VIEs that existed prior to that date. We plan to adopt the
initial and transitional consolidation provisions of FIN 46 on February 1, 2003
and January 1, 2004, respectively. We are currently evaluating the impact of
this statement on our results of operations or financial position.
F-56Table of Contents

INSTRUMENTARIUM CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements   (Continued)
(in thousands, except for per share amounts)

In April 2003, FASB issued SFAS 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. The Statement
changes the accounting for certain financial instruments that, under previous
guidance, issuers could account for as equity. The new Statement requires that
those instruments be classified as liabilities in statements of financial
position. The Statement is effective for interim periods beginning after June
15, 2003. We are currently evaluating the effect of this statement on our
results of operations or financial position.



| |  | 24 Subsequent Events
| |  | --------------------

At the beginning of 2003, we divested our shareholding in Spacelabs
Burdick, Inc. to Quinton Cardiology Systems, Inc. Burdick was a subsidiary of
Spacelabs Medical and specialized in cardiology diagnostic equipment and
systems.

Instrumentarium and General Electric signed a combination agreement on
December 18, 2002, under which General Electric offers to purchase all shares
and options in Instrumentarium. The tender offer was announced on January 14,
2003 and it was originally scheduled to expire on April 11, 2003. The tender
offer has been extended to expire on August 29, 2003, to allow for the
completion of the regulatory review process, unless it is discontinued by GE as
provided for in the terms and conditions of the tender offer. The Boards of
Directors of both Instrumentarium and General Electric have approved the
combination agreement.

Under the tender offer, General Electric offers to purchase all shares in
Instrumentarium for EUR 40 per share in cash. In addition to the purchase price
offered, shareholders may be entitled to a dividend of EUR 0.70 per share
without affecting the price offered. If the dividend per share paid exceeds EUR
0.70, the purchase price offered shall be reduced by the amount of dividend
exceeding EUR 0.70 per share.

In the Annual General Meeting of March 25, 2003 shareholders approved the
payment of a combined regular and special dividend of EUR 4.70 per share.
Consequently, as provided for in the terms and conditions of the tender offer,
the amount offered by GE in the tender offer is EUR 36.00 per share in cash to
reflect the payment to shareholders of the special dividend of EUR 4.00 per
share. The dividend does not affect the price offered for Instrumentarium
options.

F-57



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##### Table of Contents



Commission File No. 0-12009

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549




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Exhibits to
Annual Report on
Form 20-F



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Instrumentarium Corporation





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##### Table of Contents



Exhibit Index

|    |  |                                                                                                                                                                                                                                                                                                                                  
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1 |  | Articles of Association as amended on March 26, 2001, in English
translation (incorporated by reference from the Annual Report on Form 20-F
for the fiscal year ended December 31, 2000 (Commission file number
0-12009)).                                                                                                       
|    |  |                                                                                                                                                                                                                                                                                                                                  
|1.2 |  | Amended and Restated Deposit Agreement dated as of April 3, 2002 among
Instrumentarium Corporation, JP Morgan Chase Bank, as Depositary and
Holders of American Depositary Receipts (incorporated by reference from
the Annual Report on Form 20-F for the fiscal year ended December 31, 2001
(Commission file number 0-12009)).
|    |  |                                                                                                                                                                                                                                                                                                                                  
|4.1 |  | Agreement and Plan of Reorganization, dated March 22, 2002, between
Spacelabs Medical, Inc., Instrumentarium Corporation and Boxer Acquisition
Corp. (incorporated by reference from the Annual Report on Form 20-F for
the fiscal year ended December 31, 2001 (Commission file number 0-12009)).                               
|    |  |                                                                                                                                                                                                                                                                                                                                  
|4.2 |  | Agreement and Plan of Merger, dated March 22, 2002,
between Spacelabs Medical, Inc., Instrumentarium Corporation and Boxer
Acquisition Corp. (incorporated by reference from the Annual Report on
Form 20-F for the fiscal year ended December 31, 2001 (Commission file
number 0-12009)).                                       
|    |  |                                                                                                                                                                                                                                                                                                                                  
|4.3 |  | Combination Agreement dated December 18, 2002 between General Electric
Company and Instrumentarium Corporation.                                                                                                                                                                                                                  
|    |  |                                                                                                                                                                                                                                                                                                                                  
|6.  |  | See note 8 to our financial statements included in Item 18 of this Form
20-F for information on how earnings per share information was calculated.                                                                                                                                                                               
|    |  |                                                                                                                                                                                                                                                                                                                                  
|8.1 |  | For a list of our subsidiaries, please see note 21 to our consolidated
financial statements.                                                                                                                                                                                                                                     
|    |  |                                                                                                                                                                                                                                                                                                                                  
|10. |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.