<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2001

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934.

FOR THE TRANSITION PERIOD FROM ____________________TO__________________


                         COMMISSION FILE NUMBER: 1-3720
                                                 ------
                      FRESENIUS MEDICAL CARE HOLDINGS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                 New York                                      13-3461988
----------------------------------------------          ------------------------
(State or Other Jurisdiction of Incorporation)          (I.R.S. Employer ID No.)

    95 Hayden Avenue, Lexington, MA                             02420
---------------------------------------                       ----------
(Address of Principal Executive Office)                       (Zip Code)


        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 781-402-9000
        ----------------------------------------------------------------


   --------------------------------------------------------------------------
   (Former Name, Former Address and Former Fiscal Year, if Changed Since Last
                                     Report)

Indicated by check 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 ___

<PAGE>   2


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: As of the date hereof,
90,000,000 shares of common stock, par value $1.00 per share, are outstanding,
all of which are held by Fresenius Medical Care AG.


                                       2
<PAGE>   3


       FRESENIUS MEDICAL CARE HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

                                TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                               PAGE
<S>                                                                                            <C>
      ITEM 1:     FINANCIAL STATEMENTS

                  Unaudited Consolidated Statements of Earnings ................................ 4
                  Unaudited Consolidated Statements of Comprehensive Income..................... 5
                  Unaudited Consolidated Balance Sheets......................................... 6
                  Unaudited Consolidated Statements of Cash Flows............................... 7
                  Notes to Unaudited Consolidated Financial Statements.......................... 9

      ITEM 2:     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS.......................................... 16

      ITEM 3:     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                  MARKET RISK.................................................................. 18

PART II: OTHER INFORMATION

       ITEM 1:    Legal Proceedings............................................................ 20
       ITEM 6:    Exhibits and Reports on Form 8-K............................................. 23
</TABLE>


                                       3
<PAGE>   4


                                     PART I

                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

       FRESENIUS MEDICAL CARE HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

                 UNAUDITED, CONSOLIDATED STATEMENTS OF EARNINGS
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                               THREE MONTHS ENDED
                                                                                    MARCH 31,
                                                                           --------------------------
                                                                             2001              2000
                                                                           --------          --------
<S>                                                                        <C>               <C>
NET REVENUES
     Health care services .......................................          $688,401          $626,077
     Medical supplies ...........................................           116,740           119,038
                                                                           --------          --------
                                                                            805,141           745,115
                                                                           --------          --------

EXPENSES
     Cost of health care services ...............................           476,397           420,403
     Cost of medical supplies ...................................            84,221            86,455
     General and administrative expenses ........................            75,088            71,587
     Provision for doubtful accounts ............................            16,335            12,379
     Depreciation and amortization ..............................            56,510            54,736
     Research and development ...................................             1,084             1,197
     Interest expense, net, and related financing costs including
       $26,764 and  $25,164, of interest with affiliates ........            51,050            53,303
                                                                           --------          --------
                                                                            760,685           700,060
                                                                           --------          --------

INCOME BEFORE INCOME TAXES ......................................            44,456            45,055
PROVISION FOR INCOME TAXES ......................................            21,306            21,961
                                                                           --------          --------

NET INCOME ......................................................          $ 23,150          $ 23,094
                                                                           ========          ========

Basic and fully dilutive earnings per share
   Net Income ...................................................          $   0.26          $   0.26
</TABLE>


     See accompanying Notes to Unaudited, Consolidated Financial Statements


                                       4
<PAGE>   5


       FRESENIUS MEDICAL CARE HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

           UNAUDITED, CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                                   MARCH 31,
                                                          ---------------------------
                                                            2001               2000
                                                          --------           --------
<S>                                                       <C>                <C>
NET INCOME .....................................          $ 23,150            $23,094
Other comprehensive income
   Foreign currency translation adjustments.....              (408)               120
   Derivative instruments ......................           (28,039)                --
                                                          --------            -------
   Total other comprehensive income/(loss)......           (28,447)               120
                                                          --------            -------
COMPREHENSIVE INCOME/ (LOSS) ...................          $ (5,297)           $23,214
                                                          ========            =======
</TABLE>


     See accompanying Notes to Unaudited, Consolidated Financial Statements


                                       5
<PAGE>   6


       FRESENIUS MEDICAL CARE HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                MARCH 31,           DECEMBER 31,
                                                                                  2001                  2000
                                                                               -----------          ------------
                                                                               (UNAUDITED)
<S>                                                                            <C>                   <C>
ASSETS
------

 Current Assets:
     Cash and cash equivalents ......................................          $    33,159           $    33,327
     Accounts receivable, less allowances of $81,283 and $80,466.....              357,568               318,391
     Inventories ....................................................              197,029               191,699
     Deferred income taxes ..........................................              134,698               123,190
     Other current assets ...........................................              156,852               139,082
     Net accounts receivable from affiliates.........................               13,490                    --
     IDPN accounts receivable .......................................                   --                 5,189
                                                                               -----------           -----------
          Total Current Assets ......................................              892,796               810,878
                                                                               -----------           -----------

 Properties and equipment, net ......................................              471,373               456,936
                                                                               -----------           -----------

Other Assets:
     Excess of cost over the fair value of net assets
       acquired and other intangible assets, net of
       accumulated amortization of $600,397 and $564,880 ............            3,190,307             3,222,044
     Other assets and deferred charges ..............................               49,588                63,500
                                                                               -----------           -----------
          Total Other Assets ........................................            3,239,895             3,285,544
                                                                               -----------           -----------
Total Assets ........................................................          $ 4,604,064           $ 4,553,358
                                                                               ===========           ===========

LIABILITIES AND EQUITY
----------------------

Current Liabilities:
     Note payable for settlement of investigation ...................          $    51,186           $    85,920
     Current portion of long-term debt and capitalized lease
        obligations .................................................              151,251               151,268
     Current portion of borrowing from affiliates ...................              331,218               341,643
     Accounts payable ...............................................              151,640               139,754
     Accrued liabilities ............................................              211,549               228,025
     Net accounts payable (receivable) to affiliates ................               10,499                 6,317
     Accrued income taxes ...........................................               41,334                11,525
                                                                               -----------           -----------
          Total Current Liabilities .................................              948,677               964,452

Long-term debt ......................................................              631,413               588,526
Non-current borrowings from affiliates ..............................              786,865               786,865
Capitalized lease obligations .......................................                  859                   911
Deferred income taxes ...............................................              106,949               122,946
Other liabilities ...................................................              107,246                58,188
                                                                               -----------           -----------
          Total Liabilities .........................................            2,582,009             2,521,888
                                                                               -----------           -----------

Mandatorily Redeemable Preferred Securities .........................              301,511               305,500
                                                                               -----------           -----------

Equity:
   Preferred stock, $100 par value ..................................                7,412                 7,412
   Preferred stock, $.10 par value ..................................                8,906                 8,906
   Common stock, $1 par value; 300,000,000 shares
     authorized; outstanding 90,000,000 .............................               90,000                90,000
   Paid in capital ..................................................            1,942,387             1,942,387
   Retained deficit .................................................             (299,952)             (322,973)
   Accumulated comprehensive income (loss) ..........................              (28,209)                  238
                                                                               -----------           -----------
        Total Equity ................................................            1,720,544             1,725,970
                                                                               -----------           -----------
Total Liabilities and Equity ........................................          $ 4,604,064           $ 4,553,358
                                                                               ===========           ===========
</TABLE>


     See accompanying Notes to Unaudited, Consolidated Financial Statements.


                                       6
<PAGE>   7


       FRESENIUS MEDICAL CARE HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
                UNAUDITED, CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                        THREE MONTHS ENDED
                                                                                             MARCH 31,
                                                                                   -----------------------------
                                                                                      2001                2000
                                                                                   ---------           ---------
<S>                                                                                <C>                 <C>
Cash Flows from Operating Activities:
     Net income .........................................................          $  23,150           $  23,094
     Adjustments to reconcile net income to net cash from
      operating activities:
          Depreciation and amortization .................................             56,510              54,736
          Provision for doubtful accounts ...............................             16,335              12,379
          Deferred income taxes .........................................             (8,813)             12,515
          Loss (gain) on disposal of properties and equipment ...........                210                (137)

  Changes in operating assets and liabilities, net of effects of purchase
       acquisitions and foreign exchange:
          Increase in accounts receivable ...............................            (49,912)            (61,101)
          (Increase) decrease in inventories ............................             (5,330)              6,432
          (Increase) decrease in other current assets ...................            (17,770)              8,958
          Decrease in IDPN accounts receivable ..........................              5,189              38,395
          Decrease in other assets and deferred charges .................             12,030                  76
          Increase (decrease) in accounts payable .......................             11,888              (2,238)
          Increase in accrued income taxes ..............................             29,809               7,637
          Decrease in accrued liabilities ...............................            (16,476)            (37,238)
          Increase in other long-term liabilities .......................              2,025               2,010
          Net changes due to/from affiliates ............................             (9,308)             (5,419)
          Other, net ....................................................               (650)              1,078
                                                                                   ---------           ---------
     Net cash provided by operating activities ..........................             48,887              61,177
                                                                                   ---------           ---------

Cash Flows from Investing Activities:
          Capital expenditures ..........................................            (35,482)            (20,261)
          Payments for acquisitions, net of cash acquired ...............             (5,086)            (35,545)
                                                                                   ---------           ---------
     Net cash used in investing activities ..............................            (40,568)            (55,806)
                                                                                   ---------           ---------

Cash Flows from Financing Activities:
          Payments on settlement of investigation .......................            (34,734)           (286,402)
          Net (decrease) increase in borrowings from affiliates .........            (10,425)            297,323
          Cash dividends paid ...........................................               (130)               (130)
          (Payments) proceeds from receivable financing facility ........             (5,600)              7,800
          Net increase/(decrease) on debt and capitalized leases ........             42,818             (20,665)
                                                                                   ---------           ---------
    Net cash used in financing activities ...............................             (8,071)             (2,074)
                                                                                   ---------           ---------
Effects of changes in foreign exchange rates ............................               (416)                 81
                                                                                   ---------           ---------
Change in cash and cash equivalents .....................................               (168)              3,378
Cash and cash equivalents at beginning of period ........................             33,327              12,563
                                                                                   ---------           ---------
Cash and cash equivalents at end of period ..............................          $  33,159           $  15,941
                                                                                   =========           =========
</TABLE>


     See accompanying Notes to Unaudited, Consolidated Financial Statements


                                       7
<PAGE>   8


             FRESENIUS MEDICAL CARE HOLDINGS, INC. AND SUBSIDIARIES

                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED
                                                                   MARCH 31,
                                                            ------------------------
                                                             2001             2000
                                                            -------          -------

<S>                                                         <C>              <C>
Supplemental disclosures of cash flow information:
  Cash paid during the period for:
    Interest, net ................................          $41,710          $53,947
    Income taxes paid, net .......................            1,269            2,241

Details for Acquisitions:
  Assets acquired ................................            5,086           35,545
                                                            -------          -------
  Net cash paid for acquisitions .................          $ 5,086          $35,545
                                                            =======          =======
</TABLE>


     See accompanying Notes to Unaudited, Consolidated Financial Statements


                                       8
<PAGE>   9


       FRESENIUS MEDICAL CARE HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES

          NOTES TO UNAUDITED, CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)

NOTE 1. THE COMPANY

     Fresenius Medical Care Holdings, Inc., a New York corporation ("the
Company") is a subsidiary of Fresenius Medical Care AG, a German corporation
("FMC" or "Fresenius Medical Care"). The Company conducts its operations through
five principal subsidiaries, National Medical Care, Inc., ("NMC"); Fresenius USA
Marketing, Inc., Fresenius USA Manufacturing, Inc., and SRC Holding Company,
Inc., ("SRC"), all Delaware corporations and Fresenius USA, Inc., a
Massachusetts corporation.

     The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, NMC, FUSA, and SRC and those financial
statements where the Company controls professional corporations in accordance
with Emerging Issues Task Force Issue 97-2.

     The Company is primarily engaged in (i) providing kidney dialysis services,
clinical laboratory testing and renal diagnostic services, and (ii)
manufacturing and distributing products and equipment for dialysis treatment.

BASIS OF PRESENTATION

     BASIS OF CONSOLIDATION

     The consolidated financial statements in this report at March 31, 2001 and
2000 and for the three month interim periods then ended are unaudited and should
be read in conjunction with the audited, consolidated financial statements in
the Company's 2000 report on Form 10-K. Such interim financial statements
reflect all adjustments that, in the opinion of management, are necessary for a
fair presentation of the results of the interim periods presented. Certain
amounts in the prior periods' consolidated financial statements have been
reclassified to conform to the current periods' basis of presentation.

     The results of operations for the three month period ended March 31, 2001
are not necessarily indicative of the results of operations for the fiscal year
ending December 31, 2001.

     All intercompany transactions and balances have been eliminated in
consolidation.

     EARNINGS PER SHARE

     Basic earnings per share are computed by dividing net income available to
common shareholders by the weighted-average number of common shares outstanding
during the year. Diluted earnings per share includes the effect of all dilutive
potential common shares that were outstanding during the year. The number of
shares used to compute basic and diluted earnings per share was 90,000 in all
periods as there were no potential common shares and no adjustments to income to
be considered for purposes of the diluted earnings per shares calculation.

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED
                                                                MARCH 31,
                                                         ----------------------
                                                          2001            2000
                                                         ------          ------

<S>                                                      <C>             <C>
The weighted average number of shares of
  Common Stock were as follows ................          90,000          90,000
                                                         ======          ======
</TABLE>


                                       9
<PAGE>   10


Net income used in the computation of earnings per share is as follows:

<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED
                                                                        MARCH 31,
                                                               ---------------------------
                                                                 2001               2000
                                                               --------           --------

<S>                                                            <C>                <C>
CONSOLIDATED

Net income ..........................................          $ 23,150           $ 23,094

Dividends paid on preferred stocks ..................              (130)              (130)
                                                               --------           --------

Income used in per share computation of earnings.....          $ 23,020           $ 22,964
                                                               ========           ========

Basic and fully dilutive earnings per share .........          $   0.26           $   0.26
                                                               ========           ========
</TABLE>

     DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

     Effective January 1, 2001, the Company adopted the provisions of SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities and the
related amendments of SFAS No. 138. The cumulative effect of adopting SFAS 133
as of January 1, 2001 was not material to the Company's consolidated financial
statements.

     The Company is exposed to market risk due to changes in interest rates and
foreign currencies. The Company uses derivative financial instruments, including
interest rate swaps and foreign exchange contracts, as part of its risk
management strategy. These instruments are used as a means of hedging exposure
to interest rate and foreign currency fluctuations in connection with debt
obligations, forecasted raw material purchases and Euro denominated mandatorily
redeemable preferred stock.

     The interest rate swaps are designated as cash flow hedges effectively
converting certain variable interest rate payments into fixed interest rate
payments. After tax losses of $28 million ($47 million pretax), were deferred in
other comprehensive income during the quarter. Interest payable and interest
receivable under the swap terms are accrued and recorded as an adjustment to
interest expense at each reporting date. Ineffective amounts had no material
impact on earnings for the three months ended March 31, 2001.

     The Company enters into forward rate agreements that are designated and
effective as hedges of forecasted raw material purchases. After tax losses of
$0.2 million ($0.3 million pretax), were deferred in other comprehensive income
during the quarter and will be reclassified into cost of sales in the period
during which the hedged transaction affects earnings. All deferred amounts will
be reclassified into earnings within the next twelve months. Ineffective amounts
had no impact on earnings for the three months ended March 31, 2001.

     The Company enters into forward rate agreements that are designated and
effective as hedges of changes in the fair value of the Euro denominated
mandatorily redeemable preferred stock. Changes in fair value are recorded in
earnings and offset against gains and losses resulting from the underlying
exposures. Ineffective amounts had no material impact on earnings for the three
months ended March 31, 2001.

     Periodically, the Company enters into derivative instruments with related
parties to form a natural hedge for currency exposures on intercompany
obligations. These instruments are reflected in the balance sheet at fair value
with changes in fair value recognized in earnings.

     FMC-AG ACQUISITION

     On January 8, 2001, FMC acquired Everest Healthcare Services Corporation
(now known as Everest Healthcare Holdings, Inc. "Everest") through a merger of
Everest into a subsidiary of FMC at a purchase price of $343 million, which
included assumed debt and the issuance of 2.25 million FMC preference shares.
Everest owns, operates or manages approximately 70 clinic facilities providing
therapy to approximately 6,800 patients in the United States. Everest also
operates extracorporal blood services and acute dialysis businesses that provide
acute dialysis, apheresis and hemoperfusion services to approximately 100
hospitals. The Company has entered into agreements with Everest where it
provides certain management services on behalf of FMC.

     The Company sells dialysis products and provides laboratory services to
Everest. Net revenues for sales to Everest were approximately $5.5 million for
the three months ended March 31, 2001. In addition, the Company provides
financing to Everest. At March 31, 2001, the Company has trade accounts
receivable of $1.7 million and a net loan receivable of $226.7 million. The net
loan receivable is recorded in the current portion of borrowings from
affiliates.

     NEW PRONOUNCEMENTS

     In September 2000, the Financial Accounting Standards Board issued SFAS No.
140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, which replaces SFAS No. 125 and rescinds SFAS
No. 127. SFAS No. 140 provides the accounting and reporting standards for
securitizations and other transfers of financial assets and collateral. These
standards are based on consistent application of a financial-components approach
that focuses on control. This Statement also provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers that
are secured borrowings. SFAS No. 140 is effective for transfers after March 31,
2001 and is effective for disclosures about securitizations and collateral for
fiscal years ending after December 15, 2000. There is no impact for the adoption
of SFAS No. 140.


                                       10
<PAGE>   11


NOTE 2. INVENTORIES

<TABLE>
<CAPTION>
                                                                           MARCH 31,       DECEMBER 31,
                                                                             2001              2000
                                                                           ---------       ------------
<S>                                                                        <C>             <C>
   Inventories:
     Raw materials ..............................................          $ 42,853          $ 44,787
     Manufactured goods in process ..............................             9,808            10,516
     Manufactured and purchased inventory available for sale.....            88,541            80,520
                                                                           --------          --------
                                                                            141,202           135,823
      Health care supplies ......................................            55,827            55,876
                                                                           --------          --------
          Total .................................................          $197,029          $191,699
                                                                           ========          ========
</TABLE>

NOTE 3. DEBT
<TABLE>
<CAPTION>
                                                                           MARCH 31,       DECEMBER 31,
                                                                             2001              2000
                                                                           ---------       ------------
<S>                                                                        <C>               <C>
   Long-term debt to outside parties consists of:

   NMC Credit Facility ..........................................          $775,400          $732,500
   Note payable for settlement ..................................            51,186            85,920
   Other ........................................................             7,066             7,120
                                                                           --------          --------
                                                                            833,652           825,540
   Less amounts classified as current ...........................           202,239           237,014
                                                                           --------          --------
                                                                           $631,413          $588,526
                                                                           ========          ========
</TABLE>

     Borrowings/(receivables) from affiliates consists of:
<TABLE>
<CAPTION>
                                                                            MARCH 31,            DECEMBER 31,
                                                                              2001                   2000
                                                                           -----------           ------------
<S>                                                                        <C>                   <C>
   Fresenius Medical Care AG borrowings primarily at interest
      rates approximating 7.75% .................................            $ 235,132             $  18,850
   Fresenius AG borrowing at interest rates approximating 7.34
       - 7.38% ..................................................              209,000               209,000
   Fresenius Medical Care Trust Finance S.a.r.l. borrowings at
      interest rates of 8.43% and 9.25% .........................              786,524               786,524
   Franconia Acquisition, LLC at interest rates approximating
       6.87% ....................................................              113,121               113,121
   Everest Healthcare Holdings, Inc. ............................             (226,707)                   --
   Other ........................................................                1,013                 1,013
                                                                             ---------             ---------
                                                                             1,118,083             1,128,508
   Less amounts classified as current ...........................              331,218               341,643
                                                                             ---------             ---------
   Total ........................................................            $ 786,865             $ 786,865
                                                                             =========             =========
</TABLE>

NOTE 4. MANDATORILY REDEEMABLE PREFERRED SECURITIES

     During the fourth quarter of 2000, a wholly-owned subsidiary of the Company
issued to NMC 1,000 shares of Series A Preferred Stock and 1,700 shares of
Series C Preferred Stock that were then transferred to FMC for proceeds of
$113,500 and $192,000, respectively ("Redeemable Preferred Securities"). The
Redeemable Preferred Securities are identical in substance except that the
Series A shares rank prior to the Series C shares both as to dividends and
liquidation, dissolution or winding-up of the subsidiary.


                                       11
<PAGE>   12


     The Redeemable Preferred Securities have a par value of $.01 per share. The
holders of the securities are entitled to receive dividends in amount of dollars
per share equal to approximately 8% of the share issuance price. The dividends
will be declared and paid in cash at least annually.

     Upon liquidation or dissolution or winding up of the subsidiary, the
holders of the Redeemable Preferred Securities are entitled to an amount equal
to the liquidation preference for each share of stock plus an amount equal to
all accrued and unpaid dividends thereon through the date of distribution. The
liquidation preference is the sum of the issuance price plus, for each year or
portion thereof an amount equal to one-half of one percent of the issue price,
not to exceed 5%.

     The Redeemable Preferred Securities will be sold to the Company in two
years for an amount equal to Euros 341,385 plus any accrued and unpaid
dividends. Accordingly, the mandatorily redeemable preferred securities are
deemed to be a Euro liability and the risk of foreign currency fluctuations are
hedged through forward currency contracts.

     The holders of the Redeemable Preferred Securities have the same
participation rights of the holders of all other classes of capital stock of the
subsidiary.

NOTE 5. SETTLEMENT OF INVESTIGATION WITH THE U.S. GOVERNMENT

     During the quarter, the Company made payments to the U.S. Government of
$35.4 million, pursuant to the January 2000 settlement agreement with the U.S.
Government. The final two installments of $27.8 million including interest will
be paid in April and July 2001.

     In addition, the Company received a the final payment of $5.2 million in
February 2001, from the U.S. Government, related to the Company's claims for
outstanding Medicare receivables.

NOTE 6. COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS

     COMMERCIAL LITIGATION

     In 1997, the Company, NMC, and certain named NMC subsidiaries, were served
with a civil complaint filed by Aetna Life Insurance Company in the U.S.
District Court for the Southern District of New York. The lawsuit alleges
inappropriate billing practices for nutritional therapy, diagnostic and clinical
laboratory tests and misrepresentations. In April 1999, Aetna amended its
complaint to include its affiliate, Aetna U.S. Healthcare, Inc., as an
additional plaintiff, and to make certain other limited changes in its pleading.
The amended complaint seeks unspecified damages and costs. Other insurance
companies have filed similar claims seeking unspecified damages and costs. The
Company, NMC and its subsidiaries believe that there are substantial defenses to
the claims asserted, and intend to vigorously defend all lawsuits. Other private
payors have contacted the Company and may assert that NMC received excess
payment and, similarly, may join the lawsuits or file their own lawsuit seeking
reimbursement and other damages. Although the ultimate outcome on the Company of
these proceedings cannot be predicted at this time, an adverse result could have
a material adverse effect on the Company's business, financial condition and
result of operations.

     The Company has filed counterclaims against the plaintiffs in these matters
based on inappropriate claim denials and delays in claim payments.

     On September 28, 2000, Mesquita, et al. v. W.R. Grace & Company, et al.
(Sup. Court of Calif., S.F. County, #315465) was filed as a class action by
plaintiffs claiming to be creditors of W. R. Grace & Co.-Conn ("Grace
Chemicals") against Grace Chemicals, the Company and other defendants,
principally alleging that the Merger which resulted in the original formation of
the Company (described in greater detail in "Indemnification by W.R. Grace &
Co." below) was a fraudulent transfer, violated the uniform fraudulent transfer
act, and constituted a conspiracy. An amended complaint (Abner et al. v. W. R.
Grace & Company, et al.) and an additional class action were filed subsequently
with substantially similar allegations. These cases have been stayed in
connection with


                                       12
<PAGE>   13


Grace's Chapter 11 bankruptcy proceedings. The Company has requested
indemnification from Grace Chemicals pursuant to the Merger agreements. If the
Merger is determined to have been a fraudulent transfer, if material damages are
proved by the plaintiffs, and if the Company is not able to collect, in whole or
in part on the indemnity, from W.R. Grace & Co. or its affiliates or former
affiliates or their insurers, and if the Company is not able to collect against
any party that may have received proceeds from W.R. Grace & Co., a judgment
could have a material adverse effect on the Company's business, financial
condition and results of operations. The Company is confident that no fraudulent
transfer or conspiracy occurred and intends to defend the cases vigorously.

     OBRA 93

     The Omnibus Budget Reconciliation Act of 1993 affected the payment of
benefits under Medicare and employer health plans for dual-eligible ESRD
patients. In July 1994, the Health Care Financing Administration issued an
instruction to Medicare claims processors to the effect that Medicare benefits
for the patients affected by that act would be subject to a new 18-month
"coordination of benefits" period. This instruction had a positive impact on
NMC's dialysis revenues because, during the 18-month coordination of benefits
period, patients' employer health plans were responsible for payment, which was
generally at rates higher than those provided under Medicare.

     In April 1995, the Health Care Financing Administration issued a new
instruction, reversing its original instruction in a manner that would
substantially diminish the positive effect of the original instruction on NMC's
dialysis business. The Health Care Financing Administration further proposed
that its new instruction be effective retroactive to August 1993, the effective
date of the Omnibus Budget Reconciliation Act of 1993.

     NMC ceased to recognize the incremental revenue realized under the original
instruction as of July 1, 1995, but it continued to bill employer health plans
as primary payors for patients affected by the Omnibus Budget Reconciliation Act
of 1993 through December 31, 1995. As of January 1, 1996, NMC commenced billing
Medicare as primary payor for dual eligible ESRD patients affected by the act,
and then began to re-bill in compliance with the revised policy for services
rendered between April 24 and December 31, 1995.

     On May 5, 1995, NMC filed a complaint in the U.S. District Court for the
District of Columbia (National Medical Care, Inc. and Bio-Medical Applications
of Colorado, Inc. d/b/a Northern Colorado Kidney Center v. Shalala, C.A.
No.95-0860 (WBB)) seeking to preclude the Health Care Financing Administration
from retroactively enforcing its April 24, 1995 implementation of the Omnibus
Budget Reconciliation Act of 1993 provision relating to the coordination of
benefits for dual eligible ESRD patients. On May 9, 1995, NMC moved for a
preliminary injunction to preclude the Health Care Financing Administration from
enforcing its new policy retroactively, that is, to billing for services
provided between August 10, 1993 and April 23, 1995. On June 6, 1995, the court
granted NMC's request for a preliminary injunction and in December of 1996, NMC
moved for partial summary judgment seeking a declaration from the Court that the
Health Care Financing Administration's retroactive application of the April 1995
rule was legally invalid. The Health Care Financing Administration cross-moved
for summary judgment on the grounds that the April 1995 rule was validly applied
prospectively. In January 1998, the court granted NMC's motion for partial
summary judgment and entered a declaratory judgment in favor of NMC, holding the
Health Care Financing Administration's retroactive application of the April 1995
rule legally invalid. Based on its finding, the Court also permanently enjoined
the Health Care Financing Administration from enforcing and applying the April
1995 rule retroactively against NMC. The Court took no action on the Health Care
Financing Administration's motion for summary judgment pending completion of the
outstanding discovery. On October 5, 1998, NMC filed its own motion for summary
judgment requesting that the Court declare the Health Care Financing
Administration's prospective application of the April 1995 rule invalid and
permanently enjoin Health Care Financing Administration from prospectively
enforcing and applying the April 1995 rule. The Court has not yet ruled on the
parties' motions. The Health Care Financing Administration elected not to appeal
the Court's June 1995 and January 1998 orders. The Health Care Financing
Administration may, however, appeal all rulings at the conclusion of the
litigation. If the Health Care Financing Administration should successfully
appeal so that the revised interpretation would be applied retroactively, NMC
may be required to refund the payment received from employer health plans for
services provided after August 10, 1993 under the Health Care Financing
Administration's original implementation, and to re-bill Medicare for the same
services, which would result in a loss to NMC of approximately $120 million
attributable to all periods prior to December 31, 1995. Also, in this event, the
Company's business, financial condition and results of operations would be
materially adversely affected.

     In July, 2000, NMC filed a complaint in the U.S. District Court for the
Eastern District of Virginia (National Medical Care, Inc. and Bio-Medical
Applications of Virginia, Inc. v. Aetna Life Insurance, Co., Inc. Aetna U.S.
Healthcare, Inc. and John Does 1-10) seeking recovery against Aetna U.S.
Healthcare and health plans administered by Aetna U.S. Healthcare for claims
related to primary payor liability for dual eligible ESRD patients under the
Omnibus Budget Reconciliation Act of 1993. On January 16, 2001, the Court stayed
the action pending resolution of the District of Columbia Court action.


                                       13
<PAGE>   14
     OTHER LITIGATION AND POTENTIAL EXPOSURES

     From time to time, the Company is a party to or may be threatened with
other litigation arising in the ordinary course of its business. Management
regularly analyzes current information including, as applicable, the Company's
defenses and insurance coverage and, as necessary, provides accruals for
probable liabilities for the eventual disposition of these matters. The ultimate
outcome of these matters is not expected to materially affect the Company's
financial position, results of operations or cash flows.

     The Company, like other health care providers, conducts its operations
under intense government regulation and scrutiny. The Company must comply with
regulations which relate to or govern the safety and efficacy of medical
products and supplies, the operation of manufacturing facilities, laboratories
and dialysis clinics, and environmental and occupational health and safety. The
Company must also comply with the U.S. anti-kickback statute, the False Claims
Act, the Stark Law, and other federal and state fraud and abuse laws. Applicable
laws or regulations may be amended, or enforcement agencies or courts may make
interpretations that differ from the Company's or the manner in which the
Company conduct its business. In the U.S., enforcement has become a high
priority for the federal government and some states. In addition, the provisions
of the False Claims Act authorizing payment of a portion of any recovery to the
party bringing the suit encourage private plaintiffs to commence "whistle
blower" actions. By virtue of this regulatory environment, as well as our
corporate integrity agreement with the government, the Company expects that its
business activities and practices will continue to be subject to extensive
review by regulatory authorities and private parties, and continuing inquiries,
claims and litigation relating to its compliance with applicable laws and
regulations. The Company may not always be aware that an inquiry or action has
begun, particularly in the case of "whistle blower" actions, which are initially
filed under court seal.

     The Company operates a large number facilities throughout the U.S. In such
a decentralized system, it is often difficult to maintain the desired level of
oversight and control over the thousands of individuals employed by many
affiliate companies. The Company relies upon its management structure,
regulatory and legal resources, and the effective operation of its compliance
program to direct, manage and monitor the activities of these employees. On
occasion, the Company may identify instances where employees, deliberately or
inadvertently, have submitted inadequate or false billings. The actions of such
persons may subject the Company and its subsidiaries to liability under the
False Claims Act, among other laws, and the Company cannot predict whether law
enforcement authorities may use such information to initiate further
investigations of the business practices disclosed or any of its other business
activities.

     Physicians, hospitals and other participants in the health care industry
are also subject to a large number of lawsuits alleging professional negligence,
malpractice, product liability, worker's compensation or related claims, many of
which involve large claims and significant defense costs. The Company has been
subject to these suits due to the nature of its business and the Company expects
that those types of lawsuits may continue. Although the Company maintains
insurance at a level which it believes to be prudent, the Company cannot assure
that the coverage limits will be adequate or that insurance will cover all
asserted claims. A successful claim against the Company or any of its
subsidiaries in excess of insurance coverage could have a material adverse
effect upon the Company and the results of its operations. Any claims,
regardless of their merit or eventual outcome, also may have a material adverse
effect on the Company's reputation and business.

     The Company has also had claims asserted against it and has had lawsuits
filed against it relating to businesses that it has acquired or divested. These
claims and suits relate both to operation of the businesses and to the
acquisition and divestiture transactions. The Company has asserted its own
claims, and claims for indemnification. Although the ultimate outcome on the
Company cannot be predicted at this time, an adverse result could have a
material adverse effect upon the Company's business, financial condition, and
results of operations.

     INDEMNIFICATION BY W. R. GRACE & CO.

     The Company was formed as a result of a series of transactions pursuant to
the Agreement and Plan of Reorganization (the "Merger") dated as of February 4,
1996 by and between W.R. Grace & Co. and Fresenius AG.

     At the time of the Merger, a W.R. Grace & Co. subsidiary known as W.R.
Grace & Co.-Conn. had, and continues to have, significant liabilities arising
out of product-liability related litigation, pre-merger tax claims and other
claims unrelated to NMC, which was Grace's dialysis business prior to the
Merger. In connection with the Merger, W.R. Grace & Co.-Conn. agreed to
indemnify the Company and NMC against all liabilities of W.R. Grace & Co.,
whether relating to events occurring before or after the Merger, other than
liabilities arising from or relating to NMC's operations. Proceedings have been
brought against W.R. Grace & Co. and the Company by plaintiffs claiming to be
creditors of W.R. Grace & Co.-Conn., principally alleging that the Merger was a
fraudulent conveyance, violated the uniform fraudulent transfer act, and
constituted a conspiracy. See "Legal Proceedings" above. In addition, the Merger
was consummated as a tax free reorganization. Pre-merger tax claims or tax
claims that would arise if events were to violate the tax-free nature of the
Merger could be the obligation of the Company. Subject to certain
representations made by W.R. Grace & Co.-Conn., the Company and Fresenius AG,
W.R. Grace & Co.-Conn. also agreed to indemnify the Company against any such tax
liability. W.R. Grace & Co.-Conn. and certain of its subsidiaries have filed
for reorganization under Chapter 11 of the U.S. Bankruptcy Code. If the Merger
is determined to be a fraudulent transfer and if material damages are proved by
the plaintiffs, or if the Merger is determined to be a taxable transaction, or
if W.R. Grace & Co. is unable to satisfy its merger related or pre-merger tax
obligations, and if the Company is not able to collect on the indemnities from
W.R. Grace & Co. as a result of the bankruptcy proceedings or otherwise, and if
the Company is not able to collect on the indemnities from any affiliates or
former affiliates of W.R. Grace & Co. or their insurers, and if the Company is
not able to collect against any party that may have received proceeds from W.R.
Grace & Co., a judgment could have a material adverse effect on the Company's
business, financial condition and results of operations.

                                       14

<PAGE>   15


NOTE 7. INDUSTRY SEGMENTS INFORMATION

     The Company's reportable segments are Dialysis Services and Dialysis
Products. For purposes of segment reporting, the Dialysis Services Division and
Spectra Renal Management are combined and reported as Dialysis Services. These
divisions are aggregated because of their similar economic classifications.
These include the fact that they are both health care service providers whose
services are provided to a common patient population, and both receive a
significant portion of their net revenue from Medicare and other government and
non-government third party payors. The Dialysis Products segment reflects the
activity of the Dialysis Products Division only.

The table below provides information for the three months ended March 31, 2001
and 2000 pertaining to the Company's two industry segments.

<TABLE>
<CAPTION>
                                                                                             LESS
                                                    DIALYSIS            DIALYSIS          INTERSEGMENT
                                                    SERVICES            PRODUCTS             SALES               TOTAL
                                                   ----------          ----------         ------------         ----------

<S>                                                <C>                 <C>                <C>                  <C>
NET REVENUES FOR THREE MONTHS ENDED
3/31/01                                            $  692,471            $178,679             $66,009          $  805,141
3/31/00                                            $  630,002            $174,942             $59,829          $  745,115

OPERATING EARNINGS FOR THREE MONTHS ENDED
3/31/01                                                98,975              30,487                  --             129,462
3/31/00                                                99,101              26,252                  --             125,353

ASSETS AT
3/31/2001                                           2,233,373             653,571                  --           2,886,944
12/31/2000                                          2,176,055             644,853                  --           2,820,908
</TABLE>

     Total assets of $4,604,064 is comprised of total assets for reportable
segments, $2,886,944; intangible assets not allocated to segments, $1,916,562;
accounts receivable financing agreement ($439,700); and other corporate assets,
$240,258.

The table below provides the reconciliations of reportable segment operating
earnings to the Company's consolidated totals.

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED
                  SEGMENT RECONCILIATION                                 MARCH 31,
                  ----------------------                       -----------------------------
                                                                 2001                 2000
                                                               ---------           ---------
<S>                                                            <C>                 <C>
INCOME BEFORE INCOME TAXES:
     Total operating earnings for reportable segments           $129,462            $125,353
     Corporate G&A                                               (32,872)            (25,798)
     Research and development expense                             (1,084)             (1,197)
     Net interest expense                                        (51,050)            (53,303)
                                                                --------            --------

 Income Before Income Taxes                                     $ 44,456            $ 45,055
                                                                ========            ========
</TABLE>


                                       15
<PAGE>   16


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The following is a discussion of the financial condition and results of
operations of the Company. The discussion should be read in conjunction with the
consolidated financial statements included elsewhere in this document.

     This section contains certain forward-looking statements that are subject
to various risks and uncertainties. Such statements include, without limitation,
discussions concerning the outlook of the Company, government reimbursement,
future plans and management's expectations regarding future performance. Actual
results could differ materially from those contained in these forward-looking
statements due to certain factors including, without limitation, changes in
business, economic and competitive conditions, regulatory reforms, foreign
exchange rate fluctuations, uncertainties in litigation or investigative
proceedings, the realization of anticipated tax deductions, and the availability
of financing. These and other risks and uncertainties, which are more fully
described elsewhere in this Item 2 and in the Company's reports filed from time
to time with the Security Exchange Commission, could cause the Company's results
to differ materially from the results that have been or may be projected by or
on behalf of the Company.

RESULTS OF OPERATIONS

     The following table summarizes certain operating results of the Company by
principal business unit for the periods indicated. Intercompany eliminations
primarily reflect sales of medical supplies by Dialysis Products to Dialysis
Services.

<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED
                                                  MARCH 31,
                                            ---------------------
                                            (DOLLARS IN MILLIONS)
                                            2001            2000
                                            -----           -----
<S>                                         <C>             <C>
NET REVENUES
    Dialysis Services ............           $692            $630
    Dialysis Products ............            179             175
    Intercompany Eliminations.....            (66)            (60)
                                             ----            ----
Total Net Revenues ...............           $805            $745
                                             ====            ====

Operating Earnings:
    Dialysis Services ............           $ 99            $ 99
    Dialysis Products ............             30              26
                                             ----            ----
Total Operating Earnings .........            129             125
                                             ----            ----

Other Expenses:
    General Corporate ............           $ 33            $ 26
    Research & Development .......              1               1
    Interest Expense, Net ........             51              53
                                             ----            ----
Total Other Expenses .............             85              80
                                             ----            ----

Earnings Before Income Taxes .....             44              45
Provision for Income Taxes .......             21              22
                                             ----            ----
Net Income .......................           $ 23            $ 23
                                             ====            ====
</TABLE>


                                       16
<PAGE>   17


THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

     Net revenues for the first three months of 2001 increased by 8% ($60
million) over the comparable period in 2000. Net earnings for the first three
months of 2001 remained unchanged over the comparable period in 2000 as a result
of increased operating earnings and decreased interest expense offset by
increased general corporate expenses.

     DIALYSIS SERVICES

     Dialysis Services net revenues for the first three months of 2001 increased
by 10% ($62 million) over the comparable period in 2000, primarily as a result
of an 8% increase in the number of treatments provided, the impact of increased
Medicare reimbursement rates, and increased laboratory testing revenues due to
patient volume. The treatment increase was a result of base business growth and
the impact of 2000 acquisitions. The laboratory testing revenues increased as a
result of higher patient volume.

     Dialysis Services operating earnings for the first three months of 2001
remained unchanged over the comparable period of 2000 as the revenue increases
were entirely offset by increased operating expenses primarily related to higher
personnel costs, increases in the provision for doubtful accounts, and increases
to other operating expenses.

     DIALYSIS PRODUCTS

     Dialysis Products net revenues for the first three months of 2001 increased
by 2% ($4 million) over the comparable period of 2000. This is primarily due to
increased sales of dialyzers and other hemo disposable products, partially
offset by decreased sales of machines and peritoneal products.

     Dialysis Products operating earnings for the first three months of 2001
increased by 15% ($4 million) over the comparable period of 2000. This is a
result of an improvement in gross margin and decreased freight and distribution
expenses.

     OTHER EXPENSES

     The Company's other expenses for the first three months of 2000 increased
by 6% ($5 million) over the comparable period of 2000. General corporate
expenses increased by $7 million due to a charge of approximately $9 million to
fair value foreign exchange contracts, partially offset by reduced corporate
spending. Interest expense was favorable by $2 million primarily due to the
change in the mix of debt instruments during the first quarter 2001 versus the
first quarter 2000.

     INCOME TAX RATE

     The effective tax rate from operations for the first three months of 2001
(47.9%) is lower than the rate for the comparable period of 2000 (48.7%), due to
expected higher earnings in relation to the amount of non-deductible merger
goodwill.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's cash requirements in 2001, and 2000, including acquisitions
and capital expenditures have historically been funded by cash generated from
operations, additional net intercompany borrowings and net increases in the
receivable financing facility.

     Cash from operations decreased by $12 million from $61 million for the
three months ended Mach 31, 2000 to $49 million for the three months ended Mach
31, 2001. This decrease is primarily related to decreases in deferred income
taxes partially offset by increased addbacks for non cash expenses and net
increases in operating assets and liabilities of $3 million.

     The movement in operating assets and liabilities includes the collection of
$5 million related to IDPN receivables. Increases in accounts receivable of $50
million in the three month period 2001 are primarily due to the impact of
acquisitions in 2001 and 2000, as well as slower payment patterns from third
parties, specifically non governmental payors. Increases in accounts payable are
primarily due to the timing of disbursements.

                                       17
<PAGE>   18



Cash on hand was $33 million at March 31, 2001 and December 31, 2000.

     Net cash flows used in investing activities of operations totaled $41
million in 2001 compared to $56 million in 2000. The Company funded its
acquisitions and capital expenditures primarily through cash flows from
operations and intercompany borrowings. Acquisitions totaled $5 million and $36
million in 2001 and 2000, respectively, net of cash acquired. Capital
expenditures of $35 million and $20 million were made for internal expansion,
improvements, new furnishings and equipment in 2001 and 2000, respectively.

     Net cash flows used in financing activities of operations totaled $8
million in 2001 compared to $2 million in 2000. During the first three months of
2001, the Company made payments to the U.S. Government totaling $35 million for
the Settlement. In addition, debt and capital lease obligations increased by $43
million, primarily due to an increase on the Company's credit facility of $43
million.

IMPACT OF INFLATION

     A substantial portion of the Company's net revenue is subject to
reimbursement rates which are regulated by the federal government and do not
automatically adjust for inflation. Non-governmental payors also are exerting
downward pressure on reimbursement levels. Increased operating costs that are
subject to inflation, such as labor and supply costs, without a compensating
increase in reimbursement rates, may adversely affect the Company's business and
results of operations. Amgen Inc. has announced a 3.9% increase in its
wholesaler acquisition price for Epogen effective May 9, 2001. The Company's
purchase contract with Amgen contains pricing protection such that its purchase
price for Epogen will be unaffected by such increase through December 31, 2001.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company is exposed to market risks due to changes in interest rates and
foreign currency rates. The Company uses derivative financial instruments,
including interest rate swaps and foreign exchange contracts, as part of its
market risk management strategy. These instruments are used as a means of
hedging exposure to interest rate and foreign currency fluctuations in
connection with debt obligations and purchase commitments. Periodically, the
Company enters into derivative instruments with related parties to form a
natural hedge for currency exposures on intercompany obligations. These
instruments are reflected in the balance sheet at fair value with changes in
fair value recognized in earnings.

     Hedge accounting is applied if the derivative reduces the risk of the
underlying hedged item and is designated at inception as a hedge. Additionally,
changes in the value of the derivative must result in payoffs that are highly
correlated to the changes in value of the hedged item. Derivatives are measured
for effectiveness both at inception and on an ongoing basis.

     The Company enters into foreign exchange contracts that are designated as,
and effective as, hedges for the Euro denominated mandatorily redeemable
preferred stock and for forecasted purchases of raw materials. Also, since the
Company carries a substantial amount of floating rate debt, the Company uses
interest rate swaps to synthetically change certain variable-rate debt
obligations to fixed-rate obligations, as well as options to mitigate the impact
of interest rate fluctuations.

     Gains and losses on foreign exchange contracts accounted for as cash flow
hedges are deferred in comprehensive income. The deferred gains and losses are
recognized as adjustments to cost of sales when the future sales are recognized.
Interest rate swap payments and receipts are recorded as part of interest
expense. Gains and losses from interest rate swaps are deferred in other
comprehensive income and will be reclassed into interest expense over the period
during which the hedge variable interest rate payments are recognized. Cash
flows from derivatives are recognized in the consolidated statement of cash
flows in the same category as the item being hedged.

     At March 31, 2001, the fair value of the Company's interest rate
agreements, which consisted entirely of interest rate swaps, is approximately
($47.0 million) and the fair value of the Company's foreign exchange contracts,
which consisted entirely of forward agreements, is valued at approximately $10.6
million. The Company had outstanding contracts covering the purchase of 488
million Euros ("EUR") at an average contract price of $0.9114 per EUR, for
delivery between April 2001 and November 2003.


                                       18
<PAGE>   19


                                     PART II

                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     Commercial Litigation

     In 1997, the Company, NMC, and certain named NMC subsidiaries, were served
with a civil complaint filed by Aetna Life Insurance Company in the U.S.
District Court for the Southern District of New York. The lawsuit alleges
inappropriate billing practices for nutritional therapy, diagnostic and clinical
laboratory tests and misrepresentations. In April 1999, Aetna amended its
complaint to include its affiliate, Aetna U.S. Healthcare, Inc., as an
additional plaintiff, and to make certain other limited changes in its pleading.
The amended complaint seeks unspecified damages and costs. Other insurance
companies have filed similar clams seeking unspecified damages and costs. The
Company, NMC and its subsidiaries believe that there are substantial defenses to
the claims asserted, and intend to vigorously defend all lawsuits. Other private
payors have contacted the Company and may assert that NMC received excess
payment and, similarly, may join the lawsuits or file their own lawsuit seeking
reimbursement and other damages. Although the ultimate outcome on the Company of
these proceedings cannot be predicted at this time, an adverse result could have
a material adverse effect on the Company's business, financial condition and
result of operations.

     The Company has filed counterclaims against the plaintiffs in these matters
based on inappropriate claim denials and delays in claim payments.

     On September 28, 2000, Mesquita, et al. v. W.R. Grace & Company, et al.
(Sup. Court of Calif., S.F. County, #315465) was filed as a class action by
plaintiffs claiming to be creditors of W.R. Grace & Co.-Conn. ("Grace
Chemicals") against Grace Chemicals, the Company and other defendants,
principally alleging that the Merger which resulted in the original formation of
the Company (described in greater detail in Note 5 to the financial statements
included in Part I infra) was a fraudulent transfer, violated the uniform
fraudulent transfer act, and constituted a conspiracy. An amended complaint
(Abner et al. v. W.R. Grace & Company, et al.) and an additional class action
were filed subsequently with substantially similar allegations. These cases have
been stayed in connection with Grace's Chapter 11 bankruptcy proceedings. The
Company has requested indemnification from Grace Chemicals pursuant to the
Merger agreements. If the Merger is determined to have been a fraudulent
transfer, if material damages are proved by the plaintiffs, and if the Company
is not able to collect, in whole or in part on the indemnity from W.R. Grace &
Co. or its affiliates or former affiliates or their insurers, and if the Company
is not able to collect against any party that may have received proceeds from
W.R. Grace & Co., a judgment could have a material adverse effect on the
Company's business, financial condition and results of operations. The Company
is confident that no fraudulent transfer or conspiracy occurred and intends to
defend the cases vigorously.

     OBRA 93

     The Omnibus Budget Reconciliation Act of 1933 affected the payment of
benefits under Medicare and employer health plans for dual-eligible ESRD
patients. In July 1994, the Health Care Financing Administration issued an
instruction to Medicare claims processors to the effect that Medicare benefits
for the patients affected by that act would be subject to a new 18-month
"coordination of benefits" period. This instruction had a positive impact on
NMC's dialysis revenues because, during the 18-month coordination of benefits
period, patients' employer health plans were responsible for payment, which was
generally at rates higher than those provided under Medicare.

     In April 1995, the Health Care Financing Administration issued a new
instruction, reversing its original instruction in a manner that would
substantially diminish the positive effect of the original instruction on NMC's
dialysis business. The Health Care Financing Administration further proposed
that its new instruction be effective retroactive to August 1993, the effective
date of the Omnibus Budget Reconciliation Act of 1993.

     NMC ceased to recognize the incremental revenue realized under the original
instruction as of July 1, 1995, but it continued to bill employer health plans
as primary payors for patients affected by the Omnibus Budget Reconciliation Act
of 1993 through December 31, 1995. As of January 1, 1996, NMC commenced billing
Medicare as primary payor for dual eligible ESRD patients affected by the act,
and then began to re-bill in compliance with the revised policy for services
rendered between April 24 and December 31, 1995.

                                       20
<PAGE>   20
     On May 5, 1995, NMC filed a complaint in the U.S. District Court for the
District of Columbia (National Medical Care, Inc. and Bio-Medical Applications
of Colorado, Inc. d/b/a Northern Colorado Kidney Center v. Shalala, C.A. No.
95-0860 (WBB)) seeking to preclude the Health Care Financing Administration
from retroactively enforcing its April 24, 1995 implementation of the Omnibus
Budget Reconciliation Act of 1993 provision relating to the coordination of
benefits for dual eligible ESRD patients. On May 9, 1995, NMC moved for a
preliminary injunction to preclude the Health Care Financing Administration
from enforcing its new policy retroactively, that is, to billing for services
provided between August 10, 1993 and April 23, 1995. On June 6, 1995, the court
granted NMC's request for a preliminary injunction and in December of 1996, NMC
moved for partial summary judgment seeking a declaration from the Court that
the Health Care Financing Administration's retroactive application of the April
1995 rule was legally invalid. The Health Care Financing Administration
cross-moved for summary judgment on the grounds that the April 1995 rule was
validly applied prospectively. In January 1998, the court granted NMC's motion
for partial summary judgment and entered a declaratory judgment in favor of
NMC, holding the Health Care Financing Administration's retroactive application
of the April 1995 rule legally invalid. Based on its finding, the Court also
permanently enjoined the Health Care Financing Administration from enforcing and
applying the April 1995 rule retroactively against NMC. The Court took no action
on the Health Care Financing Administration's motion for summary judgment
pending completion of the outstanding discovery. On October 5, 1998, NMC filed
its own motion for summary judgment requesting that the Court declare the Health
Care Financing Administration's prospective application of the April 1995 rule
invalid and permanently enjoin Health Care Financing Administration from
prospectively enforcing and applying the April 1995 rule. The Court has not yet
ruled on the parties' motions. The Health Care Financing Administration elected
not to appeal the Court's June 1995 and January 1998 orders. The Health Care
Financing Administration may, however, appeal all rulings at the conclusion of
the litigation. If the Health Care Financing Administration should successfully
appeal so that the revised interpretation would be applied retroactively, NMC
may be required to refund the payment received from the employer health plans
for services provided after August 10, 1993 under the Health Care Financing
Administration's original implementation, and to re-bill Medicare for the same
services, which would result in a loss to NMC of approximately $120 million
attributable to all periods prior to December 31, 1995. Also, in this event, the
Company's business, financial condition and results of operations would be
materially adversely affected.

     In July, 2000, NMC filed a complaint in the U.S. District Court for the
Eastern District of Virginia (National Medical Care, Inc. and Bio-Medical
Applications of Virginia, Inc. v. Aetna Life Insurance, Co., Inc. Aetna U.S.
Healthcare, Inc. and John Does 1-10) seeking recovery against Aetna U.S.
Healthcare and health plans administered by Aetna U.S. Healthcare for claims
related to primary payor liability for dual eligible ESRD patients under the
Omnibus Budget Reconciliation Act of 1993. On January 16, 2001, the Court
stayed the action pending resolution of the District of Columbia Court action.

     OTHER LITIGATION AND POTENTIAL EXPOSURES

     From time to time, the Company is a party to or may be threatened with
other litigation arising in the ordinary course of its business. Management
regularly analyzes current information including, as applicable, the Company's
defenses and insurance coverage and, as necessary, provides accruals for
probable liabilities for the eventual disposition of these matters. The
ultimate outcome of these matters is not expected to materially affect the
Company's financial position, results of operations or cash flows.

     The Company, like other health care providers, conducts its operations
under intense government regulation and scrutiny. The Company must comply with
regulations which relate to or govern the safety and efficacy of medical
products and supplies, the operation of manufacturing facilities, laboratories
and dialysis clinics, and environmental and occupational health and safety. The
Company must also comply with the U.S. anti-kickback statute, the False Claims
Act, the Stark Law, and other federal and state fraud and abuse laws.
Applicable laws or regulations may be amended, or enforcement agencies or
courts may make interpretations that differ from the Company's or the manner in
which the Company conduct its business. In the U.S., enforcement has become a
high priority for the federal government and some states. In addition, the
provisions of the False Claims Act authorizing payment of a portion of any
recovery to the party bringing the suit encourage private plaintiffs to commence
"whistle blower" actions. By virtue of this regulatory

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<PAGE>   21
environment, as well as our corporate integrity agreement with the government,
the Company expects that its business activities and practices will continue to
be subject to extensive review by regulatory authorities and private parties,
and continuing inquiries, claims and litigation relating to its compliance with
applicable laws and regulations. The Company may not always be aware that an
inquiry or action has begun, particularly in the case of "whistle blower"
actions, which are initially filed under court seal.

     The Company operates a large number of facilities throughout the U.S. In
such a decentralized system, it is often difficult to maintain the desired level
of oversight and control over the thousands of individuals employed by many
affiliate companies. The Company relies upon its management structure,
regulatory and legal resources, and the effective operation of its compliance
program to direct, manage and monitor the activities of these employees. On
occasion, the Company may identify instances where employees, deliberately or
inadvertently, have submitted inadequate or false billings. The actions of such
persons may subject the Company and its subsidiaries to liability under the
False Claims Act, among other laws, and the Company cannot predict whether law
enforcement authorities may use such information to initiate further
investigations of the business practices disclosed or any of its other business
activities.

     Physicians, hospitals and other participants in the health care industry
are also subject to a large number of lawsuits alleging professional negligence,
malpractice, product liability, worker's compensation or related claims, many of
which involve large claims and significant defense costs. The Company has been
subject to these suits due to the nature of its business and the Company expects
that those types of lawsuits may continue. Although the Company maintains
insurance at a level which it believes to be prudent, the Company cannot assure
that the coverage limits will be adequate or that insurance will cover all
asserted claims. A successful claim against the Company or any of its
subsidiaries in excess of insurance coverage could have a material adverse
effect upon the Company and the results of its operations. Any claims,
regardless of their merit or eventual outcome, also may have a material adverse
effect on the Company's reputation and business.

     The Company has also had claims asserted against it and has had lawsuits
filed against it relating to businesses that it has acquired or divested. These
claims and suits relate both to operation of the businesses and to the
acquisition and divestiture transactions. The Company has asserted its own
claims, and claims for indemnification. Although the ultimate outcome on the
Company cannot be predicted at this time, an adverse result could have a
material adverse effect upon the Company's business, financial condition, and
results of operations.


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<PAGE>   22


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>
EXHIBIT NO.                                                       DESCRIPTION
-----------                                                       -----------

<S>                 <C>
Exhibit 2.1         Agreement and Plan of Reorganization dated as of February 4, 1996 between W. R. Grace & Co. and Fresenius AG
                    (incorporated herein by reference to Appendix A to the Joint Proxy Statement-Prospectus of Fresenius Medical
                    Care AG, W. R. Grace & Co. and Fresenius USA, Inc. dated August 2, 1996 and filed with the Commission on August
                    5, 1996).

Exhibit 2.2         Distribution Agreement by and among W. R. Grace & Co., W. R. Grace & Co.-Conn. and Fresenius AG dated as of
                    February 4, 1996 (incorporated herein by reference to Exhibit A to Appendix A to the Joint Proxy
                    Statement-Prospectus of Fresenius Medical Care AG, W. R. Grace & Co. and Fresenius USA, Inc. dated August 2,
                    1996 and filed with the Commission on August 5, 1996).

Exhibit 2.3         Contribution Agreement by and among Fresenius AG, Sterilpharma GmbH and W. R. Grace & Co.-Conn. dated
                    February 4, 1996 (incorporated herein by reference to Exhibit E to Appendix A to the Joint Proxy-Statement
                    Prospectus of Fresenius Medical Care AG, W. R. Grace & Co. and Fresenius USA, Inc. dated August 2, 1996 and
                    filed with the Commission on August 5, 1996).

Exhibit 3.1         Certificate of Incorporation of Fresenius Medical Care Holdings, Inc. (f/k/a W. R. Grace & Co.) under Section
                    402 of the New York Business Corporation Law dated March 23, 1988 (incorporated herein by reference to the
                    Form 8-K of the Company filed on May 9, 1988).

Exhibit 3.2         Certificate of Amendment of the Certificate of Incorporation of Fresenius Medical Care Holdings, Inc. (f/k/a W.
                    R. Grace & Co.) under Section 805 of the New York Business Corporation Law dated May 25, 1988 (changing the
                    name to W. R. Grace & Co., incorporated herein by reference to the Form 8-K of the Company filed on May 9,
                    1988).

Exhibit 3.3         Certificate of Amendment of the Certificate of Incorporation of Fresenius Medical Care Holdings, Inc. (f/k/a W.
                    R. Grace & Co.) under Section 805 of the New York Business Corporation Law dated September 27, 1996
                    (incorporated herein by reference to the Form 8-K of the Company filed with the Commission on October 15,
                    1996).

Exhibit 3.4         Certificate of Amendment of the Certificate of Incorporation of Fresenius Medical Care Holdings, Inc. (f/k/a W.
                    R. Grace & Co.) under Section 805 of the New York Business Corporation Law dated September 27, 1996 (changing
                    the name to Fresenius National Medical Care Holdings, Inc., incorporated herein by reference to the Form 8-K of
                    the Company filed with the Commission on October 15, 1996).

Exhibit 3.5         Certificate of Amendment of the Certificate of Incorporation of Fresenius Medical Care Holdings, Inc. under
                    Section 805 of the New York Business Corporation Law dated June 12, 1997 (changing name to Fresenius Medical
                    Care Holdings, Inc., incorporated herein by reference to the Form 10-Q of the Company filed with the Commission
                    on August 14, 1997).

Exhibit 3.6         Amended and Restated By-laws of Fresenius Medical Care Holdings, Inc. (incorporated herein by reference to the
                    Form 10-Q of the Company filed with the Commission on August 14, 1997).

Exhibit 4.1         Credit Agreement dated as of September 27, 1996 among National Medical Care, Inc. and Certain Subsidiaries and
                    Affiliates, as Borrowers, Certain Subsidiaries and Affiliates, as Guarantors, the Lenders named therein,
                    NationsBank, N.A., as paying agent and The Bank of Nova Scotia, The Chase Manhattan Bank, Dresdner Bank AG and
                    Bank of America, N.A. (formerly known as NationsBank, N.A.), as Managing Agents (incorporated herein by
                    reference to the Form 6-K of Fresenius Medical Care AG filed with the Commission on October 15, 1996).
</TABLE>


                                       23
<PAGE>   23


<TABLE>
<S>            <C>
Exhibit 4.2    Amendment dated as of November 26, 1996 (amendment to the Credit Agreement dated as of September 27, 1996,
               incorporated herein by reference to the Form 8-K of Registrant filed with the Commission on December 16, 1996).

Exhibit 4.3    Amendment No. 2 dated December 12, 1996 (second amendment to the Credit Agreement dated as of September 27,
               1996, incorporated herein by reference to the Form 10-K of Registrant filed with the Commission on March 31, 1997).

Exhibit 4.4    Amendment No. 3 dated June 13, 1997 to the Credit Agreement dated as of September 27, 1996, among National
               Medical Care, Inc. and Certain Subsidiaries and Affiliates, as Borrowers, Certain Subsidiaries and Affiliates, as
               Guarantors, the Lenders named therein, NationsBank, N.A., as paying agent and The Bank of Nova Scotia, The
               Chase Manhattan Bank, Dresdner Bank AG and Bank of America, N.A. (formerly known as NationsBank, N.A.), as
               Managing Agents, as previously amended (incorporated herein by reference to the Form 10-Q of the Registrant filed
               with the Commission on November 14, 1997).

Exhibit 4.5    Amendment No. 4, dated August 26, 1997 to the Credit Agreement dated as of September 27, 1996, among
               National Medical Care, Inc. and Certain Subsidiaries and Affiliates, as Borrowers, Certain Subsidiaries and
               Affiliates, as Guarantors, the Lenders named therein, NationsBank, N.A., as paying agent and The Bank of Nova
               Scotia, The Chase Manhattan Bank, Dresdner Bank AG and Bank of America, N.A. (formerly known as
               NationsBank, N.A.), as Managing Agents, as previously amended (incorporated herein by reference to the Form 10-Q
               of Registrant filed with Commission on November 14, 1997).

Exhibit 4.6    Amendment No. 5 dated December 12, 1997 to the Credit Agreement dated as of September 27, 1996, among
               National Medical Care, Inc. and Certain Subsidiaries and Affiliates, as Borrowers, Certain Subsidiaries and
               Affiliates, as Guarantors, the Lenders named therein, NationsBank, N.A., as paying agent and The Bank of Nova Scotia,
               The Chase Manhattan Bank, Dresdner Bank AG and Bank of America, N.A. (formerly known as NationsBank, N.A.), as
               Managing Agents, as previously amended (incorporated herein by reference to the Form 10-K of Registrant filed with
               Commission on March 23, 1998).

Exhibit 4.7    Form of Consent to Modification of Amendment No. 5 dated December 12, 1997 to the Credit Agreement dated as of
               September 27, 1996 among National Medical Care, Inc. and Certain Subsidiaries and Affiliates, as Borrowers, Certain
               Subsidiaries and Affiliates, as Guarantors, the Lenders named therein, NationsBank, N.A., as paying agent and The
               Bank of Nova Scotia, The Chase Manhattan Bank, Dresdner Bank AG and Bank of America, N.A. (formerly known as
               NationsBank, N.A.), as Managing Agents (incorporated herein by reference to the Form 10-K of Registrant filed with
               Commission on March 23, 1998).

Exhibit 4.8    Amendment No. 6 dated effective September 30, 1998 to the Credit Agreement dated as of September 27, 1996,
               among National Medical Care, Inc. and Certain Subsidiaries and Affiliates, as Borrowers, Certain Subsidiaries and
               Affiliates, as Guarantors, the Lenders named therein, NationsBank, as paying agent and The Bank of Nova Scotia, The
               Chase Manhattan Bank, N.A., Dresdner Bank AG and Bank of America, N.A. (formerly known as NationsBank, N.A.),
               as Managing Agents, as previously amended (incorporated herein by reference to the Form 10-Q of Registrant filed
               with Commission on November 12, 1998).

Exhibit 4.9    Amendment No. 7 dated as of December 31, 1998 to the Credit Agreement dated as of September 27, 1996 among
               National Medical Care, Inc. and Certain Subsidiaries and Affiliates, as Borrowers, Certain Subsidiaries and
               Affiliates Guarantors , the Lenders named therein, Nations Bank, N.A. as paying agent and The Bank of Nova Scotia,
               The Chase Manhattan Bank, Dresdner Bank A. G. and Bank of America, N.A. (formerly known as NationsBank, N.A.). as
               Managing Agents, (incorporated herein by reference to the Form 10-K of registrant filed with Commission on March
               9, 1999).

Exhibit 4.10   Amendment No. 8 dated as of June 30, 1999 to the Credit Agreement dated as of September 27, 1996 among
               National Medical Care, Inc. and Certain Subsidiaries and Affiliates, as Borrowers, Certain Subsidiaries and
               Affiliates Guarantors, the Lenders named therein, NationsBank, N.A. as paying agent and The Bank of Nova Scotia, The
               Chase Manhattan Bank, Dresdner Bank A.G. and Bank of America, N.A. (formerly known as NationsBank, N.A.), as
               Managing Agent (incorporated herein by reference to the Form 10-K of registrant filed with Commission on March 30,
               2000).
</TABLE>


                                       24
<PAGE>   24


<TABLE>
<S>            <C>
Exhibit 4.11   Amendment No. 9 dated as of December 15, 1999 to the Credit Agreement dated as of September 27, 1996 among
               National Medical Care, Inc. and Certain Subsidiaries and Affiliates, as Borrowers, Certain Subsidiaries and
               Affiliates Guarantors, the Lenders named therein, NationsBank, N.A. as paying agent and The Bank of Nova Scotia, The
               Chase Manhattan Bank, Dresdner Bank A.G. and Bank of America, N.A. (formerly known as NationsBank, N.A.), as
               Managing Agent (incorporated herein by reference to the Form 10-K of registrant filed with Commission on March 30,
               2000).

Exhibit 4.12   Amendment No. 10 dated as of September 21, 2000 to the Credit Agreement dated as of September 27, 1996 among
               National Medical Care, Inc. and Certain Subsidiaries and Affiliates, as Borrowers, Certain Subsidiaries and
               Affiliates Guarantors, the Lenders named therein, NationsBank, N.A. as paying agent and The Bank of Nova Scotia, The
               Chase Manhattan Bank, Dresdner Bank A.G. and Bank of America, N.A. (formerly known as NationsBank, N.A.), as
               Managing Agent, (incorporated herein by reference to the Form 10-K of registrant filed with Commission on
               November 11, 2000).

Exhibit 4.13   Fresenius Medical Care AG 1998 Stock Incentive Plan as amended effective as of August 3, 1998 (incorporated
               herein by reference to the Form 10-Q of Registrant filed with Commission on May 14, 1998).

Exhibit 4.14   Senior Subordinated Indenture dated November 27, 1996, among Fresenius Medical Care AG, State Street Bank and
               Trust Company, as successor to Fleet National Bank, as Trustee and the Subsidiary Guarantors named therein
               (incorporated herein by reference to the Form 10-K of Registrant filed with the Commission on March 31, 1997).

Exhibit 4.15   Senior Subordinated Indenture dated as of February 19, 1998, among Fresenius Medical Care AG, State Street Bank
               and Trust Company as Trustee and Fresenius Medical Care Holdings, Inc., and Fresenius Medical Care AG, as
               Guarantors with respect to the issuance of 7 7/8% Senior Subordinated Notes due 2008 (incorporated herein by
               reference to the Form 10-K of Registrant filed with Commission on March 23, 1998).

Exhibit 4.16   Senior Subordinated Indenture dated as of February 19, 1998 among FMC Trust Finance S.a.r.l. Luxemborg, as
               Insurer, State Street Bank and Trust Company as Trustee and Fresenius Medical Care Holdings, Inc., and Fresenius
               Medical Care AG, as Guarantors with respect to the issuance of 7 3/8% Senior Subordinated Notes due 2008
               (incorporated herein by reference to the Form 10-K of Registrant filed with Commission on March 23, 1998).

Exhibit 10.1   Employee Benefits and Compensation Agreement dated September 27, 1996 by and among W. R. Grace & Co.,
               National Medical Care, Inc., and W. R. Grace & Co.-- Conn. (incorporated herein by reference to the Registration
               Statement on Form F-1 of Fresenius Medical Care AG, as amended (Registration No. 333-05922), dated November 22,
               1996 and the exhibits thereto).

Exhibit 10.2   Purchase Agreement, effective January 1, 1995, between Baxter Health Care Corporation and National Medical Care,
               Inc., including the addendum thereto (incorporated by reference to the Form SE of Fresenius Medical Care dated
               July 29, 1996 and the exhibits thereto).

Exhibit 10.3*  Product Purchase Agreement effective January 1, 2001 between Amgen, Inc. and National Medical Care, Inc. and
               Everest Healthcare Services Corporation (filed herewith).

Exhibit 10.4   Primary Guarantee dated July 31, 1996 (incorporated by reference to the Registrant's Registration Statement on Form
               S-4 (Registration No. 333-09497) dated August 2, 1996 and the exhibits thereto).

Exhibit 10.5   Secondary Guarantee dated July 31, 1996 (incorporated by reference to the Registrant's Registration Statement on
               Form S-4 (Registration No. 333-09497) dated August 2, 1996 and the exhibits thereto).

Exhibit 10.6   Receivables Purchase Agreement dated August 28, 1997 between National Medical Care, Inc. and NMC Funding
               Corporation (incorporated herein by reference to the Form 10-Q of the Registrant filed with the Commission on
               November 14, 1997).
</TABLE>


                                       25
<PAGE>   25


<TABLE>
<S>            <C>
Exhibit 10.7   Amendment dated as of September 28, 1998 to the Receivables Purchase Agreement dated as of August 28, 1997, by
               and between NMC Funding Corporation, as Purchaser and National Medical Care, Inc., as Seller (incorporated herein
               by reference to the Form 10-Q of Registrant filed with Commission on November 12, 1998).

Exhibit 10.8   Amended and Restated Transfer and Administration Agreement dated as October 26, 2000 among Compass US
               Acquisition, LLC, NMC Funding Corporation, National Medical Care, Inc., Enterprise Funding Corporation, the
               Bank Investors listed therein, Westdeutsche Landesbank Girozentrale, New York Branch, as an administrative agent
               and Bank of America, N.A., as an administrative agent  (incorporated herein by reference to the Form 10-K of
               Registrant filed with Commission on April 2, 2001).

Exhibit 10.9   Employment Agreement dated January 1, 1992 by and between Ben J. Lipps and Fresenius USA, Inc. (incorporated
               herein by reference to the Annual Report on Form 10-K of Fresenius USA, Inc., for the year ended December 31,
               1992).

Exhibit 10.10  Modification to FUSA Employment Agreement effective as of January 1, 1998 by and between Ben J. Lipps and
               Fresenius Medical Care AG (incorporated herein by reference to the Form 10-Q of Registrant filed with Commission
               on May 14, 1998).

Exhibit 10.11  Separation Agreement dated January 31, 2001 by and between Roger G. Stoll and Fresenius Medical Care Holdings,
               Inc. (filed herewith).

Exhibit 10.12  Loan Agreement dated January 31, 2001 by and between Roger G. Stoll and Fresenius Medical Care Holdings, Inc.
               (filed herewith).

Exhibit 10.13  Employment Agreement dated March 15, 2000 by and between Jerry A. Schneider and National Medical Care, Inc.
               (incorporated herein by reference to the Form 10-Q of Registrant filed with Commission on May 12, 2000).

Exhibit 10.14  Employment Agreement dated March 15, 2000 by and between Ronald J. Kuerbitz and National Medical Care, Inc.
               (incorporated herein by reference to the Form 10-Q of Registrant filed with Commission on May 12, 2000).

Exhibit 10.15  Employment Agreement dated March 15, 2000 by and between J. Michael Lazarus and National Medical Care, Inc.
               (incorporated herein by reference to the Form 10-Q of Registrant filed with Commission on May 12, 2000).

Exhibit 10.16  Employment Agreement dated March 15, 2000 by and between Robert "Rice" M. Powell, Jr. and National Medical
               Care, Inc. (incorporated herein by reference to the Form 10-K of Registrant filed with Commission on April 2, 2001).

Exhibit 10.17  Employment Agreement dated June 1, 2000 by and between John F. Markus and National Medical Care, Inc.
               (incorporated herein by reference to the Form 10-K of Registrant filed with Commission on April 2, 2001).

Exhibit 10.18  Employment Agreement dated January 1, 2001 by and between E. Craig Dawson and National Medical Care, Inc.
               (incorporated herein by reference to the Form 10-K of Registrant filed with Commission on April 2, 2001).

Exhibit 10.19  Subordinated Loan Note dated as of May 18, 1999, among National Medical Care, Inc. and certain Subsidiaries with
               Fresenius AG as lender (incorporated herein by reference to the Form 10-Q of Registrant filed with Commission on
               November 22, 1999).

Exhibit 11     Statement re: Computation of Per Share Earnings.
</TABLE>


(b)  Reports on Form 8-K

     The Company filed no current reports on Form 8-K during the quarter for
which this report is filed.

* Confidential treatment has been requested as to certain portions of this
Exhibit


                                       26
<PAGE>   26


                                   SIGNATURES

     Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                      Fresenius Medical Care Holdings, Inc.


DATE: May 15, 2001                    /s/ Ben J. Lipps
      ------------                    ------------------------------------------
                                      NAME: Ben J. Lipps
                                      TITLE: President (Chief Executive Officer)




DATE: May 15, 2001                    /s/ Jerry A. Schneider
      ------------                    ------------------------------------------
                                      NAME: Jerry Schneider
                                      TITLE: Chief Financial Officer


                                       27