<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                                 UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 20-F

[ ]   REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
     SECURITIES EXCHANGE ACT OF 1934

                                       OR

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                                       OR

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

                        COMMISSION FILE NUMBER --------
                            ------------------------

                   FRESENIUS MEDICAL CARE AKTIENGESELLSCHAFT
             (Exact name of Registrant as specified in its charter)

                       FRESENIUS MEDICAL CARE CORPORATION
                (Translation of Registrant's name into English)

                                    GERMANY
                (Jurisdiction of incorporation or organization)

                            ------------------------

               ELSE-KRONER STRASSE 1, 61352 BAD HOMBURG, GERMANY
                    (Address of principal executive offices)

     SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE
ACT:

<Table>
<Caption>
    TITLE OF EACH CLASS                                     NAME OF EACH EXCHANGE ON WHICH REGISTERED
    -------------------                                     -----------------------------------------
    <S>                                                     <C>
    AMERICAN DEPOSITARY SHARES REPRESENTING PREFERENCE      NEW YORK STOCK EXCHANGE
    SHARES

    PREFERENCE SHARES, NO PAR VALUE                         NEW YORK STOCK EXCHANGE(1)

    AMERICAN DEPOSITARY SHARES REPRESENTING ORDINARY        NEW YORK STOCK EXCHANGE
    SHARES

    ORDINARY SHARES, NO PAR VALUE                           NEW YORK STOCK EXCHANGE(1)
</Table>

     SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE
ACT: None

    SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION
    15(d) OF THE ACT: 7 7/8% USD TRUST PREFERRED SECURITIES DUE 2008, 7 3/8% DM
    TRUST PREFERRED SECURITIES DUE 2008, 7 7/8% USD TRUST PREFERRED SECURITIES
    DUE 2011, 7 3/8% EURO TRUST PREFERRED SECURITIES DUE 2011
------------------

(1) Not for trading, but only in connection with the registration of American
    Depositary Shares representing such shares.

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

     Preference Shares, no par value 26,176,508

     Ordinary Shares, no par value 70,000,000

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

                               Yes [X]     No [ ]

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

                          Item 17 [ ]     Item 18 [X]
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                                                PAGE
                                                                                ----
<S>                <C>                                                          <C>
INTRODUCTION
PART I
Item  1.           Identity of Directors, Senior Management and Advisors.......    2
Item  2.           Other Statistics and Expected Timetable.....................    2
Item  3.           Key Information.............................................    2
Item  4.           Information on the Company..................................    9
Item  5.           Operating and Financial Review and Prospects................   42
Item  6.           Directors, Senior Management and Employees..................   59
Item  7.           Major Shareholders and Related Party Transactions...........   64
Item  8.           Financial Information.......................................   68
Item  9.           The Offer and Listing Details...............................   73
Item 10.           Additional Information......................................   78
Item 11.           Quantitative and Qualitative Disclosures About Market
                   Risk........................................................   88
Item 12.           Description of Securities other than Equity Securities......   92

PART II
Item 13.           Defaults, Dividend Arrearages and Delinquencies.............   93
Item 14.           Material Modifications to the Rights of Security Holders and
                   Use of Proceeds.............................................   93
Item 15.           [Reserved]..................................................   93
Item 16.           [Reserved]..................................................   93

PART III
Item 17.           Financial Statements........................................   93
Item 18.           Financial Statements........................................   93
Item 19.           Exhibits....................................................   93
</Table>

                                        i
<PAGE>

                                  INTRODUCTION

FORWARD LOOKING STATEMENTS

     This report contains forward-looking statements within the meaning of
section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are based upon our current
expectations, assumptions, estimates and projections about us and our industry
that address, among other things:

     -  our business development, operating development and financial condition;

     -  our expectations of growth in the patient population regarding renal
        dialysis products and services;

     -  our expansion and acquisition plans and our capital expenditures budget;

     -  the impact of our expansion on our revenue potential, cost basis and
        margins;

     -  our ability to remain competitive in the markets for our products and
        services;

     -  the effects of regulatory developments, legal proceedings and our
        settlement of government investigations into our business;

     -  possible changes in government reimbursement policies and those of
        private payors;

     -  our ability to develop and maintain additional sources of financing; and

     -  other statements of our expectations, beliefs, future plans and
        strategies, anticipated development and other matters that are not
        historical facts.

     When used in this report, the words "expects", "anticipates", "intends",
"plans", "believes", "seeks", "estimates" and similar expressions are generally
intended to identify forward looking statements. Although we believe that the
expectations reflected in such forward-looking statements are reasonable,
forward-looking statements are inherently subject to risks and uncertainties,
many of which cannot be predicted with accuracy and some of which might not even
be anticipated. Future events and actual results, financial and otherwise, could
differ materially from those set forth in or contemplated by the forward-looking
statements contained elsewhere in this report. Important factors that could
contribute to such differences are noted in this report under "Business
Overview" in "Item 4. Information on the Company", "Item 5. Operating and
Financial Review and Prospects" and "Item 8.A.7. Legal Proceedings".

                                        1
<PAGE>

                                     PART I

ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

     Not applicable

ITEM 2.  OTHER STATISTICS AND EXPECTED TIMETABLE

     Not applicable

ITEM 3.  KEY INFORMATION

SELECTED FINANCIAL DATA

     The following table summarizes the consolidated financial information for
our business for each of the years 1997 through 2001. We derived the selected
financial information from our consolidated financial statements. We prepared
our financial statements in accordance with accounting principles generally
accepted in the United States of America and KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft Wirtschaftsprufungsgesellschaft, independent accountants,
audited these financial statements. You should read this information together
with our consolidated financial statements and the notes to those statements
appearing elsewhere in this document and the information under "Item 5.
Operating and Financial Review and Prospects".

<Table>
<Caption>
                                    2001(A)        2000         1999(B)       1998(C)        1997
                                  -----------   -----------   -----------   -----------   -----------
                                                             (IN MILLIONS)
<S>                               <C>           <C>           <C>           <C>           <C>
STATEMENT OF OPERATIONS DATA:
Net revenues....................  $     4,859   $     4,201   $     3,840   $     3,506   $     2,974
Cost of revenues................        3,220         2,734         2,463         2,243         1,886
                                  -----------   -----------   -----------   -----------   -----------
Gross profit....................        1,639         1,467         1,377         1,263         1,088
Selling, general and
  administrative................          966           814           785           743           675
Research and development........           36            32            32            31            22
Special charge..................          258            --           601            --            --
                                  -----------   -----------   -----------   -----------   -----------
Operating income (loss).........          379           621           (41)          489           391
Interest expense, net...........          223           216           218           220           184
                                  -----------   -----------   -----------   -----------   -----------
Income (loss) before income
  taxes and minority interest...          156           405          (259)          269           207
Income (loss) from continuing
  operations before cumulative
  effect of accounting change...           63           212          (249)          132           104
Net income (loss)...............  $        63   $       212   $      (249)  $        19   $        90
                                  ===========   ===========   ===========   ===========   ===========
Weighted average of:
  Preference shares
     outstanding................   26,035,330    19,002,118     9,023,341     9,023,341     6,506,917
  Ordinary shares outstanding...   70,000,000    70,000,000    70,000,000    70,000,000    70,000,000
Basic income (loss) from
  continuing operations per
  Ordinary share................  $      0.65   $      2.37   $     (3.15)  $      1.62   $      1.34
Fully diluted income (loss) from
  continuing operations per
  Ordinary share................         0.64          2.36         (3.15)         1.62          1.34
Basic income (loss) per Ordinary
  share.........................         0.65          2.37         (3.15)         0.20          1.16
Fully diluted income (loss) per
  Ordinary share................         0.64          2.36         (3.15)         0.20          1.16
Basic income (loss) from
  continuing operations per
  Preference share..............         0.70          2.43         (3.15)         1.78          1.39
</Table>

                                        2
<PAGE>

<Table>
<Caption>
                                    2001(A)        2000         1999(B)       1998(C)        1997
                                  -----------   -----------   -----------   -----------   -----------
                                                             (IN MILLIONS)
<S>                               <C>           <C>           <C>           <C>           <C>
Fully diluted income (loss) from
  continuing operations per
  Preference share..............         0.69          2.42         (3.15)         1.78          1.39
Basic income (loss) per
  Preference share..............         0.70          2.43         (3.15)         0.36          1.21
Fully diluted income (loss) per
  Preference share..............         0.69          2.42         (3.15)         0.36          1.21
Basic and fully diluted net
  income (loss) per Ordinary
  ADS...........................         0.22          0.79         (1.05)         0.07          0.39
Basic and fully diluted net
  income (loss) per Preference
  ADS...........................         0.23          0.81         (1.05)         0.12          0.40
Dividends declared per Ordinary
  share (E)(a)..................         0.85(b)        0.78         0.69          0.59          0.51
Dividends declared per
  Preference share (E)(a).......         0.91(b)        0.84         0.75          0.64          0.56
Dividends declared per Ordinary
  share ($)(a)..................           --(b)        0.72         0.64          0.61          0.55
Dividends declared per
  Preference share ($)(a).......           --(b)        0.78         0.69          0.66          0.61
BALANCE SHEET DATA
Working capital.................  $       402   $       191   $      (229)  $       448   $       548
Total assets....................        6,516         5,979         5,752         5,679         5,541
Total long-term debt(c).........        2,165         1,611         1,618         2,070         2,001
Shareholders' equity (net
  assets).......................        2,617         2,679         2,002         2,357         2,446
Capital Stock -- Preference
  shares -- Nominal Value.......           70            64            28            28            28
Capital Stock -- Ordinary shares
  -- Nominal Value..............          229           229           229           229           229
</Table>

---------------

(A) Includes the special charge to address 1996 merger related legal matters,
    estimated liabilities and legal expenses arising in connection with the W.R.
    Grace Chapter 11 proceedings and the cost of resolving pending litigation
    and other disputes with certain commercial insurers. You can find a more
    detailed discussion of this special charge in "Item 5.B. Operating and
    Financial Review and Prospects -- Special Charge for Legal Matters" and in
    Note 3 of the Notes to our Consolidated Financial Statements.

(B) Reflects the impact of the special charge relating to the settlement
    agreement reached with the U.S. government regarding U.S. government
    investigations. You can find a more detailed discussion of the final terms
    of the settlement in "Item 5.B. Operating and Financial Review and Prospects
    -- Liquidity and Capital Resources" and in Note 2 of the Notes to our
    Consolidated Financial Statements.

(C) Includes the effect of an accounting change. See Note 1 of the Notes to our
    Consolidated Financial Statements.

(a) Amounts shown for each year from 1997 to 2000 represent dividends paid with
    respect to such year. The actual declaration and payment of the dividend was
    made in the following year, after approval of the dividend at our general
    meeting.

(b) Our managing board and our supervisory board have proposed dividends for
    2001 of E0.91 per Preference share and E0.85 per Ordinary share. These
    dividends are subject to approval by our shareholders at our annual general
    meeting to be held on May 22, 2002.

(c) Total long-term debt represents long-term debt and capital lease
    obligations, less current portions and (i) at December 31, 1997, the
    mandatorily redeemable preferred securities of Fresenius Medical Care
    Capital Trust, and (ii) at December 31, 1998, 1999 and 2000, the mandatorily
    redeemable preferred securities of Fresenius Medical Care Capital Trust,
    Fresenius Medical Care Capital Trust II, and Fresenius Medical Care Capital
    Trust III, and (iii) at December 31, 2001, the mandatorily redeemable
    preferred securities of Fresenius Medical Care Capital Trust, Fresenius
    Medical Care Capital Trust II, Fresenius Medical Care Capital Trust III,
    Fresenius Medical Care Capital Trust IV, and Fresenius Medical Care Capital
    Trust V. On February 14, 2002, we redeemed the entire $360 million aggregate
    liquidation amount of the trust preferred securities of Fresenius Medical
    Care Capital Trust.

                                        3
<PAGE>

RISK FACTORS

RISKS RELATING TO LITIGATION AND REGULATORY MATTERS IN THE U.S.

IF WE DO NOT COMPLY WITH THE MANY GOVERNMENTAL REGULATIONS APPLICABLE TO OUR
BUSINESS OR WITH THE CORPORATE INTEGRITY AGREEMENT BETWEEN US AND THE U.S.
GOVERNMENT, WE COULD BE EXCLUDED FROM GOVERNMENT HEALTH CARE REIMBURSEMENT
PROGRAMS OR OUR AUTHORITY TO CONDUCT BUSINESS COULD BE TERMINATED, EITHER OF
WHICH WOULD RESULT IN A MATERIAL DECREASE IN OUR REVENUE

     Our operations in both our provider business and our products business are
subject to extensive governmental regulation in virtually every country in which
we operate. The applicable regulations, which differ from country to country,
relate in general to the safety and efficacy of medical products and supplies,
the operation of manufacturing facilities, laboratories and dialysis clinics,
the rate of, and accurate reporting and billing for, government and third-party
reimbursement, and compensation of medical directors and other financial
arrangements with physicians and other referral sources. We are also subject to
other laws of general applicability, including antitrust laws.

     Fresenius Medical Care Holdings is party to a corporate integrity agreement
with the U.S. government. This agreement requires that Fresenius Medical Care
Holdings staff and maintain a comprehensive compliance program, including a
written code of conduct, training programs, regulatory compliance policies and
procedures, annual audits and periodic reporting to the government. The
corporate integrity agreement permits the U.S. government to exclude Fresenius
Medical Care Holdings and its subsidiaries from participation in U.S. federal
health care programs if there is a material breach of the agreement that
Fresenius Medical Care Holdings does not cure within thirty days after Fresenius
Medical Care Holdings receives written notice of the breach. We derive
approximately 42% of our consolidated revenue from U.S. federal health care
benefit programs. Consequently, if Fresenius Medical Care Holdings commits a
material breach of the corporate integrity agreement that results in the
exclusion of Fresenius Medical Care Holdings or its subsidiaries from continued
participation in those programs it would significantly decrease our revenue and
have a material adverse effect on our business, financial condition and results
of operations.

     While we rely upon our management structure, regulatory and legal
resources, and the effective operation of our compliance program to direct,
manage and monitor these activities, if employees, deliberately or
inadvertently, failed to adhere to these regulations then our authority to
conduct business could be terminated or our operations could be significantly
curtailed. Any such terminations or reductions could materially reduce our
revenues with a resulting adverse impact on our business, financial condition
and results of operations.

A REDUCTION IN U.S. GOVERNMENT REIMBURSEMENT FOR DIALYSIS CARE WOULD MATERIALLY
DECREASE OUR REVENUES

     For the twelve months ended December 31, 2001 approximately 42% of our
consolidated revenues resulted from Medicare and Medicaid reimbursement.
Legislative changes may affect all Medicare reimbursement rates for the services
we provide, as well as the scope of Medicare coverage. A decrease in Medicare
reimbursement rates or covered services could have a material adverse effect on
our business, financial condition and results of operations.

A CHANGE IN REIMBURSEMENT FOR OR UTILIZATION OF EPO COULD MATERIALLY REDUCE OUR
REVENUE AND OPERATING PROFIT

     Reimbursement and revenue from the administration of erythropoetin, or EPO,
accounted for approximately 27% of dialysis care revenue in our North America
segment for the twelve months ended December 31, 2001. EPO is produced by a
single source manufacturer, Amgen Inc. Our current contract with Amgen covers
the period from January, 2002 to December 2003, with price guarantees and volume
and outcome discounts. A reduction in reimbursement for EPO, a significant
change in utilization of EPO, an interruption of supply or our inability to
obtain satisfactory purchase terms for EPO could reduce our revenues from, or
increase our costs in connection with, administration of EPO, which could
materially adversely affect our business, financial condition and results of
operations.

                                        4
<PAGE>

CREDITORS OF W.R. GRACE & CO. CONN. HAVE ASSERTED CLAIMS AGAINST US

     We were formed in 1996 as a result of a series of transactions with W.R.
Grace & Co that we refer to as the merger. At the time of the merger, 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 its dialysis business and, in connection with the merger, W.R.
Grace & Co.-Conn. agreed to indemnify Fresenius Medical Care and its
subsidiaries 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 National Medical Care's operations. In addition, the merger was
consummated as a tax free organization. Pre-merger tax claims or other tax
claims that would arise if events were to violate the tax-free nature of the
merger could ultimately be the obligation of our principal subsidiary, Fresenius
Medical Care Holdings, Inc. ("FMCH"). In particular, W.R. Grace & Co. has
publicly disclosed that its tax returns for the years 1993 through 1996 are
under audit by the U.S. Internal Revenue Service, that it has paid tax and
interest with respect to certain deductions taken prior to 1993 and that similar
deductions were taken in the years under audit. Subject to certain
representations made by W.R. Grace & Co.-Conn, FMCH and Fresenius AG, W.R. Grace
& Co.-Conn. also agreed to indemnify us against any such tax liability. W.R.
Grace & Co.-Conn. has filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code. If W.R. Grace & Co.-Conn.'s obligation to indemnify us is
terminated or limited as a result of bankruptcy proceedings, and we are held
liable for pre-merger obligations of W.R. Grace & Co.-Conn. or the merger is
determined to be a taxable transaction, our business, financial condition and
results of operations could be adversely affected.

     Proceedings have been brought against W.R. Grace & Co. and FMCH 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. We believe that no
fraudulent transfer or conspiracy occurred and we intend to defend the cases
vigorously, and we have also requested indemnification from W.R. Grace &
Co.-Conn. with respect to these proceedings. We are also engaged in litigation
with Sealed Air Corporation (with which W.R. Grace & Co.-Conn. conducted a
multistep transaction subsequent to the merger) over our entitlement to
indemnification from Sealed Air for losses and expenses we incur relating to
pre-merger tax liabilities of W.R. Grace & Co. and merger-related claims. For
additional information with respect to these proceedings see "Item 8.A.7 --
Legal Proceedings." If the merger is determined to be a fraudulent transfer, if
material damages are proved by the plaintiffs and we are not able to collect, in
whole or in part on the indemnity, a judgment could have a material adverse
effect on our business, financial condition and results of operations. We
recorded a pre-tax accrual of $172,034,000 at December 31, 2001 to reflect our
estimated exposure for liabilities and expenses related to the W.R. Grace & Co.
bankruptcy. See Note 3 to our consolidated financial statements.

WE ARE DEFENDANTS IN LITIGATION BY PRIVATE INSURANCE COMPANIES ALLEGING
INAPPROPRIATE BILLING PRACTICES

     FMCH, National Medical Care, and subsidiaries of National Medical Care are
defendants in litigation brought by private payors alleging inappropriate
billing practices for nutritional therapy and diagnostic and clinical laboratory
tests, and misrepresentations. For information regarding these proceedings, see
"Item 8.A.7 -- Legal Proceedings." In January 2002, FMCH entered into an
agreement in principle with Aetna Life Insurance Company to establish a process
for resolving these claims and the Company's counterclaims relating to overdue
payments for services rendered by the Company to the Aetna's beneficiaries.
Other private payors have contacted FMCH and have asserted that National Medical
Care received excess payments and may file their own lawsuit seeking
reimbursement and other damages from National Medical Care. Although we cannot
predict the ultimate outcome of these proceedings at this time, an adverse
result could have a material adverse effect on our business, financial condition
and results of operations. In light of the Aetna agreement in principle we
established a pre-tax accrual of $55,489,000 at December 31, 2001 to provide for
the anticipated settlement of the Aetna lawsuit and estimated legal expenses
related to the continued defense of other commercial insurer claims and
resolution of these claims, including overdue payments for services we rendered
to these insurers' beneficiaries (see Note 3 to our consolidated financial
statements). We cannot assure that the anticipated Aetna settlement will be
consummated or that the costs associated with such a settlement or a litigated
resolution of Aetna's claims and the other commercial insurers' claims will not
exceed the $55,489,000 pre-tax accrual.

                                        5
<PAGE>

IF THE POSITION OF THE U.S. CENTERS FOR MEDICARE AND MEDICAID SERVICES IN THE
OBRA 93 DISPUTE IS ULTIMATELY UPHELD, WE COULD BE OBLIGATED TO REFUND UP TO $120
MILLION TO MEDICARE

     Under the U.S. Omnibus Budget Reconciliation Act of 1993, as initially
interpreted by the U.S. Centers for Medicare and Medicaid Services (formerly
known as the Health Care Financing Administration), which administers the
Medicare and Medicaid programs, employer health plans were the primary payor for
end-stage renal disease ("ESRD") dual-eligible patients (i.e., patients age 65
and over who are eligible for Medicare and covered by an employer health plan)
during the first 18 months of their Medicare eligibility. This interpretation
resulted in increased revenue for National Medical Care because, during the
18-month period, the rate paid by the employer health plan was generally in
excess of the Medicare rate. In April 1995, the U.S. Health Care Financing
Administration announced a new interpretation of the U.S. Omnibus Budget
Reconciliation Act of 1993 which retroactively eliminated the 18-month period in
which the employer health plan was the primary payor for dual eligible patients.
National Medical Care has obtained a permanent injunction against the
retroactive implementation of this revised interpretation. Its motion for a
declaratory judgment against implementation on a going-forward basis, and the
government's motion for a declaratory judgment that the rule was validly applied
on a prospective basis, are both pending. It is not clear at this time whether
the government intends to appeal the rulings. As of July 1, 1995, National
Medical Care ceased to recognize the incremental revenue realized under the
original implementation, but continued to bill employer health plans as primary
payors until December 31, 1995. If the government should appeal and be
successful in reversing the rulings, thereby upholding the government's
retroactive implementation of its revised interpretation, National Medical Care
may be required to refund the payments received from employer health plans for
services provided after August 10, 1993 under the original implementation and to
rebill Medicare for the same services. This refunding and rebilling would result
in a net loss to National Medical Care of approximately $120 million for billing
through December 31, 1995.

AS HEALTH MAINTENANCE ORGANIZATIONS AND OTHER MANAGED CARE PLANS GROW, AMOUNTS
PAID FOR OUR SERVICES AND PRODUCTS BY NON-GOVERNMENTAL PAYORS MAY DECREASE

     We obtain a significant portion of our revenues from reimbursement provided
by non-governmental third-party payors. Although non-governmental payors
generally pay at higher reimbursement rates than governmental payors, managed
care plans generally negotiate lower reimbursement rates than indemnity
insurance plans. Some managed care plans also utilize a capitated fee structure
or limit reimbursement for ancillary services.

     As managed care programs have increased market share, there has been
increased pressure to reduce the amounts paid for our services and products.
These trends may be accelerated if future changes to the U.S. Medicare ESRD
program require private payors to assume a greater percentage of the total cost
of care given to dialysis patients over the term of their illness, or if managed
care plans otherwise significantly increase their enrollment of renal patients.

     If substantially more of our patients join managed care plans or such plans
reduce reimbursements, our revenues from non-governmental payors could decrease,
and our financial condition and results of operations could be materially
adversely affected.

PROPOSALS FOR HEALTH CARE REFORM COULD DECREASE OUR REVENUES

     Proposals to modify the current health care system in the U.S. to improve
access to health care and control its costs are continually being considered by
the federal and certain state governments. We anticipate that the U.S. Congress
and state legislatures will continue to review and assess alternative health
care reforms, and we cannot predict whether these reform proposals will be
adopted, when they may be adopted or what impact they may have on us. Any
spending decreases or other significant changes in the Medicare program could
reduce our revenues and profitability and have a material adverse effect on our
business, financial condition and results of operations.

     Other countries, especially those in western Europe, have also considered
health care reform proposals and could materially alter their
government-sponsored health care programs by reducing reimbursement payments.
Any reduction could affect the pricing of our products and the profitability of
our services, especially as we

                                        6
<PAGE>

expand our international business. This potential development could have a
material adverse effect on our business, financial condition and results of
operations.

RISKS RELATING TO OUR BUSINESS

OUR COMPETITORS COULD DEVELOP SUPERIOR TECHNOLOGY, IMPACT OUR PRODUCT SALES, OR
DRIVE UP ACQUISITION PRICES, WHICH WOULD ADVERSELY AFFECT OUR ABILITY TO MAKE
ACQUISITIONS

     We face numerous competitors in both our dialysis services business and our
dialysis products business, some of which may possess substantial financial,
marketing or research and development resources. Competition could materially
adversely affect the future pricing and sale of our products and services. In
particular, technological innovation has historically been a significant
competitive factor in the dialysis products business. The introduction of new
products by competitors could render one or more of our products obsolete.

     We are engaged in both manufacturing dialysis products and providing
dialysis services. We compete in the dialysis services business with many
customers of our products business. As a result, independent dialysis clinics,
those operated by other chains and dialysis centers acquired by other products
manufacturers may elect to limit or terminate their purchases of our dialysis
products so as to avoid purchasing products manufactured by a competitor.
Possible purchase reductions could decrease our product revenues, with a
material adverse effect on our business, financial condition and results of
operations.

     We also compete with other dialysis products and services companies in
seeking selected acquisitions. If we are not able to continue to effect
acquisitions in the provider business upon reasonable terms, particularly in our
International segment, there could be an adverse impact on the growth of our
business and our future growth prospects.

WE FACE PRODUCTS LIABILITY AND OTHER CLAIMS WHICH COULD RESULT IN SIGNIFICANT
LIABILITY

     Health care companies are subject to claims alleging negligence, products
liability, breach of warranty, malpractice and other legal theories that may
involve large claims and significant defense costs whether or not liability is
ultimately imposed. Health care products may also be subject to recalls.
Although liability claims and recalls have not had a material adverse effect on
our businesses in the past, we cannot assure that we will not suffer one or more
significant claims or product recalls in the future. Product liability claims or
recalls could result in judgments against us or significant compliance costs,
which could materially adversely affect our business, financial condition and
results of operations.

     While we have been able to obtain liability insurance in the past, it is
possible that such insurance may not be available in the future either on
acceptable terms or at all. A successful claim in excess of the limits of our
insurance coverage could have a material adverse effect on our results of
operations and financial condition. Liability claims, regardless of their merit
or eventual outcome, also may have a material adverse effect on our business and
reputation, which could in turn reduce our revenues and profitability.

IF PHYSICIANS AND OTHER REFERRAL SOURCES CEASE REFERRING PATIENTS TO OUR
DIALYSIS CLINICS OR CEASE PURCHASING OUR DIALYSIS PRODUCTS, OUR REVENUES WOULD
DECREASE

     Our dialysis services business is dependent upon patients choosing our
clinics as the location for their treatments. Patients may select a clinic
based, in whole or in part, on the recommendation of their physician. We believe
that physicians and other clinicians typically consider a number of factors when
recommending a particular dialysis facility to an ESRD patient, including, but
not limited to, the quality of care at a clinic, the competency of a clinic's
staff, convenient scheduling, and a clinic's location and physical condition.
Physicians may change their facility recommendations at any time, which may
result in the movement of our existing patients to competing clinics, including
clinics established by the physicians themselves. At most of our clinics, a
relatively small number of physicians account for the referral of all or a
significant portion of the patient base. If a significant number of physicians
ceased referring their patients to our clinics, this could reduce our dialysis
care revenue and materially adversely affect our overall operations. Our
operations are also affected by referrals from hospitals, managed care plans and
other sources.

                                        7
<PAGE>

     The decision to purchase our dialysis products and other services or
competing dialysis products and other services will be made in some instances by
medical directors and other referring physicians at our dialysis clinics and by
the managing medical personnel and referring physicians at other dialysis
clinics, subject to applicable regulatory requirements. A decline in physician
recommendations or purchases of our products or ancillary services could reduce
our dialysis product and other services revenue, and materially adversely affect
our business, financial condition and results of operations.

IF WE ARE UNABLE TO ATTRACT AND RETAIN SKILLED MEDICAL, TECHNICAL AND
ENGINEERING PERSONNEL, WE MAY BE UNABLE TO MANAGE OUR GROWTH OR CONTINUE OUR
TECHNOLOGICAL DEVELOPMENT

     Our continued growth in the provider business will depend upon our ability
to attract and retain skilled employees, such as highly skilled nurses and other
medical personnel. Competition for those employees is intense. Moreover, we
believe that future success in the provider business will be significantly
dependent on our ability to attract and retain qualified physicians to serve as
medical directors of our dialysis clinics. Our dialysis products business
depends on the development of new products, technologies and treatment concepts.
Competition is also intense for skilled engineers and other technical research
and development personnel. If we are unable to obtain the services of key
personnel, the ability of our officers and key employees to manage our growth
would suffer and our operations could suffer in other respects. These factors
could preclude us from integrating acquired companies into our operations, which
could increase our costs and prevent us from realizing synergies from
acquisitions. Lack of skilled research and development personnel could impair
our technological development, which would increase our costs and impair our
reputation for production of technologically advanced products.

WE FACE ADDITIONAL COSTS AND UNCERTAINTIES FROM INTERNATIONAL OPERATIONS

     We intend to expand our international presence. As a result, we expect that
revenues from countries other than the U.S. and Germany will account for an
increasing portion of future revenues.

     Revenues from international operations are subject to a number of risks,
including the following:

     -  Fluctuations in exchange rates could adversely affect profitability;

     -  We may face difficulties in enforcing and collecting accounts receivable
        under some countries' legal systems;

     -  Local regulations may restrict our ability to obtain a direct ownership
        interest in dialysis clinics or other operations;

     -  Political instability, especially in developing countries, could disrupt
        our operations;

     -  Some customers and governments may have longer payment cycles, with
        resulting adverse effects on our cash flow; and

     -  Some countries could impose additional taxes or restrict the import of
        our products.

     Any one or more of these factors, or any difficulty in integrating
businesses we acquire into our operations, could increase our costs, reduce our
revenues, or disrupt our operations, with possible material adverse effects on
our business, financial condition and results of operations.

OTHER RISKS

OUR SIGNIFICANT INDEBTEDNESS MAY LIMIT OUR ABILITY TO PAY DIVIDENDS OR IMPLEMENT
CERTAIN ELEMENTS OF OUR BUSINESS STRATEGY

     We are substantially leveraged. As of December 31, 2001, our total
consolidated liabilities were $3.90 billion, including obligations with respect
to all our trust preferred securities of approximately $1.43 billion, our total
consolidated assets were $6.52 billion and our stockholders' equity was $2.62
billion. Our substantial level of debt presents the risk that we might not
generate sufficient cash to service our indebtedness or

                                        8
<PAGE>

that our leveraged capital structure could limit our ability to finance the
acquisition and development of additional projects, to compete effectively or to
operate successfully under adverse economic conditions.

     Our senior credit agreement and the indentures relating to our trust
preferred securities include covenants that require us to maintain certain
financial ratios or meet other financial tests. Under our senior credit
agreement, we are obligated to maintain a minimum consolidated net worth and a
minimum consolidated fixed charge ratio (ratio of consolidated earnings before
interest, taxes, depreciation and amortization (EBITDA) to fixed charges) and we
are subject to a limit on our consolidated leverage ratio (ratio of consolidated
funded debt to EBITDA).

     Our senior credit agreement and our indentures include other covenants
which, among other things, restrict or have the effect of restricting our
ability to dispose of assets, incur debt, pay dividends, create liens or make
capital expenditures, investments or acquisitions. These covenants may otherwise
limit our activities. The breach of any of the covenants could result in a
default under the credit agreement or the indentures, which could, in turn,
create additional defaults under the agreements relating to our other long term
indebtedness.

BECAUSE WE ARE NOT ORGANIZED UNDER U.S. LAW, WE ARE SUBJECT TO CERTAIN LESS
DETAILED DISCLOSURE REQUIREMENTS UNDER U.S. FEDERAL SECURITIES LAWS

     Under pooling agreements that we have entered into for the benefit of
minority holders of our Ordinary shares and holders of our Preference shares
(including, in each case, holders of American Depositary Receipts representing
beneficial ownership of such shares), we have agreed to file quarterly reports
with the Securities and Exchange Commission, to prepare annual and quarterly
financial statements in accordance with U.S. generally accepted accounting
principles, and to file information with the Securities and Exchange Commission
with respect to annual and general meetings of our shareholders. However, we are
a "foreign private issuer," as defined in the Securities and Exchange
Commission's regulations, and consequently we are not subject to all of the same
disclosure requirements applicable to domestic companies. We are exempt from the
Securities and Exchange Commission's proxy rules, and our annual reports contain
less detailed disclosure than reports of domestic issuers regarding such matters
as management, executive compensation and outstanding options, beneficial
ownership of our securities and certain related party transactions. Also, our
officers, directors and beneficial owners of more than 10% of our equity
securities are exempt from the reporting requirements and short-swing profit
recovery provisions of Section 16 of the Securities Exchange Act of 1934. These
limits on available information about our company may adversely affect the
market prices for our securities.

ITEM 4.  INFORMATION ON THE COMPANY

A.  HISTORY AND DEVELOPMENT OF THE COMPANY

GENERAL

     Fresenius Medical Care AG is a stock corporation (Aktiengesellschaft)
organized under the laws of Germany. It was incorporated on August 5, 1996.
Fresenius Medical Care AG is registered with the commercial register of the
local court (Amtsgericht) of Hof an der Saale, Germany under HRB 2460. Our
registered office (Sitz) is Hof an der Saale, Germany. Our business address is
Else-Kroner-Strasse 1, 61352 Bad Homburg, Germany, telephone ++49-6172-609-0.

HISTORY

     Fresenius Medical Care AG was created by the conversion of Sterilpharma
GmbH, a limited liability company under German law organized in 1975, into a
stock corporation under German law (Aktiengesellschaft). A shareholder's meeting
on April 17, 1996 adopted the resolutions for this conversion and the commercial
register registered the conversion on August 5, 1996.

     On September 30, 1996, we completed a series of transactions to consummate
an Agreement and Plan of Reorganization entered into on February 4, 1996 by
Fresenius AG and W.R. Grace which we refer to as "the Merger" elsewhere in this
report. Pursuant to that agreement, Fresenius AG contributed Fresenius Worldwide
Dialysis, its global dialysis business, including its controlling interest in
Fresenius USA, Inc., in exchange for 35,210,000 Fresenius Medical Care Ordinary
shares. Thereafter, we acquired:
                                        9
<PAGE>

     -  all of the outstanding common stock of W.R. Grace, whose sole business
        at the time of the transaction consisted of National Medical Care, Inc.,
        its global dialysis business, in exchange for 31,360,000 Ordinary
        shares; and

     -  the publicly-held minority interest in Fresenius USA, in exchange for
        3,430,000 Ordinary shares.

     Effective October 1, 1996, we contributed all our shares in Fresenius USA
to Fresenius Medical Care Holdings, which conducts business under the trade name
Fresenius Medical Care North America, and which is the holding company for all
of our operations in the U.S. and Canada and manufacturing operations in Mexico.

CAPITAL EXPENDITURES

     We invested, by business segment and geographical areas, the following
amounts during the three fiscal years ended December 31, 2001, 2000 and 1999 and
have budgeted the following amounts for the year 2002:

<Table>
<Caption>
                                                                     ACTUAL
                                                                 (IN MILLIONS)
                                                              --------------------    BUDGET
                                                              2001    2000    1999     2002
                                                              ----    ----    ----    ------
<S>                                                           <C>     <C>     <C>     <C>
Acquisitions
  North America.............................................  $412    $116    $ 65
  International
     Germany................................................    --      11      --
     Rest of World..........................................    49     161      46
                                                              ----    ----    ----     ----
       Total Acquisitions...................................  $461    $288    $111     $100
                                                              ====    ====    ====     ====
Capital expenditures for property, plant and equipment
  North America.............................................  $138    $113    $ 81
  International
     Germany................................................    34      24      24
     Rest of World..........................................   103      91      55
                                                              ----    ----    ----     ----
       Total Capital Expenditures...........................  $275    $228    $160     $220
                                                              ====    ====    ====     ====
</Table>

     In North America major capital expenditures for the year 2002 are planned
for our manufacturing facility in Ogden, Utah. Beginning in 2001, we made a $65
million capital commitment to construct two dialyzer assembly lines and two
fiber spinning lines, increasing our dialyzer manufacturing capacity by 200%.
Production starts were scheduled between the fourth quarter of 2001 and the
second quarter of 2002.

     Major capital expenditures in Japan for 2001 included a $15 million
investment in a second fiber spinning line in Inukai and a $14 million
investment in a peritoneal dialysis solution manufacturing line in Buzen, Japan.
At our St. Wendel plant in Germany we built a dialyzer assembly line for
production of the new generation of FX-class dialyzers at a cost of $2 million
in 2001, with another $8 million expansion planned over the next two years. In
Latin America we plan to invest $9 million in peritoneal dialysis solutions
manufacture in Mexico. We finance our capital expenditures through cash flow
from operations or under existing credit facilities.

     For information regarding recent acquisitions, see "Business Overview --
Acquisitions."

B.  BUSINESS OVERVIEW

OUR BUSINESS

     We are the world's largest kidney dialysis company engaged in both
providing dialysis care and manufacturing dialysis products, based on publicly
reported revenues and patients treated. We provide dialysis treatment to over
105,000 patients at our 1,400 clinics located in 20 countries. In the U.S., we
also provide inpatient dialysis services, therapeutic apheresis, hemoperfusion
and other services under contract to hospitals. We also develop and manufacture
a complete range of equipment, systems and disposable products, which we sell to
customers in over 100 countries. We are able to use the information we gain when
treating patients in

                                        10
<PAGE>

developing new and improved products. We believe that our size, our activities
in both dialysis care and dialysis products and our concentration in specific
geographic areas allow us to operate more cost-effectively than many of our
competitors. For the year ended December 31, 2001, we had net revenues of $4.9
billion, an increase of 16% over 2000 revenues. We derived 74% of our revenues
in 2001 from our North America operations and 26% from our International
operations.

     The following table summarizes revenues for our North America segment and
our International segment as well as our major categories of activity for the
three years ended December 31, 2001, 2000 and 1999.

<Table>
<Caption>
                                                               2001      2000      1999
                                                              ------    ------    ------
                                                                    (IN MILLIONS)
<S>                                                           <C>       <C>       <C>
North America
  Dialysis Care.............................................  $3,131    $2,608    $2,335
  Dialysis Products.........................................     471       474       469
                                                              ------    ------    ------
                                                               3,602     3,082     2,804
International
  Dialysis Care.............................................     426       336       265
  Dialysis Products.........................................     831       783       771
                                                              ------    ------    ------
                                                               1,257     1,119     1,036
</Table>

RENAL INDUSTRY OVERVIEW

END-STAGE RENAL DISEASE

     End-stage renal disease is the stage of advanced chronic kidney disease
that is characterized by the irreversible loss of kidney function and requires
routine dialysis treatment or kidney transplantation to sustain life. A normally
functioning human kidney removes waste products and excess water from the blood
that prevents toxin buildup, water overload and the eventual poisoning of the
body. A number of conditions -- diabetes, hypertension, glomerulonephritis and
inherited diseases -- can cause chronic kidney disease. Nearly 60% of all people
with ESRD acquire the disease as a complication of one or more of these primary
conditions.

     There are currently only two methods for treating ESRD: dialysis and kidney
transplantation. Scarcity of compatible kidneys limits transplants. According to
data published by the Center for Medicare and Medicaid Services ("CMS")
(formerly the Health Care Financing Administration) of the U.S. Department of
Health and Human Services, approximately 14,300 patients received kidney
transplants in the U.S. during 2000. Transplantation rates vary from country to
country in Europe. According to the European Dialysis and Transplantation
Association Registry Report for 1996, 2% of new ESRD patients age 15 or over
received transplants as the first mode of treatment in Europe in 1995.
Therefore, most patients suffering from ESRD must rely on dialysis, which is the
removal of toxic waste products and excess fluids from the body by artificial
means. There are two major dialysis methods commonly used today, hemodialysis
and peritoneal dialysis. These are described below under "Treatment Options for
ESRD." Generally, an ESRD patient's physician, in consultation with the patient,
chooses the patient treatment method, which is based on the patient's medical
conditions and needs.

     Based on the most recent data published by the CMS of the U.S. Department
of Health and Human Services, the number of patients in the U.S. who received
dialysis for chronic ESRD grew from approximately 66,000 in 1982 to
approximately 273,300 at December 31, 2000, or a compound annual rate of 8.2%.
It is our belief that growth will continue at 5-7% per year. The United States
Renal Data System (USRDS) projections to 2010 suggest that the number of both
dialysis and transplant patients will reach levels double those in 1997.
According to data from the CMS, the European Dialysis and Transplantation
Association and our own internal survey, the number of non-U.S. chronic dialysis
patients is growing at estimated annual rates of 8% for patients receiving
hemodialysis and 7% for patients receiving peritoneal dialysis. At the end of
2000, an estimated 1.1 million patients were undergoing dialysis treatment.
According to our own market surveys, Japan is the second largest dialysis market
in the world with approximately 210,000 dialysis patients. In the rest of the
world, we estimate that at the end of 2000 there were approximately 250,000
dialysis patients in Europe, more than 130,000 patients

                                        11
<PAGE>

in Asia (excluding Japan) and around 120,000 patients in Latin America. We
believe that the continuing growth in the number of dialysis patients is
principally attributable to:

     -  increased general life expectancy and the overall aging of the general
        U.S. and European population;

     -  shortage of donor organs for kidney transplants;

     -  improved dialysis technology that has expanded the patient population
        able to undergo life-prolonging dialysis;

     -  generally stable or increased reimbursements for treatments in many
        countries; and

     -  better treatment and survival of patients with hypertension, diabetes
        and other illnesses that lead to ESRD.

TREATMENT OPTIONS FOR ESRD

     Hemodialysis.  Hemodialysis removes toxins and excess fluids from the blood
outside the patient's body. In hemodialysis, the blood flows outside the body by
means of plastic tubes known as bloodlines into a specially designed filter,
called a dialyzer. The dialyzer functions as an artificial kidney by separating
waste products and excess water from the blood by diffusion and ultrafiltration.
Dialysis solution flowing through the dialyzer carries away the waste products
and excess water. The cleansed blood is returned to the patient. A hemodialysis
machine controls the movement of the blood and dialysis solution. The machine
pumps blood, adds anti-coagulants, regulates the purification process and
controls the mixing of dialysis solution and the rate of its flow through the
system. This machine may also monitor and record the patient's vital signs.

     In addition to standard hemodialysis, hemofiltration is a treatment method
which cleanses an ESRD patient's blood without using dialysis solution. Blood
passes through a semipermeable membrane, which filters out solute particles.
Hemodialfiltration combines the advantages of hemofiltration and hemodialysis,
and provides high elimination rates for small and large molecular weight
substances.

     Hemodialysis patients generally receive treatment three times per week,
typically for two and one-half to four hours or longer per treatment. The
majority of hemodialysis patients receive treatment at outpatient dialysis
clinics, such as ours, where hemodialysis treatments are performed with the
assistance of a nurse or dialysis technician under the general supervision of a
physician. Hemodialysis is the only form of treatment, other than
transplantation, currently available to patients who have very low residual or
nonexistent renal function and whose blood is inadequately cleansed using
peritoneal dialysis.

     According to data from the CMS, as of December 31, 2000, there were
approximately 3,927 Medicare-certified ESRD treatment clinics in the U.S.
Ownership of these clinics is fragmented. The majority of hemodialysis patients
are referred to outpatient dialysis centers, such as our clinics, where
hemodialysis treatments are performed with the assistance of a nurse or dialysis
technician under the general supervision of a physician. We estimate that there
are approximately 4,200 dialysis clinics in Europe, of which 60% are
government-owned, 30% are privately owned, and 10% are operated by health care
organizations. In Latin America, privately owned clinics predominate, comprising
over 60% of all clinics providing dialysis care.

     According to CMS, as of December 31, 2000, hemodialysis patients
represented 90% of all dialysis patients in the U.S. Our most recent studies
indicate hemodialysis patients comprise 95% of all ESRD patients in Japan, 89%
in Europe, and 83% in the rest of the world.

     Peritoneal Dialysis.  Peritoneal dialysis removes toxins from the blood
using the peritoneum, the membrane lining covering the internal organs located
in the abdominal area. Peritoneal dialysis patients administer their own
treatments in their own homes and workplaces, either by a treatment known as
continuous ambulatory peritoneal dialysis or CAPD, or by a treatment we
introduced in 1980 known as continuous cycling peritoneal dialysis or CCPD. In
both of these treatments, a surgically implanted catheter provides access to the
peritoneal cavity. Using this catheter, the patient introduces a sterile
dialysis solution from a solution bag through a tube into the peritoneal cavity
and the peritoneum operates as the filtering membrane. A typical CAPD

                                        12
<PAGE>

peritoneal dialysis program involves the introduction and disposal of dialysis
solution four times a day. With CCPD a machine "cycles" solution to and from the
patient's peritoneal cavity while the patient sleeps.

     In both CAPD and CCPD the patient undergoes dialysis daily, and typically
does not experience the buildup of toxins and fluids which hemodialysis patients
experience on the days they are not treated. In addition, because the patient
need not make frequent visits to a hemodialysis clinic, and can administer the
solution exchanges at convenient, although more frequent, times, a patient on
peritoneal dialysis may experience much less disruption to his or her life than
a patient on hemodialysis. Some aspects of peritoneal dialysis, however, limit
its use as a long-term therapy for some patients. First, some patients cannot
make the required sterile connections of the peritoneal dialysis tubing to the
catheter, leading to excessive episodes of peritonitis. Peritonitis is a
bacterial infection of the peritoneum which can result in serious adverse health
consequences, including death. Second, treatment by current forms of peritoneal
dialysis may not be as effective as hemodialysis in removing wastes and fluids.

OUR STRATEGY

     Our objective is to focus on generating revenue growth that exceeds market
growth of the dialysis industry, measured by growth in the patient population,
while maintaining our leading position in the market and increasing earnings at
a faster pace than revenue growth. Our dialysis care and product revenues have
grown faster than the market over the past five years, and we believe that we
are well positioned to meet our objectives by focusing on the following
strategies:

     -  Continue to Provide High Standards of Patient Care.  We believe that our
        reputation for providing the highest standards of patient care is a
        competitive advantage. We believe that our proprietary Patient
        Statistical Profile database, which contains clinical and demographic
        data on over 290,000 U.S. dialysis patients, is the most comprehensive
        body of information about dialysis patients in the world. In 1998, we
        initiated our European clinical database to develop a comparable body of
        data from our European dialysis clinics. We believe that these databases
        provide a unique advantage in improving dialysis therapy and treatment
        outcomes, improving the quality and effectiveness of dialysis products
        and reducing mortality rates. By improving dialysis outcomes and overall
        ESRD patient care, we also may be able to contain hospitalization and
        other costs of ESRD treatment.

     -  Expand Presence in Attractive Growth Markets Worldwide.  We intend to
        continue to take advantage of the reputation and market recognition our
        global product business has created by acquiring and establishing new
        dialysis clinics within attractive international markets. We believe
        that we will obtain an increasing percentage of our dialysis care growth
        from worldwide markets. We believe that increases in per capita income
        in developing countries will make general health care benefits, which
        may include payment for dialysis treatment, more widely available and
        present significant opportunities. During 2001, we acquired 24 clinics
        and opened 11 new clinics outside the U.S. By December 31, 2001, we
        treated over 29,000 patients outside the U.S., an increase of
        approximately 22% over the figure at December 31, 2000. To take
        advantage of the growing trend towards consolidation outside of the
        U.S., we envision making additional acquisitions in selected
        international markets.

     -  Increase Our Spectrum of Dialysis Services.  One of our objectives is to
        continue to expand our role within the broad spectrum of services for
        dialysis patients. We have begun to implement this strategy by providing
        expanded and enhanced patient services, including laboratory services,
        to both our own clinics and those of third parties. We estimate that our
        Spectra Renal Management division provides laboratory services for 40%
        of the ESRD patients in the U.S. We have developed disease state
        management methodologies, which involve total patient care for ESRD
        patients and which we believe are attractive to managed care payors. As
        part of our plans to develop disease state management, we have formed
        Optimal Renal Care, LLC, a joint venture with Southern California
        Permanente Medical Group, a subsidiary of Kaiser Permanente, Inc. which
        has the largest dialysis patient population of any managed care
        organization. We expect that Optimal Renal Care will double its patient
        volume in 2002. Optimal Renal Care is expanding its focus to offer
        services to a wider range of chronic kidney disease patients, which
        includes more mild impairment of renal function. We have also formed
        Renaissance Health Care

                                        13
<PAGE>

       as a joint venture with participating nephrologists. Renaissance is
       currently contracted with 16 health plans, in 13 states. We provide End
       Stage Renal Disease and Chronic Kidney Disease programs to more than
       3,000 patients. We are also operating a surgical center for the
       management and care of vascular access for dialysis patients in the
       United States. This decreases hospitalization and keeps patients within
       the company's dialysis service patient population. Based on the results
       of this pilot project, we are exploring the possibility of opening more
       such U.S. centers in the mid- to long-term.

     -  Offer Complete Dialysis Product Lines with Recurring Disposable Products
        Revenue Streams.  We offer broad and competitive hemodialysis and
        peritoneal dialysis product lines. These product lines enjoy broad
        market acceptance and enable us to serve as our customers' single source
        for all of their dialysis machines, systems and disposable products.
        During the year ended December 31, 2001, we obtained approximately 19%
        of our product revenue from machine sales and 81% from sales of
        disposable products. These disposable products provide us with a
        continuing source of revenue from our installed base of dialysis
        equipment.

     -  Extend Our Position as an Innovator in Product and Process
        Technology.  We are committed to technological leadership in both
        hemodialysis and peritoneal dialysis products. We have an over 200
        member research and development team that focuses on developing dialysis
        systems that are safer, more effective and easier to use and that can be
        easily customized to meet the differing needs of customers around the
        world. We believe that our extensive expertise in patient treatment and
        clinical data will further enhance our ability to develop more effective
        products and treatment methodologies. Our ability to manufacture
        dialysis products on a cost-effective and competitive basis results in
        large part from our process technologies. Over the past several years,
        we have reduced manufacturing costs per unit through development of
        proprietary manufacturing technologies that have streamlined and
        automated our production processes. We intend to further improve our
        proprietary, highly automated manufacturing systems to continue to
        reduce product manufacturing costs, concurrently achieving a high level
        of quality control and reliability.

     -  Expand into Related Services.  In 2001, Fresenius Medical Care
        Cardiovascular Resources Holdings ("FMC-CVR"), in which we have a 45%
        share, purchased Edwards Lifesciences Cardiovascular Resources Inc. a
        leading provider of perfusion and related cardiovascular services. The
        addition of this business provides a strong nationwide platform for
        expansion and innovation in the extracorporeal service business which
        compliments our extracorporeal dialysis service business well. With the
        creation of our BioScience department in 2001, we are expanding into
        therapy of acute liver failure. Based on our experience with dialysis
        therapy, we are working with notable scientists to develop a dual
        treatment for acute liver failure, one part being life preserving
        detoxification, the other a bioreactor that allows metabolism and
        protein synthesis.

DIALYSIS CARE

DIALYSIS SERVICES

     We provide dialysis treatment and related laboratory and diagnostic
services at our approximately 1,400 outpatient dialysis clinics, 1,030 of which
are in the U.S. and 370 of which are in 19 countries outside of the U.S. Our
operations outside the U.S. generated 12% of our 2001 dialysis care revenue. We
currently operate dialysis clinics in Argentina, Australia, Brazil, China,
Colombia, Czech Republic, France, Germany, Hungary, Italy, Singapore, Japan,
Mexico, Portugal, Spain, Taiwan, Turkey, United Kingdom and Venezuela. Our
dialysis clinics are generally concentrated in areas of high population density.
In 2001, we acquired 88 existing clinics, opened 74 new clinics and closed or
sold 23 clinics. The number of patients we treat at our clinics increased by
about 15%, from approximately 91,900 at December 31, 2000 to approximately
105,830 at December 31, 2001.

     With our large patient population, we have developed proprietary patient
statistical databases which enable us to improve dialysis treatment outcomes,
and improve the quality and effectiveness of dialysis products, resulting in
reduced mortality rates. In addition to our patient databases, we believe that
local physicians, hospitals and managed care plans refer their ESRD patients to
our clinics for treatment due to:

                                        14
<PAGE>

     -  our reputation for quality patient care and treatment;

     -  our extensive network of dialysis clinics, which enables physicians to
        refer their patients to conveniently located clinics; and

     -  our reputation for technologically advanced products for dialysis
        treatment.

     We treat approximately 27% of the dialysis patients in the U.S. and, based
on publicly available reports we believe our next largest competitor treats
approximately 15% of U.S. dialysis patients. For the year 2001, dialysis
services accounted for 73% of our total revenue.

     At our clinics, we provide hemodialysis treatments at individual stations
through the use of dialysis machines. A nurse or dialysis technician attaches
the necessary tubing to the patient and monitors the dialysis equipment and the
patient's vital signs. The capacity of a clinic is a function of the number of
stations and such factors as the type of treatment, patient requirements, length
of time per treatment, and local operating practices and ordinances regulating
hours of operation. Most of our clinics operate two or three patient shifts per
day.

     Each of our dialysis clinics is under the general supervision of a Medical
Director and, in some cases, one or more associate Medical Directors, all of
whom are physicians. See "Patients, Physician and Other Relationships." Each
dialysis clinic also has an administrator who supervises the day-to-day
operations of the facility and the staff. The staff typically consists of
registered nurses, licensed practical nurses, patient care technicians, a social
worker, a registered dietician, a unit clerk and biomedical technicians.

     As part of the dialysis therapy, we provide a variety of services to ESRD
patients in the U.S. at our dialysis clinics. These services include
administering EPO, a bioengineered protein that stimulates the production of red
blood cells. EPO is used to treat anemia, a medical complication that ESRD
patients frequently experience, and we administer EPO to most of our patients.
Revenues from EPO accounted for approximately 27% of dialysis care revenue in
our North America segment for the year ended December 31, 2001. We receive a
substantial majority of this revenue as reimbursements through the Medicare and
Medicaid programs. Amgen Inc., is the sole manufacturer of EPO in North America,
and any interruption of supply could materially adversely affect our business,
financial condition and results of operations. Our current contract with Amgen
covers the period from January, 2002 to December, 2003 with price guarantees and
volume and outcome based discounts.

     Our clinics also offer services for home dialysis patients, the majority of
whom receive peritoneal dialysis treatment. For those patients, we provide
materials, training and patient support services, including clinical monitoring,
supply of EPO, follow-up assistance and arranging for delivery of the supplies
to the patient's residence. See "-- Regulatory and Legal Matters --
Reimbursement -- U.S." for a discussion of billing for these products and
services.

     We also provide dialysis services under contract to hospitals in the U.S.
on an "as needed" basis for hospitalized ESRD patients and for patients
suffering from acute kidney failure. Acute kidney failure can result from trauma
or similar causes, and requires dialysis until the patient's kidneys recover
their normal function. We service these patients either at their bedside, using
portable dialysis equipment, or at the hospital's dialysis site. Contracts with
hospitals provide for payment at negotiated rates that are generally higher than
the Medicare reimbursement rates for chronic in-clinic treatments.

     We employ a centralized approach with respect to certain administrative
functions common to our operations. For example, each dialysis clinic uses our
proprietary manuals containing our standardized operating and billing
procedures. We believe that centralizing and standardizing these functions
enhance our ability to perform services on a cost-effective basis.

     The manner in which each clinic conducts its business depends, in large
part, upon applicable laws, rules and regulations of the jurisdiction in which
the clinic is located, as well as our clinical policies. However, a patient's
attending physician, who may be the clinic's Medical Director or an unaffiliated
physician with staff privileges at the clinic, has medical discretion to
prescribe the particular treatment modality and medications for that patient.
Similarly, the attending physician has discretion in prescribing particular
medical products, although the clinic typically purchases equipment, regardless
of brand, in consultation with the Medical Director through our central
purchasing operations.
                                        15
<PAGE>

LABORATORY SERVICES

     We provide laboratory testing and marketing services through Spectra Renal
Management. Spectra Renal Management is the leading U.S. dialysis clinical
laboratory providing blood, urine and other bodily fluid testing services to
assist physicians in determining whether a dialysis patient's therapy regimen,
diet and medicines remain optimal. Spectra Renal Management operates two
laboratories, located in New Jersey and Northern California. During the year
ended December 31, 2001, Spectra Renal Management performed over 37 million
tests for more than 100,000 dialysis patients in 1,590 clinics across the U.S.

ACQUISITIONS

     A significant factor in the growth in our revenue and operating earnings in
prior years has been our ability to acquire health care businesses, particularly
dialysis clinics, on reasonable terms. Worldwide, physicians own many dialysis
clinics that are potential acquisition or joint venture candidates for us. In
the U.S., doctors might determine to sell their clinics to obtain relief from
day-to-day administrative responsibilities and changing governmental
regulations, to focus on patient care and to realize a return on their
investment. Outside of the U.S., doctors might determine to sell and/or enter
into joint ventures or other relationships with us to achieve the same goals and
to gain a partner with extensive expertise in dialysis products and services.
While price is typically the key factor in securing acquisitions, we believe
that we will be an attractive acquiror or partner to many dialysis clinic owners
due to:

     -  our reputation for patient treatment;

     -  our proprietary Patient Statistical Profile and European Clinical Data
        databases;

     -  our comprehensive clinical and administrative systems, manuals and
        policies, and our ability to provide ancillary services for dialysis
        clinics and patients; and

     -  our reputation for technologically advanced products.

     We paid aggregate consideration, consisting of cash and preference shares,
for acquisitions of new clinics of approximately $461 million in 2001 and
approximately $288 million in 2000.

     In January, 2001, we acquired Everest Healthcare Services Corporation
through a merger of Everest into a subsidiary of Fresenius Medical Care at a
purchase price of $365 million, which includes assumed debt and the issuance of
2.25 million preference shares. Everest owns, operates or manages approximately
70 clinic facilities providing therapy to approximately 6,800 patients in the
eastern and central United States. Everest also conducts extracorporal blood
services and acute dialysis businesses which provide acute dialysis, apheresis
and hemoperfusion services to approximately 100 hospitals. We also expect to
continue to enhance our presence in the U.S. by acquiring individual or small
groups of dialysis clinics in selected markets, expanding existing clinics, and
opening new clinics, although we will consider large acquisitions in the U.S. if
suitable opportunities, such as Everest, become available to us.

     The U.S. health care industry has experienced significant consolidation in
recent years, particularly in the dialysis service sectors in which we compete,
resulting, in some cases, in increased acquisition prices. Moreover, because of
the ongoing consolidation in the dialysis services industry, the availability of
acquisitions may decrease. Our ability to make acquisitions also will depend, in
part, on our available financial resources and the limitations imposed under our
senior credit agreement and the indentures relating to our trust preferred
securities. These limitations are discussed under "Item 5. Operating and
Financial Review and Prospects". If we are not able to continue to effect
acquisitions in the dialysis care business on reasonable terms, there could be
an adverse impact on growth in our business and on our results of operations. We
regularly evaluate and hold discussions with various other health care companies
and other businesses regarding acquisitions and joint business ventures. In
2001, we completed new acquisitions and acquisitions of previously managed
clinics totaling 88 dialysis facilities providing care to approximately 8,671
patients. These acquisitions expand our presence in selected key geographic
areas.

                                        16
<PAGE>

QUALITY ASSURANCE IN DIALYSIS CARE

     At each of our U.S. dialysis clinics, a quality assurance committee is
responsible for reviewing quality of care reports that our Patient Statistical
Profile system generates, setting goals for quality enhancement and monitoring
the progress of quality assurance initiatives. We believe that we enjoy a
reputation of providing high quality care to dialysis patients. In 2001, we
continued to develop and implement programs to assist in achieving our quality
goals. Our Access Intervention Management Program (AIM), started in 2001,
detects and corrects arteriovenous access failure in hemodialysis treatment,
which is the major cause of hospitalization and morbidity. Our PD Services
program, a regionalization program to enhance peritoneal dialysis services, has
expanded from six regions in 2000 to seventeen at the end of 2001. Kidney
Options, a pre-ESRD program to educate patients about prevention, slowing kidney
failure and treatment options has been highly successful, with its website
generating over 900,000 hits since its inception in October of 2000.

     In the International segment our quality management program focuses on
consolidation and coordination of medical matters and activities in our
international dialysis clinics to ensure and improve the quality of renal care
offered in these clinics. These clinics receive quality control guidelines to
monitor factors such as water quality, anemia treatment, and laboratory
services, using indices that are accepted worldwide in the dialysis and
scientific communities. Our system includes review and report procedures for
assessing the progress and effectiveness of our quality control activities. We
coordinate the program with internal corporate audits and audits by third
parties such as regulatory authorities. Management uses the audit reports to
further improve our system by defining additional quality control objectives.

     During 2001, we continued to develop tools to analyze and respond as
quickly as possible to customer complaints and issues. We implemented a
computerized alert system in selected FMC dialysis clinics for newly developed
medical devices. The system is monitored by a dedicated staff and reports to a
central body responsible for the evaluation and assessment of the information.
Our organizational units successfully completed all ten of their regulatory
audits in 2001. In 2000, clinics in England, Spain, Portugal and Italy were
certified according to ISO 9002 and in 2001, had our first certification in
France. Clinics in Hungary and Turkey have established management systems which
are scheduled to be certified in 2002. We had 63 ISO 9002 certified clinics at
the end of 2001 compared to 44 clinics in 2000.

PATIENT DATA COLLECTION AND ANALYSIS

     We engage in systematic efforts to measure, maintain and improve the
quality of the services at our dialysis clinics. Each clinic collects and
analyzes quality assurance and patient data, which our division and corporate
management regularly reviews.

     Our clinical laboratory results have been a critical element in the
development of our proprietary Patient Statistical Profile database, which
contains clinical, laboratory and demographic data on over 290,000 dialysis
patients in the U.S. We use this database to assist physicians in providing
quality care to dialysis patients. In addition, our Patient Statistical Profile
database is a key resource in ongoing research, both within our company and at
outside research institutions, to decrease mortality rates among dialysis
patients and improve their quality of life.

     In 1998, we began developing our European clinical database. The database
includes a version in each relevant local language and takes into account the
different health care systems of the various European countries. Compilation and
use of the information in this database are designed to comply with applicable
European standards and restrictions relating to patient privacy.

SOURCES OF U.S. DIALYSIS CARE NET REVENUE

     The following table provides information for the years ended December 31,
2001, 2000 and 1999 regarding the percentage of our U.S. dialysis treatment
services net revenues from (a) the Medicare ESRD program, (b)
private/alternative payors, such as commercial insurance and private funds, (c)
Medicaid and other government sources and (d) hospitals.

                                        17
<PAGE>

<Table>
<Caption>
                                                               YEAR ENDED DECEMBER 31,
                                                              --------------------------
                                                               2001      2000      1999
                                                              ------    ------    ------
<S>                                                           <C>       <C>       <C>
Medicare ESRD program.......................................   59.7%     59.1%     60.2%
Private/alternative payors..................................   31.2%     32.1%     30.3%
Medicaid and other government sources.......................    4.6%      4.2%      4.2%
Hospitals...................................................    4.5%      4.6%      5.3%
                                                              ------    ------    ------
Total.......................................................  100.0%    100.0%    100.0%
                                                              ======    ======    ======
</Table>

     Under the Medicare ESRD program, Medicare reimburses dialysis providers for
the treatment of certain individuals who are diagnosed as having ESRD,
regardless of age or financial circumstances. When Medicare assumes
responsibility as the primary payor, it pays for dialysis and specified related
services at 80% of the payment methodology commonly referred to as the Medicare
composite rate. In addition, subject to various restrictions and co-payment
limitations, Medicare pays separately for some dialysis-related diagnostic and
therapeutic services not included in the Medicare composite rate. A secondary
payor is responsible for paying any co-payment, which is typically 20%, other
approved services not paid by Medicare less the annual deductible. The secondary
payor is usually a Medicare supplemental insurer, a state Medicaid program or,
to a lesser extent, the patient or the patient's private insurer. Most of the
states in which we currently operate dialysis clinics provide Medicaid benefits
to qualified recipients to supplement their Medicare entitlement.

     Prior to the time at which Medicare becomes the primary payor for a
patient, another third-party payor, such as the patient's private insurer, or
the patient, pays for most dialysis treatments. ESRD patients under age 65 who
have employer health plan coverage must wait 33 months, which comprises a
three-month entitlement waiting period and an additional 30-month "coordination
of benefits period", before Medicare becomes the primary payor. During this
33-month period, the employer health plan is responsible for payment as primary
payor at its negotiated rate or, in the absence of a negotiated rate, at our
usual and customary rates, which generally are higher than the rates paid by
governmental payors, such as Medicare, and Medicare is the secondary payor. See
"-- Regulatory and Legal Matters -- Reimbursement -- U.S."

     We obtain a significant portion of our revenues for dialysis services from
reimbursement provided by non-governmental third-party payors. Some type of
managed care plan, including health maintenance organizations, now furnishes a
substantial portion of third-party health insurance in the U.S. Non-governmental
payors generally reimburse for dialysis treatments at higher rates than
governmental payors such as Medicare. However, managed care plans have been more
aggressive in contracting with a smaller number of selected providers willing to
furnish services for lower rates and subject to a variety of service
restrictions. For example, managed care plans and traditional indemnity
third-party payors increasingly are demanding alternative fee structures, such
as capitation arrangements. With capitation, a provider receives a fixed payment
per month for each enrolled patient and bears the risk of loss if the costs of
treating a patient exceed the fixed capitation payment. These market forces have
resulted in pressures to reduce the reimbursements we receive for our services
and products.

     Our ability to secure rates with indemnity and managed care plans has
largely been due to the relatively small number of ESRD patients enrolled by any
single health maintenance organization. Regulation has prohibited ESRD patients
from joining a health maintenance organization unless they are otherwise
eligible for Medicare coverage, due to their age or disability, and are members
of a managed care plan when they first experience kidney failure. The CMS has a
pilot program underway for managed care companies to treat Medicare ESRD
patients under capitated contracts. If successful, this program could result in
the elimination of the regulation that precludes ESRD patients from enrolling in
managed care organizations. If Medicare health maintenance organization
enrollments increase and the number of ESRD patients in managed care plans also
increases, managed care plans' ability to negotiate lower rates or reduce the
services we provide to them may increase. In addition, the health maintenance
organization may have contracted with another provider, or may have stricter
controls on access to certain ancillary services that we typically provide to
ESRD patients. Any of these developments could limit our future reimbursement
for such services.

     In 2000, we formed two joint ventures seeking to contract with managed care
organizations for the care of ESRD patients. Renaissance Health Care, Inc. is a
50/50 joint venture between us and participating nephrologists

                                        18
<PAGE>

throughout the U.S. Our other venture, Optimal Renal Care is a 50/50 joint
venture between us and Permanente Medical Group of Southern California. We
believe a significant increase in the number of patients enrolled in managed
care plans might also cause these plans to look more closely at outsourcing ESRD
care to ESRD companies such as our disease state management joint ventures.

     As managed care programs expand market share and gain greater bargaining
power in relation to health care providers, there will be increasing pressure to
reduce the payments for our services and products. These trends would accelerate
if future changes to the Medicare ESRD program require private payors to assume
a greater percentage of the cost of care given to dialysis patients. We are
presently seeking to expand the portion of our revenues attributable to
non-governmental private payors through such measures as Optimal Renal Care.
However, we believe that the historically higher rates of reimbursement
nongovernmental payors have paid may not continue at these high levels. If
substantially more patients join managed care plans or managed care plans reduce
reimbursements paid to us, our business and results of operations could be
adversely affected, possibly materially. See "-- Regulatory and Legal Matters --
Reimbursement-U.S." and "Anti-Kickback Statutes, False Claims Act, Stark Law,
and Fraud and Abuse Laws."

PATIENT, PHYSICIAN AND OTHER RELATIONSHIPS

     We believe that our success in establishing and maintaining dialysis
clinics, both in the U.S. and in other countries, depends significantly on our
ability to obtain the acceptance of and referrals from local physicians,
hospitals and managed care plans. A dialysis patient generally seeks treatment
at a conveniently located clinic at which the patient's nephrologist has staff
privileges. Virtually all of our clinics maintain open staff privileges for
local nephrologists. Our ability to provide quality dialysis care and otherwise
meet the needs of local patients and physicians is central to our ability to
attract nephrologists to our clinics and to receive referrals from such
physicians.

     We market the availability, quality and other advantages of our dialysis
clinics to physicians through symposia and other professional meetings. We
supplement our marketing efforts through distribution of literature and
advertisements in professional journals.

     Medicare ESRD program reimbursement regulations require that a Medical
Director generally supervise treatment at a dialysis clinic. Generally, the
Medical Director must be board certified or board eligible in internal medicine
and have at least twelve months of training or experience in the care of
patients at ESRD clinics. Our Medical Directors maintain their own private
practices.

     We have written agreements with the physicians who serve as Medical
Directors for our clinics. Our U.S. Medical Director agreements generally have
terms of three years, although some have terms of as long as five to ten years.
Our Medical Directors and other physicians under contract individually negotiate
their compensation, which generally depends upon competitive factors in the
local market, the physician's professional qualifications, experience and
responsibilities, the clinic's size and the services it provides. We fix the
aggregate compensation of Medical Directors and other physicians under contract
in advance for a period of one year or more, based in part on various efficiency
and quality incentives. We believe that compensation is paid at fair market
value. In some countries other than the U.S., Medical Director and physician
compensation may include a component based on some measure of the clinic's
financial performance.

     Virtually all of our agreements with our Medical Directors in the U.S., as
well as the typical contract under which we acquire existing dialysis clinics,
include noncompetition covenants covering specified activities within specified
geographic areas for specified periods of time. They do not prohibit the
physicians from providing direct patient care services at other locations. As
required by law, they also do not require a physician to refer patients to us or
particular clinics or to buy or use specific medical products. In certain
states, non-competition covenants may not be enforceable.

COMPETITION

     Dialysis Services.  The dialysis services industry is highly competitive.
Our major competitors in dialysis services include Gambro AB, DaVita, Inc.
(formerly Total Renal Care), Baxter International Inc., Renal Care

                                        19
<PAGE>

Group and the Kuratorium fur Dialyse und Nierentransplantation e.V. Ownership of
dialysis clinics in the U.S. is fragmented with a large number of operators each
owning 10 or fewer clinics and a small number of larger multi-clinic providers,
of which we are the largest. Industry consolidation has been ongoing over the
last decade. Many of our dialysis clinics are in urban areas, where there
frequently are many competing clinics in proximity to our clinics. We experience
direct competition from time to time from former Medical Directors, former
employees or referring physicians who establish their own clinics. Furthermore,
other health care providers or product manufacturers, some of who have
significant operations, may decide to enter the dialysis business in the future.

     Because in the U.S. government programs are the primary source of
reimbursement for services to the majority of patients, competition for patients
in the U.S. is based primarily on quality and accessibility of service and the
ability to obtain admissions from physicians with privileges at the facilities.
However, the extension of periods during which commercial insurers are primarily
responsible for reimbursement and the growth of managed care have placed greater
emphasis on service costs for patients insured with private insurance. We
believe that we compete effectively in all of these areas. In particular, based
upon our knowledge and understanding of other providers of kidney dialysis, as
well as from information obtained from publicly available sources, we believe
that we are among the most cost-efficient providers of kidney dialysis services.
In addition, as a result of our large size relative to most other dialysis
service providers, we enjoy economies of scale in administrative functions such
as purchasing, billing, collections and data processing.

     In most countries other than the U.S., we compete primarily against
individual free-standing clinics and hospital-based clinics. In many of these
countries, especially the developed countries, governments directly or
indirectly regulate prices and the opening of new clinics. Providers compete in
all countries primarily on the basis of quality and availability of service and
the development and maintenance of relationships with referring physicians.

     Laboratory Services.  Spectra Renal Management competes in the U.S. with
large nationwide laboratories, dedicated dialysis laboratories and numerous
local and regional laboratories, including hospital laboratories. In the
laboratory services market, companies compete on the basis of performance,
including quality of laboratory testing, timeliness of reporting test results
and cost-effectiveness. We believe that our services are competitive in these
areas. While the main competitors are local hospitals, Spectra Renal Management
is competitive based upon the quality and accessibility of its service.

DIALYSIS PRODUCTS

     We are currently the world's largest manufacturer and distributor of
equipment and related products for hemodialysis and the second largest
manufacturer of peritoneal dialysis products, based on publicly reported
revenues, with operations in Germany, the U.S., and in 35 other countries. We
sell our dialysis products directly and through distributors in over 100
countries. Most of our customers are dialysis clinics. For the year 2001,
dialysis products accounted for 27% of our total revenue.

     We manufacture a comprehensive line of kidney dialysis equipment and
related products for each of the hemodialysis and peritoneal dialysis markets.
Our products include:

     -  hemodialysis machines, peritoneal dialysis cyclers and related
        equipment;

     -  dialyzers;

     -  peritoneal dialysis solutions in flexible plastic bags;

     -  hemodialysis concentrates and solutions and granulate mixes;

     -  bloodlines and disposable tubing assemblies; and

     -  equipment for water treatment in dialysis clinics.

     We also distribute other manufacturers' products, including dialyzers,
special blood access needles, heparin, a drug used to prevent blood clotting,
and commodity supplies such as bandages, clamps and syringes.

                                        20
<PAGE>

OVERVIEW

     The following table shows the breakdown of our revenues for the last three
years from sales of dialysis products between hemodialysis products and
peritoneal dialysis products.

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                  ------------------------------------------------------
                                                        2001               2000               1999
                                                  ----------------   ----------------   ----------------
                                                   TOTAL              TOTAL              TOTAL
                                                  PRODUCT    % OF    PRODUCT    % OF    PRODUCT    % OF
                                                  REVENUES   TOTAL   REVENUES   TOTAL   REVENUES   TOTAL
                                                  --------   -----   --------   -----   --------   -----
                                                                (U.S. DOLLARS IN MILLIONS)
<S>                                               <C>        <C>     <C>        <C>     <C>        <C>
Hemodialysis Products...........................  $1,114.0     86    $1,060.3     84    $1,033.3     83
Peritoneal Dialysis Products....................     188.2     14       196.5     16       207.4     17
                                                  --------    ---    --------    ---    --------    ---
Total...........................................  $1,302.2    100    $1,256.8    100    $1,240.7    100
                                                  ========    ===    ========    ===    ========    ===
</Table>

HEMODIALYSIS PRODUCTS

     We offer a comprehensive hemodialysis product line, consisting of
hemodialysis machines, modular accessories for dialysis machines, polysulfone
dialyzers, bloodlines, dialysis solutions and concentrates, fistula needles,
connectors, devices for water treatment, data management systems, dialysis
chairs, machines and supplies for the reuse of dialyzers and other similar
supplies. We believe that our broad range of technologically sophisticated
hemodialysis products makes us a leader in the hemodialysis product field. We
continually strive to expand and improve the capabilities of our hemodialysis
systems to offer an advanced treatment mode at reasonable cost.

     Dialysis Machines.  We introduced our first dialysis machine in 1980, and
our dialysis machines are currently in their fifth generation of development. We
sell our dialysis machines as Series 2008H models in North America and Series
4008 models in the rest of the world. Our dialysis machines offer the following
features and advantages:

     -  Volumetric dialysate balancing and ultrafiltration control system. This
        system, which we introduced in 1977, provides for safe and more
        efficient use of highly permeable dialyzers, permitting faster dialysis
        with controlled rates of fluid removal;

     -  Proven hydraulic systems, providing reliable operation and servicing
        flexibility;

     -  Compatibility with all manufacturers' dialyzers and a wide variety of
        blood-lines and dialysis solutions, permitting maximum flexibility in
        both treatment and disposable products usage;

     -  Modular design, which permits us to offer dialysis clinics a broad range
        of options to meet specific patient or regional treatment requirements.
        Modular design also allows upgrading through module substitution without
        the need to replace the entire machine;

     -  Additional modules that provide monitoring and response capability for
        selected bio-physical patient parameters, such as body temperature,
        relative blood volume and electrolyte balances. This concept, known as
        physiological dialysis, permits hemodialysis treatments with lower
        incidence of a variety of symptoms or side effects, which still occur
        frequently in standard hemodialysis. Our most recent module, the Blood
        Volume Monitor(TM) controls removal of excess fluid from the patient;

     -  Sophisticated microprocessor controls, and display and readout panels
        that are adaptable to meet local language requirements;

     -  Battery backup, which continues operation of the blood circuit and all
        protective systems for 15 to 20 minutes following a power failure;

     -  Online clearance monitoring, measurement of dialyzer clearance for
        quality assurance with the On-Line Clearance Monitor, providing
        immediate effective clearance information, real time treatment outcome

                                        21
<PAGE>

       monitoring, and therapy adjustment during dialysis without requiring
       invasive procedures or blood samples;

     -  On-line data collection capabilities and computer interfacing with our
        FINESSE module and FDS08(R) system. Our machines can:

       -- monitor and assess prescribed therapy;

       -- connect a large number of hemodialysis machines and peripheral
          devices, such as patient scales, blood chemistry analyzers and blood
          pressure monitors, to a personal computer network;

       -- enter nursing records automatically at bedside to register and
          document patient treatment records, facilitate billing, and improve
          record-keeping and staff efficiency;

       -- adapt to new data processing devices and trends;

       -- perform home hemodialysis with remote monitoring by a staff caregiver;
          and

       -- record and analyze trends in medical outcome factors in hemodialysis
          patients; and

     -  Cost-efficient production of infusion solution during treatment with our
        ONLINEplus(TM) system for hemofiltration and hemodiafiltration with a
        special dialysis solution filter, DIASAFEplus(R), which provides
        ultrapure dialysis fluid.

     Dialyzers.  We manufacture dialyzers using hollow fiber polysulfone
membranes, a synthetic material. We are the leading worldwide producer of
polysulfone dialyzers. While competitors currently sell polysulfone membranes in
the market, we developed and are the only manufacturer with more than 19 years'
experience in applying the technology required to mass produce polysulfone
membranes. We believe that polysulfone offers the following superior performance
characteristics compared to other materials used in dialyzers:

     -  higher biological compatibility, resulting in reduced incidence of
        adverse reactions to the fibers;

     -  greater capacity to clear uremic toxins from patient blood during
        dialysis, permitting more thorough, more rapid dialysis, resulting in
        shorter treatment time; and

     -  a complete range of permeability, or membrane pore size, which permits
        dialysis at prescribed rates-high flux, medium flux and low flux, as
        well as ultra flux for acute dialysis, and allows tailoring of dialysis
        therapy to individual patients.

     Our full line of polysulfone dialyzers includes the F70NR, F50NR and F7NR
series of single-use polysulfone dialyzers and the FX class of Dialyzers for
routine high-flux dialysis. We also distribute dialyzers manufactured by others,
primarily to our own dialysis clinics. In North America, we sell dialyzer
reprocessing and rinse machines. These machines cleanse dialyzers after
dialysis, permitting multiple usage for the same patient before disposal of the
dialyzer. Reuse of disposable dialyzers is utilized with patient and physician
consent, and enables hemodialysis providers to reduce operating costs. Single
use dialyzers are becoming more popular, and we have increased production of
single-use dialyzers at our Ogden, Utah facility to meet demand for these
products.

     Other Hemodialysis Products.  We manufacture and distribute arterial,
venous, single needle and pediatric bloodlines. We produce both liquid and dry
dialysate concentrates. Liquid dialysate concentrate is mixed with purified
water by the hemodialysis machine to produce dialysis solution, which removes
the toxins and excess water from the patient's blood during dialysis. Dry
concentrate, developed more recently, is less labor-intensive to use, requires
less storage space and may be less prone to bacterial growth than liquid
solutions. We also produce dialysis solutions in bags, including solutions for
priming and rinsing hemodialysis bloodlines, as well as connection systems for
central concentrate supplies and devices for mixing dialysis solutions and
supplying them to hemodialysis machines. Other products include solutions for
disinfecting and decalcifying hemodialysis machines, fistula needles,
hemodialysis catheters, and products for acute renal treatment.

                                        22
<PAGE>

PERITONEAL DIALYSIS PRODUCTS

     We offer a full line of peritoneal dialysis products.  We manufacture
peritoneal dialysis solutions in bags, peritoneal dialysis cycling machines for
CCPD and disposable products for both CAPD and CCPD, such as tubing, sterile
solutions and sterile kits to prepare patients for dialysis. We also distribute
other manufacturers' peritoneal dialysis products, primarily to our own dialysis
clinics.

     CAPD Systems.  We manufacture standard and specialized peritoneal dialysis
solutions. We believe that our peritoneal dialysis products offer significant
advantages for CAPD, including:

     -  ease of use and greater protection against contamination by touch than
        other peritoneal dialysis systems presently available. Our products
        incorporate our Safe-Lock(R) connection system for introducing and
        draining dialysis solution into and from the abdominal cavity, using the
        same bag for introduction and drainage. Our A.N.D.Y.(R) and A.N.D.Y.
        Plus(R) systems, which include a special drainage bag and a snap-off
        Y-shaped piece connected to the Safe-Lock(R) connector at the catheter,
        provide protection from contamination in a dual-bag system;

     -  suitability for all peritoneal dialysis patients through the Inpersol(R)
        and Safe-Lock(R) product lines. Inpersol products are interchangeable
        with those of other manufacturers; Safe-Lock(R) products may be used
        only by peritoneal dialysis patients whose catheters include the
        Safe-Lock(R) connector, which attaches to a solution bag fitted with the
        other part;

     -  manufacture with Biofine(R), a new environmentally friendly plastic
        material for foils, tubings and other parts of peritoneal dialysis
        systems. Biofine(R) was developed by Fresenius AG and launched in 1997
        and has the following significant benefits:

       -- higher biocompatibility through avoidance of plasticisers, which can
          leach into dialysis solutions;

       -- lower gas permeability and less interaction with peritoneal dialysis
          solutions, permitting administration of a wide range of solutions,
          including bicarbonates;

       -- disposal with less harm to the environment. Biofine(R) is manufactured
          with less material and, when burned, releases only carbon dioxide and
          water, rather than dioxins and furans which are released during
          incineration of other foils. This should make our products more
          attractive, especially in Europe, where disposal of harmful plastics
          is highly regulated.

     -  the benefits of Biofine(R) with protection against contamination through
        our new Stay-Safe(R) system, launched in 1997. The system comprises
        tubing, connectors and a peritoneal dialysis solution double bag, made
        entirely from Biofine(R). It uses a single switching mechanism that
        replaces three tubing clamps to control solution drainage, flushing of
        tubes that connect solution bags to catheters, and introduction of new
        solution. The single switch also provides tight closure of the line and,
        to further reduce the possibility of contamination, the switch seals
        catheter access and surrounds the catheter adapter with disinfectant;

     -  higher solution bag volumes with our new Premier twin-bag system which
        provides solution container and pre-attached tubing set in one package.
        The higher solution volumes permit larger dosages without increasing the
        number of required daily solution exchanges performed by the patient;
        and

     -  improved biocompatibility with CAPD stay.safe Balance, a
        lactate-buffered peritoneal dialysis solution that has a pH balance in
        the human physiological range.

     CCPD Products.  We introduced the first peritoneal dialysis cycler machine
in 1980. We believe that CCPD therapy offers benefits over CAPD therapy for
patients who need more therapy due to body size, ultrafiltration loss or other
reasons. In a standard CAPD program, a patient manually introduces two liters of
fresh peritoneal dialysis solution and drains the used solution four times over
a 24-hour period. Treatment occurs seven days per week and the patient must
perform the treatment while awake. With CCPD therapy, the cycler automatically
delivers a prescribed volume of dialysis solution into the peritoneal cavity
through an implanted catheter, allows the solution to dwell for a specified
time, and completes the process by draining the solution. CCPD therapy offers
the following benefits over CAPD:
                                        23
<PAGE>

     -  Solution exchanges take place automatically, which may reduce the risk
        of peritonitis due to less frequent handling of the catheter and
        connections;

     -  The patient can cycle at home, throughout the night while asleep. The
        patient has complete daytime freedom, wearing only the surgically
        implanted catheter and capping device; and

     -  CCPD delivers more effective therapy than CAPD due to the supine
        position of the patient during the night, higher volume exchanges and
        preferable cycle management.

     Our cycling equipment incorporates microprocessor technology, and the
patient, hospital or clinic staff can easily program it to perform specific
prescribed therapy for a given patient. Since all components are monitored and
programmable, these machines allow the physician to prescribe any of a number of
current therapy procedures. Our CCPD products and therapies include:

     -  the Sleep-Safe(TM) cycler, a new cycler with an extremely compact and
        light design, that we began marketing in late 1999. Its pumping
        mechanism and disposable cartridge allow exact delivery of the
        peritoneal dialysis solution;

     -  PD-PLUS(R), a variant on CCPD therapy we introduced in 1994. PD-PLUS(R)
        therapy provides a more tailored therapy than regular CCPD using a
        simpler nighttime cycler and, where necessary, includes one manual
        dialysis solution exchange during the day. We believe that PD-PLUS(R)
        therapy is less costly and easier to administer than typical CCPD. We
        also believe that PD-PLUS(R) therapy improves toxin removal by more than
        40% compared to CAPD. By increasing the effectiveness of peritoneal
        dialysis treatments, PD-PLUS(R) may also effectively prolong the time
        period during which a patient will be able to remain on peritoneal
        dialysis before requiring hemodialysis. PD-PLUS(R) therapy can only be
        performed using the Fresenius Freedom(TM) Cycler and special tubing
        using Safe-Lock(R) connectors; and

     -  IQcard(TM), for use with the Freedom(TM) Cycler PD-PLUS(R) to monitor
        CCPD therapy for a full treatment history and improved therapy
        compliance.

     Other Peritoneal Dialysis Products.  We also manufacture and distribute
pediatric treatment systems for administration of low volumes of dialysis
solutions, assist devices to facilitate automated bag exchange for handicapped
patients, catheters, catheter implantation instruments, silicon glue,
Pack-PD(R), a computer program which analyzes patient and peritoneal
characteristics to present a range of treatment options for individual
therapies, disinfectants, bag heating plates adapters, and products to assist
and enhance connector sterility. We also provide scientific and patient
information products, including support materials, such as brochures, slides,
videos, instructional posters and training manuals.

MARKETING, DISTRIBUTION AND SERVICE

     We sell most of our products to hospitals, clinics and specialized
treatment clinics. With our comprehensive product line and years of experience
in dialysis, we believe that we have been able to establish and maintain very
close relationships with our clinic customer base on a global basis. Close
interaction between our sales force and research and development personnel
enables us to integrate concepts and ideas that originate in the field into
product development. We maintain a direct sales force of trained salespersons
engaged in the sale of both hemodialysis and peritoneal dialysis products. This
sales force engages in direct promotional efforts, including visits to
physicians, clinical specialists, hospitals, clinics and dialysis clinics, and
represents us at industry trade shows. We also sponsor medical conferences and
scientific symposia as a means for disseminating product information. Our
clinical nurses provide clinical support, training and assistance to customers
and assist our sales force. We also use outside distributors to provide sales
coverage in countries that our internal sales force does not service.

     In our basic distribution system, we ship products from factories to
central warehouses which are frequently located near the factories. From this
central warehouse, we distribute our dialysis products to regional warehouses.
We then distribute peritoneal dialysis products to the patient at home, and ship
hemodialysis products directly to dialysis clinics and other customers. Local
sales forces, independent distributors, dealers and sales agents sell all our
products.

                                        24
<PAGE>

     We offer customer service, training and education in the applicable local
language, and technical support such as field service, repair shops,
maintenance, and warranty regulation for each country in which we sell dialysis
products. We provide training sessions on our equipment at our facilities in
Schweinfurt, Germany and Walnut Creek, California and we also maintain regional
service centers that are responsible for day-to-day international service
support. Our Schweinfurt and Walnut Creek facilities also provide training and
act as backups for the regional service centers. We also provide technical
training to employees of hospitals and other health care providers in the use of
our products. We believe our service organizations have a reputation for
reliability and high quality service.

MANUFACTURING OPERATIONS

     We operate state-of-the-art production facilities world wide to meet the
demand for machines, cyclers, dialyzers, solutions, concentrates, mixes,
bloodlines, and disposable tubing assemblies and equipment for water treatment
in dialysis clinics. We have invested significantly in developing proprietary
processes, technologies and manufacturing equipment which we believe provide a
competitive advantage in manufacturing our products. We intend to use our
facilities in St. Wendel, Germany and Ogden, Utah as centers of competence for
development and manufacturing and to implement similar technologies at our other
facilities.

     We produce and assemble hemodialysis machines and CCPD cyclers in our
Schweinfurt, Germany and our Walnut Creek, California facilities. We also
maintain facilities at our service and local distribution centers in Argentina,
Egypt, France, Italy, The Netherlands, China, Brazil and Russia for testing and
calibrating dialysis machines manufactured or assembled elsewhere, to meet local
end user market needs. We manufacture and assemble dialyzers and polysulfone
membranes in our St. Wendel, Germany, L'Arbresle, France, Inukai, Japan and
Ogden, Utah facilities and at production facilities of our joint ventures in
Belarus, Saudi Arabia and Japan. Our facility in Schweinfurt is inspected on a
regular basis by national and international authorities. In 2001, it passed
audits by TUV product service and the U.S. Food and Drug Administration (FDA).
In 2001, we produced our 100 millionth polysulfone dialyzer in St. Wendel. We
have been producing polysulfone dialyzers in St. Wendel since 1983. At the
beginning of 2001, we launched a new product facility for bloodlines in Antalya,
Turkey. By continuously improving efficiency, coupled with excellent quality and
superior cost advantages in the initial stages of the start-up, this plant has
set a milestone in our strategy of significantly expanding our bloodline
business. In 2002, we expect to produce 6 million bloodlines in this facility.

     In North America we are expanding our manufacturing capacity substantially.
During the first quarter of 2001, we started with the increase in dialyzer
production capacity at our Ogden, Utah manufacturing facility, where we also
produce peritoneal dialysis solutions and dry concentrates. Dialyzer production
capacity will be increased by 200% over the next 12 months in order to
accommodate the continuous trend towards single-use dialyzers in North America.

     In 2001, we completed construction of the liquid concentrate manufacturing
facility in Irving, Texas. In addition, we also increased production capacity
for dry concentrate in our Perrysburg, Ohio facility. With these additions we
expect to achieve greater distribution efficiencies for concentrate products in
North America.

     Incoming raw materials for solutions undergo tests, such as, infrared,
ultraviolet and physical and chemical analyses to assure quality and
consistency. During the production cycle, sampling and testing take place in
accordance with established quality assurance procedures to ensure the finished
product's sterility, safety and potency. Pressure, temperature and time for
various processes are monitored to assure consistency of semi-finished goods.
Environmental conditions are monitored to assure that particulate and
bacteriological levels do not exceed specified maximums. We maintain continuing
quality control and Good Manufacturing Policies education and training programs
for our employees. See "Regulatory and Legal Matters."

ENVIRONMENTAL MANAGEMENT

     Fresenius Medical Care's vision to innovate for a better life also extends
to our daily efforts to preserve nature and its resources for the benefit of
both present and future generations.

                                        25
<PAGE>

     In our European facilities, we have combined and integrated the demands of
the ISO 9001:2000 quality management system and the ISO 14001 environmental
management system into our business process. This combination results in a
stronger focus on environmental improvement opportunities and cost-saving
potentials. Following this concept, we then incorporated the first dialysis
clinic in Portugal into the so-called "Integrated Management System" based on
ISO 9001:2000 and ISO 14001. By introducing an "eco-ranking" we can compute the
costs per treatment with regard to energy, water and waste. The periodic
revision of our cost-saving activities furthers both our economic and ecological
impact goals.

     At our main production site in St. Wendel (Germany), we have implemented
environmental programs to reduce cardboard container usage, minimize plastic
scrap in our BIOfine foil production, and reduce exhaust gas emissions by
monitoring and controlling out logistic activities.

     Our Multi Box System, a system that recycles containers throughout our
Company, has been extended and now includes disposables used in dialysis clinics
in Germany. In addition, we have continued to build up our
environmentally-friendly recycling system for packaging, infusion products and
plastic bags. To avoid environmental incidents we have optimized our emergency
planning and reporting methods. At the same time, we have established an
early-warning system in case an accident should occur despite our precautions.

     We plan to achieve environmental certification for Fresenius Medical Care
North America. With this in mind, we will continually intensify our waste
minimization program efforts for solid, medical and hazardous waste. This will
be accomplished by monitoring all medical waste costs in our dialysis clinics on
a quarterly basis. This monitoring focuses on the generation of medical waste
and its correct separation and disposal. We have initiated recycling programs
for cardboard, plastics and metal waste generated at our production facility in
North America. We are promoting further community-centered activities by
utilizing high-efficiency heating, ventilation and air-conditioning equipment.
In addition, we expect our suppliers to meet certain environmental requirements
and avoid any adverse environmental impact on the community.

     For the year 2002, we will further pursue our environmental policy and plan
to reduce the quantities and costs of waste. We are focusing on emission
reductions caused by the truck transportation of raw materials and finished
goods, especially in Europe.

SOURCES OF SUPPLY

     Our purchasing policy combines worldwide sourcing of high-quality materials
with the establishment of long-term relationships with our suppliers.
Additionally, we carefully assess the reliability of all materials purchased to
ensure that they comply with the rigorous quality and safety standards required
for our dialysis products. Our International Purchasing Consulting Center (PCC)
ensures that we consistently maintain high standards by entering into global
agreements. An interactive information system links all our global projects to
ensure that they are standardized and constantly monitored.

     The increased demand for polycarbonate used in our dialyzer production made
it necessary to establish new supplier relationships in 2001. Higher oil prices
in the first quarter of 2001 affected the manufacturing costs of some of our
products. However, we were able to compensate for these price increases in all
areas in the terms of our supply agreements. This resulted in substantial price
reductions for semi-finished goods and raw materials.

     In 2002, PCC will focus on further optimizing procurement logistics and
reducing purchasing costs. Another key focus of the current fiscal year is to
realize savings in energy costs due to the liberalization of the natural gas
market. Supplemental raw material contracts for all manufacturers of
semi-finished goods will enable us to improve purchasing terms for our complete
network. We will also intensify our use of e-procurement tools by purchasing raw
materials through special on-line auctions. In the Dialysis Products Division in
the U.S., our Material Management Department (MMD) is responsible for providing
production plans to the manufacturing facilities and supplying products to our
distribution centers using state-of-the-art transportation management software.
The Distribution department operates a national network of distribution centers
that are strategically located in the U.S. to ensure high service levels to the
Company's own clinics, external customers, home-based patients and hospitals.
Our sophisticated routing software enables us to distribute our supplies to best
accommodate customer requests while maintaining operational efficiency.

                                        26
<PAGE>

NEW PRODUCT INTRODUCTIONS

     Research and development focuses strongly on the development of new
products, technologies and treatment concepts to optimize treatment quality for
dialysis patients, and on process technology for manufacturing our products.
Research and development expenditures were $36 million in 2001, $32 million in
2000, and $32 million in 1999.

     We introduced the following new or enhanced products in 2001:

     -  Fluid Management Tool. A software tool which is used to solve the
        complex problem of "dry weight". An incorrect determination of dry
        weight can cause overhydration of a patient leading to hypertension and
        severe cardiovascular impairments. The bioimpedance-based system that
        was developed was evaluated in clinical studies, with results similar to
        sophisticated and time consuming clinical methods. Marketing and sales
        of this product will commence in 2002.

     -  The Multifiltrate, which offers all therapy modes known in acute
        dialysis within one machine. In its design and handling, it is
        especially adapted for use in the intensive care environment.

     -  ARrT plus, an option based on the 4008 dialysis machine for acute renal
        replacement therapy for the Asian market.

     -  The Prometheus Unit, a liver support system for removing toxins. We
        performed the first clinical application in 2001 as the first part of a
        strategic move to support therapies in addition to dialysis. The
        Prometheus Unit is based on our proven 4008 dialysis machine series
        technology and also uses SleepSafe components from out PD product
        portfolio.

     -  GENIUS, an alternative dialysis equipment product line. GENIUS was
        developed in 2000 and 2001 for an international launch in 2002.

     -  A Continuous Flow Peritoneal Dialysis clinical research machine. This
        innovative products utilizes HD technology without vascular access. We
        are continuing to explore the new potential of this technology after a
        clinical trial showed very promising results.

     -  We introduced Helixone in our FC-class dialyzers. Helixone is an
        advanced polysulfone membrane specifically designed for the targeted
        removal of large size uremic toxins without causing excessive leakage of
        proteins. Our Nano Spinning Controlled Technology (NCS) provides
        Helixone with a highly defined pore structure, which improves clearance
        and permits reduction of the flow of dialysis fluid.

     -  In North America we introduced the high performance, single use Optiflux
        series dialyzer. Optiflux polusulfone dialyzers are engineered to
        deliver superior small (urea) and middle molecular weight solute
        clearance through the use of NCS coupled with superior membrance
        composition and biocompatability. Optiflux dialyzers accounted for 18%
        of the dialyzers we sold in the U.S. during the fourth quarter of 2001.

PATENTS, TRADEMARKS AND LICENSES

     As the owner of or licensee under patents and trademarks throughout the
world, we hold rights under 1,019 patents and patent applications relating to
dialysis technology in major markets. Patented technologies that relate to
dialyzers include our polysulfone hollow fiber, an in-line sterilization method,
and sterile closures for in-line sterilized medical devices. For dialysis
machines, patents include:

     -  the location for a filter device for sterile filtering dialysate in the
        dialysis machine circuit;

     -  the safety concept for the ultrafiltration device in a dialysis machine
        used for high flux dialysis;

     -  a process for the on-line preparation of substitution fluid in
        hemodiafiltration machines;

     -  conductivity sensor arrangements in the dialysis machine circuit;

     -  conductivity sensor devices, mathematical algorithms for using such
        devices and quantifying the efficiency of the dialysis treatment;
                                        27
<PAGE>

     -  patents relating to controlled bicarbonate dialysis; and

     -  patents related to thermal balance during dialysis.

     The connector system for our biBag(TM) bicarbonate concentrate powder
container has been patented in the U.S., Norway and Europe while national
applications in Japan and Finland are still pending. Further pending patents
include the new generation of "DIASAFEplus"(R) filters and FX(R) dialyzers.

     We hold the exclusive license on European patents/patent applications on
the Autoprime(R) technology for the automated priming of the extracorporeal
hemodialysis blood circuit with dialyzing liquid through the membrane of the
dialyzer.

     For peritoneal dialysis, we hold rights on the Safe-Lock(TM)system. For our
non-polyvinyl chloride film, known as Biofine(R), indicated for general use in
intravenous and peritoneal dialysis we have been granted in Germany, Australia,
Japan, and The United States, as well as pending patent applications in various
countries. A patent granted in the United States, and pending in other major
markets describe a special film for a peelable, non-polyvinyl chloride multi
chamber bag for peritoneal dialysis solutions. Fresenius USA's intellectual
property includes the Inpersol(TM) trademark and rights to certain manufacturing
know-how Fresenius USA obtained from Abbott Laboratories, and a paid-up
non-exclusive global sublicense from Baxter, Inc. to certain CAPD and connector
technology.

     Among our more significant patents, the patent for our polysulfone hollow
fiber expires in 2007 in the United States, and 2005 in Germany and other major
markets. The patent for our in-line sterilization method expires in 2010 in
Germany, the United States, and in other jurisdictions The patent for our biBag
connector expires in 2013 in Germany, the United States, and in other
jurisdictions. We believe that even after expiration of these patents, our
proprietary knowledge for the manufacture of these products will continue to
constitute a competitive advantage.

     We believe that our success will depend, in large part, on our technology.
As a standard practice, we obtain legal protections we believe are appropriate
for our intellectual property. Intellectual property is, however, subject to
infringement or invalidation claims. In addition, technological developments in
ESRD therapy could reduce the value of our existing intellectual property. Any
such reduction could be rapid and unanticipated. Other than as disclosed in this
report, we are not dependent to any material extent upon patents, licenses or
contracts.

COMPETITION

     The markets in which we sell our dialysis products are highly competitive.
Our competitors in the sale of hemodialysis and peritoneal dialysis products
include Gambro AB, Baxter International Inc., Asahi Medical Co., Ltd., Bellco
S.p.A., a subsidiary of Sorin Biomedica S.p.A., Bieffe Medital S.p.A., which is
an affiliate of Baxter, Inc., B. Braun Melsungen AG, Nissho Corporation,
including Nissho Nipro Corporation Ltd., Nikkiso Co., Ltd., Terumo Medical
Corporation and Toray Medical Co., Ltd. Some of our competitors possess greater
financial, marketing and research and development resources than we do.

     We believe that in the dialysis product market, companies compete primarily
on the basis of product performance, cost-effectiveness, reliability, assurance
of supply and service and continued technological innovation. We believe our
products are highly competitive in all of these areas. Dialysis centers acquired
by other product manufacturers may elect to limit or terminate their purchases
of our dialysis products in order to avoid purchasing products manufactured by a
competitor. We believe, however, that customers will continue to consider our
long-term customer relationships and reputation for product quality in making
product purchasing decisions, and we intend to compete vigorously for these
customers.

REGULATORY AND LEGAL MATTERS

REGULATORY OVERVIEW

     Our operations are subject to extensive governmental regulation by
virtually every country in which we operate including, most notably, in the
U.S., at the federal, state and local levels. Although these regulations differ
from country to country, in general, non-U.S. regulations are designed to
accomplish the same objectives as
                                        28
<PAGE>

U.S. regulations regarding the operation of dialysis clinics, laboratories and
manufacturing facilities, the provision of quality health care for patients, the
maintenance of occupational, health, safety and environmental standards and the
provision of accurate reporting and billing for governmental payments and/or
reimbursement. In the U.S., some states prohibit ownership of health care
providers by for-profit corporations or establish other regulatory barriers to
direct ownership by for-profit corporations. Outside the U.S., each country has
its own payment and reimbursement rules and procedures, and some countries
prohibit ownership of health care providers or establish other regulatory
barriers to direct ownership by foreign companies. In all jurisdictions, we work
within the framework of applicable laws to establish alternative contractual
arrangements to provide services to those facilities.

     Any of the following matters could have a material adverse effect on our
business, financial condition and results of operations:

     -  failure to receive required licenses, certifications or other approvals
        for new facilities or significant delays in such receipt;

     -  loss of various federal certifications or termination of licenses under
        the laws of any state or other governmental authority; and

     -  changes resulting from health care reform or other government actions
        that reduce reimbursement or reduce or eliminate coverage for particular
        services we provide.

     We must comply with all U.S., German and other legal and regulatory
requirements under which we operate, including the U.S. federal Medicare and
Medicaid Fraud and Abuse Amendments of 1977, as amended, generally referred to
as the "anti-kickback statute", the federal restrictions on certain physician
referrals, commonly known as the "Stark Law", and other fraud and abuse laws and
similar state statutes, as well as similar laws in other countries. It is
possible that applicable laws or regulations will be amended, or that
enforcement agencies or the courts will make interpretations inconsistent with
ours or the manner in which we conduct our business. Any one of these events
could have a material adverse effect on our business, reputation, financial
condition and results of operations. Sanctions for violations of these statutes
may include criminal or civil penalties, such as imprisonment, fines or
forfeitures, denial of payments, and suspension or exclusion from the Medicare
and Medicaid programs. In the U.S., these laws have been broadly interpreted by
a number of courts, and significant government funds and personnel have been
devoted to enforcing them because enforcement has become a high priority for the
federal government and some states. We, and the health care industry in general,
will continue to be subject to extensive federal, state and foreign regulation,
and we cannot predict the full scope of these regulations.

     Fresenius Medical Care Holdings has entered into a corporate integrity
agreement with the U.S. government, which requires that Fresenius Medical Care
Holdings staff and maintain a comprehensive compliance program, including a
written code of conduct, training programs and compliance policies and
procedures. The corporate integrity agreement requires annual audits by an
independent review organization and periodic reporting to the government. The
corporate integrity agreement permits the U.S. government to exclude Fresenius
Medical Care Holdings and its subsidiaries from participation in U.S. federal
health care programs if there is a material breach of the agreement that is not
cured by Fresenius Medical Care Holdings within thirty days after Fresenius
Medical Care Holdings receives written notice of the breach.

PRODUCT REGULATION

U.S.

     In the U.S., the Food and Drug Administration and comparable state
regulatory agencies impose requirements on our subsidiaries that manufacture and
sell medical products and supplies under their jurisdiction. These rules
require:

     -  compliance with Good Manufacturing Practices in manufacturing medical
        products; and

     -  compliance with Food and Drug Administration rules regulating,

                                        29
<PAGE>

       -- product design;

       -- safety;

       -- advertising and labeling; and

       -- record-keeping and reporting of adverse events.

     In addition, in order to clinically test, produce and market certain
medical products and other disposables (including hemodialysis and peritoneal
dialysis equipment and solutions, dialyzers, bloodlines and cell separators) for
human use, we must satisfy mandatory procedures and safety and efficacy
requirements established by the Food and Drug Administration or comparable state
and foreign governmental agencies. These rules generally require that the Food
and Drug Administration approve products as safe and effective for their
intended use prior to being marketed. The Food and Drug Administration has
designated peritoneal dialysis solutions as drugs and, as such, they are subject
to additional Food and Drug Administration regulation under the Food, Drug and
Cosmetic Act of 1938.

     The approval process is expensive, time consuming and subject to
unanticipated delays. The Food and Drug Administration may also prohibit the
sale or importation of products, order product recalls or require post-
marketing testing and surveillance programs to monitor a product's effects. We
believe that we have filed for or obtained all necessary approvals for the
manufacture and sale of our products in jurisdictions in which those products
are currently produced or sold. We cannot assure that we will obtain necessary
regulatory approvals or clearances within reasonable time frames, if at all. Any
delay or failure to obtain regulatory approval or clearances could have a
materially adverse effect on our business, financial condition and results of
operations.

Germany and Non-U.S.

     Most countries maintain different regulatory regimes for pharmaceutical
products and for medical devices. In each regime, there are regulations
governing manufacturers and distributors, as well as regulations governing the
final products manufactured and distributed. Treaties or other international law
and standards and guidelines under treaties or laws may supplement or supersede
individual country regulations.

     Some of our products, such as peritoneal dialysis solutions, are considered
pharmaceuticals. The European Union has issued a directive on pharmaceuticals,
No. 65/65/EWG (January 26, 1965), as amended. Each member of the European Union
is responsible for conforming its law to comply with this directive. In Germany
the German Drug Law (Arzneimittelgesetz) which implements European Union
requirements, is the primary regulation applicable to pharmaceutical products.

     The provisions of the German Drug Law are typical of the legal standards in
other European countries. The German Drug Law states the requirements for the
authorization of a company to manufacture pharmaceuticals. A manufacturer must,
among other requirements, appoint pharmacists or physicians to be responsible
for the quality, safety and efficacy of the pharmaceuticals. At least five
responsible persons must be appointed: a marketing manager, a quality control
manager, a manufacturing manager, a safety officer, and a drug information
officer. Each of these persons may be held personally liable under German
criminal laws for violations of the German Drug Law.

     International guidelines also govern the manufacture of pharmaceuticals
and, in many cases, overlap with national requirements. In particular, the
Pharmaceutical Inspection Convention, an international treaty, contains rules
which are binding on most countries in which pharmaceuticals are manufactured.
Among other things, the Pharmaceutical Inspection Convention establishes
requirements for Good Manufacturing Practices which are then adopted at the
national level. Another international guideline, which is non-binding, is the
ISO 9000-9004 system for assuring quality control. This system is more detailed
than Good Manufacturing Practices. Compliance entitles the manufacturer to
utilize the CE certification of quality control. In addition to regulating the
manufacture of pharmaceuticals, countries directly regulate marketing of the
pharmaceuticals produced. A drug needs to be registered and authorized in every
country in which it is distributed. European Union rules govern the conditions
for a registration, such as pre-clinical and clinical testing.

                                        30
<PAGE>

     Historically, medical devices have not been regulated as strictly as
pharmaceuticals, but more stringent regulatory schemes have been adopted during
the last decade. The European Union began to harmonize national regulations
comprehensively for the control of medical devices in Europe in 1993, when it
adopted its Medical Devices Directive. In 1995, Germany implemented this
directive when it adopted the Medical Devices Act (Medizinproduktegesetz), which
is similar in many ways to the German Drug Law. The European Union directive
applies to both the manufacturer's quality control system and the products'
technical design. Depending on the class of medical devices, a manufacturer may
choose alternative regulatory modules to demonstrate compliance with European
Union provisions. To assure and demonstrate the high quality standards and
performance of our operations, we have subjected our entire European business to
the most comprehensive procedural module, which is also the fastest way to
launch a new product in the European Union. This module requires the
certification of a full quality management system by a notified body charged
with supervising the quality management system. A notified body is a group
accredited and monitored by governmental agencies that inspects manufacturing
facilities and quality control systems at regular intervals and is authorized to
carry out unannounced inspections.

     When a company receives a European Union certificate for the quality
management system of a particular facility, it may assess whether products
developed and manufactured in the facility satisfy European Union requirements.
European Union requirements for products are laid down in harmonized European
Union standards and include conformity to safety requirements, physical and
biological properties, construction and environmental properties, and
information supplied by the manufacturer. A manufacturer must demonstrate
conformity to these requirements by pre-clinical tests, biocompatibility tests,
qualification of products and packaging, risk analysis and well-conducted
clinical investigations approved by ethics committees.

     A manufacturer having a European Union-certified full quality management
system has to declare and document conformity of its products to the harmonized
European standards. If able to do so, the manufacturer must put a "CE" mark on
the products. The CE mark, which stands for Conformite Europeenne, demonstrates
compliance with the relevant European Union requirements. Products subject to
these provisions that do not bear the "CE" mark cannot be imported, sold or
distributed within the European Union.

     The Medical Devices Directive became mandatory on June 15, 1998. Our Series
4008, 4008B, 4008E dialysis machines and their therapy modifications, and our
PD-NIGHT(R) cycler, and our other medical devices distributed in the European
market, as well as our dialysis filters and dialysis tubing systems and
accessories, all bear the "CE" mark. We expect to continue to obtain additional
certificates as they are required.

FACILITIES AND OPERATIONAL REGULATION

U.S.

     The Clinical Laboratory Improvement Amendments of 1988 subject virtually
all clinical laboratory testing facilities, including our facilities, to the
jurisdiction of Department of Health and Human Services. That act establishes
national standards for assuring the quality of laboratories based upon the
complexity of testing performed by a laboratory. Some of our operations also
subject us to federal laws governing the repackaging and dispensing of drugs and
the maintenance and tracking of certain life sustaining and life-supporting
equipment.

     Our operations are subject to various U.S. Department of Transportation,
Nuclear Regulatory Commission and Environmental Protection Agency requirements
and other federal, state and local hazardous and medical waste disposal laws. As
currently in effect, laws governing the disposal of hazardous waste do not
classify most of the waste produced in connection with the provision of dialysis
or laboratory services as hazardous, although disposal of nonhazardous medical
waste is subject to specific state regulation. However, our laboratory
operations do generate hazardous waste which is subject to specific disposal
requirements. Our operations are also subject to various air emission and
wastewater discharge regulations.

     Federal, state and local regulations require that we meet various standards
relating to, among other things, facilities, management, personnel
qualifications and licensing, maintenance of proper records, equipment, quality
assurance programs, the operation of pharmacies, and dispensing of controlled
substances. All of our operations are subject to periodic inspection by federal
and state agencies and other governmental authorities to determine if the
operations, premises, equipment, personnel and patient care meet applicable
standards. To receive Medicare

                                        31
<PAGE>

reimbursement, our dialysis clinics, renal diagnostic support business and
laboratories must have Health Care Financing Administration certification. All
of our dialysis clinics and laboratories that furnish Medicare services have the
required certification.

     Some of our facilities and employees are also subject to state licensing
statutes and regulations. These statutes and regulations are in addition to
federal and state rules and standards that we must meet to qualify for payments
under Medicare, Medicaid and other government reimbursement programs. Licenses
and approvals to operate these clinics and conduct certain professional
activities are customarily subject to periodic renewal and to revocation upon
failure to comply with the conditions under which they were granted.

     Occupational Safety and Health Administration regulations require employers
to provide employees who work with blood or other potentially infectious
materials with prescribed protections against blood-borne and air-borne
infection carriers. The regulatory requirements apply to all health care
facilities, including dialysis clinics, laboratories and renal diagnostic
support businesses, and require that employers determine which employees may be
exposed to blood or other potentially infectious materials and have in effect a
written exposure control plan. In addition, employers are required to provide
hepatitis B vaccinations, personal protective equipment, blood-borne infection
training, post-exposure evaluation and follow-up, waste disposal techniques and
procedures, engineering and work practice controls and other programs required
by the Occupational Safety and Health Administration for blood-borne and
air-borne infection carriers.

     Some states in which we operate have certificate of need laws that require
any person or entity seeking to establish a new health care service or to expand
an existing service to apply for and receive an administrative determination
that the service is needed. We currently operate in 13 states and the District
of Columbia and Puerto Rico that have certificate of need laws applicable to
dialysis clinics. These requirements may provide a barrier to entry to new
companies seeking to provide services in these states, but also may constrain
our own ability to expand our operations in these states.

Germany and Other Non-U.S.

     Countries outside of the U.S. possess a wide variety of operational
regulation at disparate levels. Accordingly, our operations are subject to very
different regulations in different countries. Most countries regulate dialysis
clinic operating conditions and product manufacturing.

     We are subject to a broad spectrum of regulation. Our operations must
comply with various environmental and transportation regulations in the various
countries in which we operate. Our manufacturing facilities and dialysis clinics
are also subject to various standards relating to, among other things,
facilities, management, personnel qualifications and licensing, maintenance of
proper records, equipment, quality assurance programs, the operation of
pharmacies, the protection of workers from blood-borne diseases and the
dispensing of controlled substances. All of our operations are subject to
periodic inspection by various governmental authorities to determine if the
operations, premises, equipment, personnel and patient care meet applicable
standards. Our dialysis clinic operations and our related activities generally
require licenses, which are subject to periodic renewal and may be revoked for
violation of applicable regulatory requirements.

     In addition, many countries impose various investment restrictions on
foreign companies. For instance, government approval may be required to enter
into a joint venture with a local partner. Some countries do not permit foreign
investors to own a majority interest in local companies or require that
companies organized under their laws have at least one local shareholder.
Investment restrictions therefore affect the corporate structure, operating
procedures and other characteristics of our subsidiaries and joint ventures in
these and other countries.

     We believe our facilities are currently in compliance in all material
respects with the applicable national and local requirements in the
jurisdictions in which they operate.

                                        32
<PAGE>

REIMBURSEMENT

U.S.

     Dialysis Services.  Our dialysis clinics provide outpatient hemodialysis
treatment and related services for ESRD patients. In addition, some of our
clinics offer services for the provision of peritoneal dialysis and hemodialysis
treatment at home.

     The Medicare program is the primary source of revenue for the North America
segment's dialysis care business. For example, in 2001, approximately 60% of
dialysis care revenue in the U.S. or approximately 39% of our revenue worldwide
resulted from Medicare's ESRD program. As described below, the Medicare program
reimburses the North America segment for dialysis treatment and related
laboratory services in accordance with the Medicare composite rate for some
products and services rendered at our dialysis clinics. As described in the next
paragraph, other payment methodologies apply to Medicare reimbursement for other
products and services that we provide at our dialysis clinics and for products
that we sell and support services we furnish to ESRD patients receiving dialysis
treatment at home. Medicare reimbursement rates are fixed in advance and are
subject to adjustment from time to time by the U.S. Congress. Although this form
of reimbursement limits the allowable charge per treatment, it provides us with
predictable and recurring revenue per treatment.

     When Medicare assumes responsibility as primary payor, as described below
under "Coordination of Benefits," Medicare is responsible for payment of 80% of
the Medicare composite rate set by the Health Care Financing Administration for
dialysis treatments. The Medicare composite rate governs the Medicare
reimbursement available for a designated group of dialysis services, including
the dialysis treatment, supplies used for treatment, specified laboratory tests
and specified medications. The Medicare composite rate consists of labor and
non-labor components with adjustments made for regional wage costs, subject to a
national payment rate schedule. The Medicare composite rate for 2001 was
increased by an average of 2.4% (as a result of set increases over the year),
with a new payment ceiling of $144 per treatment. Some exceptions are paid at a
higher rate based on specific criteria.

     Medicare reimburses us for home dialysis using two methods based on which
supplier is selected to provide dialysis supplies and equipment. In Method I
reimbursement, the dialysis clinic is designated as the supplier. Under Method
I, the clinic provides all dialysis treatment related services, including
equipment and supplies, and is reimbursed using a methodology based on the
Medicare composite rate. In Method II reimbursement, our dialysis products
division is designated as the direct supplier. Under Method II, our dialysis
products division provides the patient directly with all necessary equipment and
supplies and is reimbursed by Medicare subject to a capitated ceiling. Clinics
provide home support services to Method II patients and these services are
reimbursed at a monthly fee for service basis subject to a capitated ceiling.
The reimbursement rates under Method I and Method II differ, although both are
prospectively determined and are subject to adjustment from time to time by the
U.S. Congress.

     Some items and services that we furnish at our dialysis clinics are not
included in the Medicare composite rate and are eligible for separate Medicare
reimbursement, typically on the basis of established fee schedule amounts. These
items and services include specified drugs such as EPO, blood transfusions and
some diagnostic tests.

     Medicare payments are subject to change by legislation and pursuant to
deficit reduction measures. The Medicare composite rate was unchanged from
commencement of the Medicare ESRD program in 1972 until 1983. From 1983 through
December 1990, numerous congressional actions resulted in a net reduction of the
average reimbursement rate from $138 per treatment in 1983 to approximately $125
per treatment in 1990. The U.S. Congress increased the ESRD reimbursement rate,
effective January 1, 1991, to an average rate of $126 per treatment. Effective
January 1, 2000, the reimbursement rate was increased by 1.2%. In December 2000
an additional increase of 2.4% was approved for the year 2001. Accordingly,
there was a 1.2% reimbursement increase on January 1, 2001. A second increase
was delayed until April 1, 2001, when rates were increased by 1.6% to make up
for the delay.

     We cannot predict what, if any, future changes may occur in the rate of
Medicare reimbursement. Any significant decreases in the Medicare reimbursement
rates could have a material adverse effect on our dialysis
                                        33
<PAGE>

services business. In addition, because the demand for products is affected by
Medicare reimbursement, a decline in reimbursement rates could also adversely
affect our products business. Increases in operating costs that are affected by
inflation, such as labor and supply costs, without a compensating increase in
reimbursement rates, also may adversely affect our business and results of
operations.

     Patients or their third-party insurance carriers, including
employer-sponsored health insurance plans, commercial insurance carriers and the
Medicaid program, are responsible for paying any co-payment amounts for approved
services not paid by Medicare. Payment of these amounts -- typically the annual
deductible and 20% co-insurance -- is subject to the specific coverage policies
of the payors. The extent to which we are actually paid the full co-payment
amounts depends on the particular responsible party. Each third-party payor,
including Medicaid, makes payment under contractual or regulatory reimbursement
provisions which may or may not cover the full 20% co-payment or annual
deductible. Where the patient has no third-party insurance or the third party
insurance does not cover co-payment or deductibles and the patient is not
eligible for Medicaid, the patient is responsible for paying the co-payments or
the deductible. We frequently do not collect these amounts in full despite
reasonable collection efforts. Under an advisory opinion from the Office of the
Inspector General, subject to specified conditions, we and other similarly
situated providers may make contributions to a non-profit organization that has
volunteered to make premium payments for supplemental medical insurance and/or
medigap insurance on behalf of indigent ESRD patients, including our patients.

     Laboratory Tests.  Spectra Renal Management obtains a substantial portion
of its net revenue from Medicare, which pays for clinical laboratory services
provided to dialysis patients in two ways.

     First, the Medicare composite rate paid to our dialysis clinics includes
payment for some routine tests. For those services, the dialysis clinics obtain
the services from a laboratory and pay the laboratory for the services. In
accordance with industry practice, Spectra Renal Management usually provides
composite rate testing services under capitation agreements with its customers
pursuant to which it bills a fixed amount per patient per month to cover the
laboratory tests included in the Medicare composite rate at the designated
frequencies. Second, Spectra Renal Management performs laboratory tests for
Medicare beneficiaries that are not included in the Medicare composite rate and
are separately billable directly to Medicare. Medicare pays for these tests at
100% of the Medicare fee schedule amounts, which are limited by national
ceilings on payment rates, called National Limitation Amounts. The U.S. Congress
has periodically reduced the fee schedule rates and the National Limitation
Amounts with the most recent reductions in the National Limitation Amounts
occurring in January 1998. (As part of the Balanced Budget Act of 1997, the U.S.
Congress lowered the National Limitation Amounts from 76% to 74% effective
January 1, 1998.) The U.S. Congress has also approved a five year freeze on
inflation adjustments based on the Consumer Price Index for 1998-2002.

     Medicare insurers have aggressively implemented its Local Medical Review
Policies, which limit coverage for certain clinical laboratory services to an
established list of diagnosis codes supporting medical necessity. These policies
establish criteria under which laboratory tests will be considered medically
necessary only if the patient's condition is reflected in specified diagnosis
codes. They also establish rules limiting the frequency of certain laboratory
tests. Provisions in the Balanced Budget Act of 1997 require the Secretary of
Health and Human Services to adopt uniform coverage and payment policies for
laboratory testing by July 1, 1999. The adoption of additional coverage policies
would reduce the number of covered services and could materially affect our
revenues. Laboratory tests are ordered only by physicians based on their
patients' needs.

     Erythropoetin.  In 1999, the Office of the Inspector General and the
Clinton Administration announced their intention to seek a 10% reduction in
Medicare reimbursement for EPO. Although this proposal was not enacted, any of
the following could adversely affect our business, and results of operations,
possibly materially:

     -  future changes in the EPO reimbursement rate;

     -  inclusion of EPO in the Medicare composite rate;

     -  changes in the typical dosage per administration; or

     -  increases in the cost of EPO.

                                        34
<PAGE>

     Coordination of Benefits.  Medicare entitlement begins for most patients in
the fourth month after chronic dialysis treatment at a dialysis clinic
commences. During the first three months, considered to be a waiting period, the
patient or the patient's insurance company, Medicaid or a state renal program
are responsible for payment.

     Patients who have Medicare coverage and are also covered by an employer
group health plan are subject to a 30-month coordination period during which the
employer group health plan is the primary payor and Medicare the secondary
payor. During this coordination period the employer group health plan pays a
negotiated rate or, in the absence of such a rate, our standard rate or a rate
defined by the health plan documents. These payments are generally higher than
the Medicare composite rate. Insurance will therefore generally cover a total of
33 months, the 3 month waiting period plus the 30 month coordination period.

     Patients who already are eligible for Medicare coverage based on age when
they become ESRD patients are dual eligible patients. If these patients have an
employer group health plan that is their primary payor for covered services then
these patients will have a 30 month coordination period. If Medicare is already
the primary payor when ESRD entitlement begins, Medicare remains the primary
payor, the employer group health plan is the secondary payor and no coordination
period will apply. All ESRD patients or patients over 65 who do not have a
health insurance retirement benefit plan can purchase Medigap plans.

     Possible Changes in Medicare.  Because the Medicare program represents a
substantial portion of the federal budget the U.S. Congress takes action
frequently to modify the Medicare program by refining the amounts payable to
health care providers. Future legislation or regulations could substantially
modify or reduce the amounts paid for our services and products. It is also
possible that future statutes or regulations may impose additional eligibility
requirements for participation in the federal and state health care programs.
Any such new legislation or regulations may adversely affect our businesses and
results of operations.

Germany and Other Non-U.S.

     As a global company delivering dialysis care and dialysis products in more
than 100 countries world wide, we face the challenge of addressing the needs of
dialysis patients in widely varying economic and health care environments.

     Health care systems and reimbursement structures for ESRD treatment vary by
country. In general, the government pays for health care and finances its
payments through taxes and other sources of government income, from social
contributions, or a combination of those sources. However, not all health care
systems provide for dialysis treatment. In many developing countries, only
limited subsidies from government or charitable institutions are available, and
dialysis patients must finance all or substantially all of the cost of their
treatment. In some countries patients in need of dialysis do not receive
treatment on a regular basis but rather when the financial resources allow it.

     In the major European and British Commonwealth countries, health care
systems are generally based on one of two models. The German model is based on
mandatory employer and employee contributions dedicated to health care
financing. The British model provides a national health care system funded by
taxes, with the result that funds allocated to health care may vary from year to
year. Within these systems provision for the treatment of dialysis has been made
either through allocation of a national budget or a billing system reimbursing
on a fee-for-service basis. The health care systems of Japan, France,
Switzerland and the Netherlands are based on the German model. Canada,
Scandinavia, Italy and Spain established their national health services using
the British model.

     Ownership of health care providers and, more specifically dialysis care
providers, varies within the different systems and from country-to-country. In
Europe more than 60% of the clinics providing dialysis care and services are
publicly owned, nearly 30% are privately owned and approximately 10% belong to a
health care organization. It should be noted that health care organizations
treating a significant patient population operate only in Germany, France and
Spain. Publicly run clinics care for almost 100% of the dialysis populations in
Canada and Australia. Within Europe, nearly 100% of the dialysis population is
treated in public clinics in the United Kingdom, the Netherlands and the
Scandinavian countries, while more than 50% of dialysis clinics are privately
owned in Spain and Portugal.

                                        35
<PAGE>

     In Latin America and Asia, privately owned clinics predominate,
constituting more than 60% of all clinics providing dialysis care. As in the
U.S., only approximately 15% of dialysis clinics in Japan are publicly operated.
Unlike the U.S., however, Japan has a premium-based, mandatory social insurance
system, and the structure of its health care system is more closely comparable
to the German system.

     Financing policies for ESRD treatment also differ from country-to-country.
In countries with a health care system that includes provisions for ESRD patient
care, treatment is generally financed through a government budget allocation or
on a fee-for-service basis. A few European countries have introduced payment
systems based on fixed fees charged according to the disease related group, an
arrangement similar to capitation. This basis for payment was adopted from the
United States where it was implemented as a method to curtail costs.

     Treatment components included in the cost of dialysis may vary from
country-to-country, depending on the structure and cost allocation principles.
Where treatment is reimbursed on a fee-for-service basis, reimbursement rates
are allocated in accordance with the type of treatment performed. We believe
that it is not possible to calculate a global reimbursement amount, because the
services and costs for which reimbursement is provided in any such global amount
would be likely to bear little relation to the actual reimbursement system in
any one country. Generally, in countries with established dialysis programs,
reimbursements range from $100 to more than $300 per treatment. However, a
comparison from country to country would not be meaningful if made in the
absence of a detailed analysis of the cost components reimbursed, services
rendered and the structure of the dialysis clinic in each country being
compared.

     Health care expenditures are consuming an ever increasing portion of the
gross domestic product worldwide. In the developed economies of Europe, Asia and
Latin America, health care spending is in the range of 5%-14% of gross domestic
product. As in the U.S., dialysis costs consume a disproportionately high amount
of health care spending and these costs may be considered a target for
implementation of cost containment measures. Today, there is increasing
awareness of the correlation between the quality of care delivered in the
dialysis unit and the total health care expenses incurred by the dialysis
patient. Accordingly, developments in reimbursement policies include higher
reimbursement rates for practices which are believed to improve the overall
state of health of the ESRD patient and reduce the need for additional medical
treatment.

ANTI-KICKBACK STATUTES, FALSE CLAIMS ACT, HEALTH CARE FRAUD, STARK LAW AND FRAUD
AND ABUSE LAWS

     Some of our operations are subject to federal and state statutes and
regulations governing financial relationships between health care providers and
potential referral sources and reimbursement for services and items provided to
Medicare and Medicaid patients. Such laws include the anti-kickback statute,
health care fraud statutes, the False Claims Act, the Stark Law, other federal
fraud and abuse laws and similar state laws. These laws apply because the our
Medical Directors and other physicians with whom we have financial relationships
refer patients to, and order diagnostic and therapeutic services from, our
dialysis centers and other operations. As is generally true in the dialysis
industry, at each dialysis facility a small number of physicians account for all
or a significant portion of the patient referral base. An ESRD patient generally
seeks treatment at a center that is convenient to the patient and at which the
patient's nephrologist has staff privileges. Virtually all of the our centers
maintain open staff privileges for local nephrologists. Our ability to provide
quality dialysis care and to otherwise meet the needs of patients and local
physicians is central to our ability to attract nephrologists to dialysis
facilities and to receive referrals from such physicians.

     The U.S. federal government, many states and private third-party insurance
payors have made combating health care waste, fraud and abuse one of their
highest enforcement priorities, resulting in increasing resources devoted to
this problem. Consequently, the Office of the Inspector General of the US
Department of Health and Human Services and other enforcement authorities are
increasing scrutiny of arrangements between physicians and health care providers
for possible violations of the anti-kickback statute or other federal or state
laws.

ANTI-KICKBACK STATUTES

     The federal anti-kickback statute establishes criminal prohibitions against
and civil penalties for the knowing and willful solicitation, receipt, offer or
payment of any remuneration, whether direct or indirect, in return for or to
induce the referral of patients or the ordering or purchasing of items or
services payable in whole or in part
                                        36
<PAGE>

under Medicare, Medicaid or other federal health care programs. Sanctions for
violations of the anti-kickback statute include criminal and civil penalties,
such as imprisonment or criminal fines of up to $25,000 per violation, and civil
penalties of up to $50,000 per violation, and exclusion from the Medicare or
Medicaid programs and other federal programs. In addition, certain provisions of
federal criminal law that may be applicable provide that if a corporation is
found guilty of a criminal offense it may be fined no more than twice any
pecuniary gain to the corporation, or, in the alternative, no more than $500,000
per offense.

     Some states also have enacted statutes similar to the anti-kickback
statute, which may include criminal penalties, applicable to referrals of
patients regardless of payor source, and may contain exceptions different from
state to state and from those contained in the federal anti-kickback statute.

FALSE CLAIMS ACT AND RELATED CRIMINAL PROVISIONS

     The federal False Claims Act (the "False Claims Act") imposes civil
penalties for making false claims with respect to governmental programs, such as
Medicare and Medicaid, for services not rendered, or for misrepresenting actual
services rendered, in order to obtain higher reimbursement. Moreover, private
individuals may bring qui tam or "whistle blower" suits against providers under
the False Claims Act, which authorizes the payment of a portion of any recovery
to the individual bringing suit. Such actions are initially required to be filed
under seal pending their review by the Department of Justice. A few federal
district courts have recently interpreted the False Claims Act as applying to
claims for reimbursement that violate the anti-kickback statute under certain
circumstances. The False Claims Act generally provides for the imposition of
civil penalties of $5,500 to $11,000 per claim and for treble damages, resulting
in the possibility of substantial financial penalties for small billing errors
that are replicated in a large number of claims, as each individual claim could
be deemed to be a separate violation of the False Claims Act. Criminal
provisions that are similar to the False Claims Act provide that if a
corporation is convicted of presenting a claim or making a statement that it
knows to be false, fictitious or fraudulent to any federal agency it may be
fined not more than twice any pecuniary gain to the corporation, or, in the
alternative, no more than $500,000 per offense. Some states also have enacted
statutes similar to the False Claims Act which may include criminal penalties,
substantial fines, and treble damages.

THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996

     The Health Insurance Portability and Accountability Act of 1996 was enacted
in August 1996 and substantively changed U.S. federal fraud and abuse laws. The
act:

     -  expanded the reach of fraud and abuse laws to all federal health care
        programs;

     -  established new bases for exclusions from government health programs and
        mandated minimum exclusion terms;

     -  created an additional exception to the anti-kickback penalties for
        risk-sharing arrangements;

     -  required the Secretary of Health and Human Services to issue advisory
        opinions;

     -  increased civil monetary penalties to $10,000 (formerly $2,000) per item
        or service and assessments to three times (formerly twice) the amount
        claimed;

     -  created a specific health care offense of health care fraud applicable
        to all payors and related health fraud crimes; and

     -  expanded investigative authority and sanctions applicable to health care
        fraud.

     The act also prohibits provider payments which could be deemed an
inducement to patient selection of a provider.

     The law expands criminal sanctions for health care fraud involving any
governmental or private health benefit program, including freezing of assets and
forfeiture of property traceable to commission of a health care offense.

                                        37
<PAGE>

BALANCED BUDGET ACT OF 1997

     The Balanced Budget Act of 1997 (the "BBA") contained sweeping adjustments
to both the Medicare and Medicaid programs, as well as further expansion of the
federal fraud and abuse laws. Specifically, the BBA created a civil monetary
penalty for violations of the federal anti-kickback statute whereby violations
will result in damages equal to three times the amount involved as well as a
penalty of $50,000 per violation. In addition, the new provisions expanded the
exclusion requirements so that any person or entity convicted of three health
care offenses is automatically excluded from federally funded health care
programs for life. Individuals or entities convicted of two offenses are subject
to mandatory exclusion of 10 years, while any provider or supplier convicted of
any felony may be denied entry into the Medicare program by the Secretary of HHS
if deemed to be detrimental to the best interests of the Medicare program or its
beneficiaries.

     The BBA also provides that any person or entity that arranges or contracts
with an individual or entity that has been excluded from a federally funded
health care program will be subject to civil monetary penalties if the
individual or entity "knows or should have known" of the sanction.

STARK LAW

     The original Stark Law, known as "Stark I" was enacted as part of the U.S.
Omnibus Budget Reconciliation Act of 1989, and prohibits a physician from
referring Medicare patients for clinical laboratory services to entities with
which the physician (or an immediate family member) has a financial
relationship, unless certain exceptions apply. Sanctions for violations of the
Stark Law may include denial of payment, refund obligations, civil monetary
penalties and exclusion of the provider from the Medicare and Medicaid programs.
The Stark Law also prohibits the entity receiving the referral from filing a
claim or billing for services arising out of the prohibited referral.

     Provisions of the U.S. Omnibus Budget Reconciliation Act of 1993, known as
"Stark II" amended Stark I to revise and expand upon various statutory
exceptions, to expand the services regulated by the statute to a list of
"Designated Health Services," and to prohibit similar Medicaid Designated Health
Services referrals where a financial relationship exists. The provisions of
Stark II generally became effective on January 1, 1995. The additional
Designated Health Services include:

     -  physical therapy services;

     -  occupational therapy services;

     -  radiology services, including magnetic resonance imaging, computer axial
        tomography scans and ultrasound services;

     -  durable medical equipment and supplies;

     -  parenteral and enteral nutrients, equipment and supplies;

     -  home health services;

     -  outpatient prescription drugs; and

     -  inpatient and outpatient hospital services.

     Proposed regulations implementing Stark I and Stark II, published on
January 9, 1998, would specifically exempt EPO as a Designated Health Service if
it is provided to ESRD patients as part of a renal dialysis treatment plan.
Further, the proposed regulations discussing durable medical equipment would
exclude ESRD equipment and supplies from coverage as a Designated Health
Service. Outpatient prescription drugs and in-hospital treatments would also be
excluded because the ESRD benefit is distinguished under Medicare from the
durable medical equipment benefit.

     Several states in which we operate have enacted self-referral statutes
similar to the Stark Law. These state self-referral laws may apply to referrals
of patients regardless of payor source and may contain exceptions different from
each other and from those contained in the Stark Law.

                                        38
<PAGE>

OTHER FRAUD AND ABUSE LAWS

     The Company's operations are also subject to a variety of other federal and
state fraud and abuse laws, principally designed to ensure that claims for
payment to be made with public funds are complete, accurate and fully comply
with all applicable program rules.

     The civil monetary penalty provisions are triggered by violations of
numerous rules under the Medicare statute, including the filing of a false or
fraudulent claim and billing in excess of the amount permitted to be charged for
a particular item or service. Violations may also result in suspension of
payments, exclusion from the Medicare and Medicaid programs, as well as other
federal health care benefit programs, or forfeiture of assets.

     In addition to the statutes described above, other criminal statutes may be
applicable to conduct that is found to violate any of the statutes described
above.

HEALTH CARE REFORM

     Health care reform is considered by many countries to be a national
priority. In the U.S., members of Congress from both parties and the executive
branch are continuing to consider many health care proposals, some of which are
comprehensive and far-reaching in nature. Several states of the U.S. and many of
the countries in which we do business are also currently considering health care
proposals. We cannot predict what additional action, if any, the federal
government or any state may ultimately take with respect to health care reform
or when any such action will be taken. Health care reform may bring radical
changes in health care industry financing and regulation, which could have a
material adverse effect on our business, financial condition and results of
operations.

                                        39
<PAGE>

C.  ORGANIZATIONAL STRUCTURE

     The following chart shows our organizational structure and our significant
subsidiaries. Fresenius Medical Care Holdings, Inc. conducts its business as
"Fresenius Medical Care North America."

                             (ORGANIZATIONAL CHART)

D.  PROPERTY, PLANT AND EQUIPMENT

PROPERTY

     The table below describes our principal facilities.  We do not own the land
and buildings comprising our principal facilities in Germany. Rather, we lease
those facilities on a long-term basis from Fresenius AG or one of its
affiliates. This lease is described under "Item 7.B. Related Party Transactions
-- Real Property Lease."

<Table>
<Caption>
                                                   CURRENTLY
                                                     OWNED
                                   FLOOR AREA      OR LEASED
                                  (APPROXIMATE    BY FRESENIUS
LOCATION                         SQUARE METERS)   MEDICAL CARE   LEASE EXPIRATION          USE
--------                         --------------   ------------   ----------------          ---
<S>                              <C>              <C>            <C>                       <C>
Bad Homburg, Germany...........       5,374        leased        December 2006             Corporate headquarters and
                                                                                           administration
St. Wendel, Germany............      49,732        leased        December 2006             Manufacture of polysulfone
                                                                                           membranes and dialyzers,
                                                                                           bloodlines, and peritoneal
                                                                                           dialysis solutions; research
                                                                                           and development
</Table>

                                        40
<PAGE>

<Table>
<Caption>
                                                   CURRENTLY
                                                     OWNED
                                   FLOOR AREA      OR LEASED
                                  (APPROXIMATE    BY FRESENIUS
LOCATION                         SQUARE METERS)   MEDICAL CARE   LEASE EXPIRATION          USE
--------                         --------------   ------------   ----------------          ---
<S>                              <C>              <C>            <C>                       <C>
Schweinfurt, Germany...........      15,717        leased        December 2006             Manufacture of hemodialysis
                                                                                           machines and peritoneal
                                                                                           dialysis cyclers; research and
                                                                                           development
L'Arbresle, France.............      13,524         owned                                  Manufacture of polysulfone
                                                                                           dialyzers and special filters
                                                                                           dry hemodialysis concentrates
Palazzo Pignano, Italy.........      66,550         owned                                  Manufacture of bloodlines and
                                                                                           tubing
Nottinghamshire, United               5,110         owned                                  Manufacture of hemodialysis
  Kingdom......................                                                            concentrate solutions
Barcelona, Spain...............       2,000         owned                                  Manufacture of peritoneal
                                                                                           dialysis bags and concentrates
Ankara, Turkey.................       1,000        leased        February 2009             Manufacture of liquid
                                                                                           hemodialysis concentrate
                                                                                           solutions
Tunisia........................         491        leased        December 2020             Manufacture of liquid
                                                                                           hemodialysis concentrate
                                                                                           solutions
Buenos Aires, Argentina........      10,100         owned                                  Manufacture of hemodialysis
                                                                                           concentrate solutions
Rio de Janeiro, Brazil.........       1,159        leased        Month to Month            Manufacture of hemodialysis
                                                                                           concentrate solutions
Reynosa, Mexico................      13,936         owned                                  Manufacture of bloodlines
Oita, Japan(1).................      24,083         owned                                  Manufacture of polysulfone
                                                                                           membranes, dialyzers, dialysis
                                                                                           solutions, dialysis machine
                                                                                           components and assembly of
                                                                                           dialysis machines
Hong Kong......................       1,013        leased        February 2003             Corporate headquarter and
                                                                                           administration -- Asia-Pacific
Milson Point, Australia........         557        leased        June 2003                 Administration
Smithfield, Australia..........       5,350         owned                                  Manufacture of hemodialysis
                                                                                           concentrate solutions Warehouse
Auckland, New Zealand..........       2,043        leased        December 2005             Administration
Pusat, KL, Malaysia............       4,060        leased        March 2002 with 2-year    Administration
                                                                 renewal option
Taipei, Taiwan.................       5,940        leased        December 2003             Administration
Tokyo, Japan...................       1,153        leased        December 2003 with        Administration
                                                                 5-year renewal option
Inukai, Japan..................
  -- Land                            24,084         owned                                  Manufacture of polysulfone
                                                                                           dialyzers and filters
  -- Building                         2,142         owned
Buzen, Japan...................      37,094         owned                                  Manufacture of peritoneal
                                                                                           dialysis solutions
Seoul, South Korea.............       1,554        leased        August 2002               Administration
Lexington, Massachusetts.......      18,581        leased        October 2007 with 5-year  Corporate headquarters and
                                                                 renewal option            administration -- North America
Walnut Creek, California.......       7,897        leased        June 2002 with 5-year     Manufacture of Hemodialysis
                                                                 renewal option            machines and peritoneal
                                                                                           dialysis cyclers; research and
                                                                                           development
                                      1,625        leased                                  Warehouse Space -- Machine
                                                                                           components
</Table>

                                        41
<PAGE>

<Table>
<Caption>
                                                   CURRENTLY
                                                     OWNED
                                   FLOOR AREA      OR LEASED
                                  (APPROXIMATE    BY FRESENIUS
LOCATION                         SQUARE METERS)   MEDICAL CARE   LEASE EXPIRATION          USE
--------                         --------------   ------------   ----------------          ---
<S>                              <C>              <C>            <C>                       <C>
Ogden, Utah....................      41,807         owned                                  Manufacture polysulfone
                                                                                           membranes and dialyzers and
                                                                                           peritoneal dialysis solutions;
                                                                                           research and development
Delran, New Jersey.............       3,902        leased        October 2002 with 5-year  Manufacture of liquid
                                                                 renewal option            hemodialysis concentrate
                                                                                           solutions
Perrysburg, Ohio...............       3,252        leased        August 2008               Manufacture of dry hemodialysis
                                                                                           concentrates
Livingston, California.........       2,973        leased        October 2006 with 5-year  Manufacture of liquid
                                                                 renewal option            hemodialysis concentrates
Chicago, Illinois..............          63        leased        March 2005                Clinical laboratory testing
Freemont, California...........       6,688        leased        July 2003 with 3-year     Clinical laboratory testing
                                                                 renewal option
Rockleigh, New Jersey..........       7,897        leased        June 2005 with two        Clinical laboratory testing
                                                                 5-year renewal options
Miami, Florida.................         400        leased        Month to Month            Administration
Irving, Texas..................       6,503        leased        December 2010             Manufacture of liquid
                                                                                           hemodialysis solution
</Table>

---------------

(1) We own 70% of the joint venture that owns the facility.

     We lease most of our dialysis clinics, manufacturing, laboratory,
warehousing and distribution and administrative and sales facilities in the U.S.
and foreign countries on terms which we believe are customary in the industry.
We own those dialysis clinics and manufacturing facilities that we do not lease.

     For information regarding plans to expand our facilities and related
capital expenditures, see "Item 4.A. History and Development of the Company --
Capital Expenditures."

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     You should read the following discussion and analysis of the results of
operations of Fresenius Medical Care in conjunction with our historical
consolidated financial statements and related notes contained elsewhere in this
report. Some of the statements contained below, including those concerning
future revenue, costs and capital expenditures and possible changes in our
industry and competitive and financial conditions include forward-looking
statements. Because such statements involve risks and uncertainties, actual
results may differ materially from the results which the forward looking
statements express or imply.

CRITICAL ACCOUNTING POLICIES

     We have identified the following selected accounting policies and issues
that we believe are critical to understand the financial reporting risks
presented in the current economic environment. These matters and judgements, and
uncertainties affecting them, are also essential to understanding our reported
and future operating results. See also Note 1 to our Consolidated Financial
Statement.

RECOVERABILITY OF GOODWILL AND INTANGIBLE ASSETS

     The growth of our business through acquisitions has created a significant
amount of intangible assets, including goodwill, patient relationships,
tradenames and other. At December 31, 2001, the carrying amount of net
intangible assets amounted to $3,682 million representing approximately 57% of
our total assets. In accordance with Statement of Financial Accounting Standards
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, we review the carrying value of our long-lived assets
for impairment whenever events or changes in circumstances indicate that the
carrying amount of assets may not be recoverable. As discussed in Note 1 to the
Consolidated Financial Statements, any impairment is tested by a

                                        42
<PAGE>

comparison of the carrying amount of intangible assets to future net cash flows
expected to be generated. If such intangible assets are considered impaired, the
impairment recognized is measured as the amount by which the carrying amount of
the assets exceeds the fair value of the assets.

     A prolonged downturn in the healthcare industry with lower than expected
increases in reimbursement rates and/or higher than expected costs for providing
our healthcare services could adversely affect our estimates of future net cash
flows in any given country or segment. Consequently, it is possible that our
future operating results could be materially and adversely affected by
additional impairment charges related to goodwill.

LEGAL CONTINGENCIES

     We are party to litigation relating to a number of matters, including the
commercial insurer litigation, OBRA 93, indemnification by W.R. Grace & Co. and
Sealed Air Corporation and other litigation arising in the ordinary course of
our business as described in Note 18 "Commitments and Contingencies" in our
Consolidated Financial Statements. The outcome of these matters may have a
material effect on our financial position, results of operations or cash flows.

     We regularly analyze current information including, as applicable, our
defenses and provide accruals for probable contingent losses including the
estimated legal expenses to resolve the matters. We use the resources of our
internal legal department as well as external lawyers for the assessment. In
making the decision, we consider the degree of probability of an unfavorable
outcome and the ability to make a reasonable estimate of the amount of loss.

     If an unfavorable outcome is probable but the amount of loss cannot be
reasonably estimated by management, appropriate disclosure is provided, but no
contingent losses are accrued. The filing of a suit or formal assertion of a
claim or assessment does not automatically indicate that accrual of a loss may
be appropriate.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

     Trade accounts receivable are a significant asset of ours and the allowance
for doubtful accounts is a significant estimate made by management. Trade
accounts receivable were $884.7 million and $753.7 million for 2001 and 2000
respectively, net of allowances and after sales of accounts receivable under the
accounts receivable facility. The allowance for doubtful accounts was $138.1
million and $111.2 million for 2001 and 2000 respectively. The majority of the
receivables relates to the dialysis service business in North America.

     Health care revenues are recognized and billed at amounts estimated to be
received under reimbursement arrangements with third party payors. Medicare and
Medicaid programs are billed at pre-determined net realizable rates per
treatment that are established by statute or regulation. Most non-governmental
payors, including contracted managed care payors, are billed at the Company's
standard rates for services net of contractual allowances to reflect the
estimated amounts to be received under reimbursement arrangements with these
payors.

     Estimates for the allowances for accounts receivable from the dialysis
service business are mainly based on past collection history. Specifically, the
allowances for the North American operations are based on an analysis of
collection experience, recognizing the differences between payors and aging of
accounts receivable. We believe that this analysis provides a reasonable
estimate for the allowance for doubtful accounts. From time to time, we review
the accounts receivable for changes from the historic collection experience to
ensure the appropriateness of the allowances. The allowances in the
international segment and the products business are also based on our estimates
and consider various factors, including aging, creditor and past collection
history.

     A significant change in the collection experience, a build up of a backlog
in receivables and collection difficulties may adversely affect our estimate of
the allowance for doubtful accounts. Consequently, it is possible that our
future operating results could be materially and adversely affected by
additional bad debt charges.

                                        43
<PAGE>

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The tables below, "Fresenius Medical Care AG Segment Data," present
disaggregated information for our company. We prepared the information using a
management approach, consistent with the basis and manner in which our
management internally disaggregates financial information to assist in making
internal operating decisions and evaluating management performance.

     This section contains forward-looking statements. We made these
forward-looking statements based on our management's expectations and beliefs
concerning future events which may affect us, but we cannot assure that such
events will occur or that the results will be as anticipated. Such statements
include the matters that we described in the discussion in this report entitled
"Forward-Looking Statements."

     Our business is also subject to other risks and uncertainties that we
describe from time to time in our public filings. Developments in any of these
areas could cause our results to differ materially from the results that we or
others have projected or may project.

OVERVIEW

     We have identified three operating segments, North America, International,
and Asia Pacific, that we determined based upon how we operate and manage our
businesses. For reporting purposes, we have aggregated the International and
Asia Pacific segments as "International." We aggregated these segments due to
their similar economic characteristics. These characteristics include same
services provided and same products sold, same type patient population, similar
methods of distribution of products and services and similar economic
environments.

     Each segment engages primarily in providing kidney dialysis services and
manufacturing and distributing products and equipment for the treatment of
end-stage renal disease. Additionally the North America segment engages in
performing clinical laboratory testing and renal diagnostic services. Our
Management Board member responsible for the profitability and cash flow of each
segment's various businesses supervises the management of each operating
segment. The accounting policies of the operating segments are the same as those
we apply in preparing our consolidated financial statements under accounting
principles generally accepted in the United States of America.

     Management evaluates each segment using a measure that reflects all of the
segment's controllable revenues and expenses. Management believes the most
appropriate measure in this regard is earnings before interest and taxes
("EBIT"). In addition to EBIT, management believes that earnings before
interest, taxes, depreciation and amortization ("EBITDA") is helpful for
investors as a measurement of the segment's and our ability to generate cash and
to service financing obligations. EBITDA is also the basis for determining
compliance with certain covenants contained in our senior credit agreement and
the indentures relating to our outstanding trust preferred securities. You
should not consider EBITDA to be an alternative to net earnings determined in
accordance with generally accepted accounting principles or to cash flow from
operations, investing activities or financing activities or as a measure of cash
flows. We believe our EBIT calculation is the functional equivalent of operating
income. Because all companies do not calculate EBITDA and EBIT consistently, the
presentation herein may not be comparable to other similarly titled measures of
other companies.

     Our discussions relating to our consolidated financial condition and
results of operations for 2001 and 1999 reflect the effects of the special
charges recorded in those years. THE DISCUSSION OF THE DISAGGREGATED RESULTS OF
OPERATIONS OF THE NORTH AMERICA SEGMENT AND THE DISCUSSION UNDER "CORPORATE"
EXCLUDE THE EFFECT OF THOSE SPECIAL CHARGES.

A.  OPERATING RESULTS

     The following tables summarize our financial performance and certain
operating results by principal business segment for the periods indicated.
Inter-segment sales primarily reflect sales of medical equipment and supplies
from the International segment to the North America segment.

                                        44
<PAGE>

                           FRESENIUS MEDICAL CARE AG

                                  SEGMENT DATA
                           (U.S. DOLLARS IN MILLIONS)

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                                --------------------------
                                                                 2001      2000      1999
                                                                ------    ------    ------
<S>                                                             <C>       <C>       <C>
Total revenue
  North America.............................................    $3,604    $3,084    $2,808
  International.............................................     1,281     1,156     1,079
                                                                ------    ------    ------
     Totals.................................................     4,885     4,240     3,887
                                                                ------    ------    ------
Inter-segment revenue North America.........................         2         2         4
  International.............................................        24        37        43
                                                                ------    ------    ------
     Totals.................................................        26        39        47
                                                                ------    ------    ------
Total net revenue North America.............................     3,602     3,082     2,804
  International.............................................     1,257     1,119     1,036
                                                                ------    ------    ------
     Totals.................................................     4,859     4,201     3,840
                                                                ------    ------    ------
EBITDA
  North America.............................................       693       652       619
  International.............................................       292       264       235
  Special charge for Legal Matters..........................      (258)       --        --
  Special charge for 1999 Settlement........................        --        --      (601)
  Corporate.................................................       (24)       (2)      (10)
                                                                ------    ------    ------
     Totals.................................................       703       914       243
                                                                ------    ------    ------
Amortization and depreciation North America.................       247       223       217
  International.............................................        76        69        65
  Corporate.................................................         1         1         2
                                                                ------    ------    ------
     Totals.................................................       324       293       284
                                                                ------    ------    ------
EBIT
  North America.............................................       446       429       402
  International.............................................       216       195       170
  Special charge for Legal Matters..........................      (258)       --        --
  Special charge for 1999 Settlement........................        --        --      (601)
  Corporate.................................................       (25)       (3)      (12)
                                                                ------    ------    ------
     Totals.................................................       379       621       (41)
                                                                ------    ------    ------
Interest income.............................................        14         9         8
Interest expense............................................      (237)     (225)     (226)
Income tax (expense) benefit................................       (91)     (190)       12
Minority interest...........................................        (2)       (3)       (2)
                                                                ------    ------    ------
Net income (loss)...........................................    $   63    $  212    $ (249)
                                                                ======    ======    ======
</Table>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     Net revenues for the year ended December 31, 2001 increased by 16% (17% at
constant exchange rates) to $4,859 million from $4,201 million for the
comparable period in 2000. Net income for the year was $63 million as compared
to $212 million in 2000. Excluding the effects of the special charge for legal
matters of $258 million recorded in the fourth quarter 2001 and related prior
quarter expenses of $7 million included in corporate, net income for the year
2001 would have increased by 15% (18% at constant exchange rates) to $245
million. Earnings per Ordinary share in 2001 were $0.65 compared to $2.37 in the
prior year. Excluding the effects of the

                                        45
<PAGE>

special charge of $258 million and related prior quarter expenses of $7 million,
earnings per Ordinary share would have increased by 7% to $2.53 in 2001.

     At December 31, 2001 we owned, operated or managed 1,400 clinics compared
to 1,270 clinics at the end of 2000. During 2001, we acquired 88 clinics with a
total of 8,671 patients, opened 74 clinics and disposed of 23 clinics.

     The number of patients treated in clinics that we own, operate or manage
increased from approximately 91,900 at the end of 2000 to 105,830 at the end of
2001. Approximately 15,200,000 treatments were provided in the year 2001; an
increase of 18% from 12,900,000 treatments for the comparable period in 2000.
Average revenue per treatment company wide increased from $228 to $233.

THE FOLLOWING DISCUSSIONS PERTAIN TO OUR BUSINESS SEGMENTS AND THE MEASURES WE
USE TO MANAGE THESE SEGMENTS. THE NORTH AMERICA SEGMENT DISCUSSION EXCLUDES THE
EFFECTS OF THE SPECIAL CHARGE FOR LEGAL MATTERS IN 2001.

NORTH AMERICA

REVENUE

     Net revenue for the North America segment for 2001 grew by 17% from $3,082
million to $3,602 million. Dialysis care revenue increased by 20% to $3,131
million, 10% attributable to base business revenue growth and 10% to
acquisitions. The increase in dialysis care revenue resulted primarily from a
$404 million (15%) increase in the number of treatments, reflecting both base
business growth and the impact of 2001 and 2000 acquisitions. Revenue was also
favorably impacted by an increase in revenue per treatment of approximately $118
million (5%) as a result of increased Medicare reimbursement rates, improved
ancillary services and introduction of perfusion services as compared to 2000.
For 2001, EPO represented approximately 27% of dialysis care revenue or
approximately 24% of total revenue.

     Medicare reimbursement rates increased 1.2% as of January 1, 2001 due to
legislation passed in January 2000. Additional legislation passed during the
fourth quarter 2000 provided for an additional 1.2% rate increase. However, this
second increase was delayed until April 1, 2001 at which time rates were
increased 1.6% to make up for this delay.

     At the end of 2001, approximately 76,600 patients were treated in the 1,030
clinics that we own, operate or manage in the North America segment, compared to
approximately 67,900 patients treated in 920 clinics at the end of 2000. The
average revenue per treatment excluding laboratory testing revenue increased
from $261 in 2000 to $272 in 2001. Including laboratory testing the average
revenue per treatment increased from $272 in 2000 to $282 in 2001. Dialysis
products revenue decreased slightly from $473 million to $471 million. This is
attributable to the continuing growth of the large vertically integrated
companies above the normal market growth and the resulting consolidation of the
available external market.

EBITDA

     EBITDA for the North America segment grew by 6% due to increased treatment
volume, improved treatment rates, increased ancillary services and increased
earnings from laboratory testing. The EBITDA margin decreased 2%, from 21.2% in
2000 to 19.2% in 2001. This was mainly due to the delayed EBITDA contribution
from the Everest acquisition, expenses caused by dialysis services converting
from re-use to single use dialyzers, an increase in personnel expenses not fully
compensated for by the increase in reimbursement rates, higher bad debt expenses
relating to the changes in payor mix and aging, and increased costs to certify
new clinics. The lower EBITDA contribution from Everest was caused by transition
and integration costs that occurred during the first half of the year.

                                        46
<PAGE>

DEPRECIATION AND AMORTIZATION

     Amortization and depreciation decreased slightly as a percentage of revenue
to just under 7% in 2001. This was mainly due to the impact of internal revenue
growth while amortization and depreciation increased to $247 million.

EBIT

     EBIT for the North America segment increased by 4% due to the increase in
EBITDA. The EBIT margin decreased from 13.9% in 2000 to 12.4% in 2001 due to the
same factors causing the decrease in the EBITDA margin.

INTERNATIONAL

REVENUE

     Net revenue for the International segment increased by 12% (18% at constant
exchange rates) from $1,119 million in 2000 to $1,257 million in 2001.
Acquisitions contributed $89 million (8%), approximately $42 million in the
European region, $21 million in the Latin America region and $26 million in the
Asia Pacific region. Base business growth during the period was 4% (10% at
constant exchange rates). Asia Pacific region revenue increased by 22% to $214
million (35 % at constant exchange rates), and Latin America region revenue
increased by 14% to $244 million (20% at constant exchange rates). European
region revenue increased by 9% from $730 million in 2000 to $799 million in 2001
(13% increase at constant exchange rates).

     Total dialysis care revenue increased by 27% (31% at constant exchange
rates) from $336 million in 2000 to $426 million in 2001. This increase is a
result of base business growth increasing approximately $37 million (13%),
combined with an approximate $67 million (18%) increase from acquisitions,
offset by an approximate $14 million (4%) from exchange rate fluctuations.

     At the end of 2001, approximately 29,230 patients were treated at 370
clinics that we own, operate or manage in the International segment compared to
24,000 patients treated at 350 clinics at the end of 2000.

     Total dialysis product revenue for 2001 increased by 6% (12% at constant
exchange rates) to $831 million. Base business increased by approximately $70
million (9%) and acquisitions contributed another $22 million (3%). Product
revenue increase was offset by approximately $45 million (6%) due to exchange
rate fluctuations.

EBITDA

     EBITDA for the International segment for 2001 grew by 11% (15% at constant
exchange rates) from $264 million to $292 million primarily due to the increased
revenue noted above. EBITDA margin remained relatively constant at 23% with the
negative effect of the financial crisis in Argentina and currency problems in
Columbia and Brazil leading to increased bad debt expense and higher cost of
goods sold offset by increases in dialyzers and hemodialysis machine sales.

DEPRECIATION AND AMORTIZATION

     Depreciation and amortization remained constant at 6% of revenues for 2001
and 2000.

EBIT

     EBIT for the International segment for 2001 increased by 11% (15% at
constant exchange rates) from $195 million to $216 million due to the increased
EBITDA mentioned above and stable depreciation and amortization as a percentage
of revenue. EBIT margin remained relatively constant at 17%, for the same
reasons as EBITDA margin described above.

                                        47
<PAGE>

ARGENTINA

     Excluding the special charge for legal matters and related prior quarter
expenses, our business in Argentina contributed about 2.2% of EBIT and 2.6% of
net income in 2001. In January 2002, the Argentine government terminated the
fixed exchange rate. On January 11, 2002, currency activity resumed, and the
floating exchange rate ranged from 1.6 to 1.7 pesos to 1 U.S. dollar. In
accordance with U.S. GAAP, we used the rate of 1.7 pesos to 1 U.S. dollar for
purposes of translating Argentine peso financial statements as of December 31,
2001. There was no effect on earnings, since translation losses at year end are
deferred in accumulated other comprehensive income.

     In Argentina Fresenius Medical Care achieved sales growth of 19% and an
earnings after tax growth of 30% in the fiscal year 2001. In 2002, we estimate
that there will be a slight negative effect on overall revenue and EBIT due
mainly to the devaluation of the peso. Based on information available at the
beginning of March, 2002, the Company does not expect impairment issues in the
group financial statements relating to its investment in Argentina.

SPECIAL CHARGE FOR LEGAL MATTERS

     In the fourth quarter of 2001, the Company recognized a $258 million ($177
million after tax) special charge to address 1996 merger related legal matters,
expected liabilities and legal expenses arising in connection with the W.R.
Grace Chapter 11 proceedings and the cost of resolving pending litigation and
other disputes with certain commercial insurers. We did not allocate this
special charge of $258 million to our North America business segment.

     The special charge primarily comprises three major components:

     (1)   We have assessed the extent of potential liabilities as a result of
the W.R. Grace Chapter 11 proceedings. The Company accrued $172 million
principally representing a provision for income taxes payable for the years
prior to the 1996 merger for which the Company has been indemnified by W.R.
Grace, but may ultimately be obligated to pay as a result of W.R. Grace's
Chapter 11 filing. In addition, that amount includes the costs of defending the
Company in litigation arising out of W.R. Grace's Chapter 11 filing.

     (2)   We have entered into an agreement in principle with Aetna Life
Insurance Company ("Aetna") to establish a process for resolving our pending
litigation with Aetna. The Company has included in the special charge the amount
of $55 million to provide for settlement obligations, legal expenses and
disputed accounts receivable for Aetna and the other litigants. If the Company
is unable to settle the pending matters with any of the remaining commercial
insurers, whether on the basis of the Aetna agreement in principle or otherwise,
the Company believes that this charge reasonably estimates the costs and
expenses associated with such litigation.

     (3)   The remaining amount of $31 million mainly represents assets impaired
due to litigation.

     See also Note 3--"Special Charge for Legal Matters" and Note
18--"Commitment and Contingencies--Legal Proceedings" in the Consolidated
Financial Statements.

CORPORATE

     We do not allocate "corporate costs" to our segments in calculating segment
EBIT and EBITDA as we believe that these costs are not within the control of the
individual segments. These corporate costs primarily relate to certain
headquarters overhead charges including accounting and finance, professional
services, legal fees, etc.

     Total corporate EBIT was $(25) million in 2001 compared to $(3) million in
2000. EBIT in 2001 was primarily affected by $7 million expenses related to 1996
merger related legal matters recorded in quarters prior to the recognition of
the special charge and lower foreign currency gains which had a positive impact
of $12 million in 2000.

                                        48
<PAGE>

     THE FOLLOWING DISCUSSIONS PERTAIN TO OUR TOTAL COMPANY COSTS, EXCLUDING THE
EFFECTS OF THE SPECIAL CHARGE FOR LEGAL MATTERE IN 2001.

INTEREST

     Interest expense for 2001 increased by 3% from $216 million to $223 million
compared to the same period in 2000 due to an increase in debt as a result of
acquisition spending.

INCOME TAXES

     The effective tax rate for the year increased from 46.9% in 2000 to 58.4%
in 2001 due to a portion of the special charge for legal matters not being
recognized for tax purposes. This was partially offset by a significantly lower
German tax rate.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Net revenues for the year ended December 31, 2000 increased by 9% (12% at
constant exchange rates) to $4,201 million from $3,840 million for the
comparable period in 1999. Net income for the year was $212 million as compared
to a net loss of $249 million in 1999. The net loss of $249 million in 1999 was
a result of the special charge of $601 million ($419 million after tax) relating
to the Settlement. Excluding the effects of the special charge during 1999, net
income for the year 2000 increased by 24% (34% at constant exchange rates) or
$42 million.

     Earnings per Ordinary share in 2000 were $2.37 compared to a loss per
Ordinary share of $3.15 in the prior year. Excluding the effects of the special
charge, earnings per Ordinary share increased by 10% from $2.15 in 1999.

     At December 31, 2000 we owned, operated or managed 1,270 clinics compared
to 1,090 clinics at the end of 1999. During 2000, we acquired 133 clinics with a
total of 7,594 patients, opened 67 clinics and disposed of 20 clinics.

     The number of patients treated in clinics that we own, operate or manage
increased from approximately 80,000 in 1999 to 91,900 at the end of 2000.
Approximately 12,900,000 treatments were provided in the year 2000; an increase
of 13% from 11,400,000 treatments for the comparable period in 1999. Average
revenue per treatment remained stable at $228.

     The following discussions pertain to our business segments and the measures
we use to manage these segments. THE NORTH AMERICA SEGMENT DISCUSSION EXCLUDES
THE EFFECTS OF THE SPECIAL CHARGE IN 1999.

NORTH AMERICA

REVENUE

     Net revenue for the North America segment for 2000 grew by 10% from $2,804
million to $3,082 million.

     Dialysis care revenue increased by 12% to $2,608 million, 9% attributable
to base business revenue growth and 3% to acquisitions. The increase in dialysis
care revenue resulted primarily from a $201 million (9%) increase in the number
of treatments, reflecting both base business growth and the impact of 1999 and
2000 acquisitions. Revenue was also favorably impacted by an increase in revenue
per treatment of approximately $72 million (3%) as a result of increased
Medicare reimbursement rates, higher revenue from disease state management
programs and higher revenues in other pharmaceuticals compared to 1999. For the
years 2000 and 1999 EPO represented approximately 28% of dialysis care revenue
or approximately 22% of total revenue.

     The 1.2% increase of the Medicare composite rate for dialysis services (59%
of dialysis care revenue in 2000 resulted from Medicare's ESRD program)
generated an additional $9 million in revenue in 2000. We expect that an
additional 2.4% increase, approved in December 2000, will have a positive impact
on our revenues for 2001. Laboratory testing revenues increased as a result of
higher patient volume.

                                        49
<PAGE>

     At the end of 2000 approximately 67,900 patients were treated in the 920
clinics that we own, operate or manage in the North America segment, compared to
approximately 62,000 patients treated in 849 clinics at the end of 1999. The
average revenue per treatment excluding laboratory testing revenue increased
from $253 in 1999 to $261 in 2000. Including laboratory testing the average
revenue per treatment increased from $264 in 1999 to $272 in 2000.

     Dialysis products revenue increased 1% to $474 million. Dialysis product
volume revenue increased approximately $8 million or 2% as a result from
increased sales of hemodialysis products, partially offset by decreased sales of
peritoneal products. Product revenue growth was slightly (1%) affected by
decreasing prices. The consolidation process in the dialysis care business also
affected product business growth. As integrated product and service providers
acquire stand alone dialysis clinics, the external market for products
decreases. The lower revenue in peritoneal products is also a result of a
decreasing external market.

EBITDA

     EBITDA for the North America segment grew by 5% due to increased treatment
volume, improved treatment rates, higher earnings in other pharmaceuticals,
increased earnings from laboratory testing and net foreign currency transaction
gains. These increases were partially offset by costs to develop new therapies,
costs to develop disease state management methodologies, higher personnel costs
due to the tight labor market for medical personnel in the U.S. and an
industry-wide price increase for Epogen, the key drug in anemia management.

AMORTIZATION AND DEPRECIATION

     Amortization and depreciation decreased slightly as a percentage of revenue
in 2000. This was mainly due to the impact of internal revenue growth while
amortization and depreciation has remained fairly constant at $222 million.

EBIT

     EBIT for the North America segment increased by 7% due to the increase in
EBITDA and the positive impact of the decreased percentage of amortization and
depreciation to revenue as previously mentioned.

INTERNATIONAL SEGMENT

REVENUE

     In 2000 the appreciation of the U.S. dollar against the euro significantly
impacted our International segment. Net revenue for the International segment
increased by 8% (19% at constant exchange rates) from $1,033 million in 1999 to
$1,119 million in 2000. Acquisitions, primarily Total Renal Care, contributed
$88 million, approximately $30 million in the European region, $46 million in
the Latin America region and $12 million in the Asia Pacific region. Base
business growth during the period was 10% at constant exchange rates. Including
the effects of acquisitions, Asia Pacific region revenue increased $39 million
or 29% (26% at constant exchange rates), and Latin America region revenue
increased $65 million or 44% (49% at constant exchange rates). European region
revenue decreased by 3% from $748 million in 1999 to $728 million in 2000 (12%
increase at constant exchange rates) due to the appreciation of the U.S. dollar
against the euro mentioned above.

     Total dialysis care revenue increased by 27% (40% at constant exchange
rates) from $265 million in 1999 to $336 million in 2000. Base business growth
consisted of approximately $27 million (10%) increase in the number of dialysis
care treatments, offset by approximately $35 million (13%) due to exchange rate
fluctuations. Average revenue per treatment increased by approximately 3% or $9
million before the impact of currency fluctuations. Acquisitions, primarily
Total Renal Care, contributed approximately $70 million (26%) to total dialysis
care revenue.

     At the end of 2000, approximately 24,000 patients were treated at 350
clinics that we own, operate or manage in the International segment compared to
18,000 patients treated at 241 clinics at the end of 1999.

                                        50
<PAGE>

     Total dialysis product revenue for 2000 increased by 2% (12% at constant
exchange rates) to $783 million. Product volume increased by approximately $121
million (16%) which was offset by lower average pricing of approximately $49
million (6%) due to the competitive nature of the market. The increase in
product revenues was further offset by approximately $78 million (10%) due to
exchange rate fluctuations. Acquisitions contributed approximately $18 million
(2%) to total product revenue.

EBITDA

     EBITDA for the International segment for 2000 grew by 12% (26% at constant
exchange rates) from $235 million to $264 million primarily due to the increased
revenue noted above.

EBIT

     EBIT for the International segment for 2000 increased by 15% (28% at
constant exchange rates) from $170 million to $195 million due to the increased
EBITDA mentioned above and stable depreciation and amortization as a percentage
of revenue.

CORPORATE

     We do not allocate "corporate costs" to our segments in calculating segment
EBIT and EBITDA. These corporate costs primarily relate to certain headquarter
overhead charges including accounting and finance, professional services, legal
fees, etc.

     Total corporate EBIT was $(3) million in 2000 compared to $(12) million in
1999. EBIT in 2000 was primarily affected by net foreign currency transaction
gains of $12 million related to intercompany financing. Excluding these net
gains, corporate costs would have increased by approximately $3 million,
resulting primarily from increased compensation expense relating to our
international stock option plan. For more information regarding our
international stock option plan, see "Item 6.E. Share Ownership -- Options to
Purchase Our Securities -- Stock Option Plans."

THE FOLLOWING DISCUSSIONS PERTAIN TO OUR TOTAL COMPANY COSTS, EXCLUDING THE
EFFECTS OF THE SPECIAL CHARGE IN 1999.

COST OF REVENUE AND OPERATING EXPENSES

     Cost of revenue increased as a percentage of revenue mainly due to costs to
develop new therapies, costs to develop disease state management methodologies,
higher personnel cost in the U.S. and an industry-wide price increase for EPO.
However, the resulting decrease of our gross profit margin was more than offset
by decreased selling, general and administrative expenses as a percentage of
revenue, mainly due to effective general cost controls and net foreign currency
transaction gains.

INTEREST

     Interest expense for 2000 remained relatively constant compared to the same
period in 1999. Interest expense related to the note payable associated with the
Settlement amounted to approximately $30 million. This additional interest
expense was offset by the reduced interest expense related to lower other
borrowings, resulting from the use of the $557 million net proceeds received
from the Preference share offerings completed during 2000. We anticipate higher
interest expense in 2001 due to the debt increase in connection with the
acquisition of Everest Healthcare Services Corporation (see "Liquidity and
Capital Resources.")

INCOME TAXES

     The effective tax rate for the year decreased from 49.5% in 1999 to 46.9%
in 2000 due to the capitalization of tax loss carry forwards and because
non-deductible amortization of goodwill relating to acquisitions was lower, as a
percentage of taxable income, for 2000 compared to the same period in 1999.

                                        51
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

CASH FLOW

OPERATIONS

     We generated cash from operating activities of $424 million in the year
ended December 31, 2001 and $391 million in the comparable period in 2000, an
increase of about 8% over the prior year. Cash from operations was not impacted
by the special charge for legal matters as the major part of the charge was
non-cash.

INVESTING

     Cash used in investing activities decreased slightly from $482 million to
$468 million mainly because of lower cash acquisition payments partly offset by
slightly higher net capital expenditures. In 2001, we paid approximately $217
million ($178 million for the North American segment and $39 million for the
International segment) cash for acquisitions consisting primarily of dialysis
clinics, including the cash portion of the purchase price for Everest.
Acquisitions for the comparable period in 2000 were $275 million, $116 million
for the North America segment and $159 million for the International segment
excluding International segment non-cash acquisitions of $14 million.

     In addition, capital expenditures for property, plant and equipment net of
disposals were $251 million for the year ended December 31, 2001 and $207
million for the comparable period in 2000. In 2001, capital expenditures were
$123 million in the North America segment and $128 million for the International
segment. In 2000, capital expenditures in the North America segment were $99
million and $109 million in the International segment. The majority of our
capital expenditures were used for equipment for new clinics, improvements to
existing clinics and expansion of production facilities. Capital expenditures
were approximately 5% of total revenue. We expect capital expenditures in the
range of 4-5% of total revenue for 2002.

FINANCING

     Net cash provided by financing decreased to $43 million in 2001 from $156
million in 2000 mostly due to increased repayments of short term borrowings to
both related and third party creditors. Cash on hand was $62 million at December
31, 2001 compared to $65 million at December 31, 2000.

     In 2000, we executed definitive agreements with respect to the settlement
of the U.S. government investigation. The agreements required net settlement
payments totaling approximately $387 million in 2000 and about $86 million in
2001.

     In January 2001, we completed the acquisition of Everest. Approximately one
third of the purchase price ($365 million) was funded by the issuance of 2.25
million Preference shares ($99 million) to Everest stockholders. The remaining
purchase price was paid with $131 million cash and debt assumed ($135 million).
This debt was subsequently retired using our senior credit facility as described
below.

     In June 2001 we completed offerings pursuant to Rule 144A and Regulation S
under the Securities Act of 1933 of $225 million aggregate liquidation amount of
dollar-denominated 7 7/8% trust preferred securities due 2011 and E 300 million
aggregate liquidation amount of euro-denominated 7 3/8% trust preferred
securities due 2011. The net proceeds of the offerings were approximately $471
million, which we used to repay outstanding revolving indebtedness under our
senior credit facility, to repay short-term debt, including approximately $120
million of short-term debt to Fresenius AG, and for general corporate purposes.

     Between July 13, 2001 and December 5, 2001 we issued four tranches of
senior notes totaling E 128.5 million. The first two tranches were issued on
July 13, 2001 with the first for E 80 million with a fixed rate of 6.16% and the
second for E 28.5 million with a floating rate, at the time of issue 5.837%. The
third tranche was issued on September 15, 2001 for E 15 million at a floating
rate of 5.077% at time of issue. The final tranche was issued on December 5,
2001 for E 5 million at a fixed rate of 5.33%. All four tranches have a maturity
date of July 13, 2005. The floating interest rates are tied to LIBOR.

                                        52
<PAGE>

     Total long-term debt net of current portion at December 31, 2001 increased
to $736 million from $658 million at year-end 2000. This increase was mainly due
to higher borrowings under our senior credit facility. Short-term borrowings
from related parties decreased from $218 million at December 31, 2000 to $15
million at December 31, 2001 whereas short term borrowings from third parties
decreased from $107 million to $93 million over the same period.

DIVIDENDS

     Consistent with prior years the Company will continue to follow an earnings
driven dividend policy. The dividend proposal with respect to 2001 will be
calculated on the earnings before the special charge for legal matters. The
Managing Board will propose to the Supervisory Board a dividend of E 0.85 per
ordinary share (2000: E 0.78) and E 0.91 per preference share (2000: E 0.84) for
shareholder approval at the annual general meeting on May 22, 2002. The total
expected dividend payment is approximately E 83 million.

LIQUIDITY

     Primary sources of liquidity have historically been cash from operations,
cash from short term borrowings as well as from long term debt from third
parties as well as related parties and cash from issuance of Preference shares.
We expect that our primary source of liquidity for 2002 will be from operations.
Cash from operations is impacted by the profitability of our business and our
working capital, mainly receivables. We believe that cash from operations will
be sufficient to cover our capital expenditures and higher working capital needs
resulting from base business growth and acquisitions in countries where we
experience higher days sales outstanding. The profitability of our business
depends on reimbursement rates. 73% of our revenues are generated from providing
dialysis treatment, a major portion of which is reimbursed by either public
health care organizations or private insurers. For the twelve months ended
December 31, 2001, approximately 42% of our consolidated revenues resulted from
U.S. federal health care benefit programs, such as Medicare and Medicaid
reimbursement. Legislative changes may affect all Medicare reimbursement rates
for the services we provide, as well as the scope of Medicare coverage. A
decrease in reimbursement rates could have a material adverse effect on our
business, financial condition and results of operations and thus on our capacity
to generate cash flow. For additional information about the impact of U.S.
government reimbursement programs, see Item 4B, "Business Overview -- Dialysis
Care -- Sources of U.S. Dialysis Care Net Revenues". Furthermore cash from
operations depends on the collection of accounts receivable. We may face
difficulties in enforcing and collecting accounts receivable under some
countries' legal systems. Some customers and governments may have longer payment
cycles. This could have a material adverse effect on our capacity to generate
cash flow.

     Cash from short term borrowings can be generated by using the revolving
portion of our senior credit facility, by selling interests in accounts
receivable (accounts receivable facility) and by borrowing from our parent
Fresenius AG. Long term financing is provided under the senior credit agreement
by using the term loan of our Credit Facility and has been provided through the
issuance of our trust preferred securities. We believe that our existing credit
facilities, cash generated from operations and other current sources of
financing are sufficient to meet our foreseeable needs.

     Our senior credit agreement and the indentures relating to our trust
preferred securities include covenants that require us to maintain certain
financial ratios or meet other financial tests. Under our senior credit
agreement, we are obligated to maintain a minimum consolidated net worth and a
minimum consolidated fixed charge ratio (ratio of EBITDA to fixed charges) and
we have to maintain a certain consolidated leverage ratio (ratio of consolidated
funded debt to EBITDA).

     Our senior credit agreement and our indentures include other covenants
which, among other things, restrict or have the effect of restricting our
ability to dispose of assets, incur debt, pay dividends, create liens or make
capital expenditures, investments or acquisitions. These covenants may otherwise
limit our activities. The breach of any of the covenants could result in a
default under the credit agreement or the notes, which could, in turn, create
additional defaults under the agreements relating to our other long term
indebtedness. In default, the outstanding balance on the senior credit agreement
becomes due.

                                        53
<PAGE>

     At December 31, 2001, we had approximately $697 million of borrowing
capacity available under the revolving portion of our senior credit facility. At
February 14, 2002, following our redemption of 9% trust preferred securities due
2006, such borrowing capacity was approximately $320 million.

     As our senior credit facility will expire on September 30, 2003, it is our
intention to negotiate a similar agreement based on our cash requirements.
Failure to enter into a new credit facility would have a material adverse effect
on our financial condition.

     After redemption of $360 million aggregate liquidation amount of 9% trust
preferred securities on February 14, 2002, our long term financing with the
remaining trust preferred securities begins to come due in 2008.

     National Medical Care, Inc. ("NMC"), our subsidiary, has an asset
securitization facility (the "accounts receivable facility") whereby receivables
of NMC and certain affiliates are sold to NMC Funding Corporation (the
"Transferor"), a wholly-owned subsidiary of NMC, and subsequently the Transferor
transfers and assigns percentage ownership interests in the receivables to
certain bank investors. The amount of the accounts receivable facility was last
amended on December 21, 2001, when we increased the accounts receivable facility
to $560 million, and extended its maturity to October 24, 2002.

     Our capacity to generate cash from the accounts receivable facility depends
on the availability of sufficient accounts receivable that meet certain criteria
defined in the agreement with the third party funding corporation. A lack of
availability of such accounts receivable may have a material impact on our
capacity to utilize the facility for our financial needs.

OBLIGATIONS

     The following table summarizes our obligations and commitments to make
future payments under our long-term debt, trust preferred securities and other
long term obligations, and our commitments and obligations under lines of credit
and letters of credit.

<Table>
<Caption>
                                                                  PAYMENTS DUE BY PERIOD OF
                                                             ------------------------------------
CONTRACTUAL CASH OBLIGATIONS                      TOTAL       1 YEAR    1-5 YEARS    OVER 5 YEARS
----------------------------                    ----------   --------   ----------   ------------
<S>                                             <C>          <C>        <C>          <C>
Trust Preferred Securities....................  $1,428,768   $360,000   $       --    $1,068,768
Long Term Debt................................     888,316    159,627      690,625        38,064
Capital Lease Obligations.....................      12,412      5,332        5,244         1,836
Operating Leases..............................     743,716    145,808      448,921       148,987
Unconditional Purchase Obligations............     338,314     99,206      239,108            --
Other Long-term Obligations...................       8,173      8,173           --            --
                                                ----------   --------   ----------    ----------
                                                $3,419,699   $778,146   $1,383,898    $1,257,655
                                                ==========   ========   ==========    ==========
</Table>

<Table>
<Caption>
                                                                   EXPIRATION PER PERIOD OF
                                                             ------------------------------------
OTHER COMMERCIAL COMMITMENTS                      TOTAL       1 YEAR    1-5 YEARS    OVER 5 YEARS
----------------------------                    ----------   --------   ----------   ------------
<S>                                             <C>          <C>        <C>          <C>
Unused Senior Credit Lines....................  $  481,900   $     --   $  481,900    $       --
Other Unused Lines of Credit..................      63,462     61,186        2,276            --
Standby Letters of Credit.....................     215,554         --      215,554            --
                                                ----------   --------   ----------    ----------
                                                $  760,916   $ 61,186   $  699,730    $       --
                                                ==========   ========   ==========    ==========
</Table>

     The amount of guarantees and other commercial commitments at December 31,
2001 is not significant.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

     We generated cash from operating activities of $391 million in 2000 and
$355 million from continuing operations in the comparable period in 1999. A net
increase in our accounts receivable balance reduced net cash provided by
operating activities. The primary reason was a significant increase in days
sales outstanding resulting

                                        54
<PAGE>

from slower payment patterns from third parties outside of Germany, specifically
from managed care plans in the U.S. Days sales outstanding were also negatively
impacted by the slowdown of the certification process for newly opened clinics
in the U.S. Furthermore acquisitions, mainly outside Germany and the U.S., and
base business growth in countries where we experience higher days sales
outstanding contributed to this increase. Cash on hand was $65 million at
December 31, 2000 compared to $35 million at December 31, 1999.

     On January 18, 2000, we executed definitive agreements with respect to the
Settlement. The agreements required net settlement payments totaling
approximately $427 million, of which $14 million had been paid prior to January
1, 2000. This net amount reflects payments to us of approximately $59 million
for Medicare receivables from the U.S. government. During the year 2000 after
court approval of the Settlement, we made payments of $387 million, including
initial cash payments of $286 million, and we received $54 million from the U.S.
government for our outstanding Medicare receivable claims for intradialytic
parenteral nutrition therapy rendered on or before December 31, 1999. We wrote
off $94 million of these receivables at December 31, 1999 in anticipation of the
final settlement.

     Under the definitive agreements with the U.S. government, we entered into a
note payable for the remainder of the settlement obligation. Installment
payments under the note will accrue interest at 6.3% on approximately $51
million of the obligation and at 7.5% annually on the balance, until paid in
full.

     The note was payable in six quarterly installments which began in April
2000 and ended in July 2001. The first four quarterly installments have been
paid in the amount of approximately $35 million each, including interest at
7.5%. The first three of these four payments were made in April, July and
October 2000 and the fourth installment was made in January 2001. The final two
installments of approximately $28 million each, including interest at 6.3%, were
paid in April and July 2001. At December 31, 2000, the note payable balance was
approximately $86 million. The U.S. government has agreed to remit the balance
of our outstanding Medicare receivables in four quarterly payments of
approximately $5 million each, plus interest at 7.5%. We received the first
three quarterly payments in May, August and October 2000 and the final payment
in February 2001.

     We amended the letter of credit that National Medical Care delivered to the
U.S. government in 1996 from $150 million to $190 million and, under the
agreement, the letter of credit will be reduced as we continue to make
installment payments to the government. At December 31, 2000, the letter of
credit was reduced to $89 million and was terminated upon final payment under
the settlement.

     In December 1999, we and the lenders under our senior credit facility
amended the financial ratios in the senior credit facility to accommodate our
obligations under the settlement agreements and to enable us to continue in
compliance with our senior credit facility as we fulfill the settlement
obligations. On September 21, 2000 the National Medical Care Credit Agreement
was amended in order to increase the facility for accounts receivable
securitization and some other credit facilities. The lenders also agreed that
the proceeds of the Preference share offerings during 2000 did not trigger
repayment obligations on the term loan portion of the facility but may be used
for capital expenditures and acquisitions.

     On March 2, 2000, we issued 8,974,359 non-voting Preference shares to a
limited number of institutional and other accredited investors in exchange for
the investors' interests in Franconia Acquisition LLC, an entity formed to
acquire dialysis clinics and other related businesses. Franconia's principal
asset at the time of this transaction was $350 million in cash. For financial
reporting purposes, the transaction, which generated net proceeds of $344
million, has been accounted for as a financing at fair value. The investors have
agreed not to effect sales or transfers of the Preference shares for a period of
24 months after issuance, except as permitted by the contribution agreement.
After this time, the investors will have the right to require, under specified
conditions, that we register the Preference shares for sale under the Securities
Act of 1933, as amended, and provide them with assistance in connection with
public offerings of their Preference shares outside the United States.

     On May 31, 2000, we paid a cash dividend of $51 million for 1999 in the
amount of E0.75 on each Preference share, excluding the Preference shares issued
on March 2, 2000, and E0.69 on each Ordinary share. In 1999 we paid dividends
per Preference share of E0.64 and E0.59 per Ordinary share for an aggregate
amount of $48 million. Our managing board and our supervisory board have
proposed dividends for 2001 of E0.84 per Preference share and E0.78 per Ordinary
share. These dividends are subject to approval by our shareholders at our

                                        55
<PAGE>

annual general meeting to be held on May 23, 2001. Under the terms of our senior
credit agreement we are restricted as to the level of dividends we may pay in
any calendar year, which was $78 million for 2000. Annual dividend distributions
by our subsidiary, National Medical Care, in any year, may not exceed 50% of its
consolidated net income of the preceding year as defined in our senior credit
agreement. These payment restrictions do not apply to any of our other
subsidiaries.

     On June 19, 2000, we purchased substantially all of the international and
non-continental U.S. operations business of Total Renal Care Holdings, Inc. for
$145 million. Additionally, we made a non-refundable deposit, not included in
the purchase price noted above, towards the purchase of the Puerto Rico
operations. The purchase of the Puerto Rico operations is pending, subject to
regulatory approval and third party consents.

     On July 26, 2000, we completed a public offering of 5,000,000 Preference
shares for net proceeds of approximately $185 million. In addition, on July 28,
2000, the underwriters of the public offering exercised options to purchase an
additional 750,000 Preference shares increasing the total net proceeds from the
public offering to approximately $213 million.

     On October 26, 2000, we increased our accounts receivable facility from
$360 million to $500 million, and extended its maturity to October 25, 2001.
Under the terms of the amended facility, the interest rate is based upon the
commercial paper rate, which was approximately 6.59% at December 31, 2000. At
December 31, 2000, we had received $445 million, and at December 31, 1999, $335
million, pursuant to sales of our receivables under the facility, which are
reflected as reductions to accounts receivable. Under the terms of the facility,
we sell new interests in accounts receivable as collections reduce previously
sold accounts receivable. We expense the cost related to these sales as we incur
them and record the costs as interest expense and related financing costs.

     On January 5, 2001, we acquired Everest Healthcare Services Corporation
("Everest"), Oak Park, Illinois through a merger of Everest into a subsidiary of
the company for $343 million, including Everest's outstanding debt. One third of
the purchase price was paid through the issuance of 2,250,000 Preference shares
on January 5, 2001. The remaining part of the acquisition was financed out of
the proceeds of the Preference share offerings completed during 2000.

     Acquisitions during the year 2000 totaled $275 million (excluding
International segment non-cash acquisitions of $14 million), $116 million in the
North America segment and $159 million in the International segment.
Acquisitions for the comparable period in 1999 were $101 million (excluding
International segment non-cash acquisitions of $10 million), $65 million for the
North America segment and $36 million for the International segment. We believe
that an increasing percentage of our dialysis care growth will be derived from
worldwide markets and we envision making acquisitions in selected international
markets. In the U.S., we generally intend to continue to enhance our presence in
the market by focusing our expansion on the acquisition of individual or small
groups of clinics, expansion of existing clinics, and opening of new clinics.
Nevertheless, we will consider large acquisitions in the U.S. if suitable
opportunities, such as Everest, become available to us.

     In addition, capital expenditures for property, plant and equipment were
$228 million for the year 2000 and $160 million in 1999. In 2000, capital
expenditures in the North America segment were $113 million and $115 million for
the International segment. In 1999, capital expenditures in the North America
segment were $81 million and $79 million in the International segment. The
majority of our capital expenditures were used for improvements to existing
clinics, equipment for new clinics and expansion of production facilities.

     Total long-term debt, net of current portion at December 31, 2000,
increased to $658 million from $654 million at year-end 1999. We reduced our
short-term borrowings from related parties from $330 million to $218 million at
December 31, 2000. Short-term borrowings from third parties increased from $96
million in 1999 to $107 million in 2000. As of December 31, 2000, the unused
portion of our senior credit facility was approximately $698 million.

     In January 2000, dollar interest rate swap agreements with a notional
amount of $850 million expired as scheduled. In November 2000, we entered into
additional dollar interest rate swap agreements with a notional amount of $450
million. At the same time, a dollar interest rate collar agreement with a
notional amount of $150 million was closed out. As of December 31, 2000, the
notional volume of dollar interest rate hedging contracts totaled $1,050
million. Those swap agreements, which expire at various dates between 2003 and
2007,
                                        56
<PAGE>

effectively fix our variable interest rate exposure on the majority of our
dollar-denominated revolving loans and outstanding obligations under the
accounts receivable securitization program at an interest rate of 6.52%. Under
our senior credit agreement, we have agreed to maintain at least $500 million of
interest rate protection. In March 2000, we entered into a yen interest rate
swap agreement with a notional amount of Japanese Yen 400 million, in line with
a yen-denominated floating-rate borrowing of our Japanese subsidiary. In
September 2000, both the bank borrowing and the notional amount of the interest
rate swap agreement were increased as scheduled to Yen 1,000 million. The bank
borrowing and the notional amount of the swap agreement will always coincide
until March 2009 when the bank debt is completely repaid and the swap expires.

     We believe that our existing credit facilities, cash generated from
operations and other current sources of financing are sufficient to meet our
foreseeable needs. If cash flows from operations or availability under existing
banking arrangements fall below expectations, we may have to consider other
alternatives to maintain sufficient liquidity. We cannot assure that we will be
able to do so on satisfactory terms, if at all.

RECENTLY ISSUED ACCOUNTING STANDARDS

     In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets.
SFAS No. 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001 as well as all purchase
method business combinations completed after June 30, 2001. SFAS No. 141 also
specifies criteria that intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill, noting
that any purchase price allocable to an assembled workforce may not be accounted
for separately.

     SFAS No. 142 will require that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually. Intangible assets with estimable useful lives will
continue to be amortized over their respective estimated useful lives.

     We adopted the provisions of SFAS No. 141 immediately, and will adopt SFAS
No. 142 effective January 1, 2002. Furthermore, any goodwill and any intangible
asset determined to have an indefinite useful life acquired in a purchase method
business combination completed after June 30, 2001 is not amortized, but will be
evaluated for impairment in accordance with SFAS No. 142. Goodwill and
intangible assets acquired in business combinations completed before July 1,
2001 will continue to be amortized until the adoption of SFAS No. 142.

     Because of the extensive effort needed to comply with adopting SFAS No. 141
and 142, it is currently not practicable to reasonably estimate all impacts of
adopting these statements on our financial statements at this time, including
whether any transitional impairment losses will be required to be recognized as
the cumulative effect of a change in accounting principle. However, based on our
current assumptions and subject to continuing analysis, had SFAS No. 142 been
effective January 1, 2001, the Company presently estimates that there would have
been a favorable impact to after tax earnings of approximately $99 million.

     In August 2001, the Financial Accounting Standards Board issued SFAS No.
143, Accounting for Asset Retirement Obligations. SFAS No. 143 requires that the
fair value of a liability for an asset retirement obligation be recognized in
the period in which it is incurred if a reasonable estimate of fair value can be
made. The associated asset retirement costs are capitalized as part of the
carrying amount of the long lived asset. It applies to legal obligations
associated with the retirement of long-lived assets that result from the
acquisition, construction, development and/or normal operation of a long-lived
asset. We are required to adopt SFAS No. 143 for financial statements issued for
fiscal years beginning after June 15, 2002. We are currently determining the
impact of adopting this statement.

     In October of 2001, the Financial Accounting Standards Board issued SFAS
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS
No. 144 retains the requirement to recognize an impairment loss only if the
carrying amount of a long-lived asset is not recoverable from its undiscounted
cash flows and measure an impairment loss as the difference between the carrying
amount and fair value of the asset. It eliminates the requirement to allocate
goodwill to long-lived assets to be tested for impairment, and requires that a
long-lived asset to be abandoned, exchanged for a similar productive asset, or
distributed to owners in a spin-off

                                        57
<PAGE>

be considered held and used until disposed. SFAS No. 144 requires revision of
the depreciable life of an asset to be abandoned. Also, all assets to be
disposed of by sale are required to be recorded at the lower of carrying amount
or fair value less cost to sell and to cease depreciation. Discontinued
operations are no longer measured on a net realizable value basis, and future
operating losses are no longer recognized before they occur. The provisions of
this statement are effective for financial statements issued for fiscal years
beginning after December 15, 2001, and all interim periods within these years.
We are currently determining the impact of adopting this statement.

C.  RESEARCH AND DEVELOPMENT

     Our research and development activities aim to improve the quality of
dialysis treatment by matching it more closely with the individual needs of the
patient, while reducing the overall cost for treatment. With our vertical
integration, our research and development department can apply our experience as
the world's largest provider of dialysis treatments to product development. To
maintain and further enhance a continuous stream of product innovations, we had
over 200 employees working in research and development worldwide at December 31,
2001. Approximately two-thirds of our research and development activities are
based in Germany and one third in North America.

     Research and development focuses strongly on the development of new
products, technologies and treatment concepts to optimize treatment quality for
dialysis patients, and on process technology for manufacturing our products.
Research and development expenditures were $32 million in 1999, $32 million in
2000, and $36 million in 2001. For information regarding recent product
introductions, see "Item 4.B. Business Overview -- New Product Introductions."

     We intend to continue to maintain our central research and development
operations for disposable products at our St. Wendel, Germany facility and for
durable products at our Schweinfurt and Bad Homburg, Germany facilities. We
expect that as our dialysis products business continues to expand
internationally, research and development activities will rely primarily on the
research and development activities conducted at St. Wendel, Bad Homburg, and
Schweinfurt, which will transfer the production technology they develop to our
production centers. Local activities will continue to focus on cooperative
efforts with those facilities to develop new products and product modifications
for local markets.

     In North America, we have concentrated our business development activities
on expanding our products business in three main areas:

     -  pharmaceutical products utilized in treating our renal patient base

     -  innovative products to improve vascular access outcomes for our renal
        patients

     -  products and technologies which leverage our core competencies to
        provide extracorporeal therapies to treat other diseases

     Our scientific service and consulting activities during 2000 focused both
on product-related scientific issues and providing consultation to the
nephrology community on these issues.

     In order to promote the exchange of new ideas in nephrology and dialysis
and to strengthen our role in the international scientific community, we have
established the "International Exchange Program for Young Nephrologists". With
our financial support and close scientific cooperation young scientists
worldwide are given the opportunity to work at renowned European research
institutions. We closely work together with international nephrology experts in
writing treatment recommendations for the most important topics in chronic and
end-stage renal failure. In the beginning of 2000 we published a treatment
recommendation on renal anemia. This was followed by a publication on renal
osteodystrophy and cardiovascular risk factors in the journal "Nephrology,
Dialysis, and Transplantation" in autumn 2000. These recommendations will be
translated into different languages and distributed to our customers.

                                        58
<PAGE>

D.  TREND INFORMATION

     For information regarding significant trends in our business see "Item 5.A.
Operating Financial Review and Prospects."

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.  DIRECTORS AND SENIOR MANAGEMENT

GENERAL

     In accordance with the German Stock Corporation Act, we have a supervisory
board and a management board. The two boards are separate and no individual may
simultaneously be a member of both boards.

OUR SUPERVISORY BOARD

     Our supervisory board consists of six members who are elected by the
holders of Ordinary shares at our annual general meeting. Pursuant to the
pooling agreements described below under "Description of Pooling Agreements," at
least one-third (but no fewer than two) of the members of the supervisory board
elected by the shareholders are required to be independent directors, i.e.,
persons with no substantial business or professional relationship with us,
Fresenius AG or any affiliate of either.

     If and when either:

     -  Fresenius Medical Care AG itself has more than 500 employees; or

     -  we enter into a domination agreement with a German subsidiary having
        more than 500 employees, or if that subsidiary is integrated into
        Fresenius Medical Care AG;

the German employees of Fresenius Medical Care AG and our German subsidiaries
will elect one-third of the members of the supervisory board. If and when the
aggregate number of employees of Fresenius Medical Care AG and our German
subsidiaries exceeds 2,000, the supervisory board will increase to 12 persons
and the holders of Ordinary shares and the German employees of Fresenius Medical
Care and our German subsidiaries will elect six members each. In that case, the
Chairman of the supervisory board will be selected from the members elected by
the shareholders and will have the tie-breaking vote.

     The term of a member of the supervisory board will expire at the end of the
general meeting of shareholders after the fourth fiscal year following the year
in which the member was elected, but not counting the fiscal year in which such
member's term begins. Members of the supervisory board elected by our
shareholders may be removed by a resolution of our general meeting. This
resolution requires a three-fourths majority of the votes cast at that meeting.
The supervisory board ordinarily acts by simple majority vote and the Chairman
has a tie-breaking vote in case of any deadlock.

     The principal function of the supervisory board is to appoint and to
supervise the management board and to approve mid-term planning, dividend
payments and matters which are not in the ordinary course of business and are of
fundamental importance to us.

     The table below provides the names and ages of the members of our
supervisory board.

<Table>
<Caption>
                                                               AGE AS OF
                                                              DECEMBER 31,
NAME                                                              2001
----                                                          ------------
<S>                                                           <C>
Dr. Gerd Krick, Chairman....................................       63
Dr. Dieter Schenk, Deputy Chairman..........................       49
Prof Dr. Bernd Fahrholz.....................................       53
Dr. Theo Spettmann..........................................       57
Walter L. Weisman(1)........................................       66
Stephen M. Peck(1)..........................................       66
</Table>

     --------------------

                                        59
<PAGE>

     (1) Independent Director

     The term for each member of the supervisory board set forth above will
expire in 2001. Members of the supervisory board are eligible for reelection.

     DR. GERD KRICK has been Chairman of our supervisory board since January 1,
1998. Since 1992, he has been Chairman of the Fresenius AG management board.
Prior to 1992, he was a Director of the Medical Systems Division of Fresenius AG
and Deputy Chairman of the Fresenius AG management board. From September 1996
until December 1997, Dr. Krick was Chairman of the management board of Fresenius
Medical Care. Dr. Krick is a member of the Board of Directors of Adelphi Capital
Europe Fund, of the Administrative Board of Dresdner Bank Luxembourg S.A., of
the supervisory board of Vereinte Krankenversicherung AG, of the Advisory Board
of HDI Haftpflichtverband der deutschen Industrie V.a.G. and of the Board of
Trustees of the Donau Universitat Krems. He is also the Chairman of the
supervisory boards of Vamed AG and of Fresenius Kabi AG.

     DR. DIETER SCHENK has been Deputy Chairman of our supervisory board since
1996. He is an attorney and tax advisor and has been a partner in the law firm
of Norr Stiefenhofer Lutz since 1986. Dr. Schenk is also a member of the
supervisory board of Fresenius AG and a member and vice-chairman of the
supervisory boards of Greiffenberger AG and TOPTICA Photonics AG as well as a
member of the supervisory boards of Deutsche BA Luftfahrtgesellschaft mbH and
Gabor Shoes AG.

     PROF. DR. BERND FAHRHOLZ has been a member of our supervisory board since
1998. He is an attorney and has been a member of the management board of
Dresdner Bank AG since 1998 and its Chairman since April 2000. Dr. Fahrholz is
also a member of the supervisory boards of Dresdner Kleinwort Benson North
America Inc.; BMW AG; BNP-Paribas S.A.; Heidelberger Zement AG; Advance Holding
AG; Banco General de Negocios S.A.. Until December 31, 2001, he was a member of
the supervisory board of Reuschel & Co.

     DR. THEO SPETTMAN has been a member of our supervisory board since April 1,
2000. He has been a member of the management board of Sudzucker AG since 1988
and Spokesman of the management board of Sudzucker AG since 1995. Dr. Spettman
also sits on the supervisory boards of VK Muhlen AG, Karlsruher Versicherungen
AG, Gerling Industrie Service AG, Scholler Holding GmbH & Co. KG, Saint Louis
Sucre S.A. and is spokesman of the supervisory board of Berentzen-Group AG.

     WALTER L. WEISMAN has been a member of our supervisory board since 1996. He
is a private investor and a former Chairman and Chief Executive Officer of
American Medical International, Inc., which he joined in 1972, was elected
President in 1979 and served as Chief Executive Officer from 1985 to 1988. Mr.
Weisman is on the board of Community Care Health Network, Inc. and is a
Vice-Chairman of the Board of the California Institute of Technology, Chairman
of the Board of the Los Angeles County Museum of Art, Chairman of the Board of
the Sundance Institute, and a trustee of the Kress Foundation and the Public
Broadcasting Service.

     STEPHEN M. PECK was elected to our supervisory board in 1999. He is a
private investor and a former managing and special partner of Weiss, Peck &
Greer which was founded in 1970. He served as Chief Investment Officer and
Director of Reliance Insurance Company, Inc. from January 1986 to July 1988. Mr.
Peck is a member of the Board of Directors of OFFIT Investment Funds, Advance
Auto Parts, Inc., Boston Life Sciences, Inc., Carnac Resource, Inc. and Banyan
Strategic Realty Trust where he serves as Non-Executive Chairman of the Board.
He also serves as a member of the Advisory Board of Brown Simpson Asset
Management. Mr. Peck is presently Chairman of the Board of Trustees and the
Executive Committee of Mount Sinai Medical Center, Mount Siani School Hospital,
and the Mount Siani School of Medicine. He is a member of the Board of Trustees
of Mount Sinai/NYU Health and The Jewish Theological Seminary.

MANAGEMENT BOARD

     Each member of our management board is appointed by the supervisory board
for a maximum term of five years and is eligible for reappointment thereafter.
Their terms expire at our annual general meeting in the years listed below.

                                        60
<PAGE>

     The table below provides names, ages, positions and terms of office of the
members of our management board.

<Table>
<Caption>
                                             AGE AS OF                                             YEAR
                                            DECEMBER 31,                                           TERM
NAME                                            2001       POSITION                               EXPIRES
----                                        ------------   --------                               -------
<S>                                         <C>            <C>                                    <C>
Dr. Ben J. Lipps..........................       61        Chairman of the management board,       2006
                                                           Chief Executive Officer of our
                                                           Company
                                                           and Chief Executive Officer
                                                           for North America
Roberto Fuste.............................       49        Chief Executive Officer for Asia        2006
                                                           Pacific
Dr. Emanuele Gatti........................       46        Chief Executive Officer for Europe,     2005
                                                           Middle East, Africa and Latin America
Dr. Ulf M. Schneider......................       36        Chief Financial Officer                 2004
                                                           (as of November 1, 2001)
Dr. Rainer Runte..........................       42        General Counsel                         2005
</Table>

     DR. BEN J. LIPPS has been Chairman of the management board since May 1,
1999 and was Vice Chairman of the management board from September 1998 until May
1, 1999. He has been President and a director of Fresenius Medical Care Holdings
since September 1996 and President, Chief Executive Officer, Chief Operating
Officer and a director of Fresenius USA since October 1989, and served in
various capacities with Fresenius USA's predecessor since 1985. Dr. Lipps joined
Dow Chemical Company in 1966 and led the research team that developed the first
hollow fiber dialyzer between 1967 and 1969. Prior to joining Fresenius USA's
predecessor, Dr. Lipps was a Vice President of Research and Development for
Cordis Dow Corporation.

     MR. ROBERTO FUSTE was appointed to our management board effective January
1, 1999. Mr. Fuste is responsible for the Asia-Pacific region within the
International segment, for which he assumed responsibility in 1998. Mr. Fuste
joined Fresenius AG in 1991 when Fresenius AG acquired Nephrocontrol S.A., a
Spanish company which he founded in 1985 and of which he was Managing Director
and joint owner. After the company was acquired by Fresenius AG, he continued as
Managing Director. In 1995, he joined the Head Office of Fresenius AG where he
has held various executive positions.

     DR. EMANUELE GATTI has been a member of our management board since May 1997
and is President and Chief Executive Officer of Europe, Latin America, Middle
East and Africa within the International segment. Previously he was Executive
Vice President with responsibility for our dialysis business in Southern Europe.
Dr. Gatti joined the Fresenius Group in 1989 when Fresenius AG acquired Sis-ter,
an Italian company of which he was General Manager. He has been working in the
field of dialysis since 1981 after leaving the Polytechnic School of Milan where
he was involved in teaching and biomedical research.

     DR. ULF M. SCHNEIDER joined our management board on November 1, 2001 and is
Chief Financial Officer. Previously he was Group Finance Director for Gehe UK
plc., a pharmaceutical wholesale and retail distributor, in Coventry, United
Kingdom. He has held several senior executive and finance positions since 1989
with Gehe's majority shareholder, Franz Haniel & Cie. GmbH, Duisburg, a
diversified German multinational company.

     DR. RAINER RUNTE was appointed a deputy member of the our management board
responsible for law and compliance effective March 15, 2002. Dr, Runte has
worked as in-house counsel within Fresenius AG and its subsidiaries and has
served as General Counsel of Fresenius Medical Care since 1997.

     The business address of all members of our management board and supervisory
board is Else-Kroner-Strasse 1, 61352 Bad Homburg, Germany.

                                        61
<PAGE>

B.  COMPENSATION

COMPENSATION OF OUR MANAGEMENT BOARD AND OUR SUPERVISORY BOARD

     For the year ended December 31, 2001, we paid aggregate compensation to all
members of the Management Board of E2,597,570. The aggregate compensation fees
to all members of the Supervisory Board was E426,000 including compensation to
Dr. Krick for his duties as Chairman of the Supervisory Board. We pay an annual
retainer fee to each member of the Supervisory Board, with the Chairman paid
twice that amount and the Deputy Chairman paid 150% of that amount. This
retainer fee was increased from $40,000 to $60,000 during the third quarter of
2001. We reimburse Supervisory Board members for their reasonable travel and
accommodation expenses incurred with respect to their duties as Supervisory
Board members. The aggregate compensation reported above does not include
amounts paid as fees for services rendered by certain business or professional
entities with which some of the Supervisory Board members are associated.

     During 2001 we awarded 16,712 options under FMC 98 Plan 1 at an exercise
price of E52.30 to members of the Management Board, none of which are
exercisable. At December 31, 2001 Management Board members held options to
acquire 182,600 Preference shares of which options to purchase 55,333 Preference
shares were exercisable at a weighted average exercise price of E39.76 under FMC
98 Plan 2. We also issued 44,300 options without stock price target at an
exercise price of E58.98 and 38,180 options with stock price target at an
exercise price of E73.72 under the new FMC International 2001 Plan. None of
these options was exercisable on December 31, 2001.

     At December 31, 2001, a loan granted to a member of our Management Board in
the principal amount of $2,000,000, bearing interest at 6% per annum, was
outstanding.

C.  BOARD PRACTICES

     For information relating to the terms of office of our management board and
our supervisory board and the periods in which the members of those bodies have
served in office, see Item 6.A. above. We do not have an audit committee or a
remuneration committee. Our Management Board carries out the functions usually
performed by audit and remuneration committees, and our Supervisory Board
reviews the compensation of the members of our Management Board.

D.  EMPLOYEES

     At December 31, 2001, we had 37,331 employees, as compared to 35,370 at
December 31, 2000 and 31,094 at December 31, 1999. They are employed in our
principal segments as follows: North America 26,352 employees and International
10,979. The following table shows the average number of employees by segment and
our major category of activities for the last three fiscal years.

<Table>
<Caption>
                                                               2001      2000      1999
                                                              ------    ------    ------
<S>                                                           <C>       <C>       <C>
North America
  Dialysis Care.............................................  22,382    19,601    18,133
  Dialysis Products.........................................   3,970     3,616     3,420
                                                              ------    ------    ------
                                                              26,352    23,217    21,553
International
  Dialysis Care.............................................   6,173     5,807     4,173
  Dialysis Products.........................................   4,806     4,292     3,592
                                                              ------    ------    ------
                                                              10,979    10,099     7,765
</Table>

     We are a member of the Chemical Industry Employers Association in Germany
and we are bound by union agreements negotiated with the respective union
representatives. We are also party to additional shop agreements negotiated with
works councils at individual facilities relating to those facilities. We believe
our relations with our employees are good. During the last three fiscal years,
we have not suffered any labor-related work disruptions. In addition,
approximately 2% of our U.S. employees are covered by union agreements.

                                        62
<PAGE>

E.  SHARE OWNERSHIP

     As of December 31, 2001, members of the Supervisory Board and the Board of
Management as a group owned 4,367 Ordinary shares (0.01% of total Ordinary
shares outstanding) and 3,200 Preference shares (0.01% of total Preference
shares outstanding). At December 31, 2001 management board members held options
to acquire 281,792 Preference shares of which options to purchase 55,333
Preference shares were exercisable at a weighted average exercise price of
E39.76. Those options expire at various dates between 2008 and 2011. None of the
members of our Management Board and our Supervisory Board beneficially owns more
than 1% of our outstanding Ordinary shares or our outstanding Preference shares.

OPTIONS TO PURCHASE OUR SECURITIES

STOCK OPTION PLANS

     Immediately prior to the formation of Fresenius Medical Care, we adopted a
stock incentive plan (the "FMC Plan") for our key management and executive
employees. As of December 31, 2001, 63,389 preference shares were available and
exercisable with an average price range between $55.59 and $78.33 per share.
Effective September 2001, no additional awards are granted under the FMC Plan.

     During 1998, we adopted two stock incentive plans ("FMC 98 Plan 1" and "FMC
98 Plan 2") for our key management and executive employees. Under FMC 98 Plan 1,
eligible employees have the right to acquire Preference shares of the Company.
The maximum number of Preference shares that may be issued under this plan is
2,443,333 less any shares issued, or subject to issue, under the FMC Plan. Any
shares available due to forfeiture of Grants under the FMC Plan would be
considered available under FMC 98 Plan 1 as long as the total Preference shares
issued under both plans does not exceed the 2,443,333 shares noted above. Under
FMC 98 Plan 2, eligible employees have the right to acquire our Preference
shares ("Options"). The share price of the Preference share shall be equal to
the average of the official daily quotation prices of the Preference shares on
the Frankfurt Stock Exchange on the thirty days (30) of trading immediately
prior to the date of grant of the Option. One third of an Option vests on each
of the second, third and fourth anniversary of the award date, provided that we
achieve certain performance criteria for the full fiscal year following the
grant date in comparison to its performance for the full fiscal year preceding
the grant date. On May 30, 2000, our shareholders approved a change to the FMC
98 Plan 2 whereby the impact of the special charge for the 1999 Settlement was
excluded from the our performance criteria relative to the EBIT growth
requirements in the plan. Options granted under FMC 98 Plan 2 have a 10-year
term. The maximum number of Preference shares that may be issued under this plan
is 2,500,000 shares, of which 500,000 are designated for Management Board
members and 2,000,000 are for other managerial staff. Each option is exercisable
into one Preference share. Effective September 2001, no additional Grants or
Options will be awarded under FMC Plan 98 1 or FMC Plan 98 2.

     On May 23, 2001, by resolution of our annual general meeting, the FMC 98
Plans were replaced by a new plan. The Management Board was empowered to issue
convertible bonds with a total value of E10,240,000 to the members of the
Management Board and to other employees entitling a total subscription of up to
4 million non-voting Preference shares. The convertible bonds have a par value
of E2.56 and are interest bearing at a rate of 5.5%. Purchase of the bonds is
funded by a non-recourse loan secured by the bond with respect to which the loan
was made. We have the right to offset its obligation on a convertible bond
against the employee obligation on the related loan; therefore, the convertible
bond obligations and employee loan receivables are not reflected in our
consolidated financial statements. The bonds mature in ten years and are
generally fully convertible after three years. The bonds may be issued either as
convertible bonds which are subject to a stock price target or convertible bonds
without a stock price target. In the case of convertible bonds which are subject
to a stock price target the conversion right is exercisable only if the market
price of the Preference shares increased by 25% or more over the grant-date
price subsequent to the day of grant for at least one day prior to exercise.
Participants have the right to opt for convertible bonds with or without the
stock price target. In order to create an incentive to select convertible bonds
which depend on the stock price target, the number of convertible bonds awarded
to those employees who select the bonds without a stock price target will be
reduced by 15%. Each convertible bond entitles the holder thereof, upon payment
of a conversion price to convert the bond into one Preference share. The
conversion price of the convertible bonds which are not subject to the stock
price target is determined by the

                                        63
<PAGE>

average price of the Preference shares during the last 30 trading days prior to
the date of grant. The conversion price of the convertible bonds which depend on
the stock price target corresponds to the closing price of the Preference shares
the day the target was reached.

     The Managing Board and Supervisory Board are authorized to issue up to 20%
of the total number of convertible bonds each year through May 22, 2006. The
plan is valid until the last convertible bond issued under this plan is
terminated or converted. Of the 723,785 shares outstanding at December 31, 2001,
126,443 shares were issued under the plan with the stock price target.

ROLLOVER OPTIONS

     In connection with our formation, employees of National Medical Care
exchanged options to purchase W.R. Grace common stock and Fresenius USA
employees exchanged options to purchase Fresenius USA common stock for
equivalent options with respect to our Ordinary shares. When we were formed,
German corporate law did not allow us to reserve Ordinary shares and issue them
upon the exercise of these rollover options, as is done by U.S. corporations.
Instead, we issued the Ordinary shares issuable upon exercise of the options to
Fresenius AG, which will hold the shares until exercise of the options.
Fresenius AG has agreed that it will not exercise voting power, and will return
any dividends paid, with respect to the Ordinary shares underlying options
formerly related to W.R. Grace common stock. Upon exercise of any of these
options, the holder will pay the option exercise price to us and Fresenius AG
will deliver the Ordinary shares to the depositary for the Ordinary shares
against issuance of ADSs representing Ordinary shares in the name of the option
holder. Upon cancellation or expiration without exercise of options formerly
relating to W.R. Grace common stock, Fresenius AG will transfer the underlying
Ordinary shares to us at no cost. Upon cancellation or expiration without
exercise of options formerly relating to Fresenius USA common stock, the
underlying Ordinary shares will revert to Fresenius AG. All rollover options
expire on the same date on which the previous options to purchase either the
W.R. Grace common stock or Fresenius USA common stock to which such rollover
options relate would have expired.

     During the year ended December 31, 2001, 38,167 FMC Rollover Plan options
were exercised by employees. Rollover Plan options for 145,839 Ordinary ADSs
were outstanding and exercisable as of December 31, 2001 at a weighted average
exercise price of $7.87. Members of our supervisory board and our management
board, as a group, held no rollover options.

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.  MAJOR SHAREHOLDERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF FRESENIUS MEDICAL CARE

     Our outstanding share capital consists of Ordinary shares and non-voting
Preference shares that are issued only in bearer form. Accordingly, unless we
receive information regarding acquisitions of our shares through a filing with
the Securities and Exchange Commission or through the German statutory
requirements referred to below, we have no way of determining who our
shareholders are or how many shares any particular shareholder owns except as
described below with respect to our shares held in ADR form. Because we are a
foreign private issuer under the rules of the Securities and Exchange
Commission, our directors and officers are not required to report their
ownership of our equity securities or their transactions in our equity
securities pursuant to Section 16 of the Exchange Act. Under the German
Securities Exchange Law (Wertpapierhandelsgesetz), holders of voting securities
of a German company listed on the official market (amtlicher Handel) of a German
stock exchange or a corresponding trading segment of a stock exchange within the
European Union are obligated to notify the company of the level of their holding
whenever such holding reaches, exceeds or falls below certain thresholds, which
have been set at 5%, 10%, 25%, 50% and 75% of a company's outstanding voting
rights.

     To our knowledge, Fresenius AG is the only entity that beneficially owns
more than 5% of our outstanding Ordinary shares. We have been informed that as
of December 31, 2000, Fresenius AG owned the majority, 50.8%, of our Ordinary
shares. At December 31, 2001 Fresenius AG's Ordinary shares represented
approximately 39% of our total share capital. Morgan Guaranty Trust Company of
New York, our ADR

                                        64
<PAGE>

depositary, informed us, that as of December 31, 2001 9,263,994 Ordinary ADSs,
each representing one-third of an Ordinary share, were held of record by 8,077
U.S. holders and 141,903 Preference ADSs, each representing one-third of a
Preference share, were held of record by 4 U.S. holders. Ordinary shares and
Preference shares of U.S. holders accounted for approximately 4% of our Ordinary
shares outstanding and less than 1% of our Preference shares outstanding as of
December 31, 2001. For more information regarding American Depositary Receipts
("ADRs") see "Item 10.B. Memorandum and Articles of Association -- Description
of American Depositary Receipts."

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF FRESENIUS AG

     Fresenius AG's share capital consists of Ordinary shares and non-voting
Preference shares. Both classes of shares are issued only in bearer form.
Accordingly, Fresenius AG has no way of determining who its shareholders are or
how many shares any particular shareholder owns. However, under the German
Securities Exchange Law, holders of voting securities of a German company listed
on the official market (amtlicher Handel) of a German stock exchange or a
corresponding trading segment of a stock exchange within the European Union are
obligated to notify the company of certain levels of holdings, as described
above.

     Based on the most recent information available to Fresenius AG the Else
Kroner-Fresenius-Stiftung owns 68% of the Fresenius AG Ordinary shares. The Else
Kroner-Fresenius-Stiftung serves to promote medical science, primarily in the
fields of research and treatment of illnesses, including the development of
apparatuses and preparations. It may promote only those research projects which
make their results generally accessible to the public. It further serves to
promote the education of physicians or of others concerned with the treatment
and care of sick persons, primarily those working in the field of dialysis, as
well as to promote the education of particularly gifted pupils and students.

     Fresenius AG has also been informed that AW Beteiligungsgesellschaft mbH,
which is controlled by Agrar Industrie Holding GmbH, owns 9% of the Fresenius AG
Ordinary shares.

     In addition, Allianz AG informed Fresenius AG that it owns 9.75% of the
Fresenius AG Ordinary shares.

B.  RELATED PARTY TRANSACTIONS

     In connection with the formation of Fresenius Medical Care, and the
combination of the dialysis businesses of Fresenius AG and W.R. Grace, Fresenius
AG and its affiliates and Fresenius Medical Care and its affiliates entered into
several agreements for the purpose of giving effect to the merger and defining
our ongoing relationship. Fresenius AG and W.R. Grace negotiated these
agreements. The information below summarizes the material aspects of certain
agreements, arrangements and transactions between Fresenius Medical Care and
Fresenius AG and their affiliates. Some of these agreements have been previously
filed with the Securities and Exchange Commission. The following descriptions
are not complete and are qualified in their entirety by reference to the
agreements, copies of which have been filed with the Securities and Exchange
Commission and the New York Stock Exchange. We believe that the leases, the
supply agreements and the services agreements are no less favorable to us and no
more favorable to Fresenius AG than would have been obtained in arm's-length
bargaining between independent parties. The trademark and other intellectual
property agreements summarized below were negotiated by Fresenius AG and W.R.
Grace, and, taken independently, are not necessarily indicative of market terms.

     In the discussion below regarding our contractual and other relationships
with Fresenius AG:

     -  the term "we (or us) and our affiliates" refers only to Fresenius
        Medical Care AG and its subsidiaries; and

     -  the term "Fresenius AG and its affiliates" refers only to Fresenius AG
        and affiliates of Fresenius AG other than Fresenius Medical Care AG and
        its subsidiaries.

REAL PROPERTY LEASE

     We did not acquire the land and buildings in Germany that Fresenius
Worldwide Dialysis used when we were formed. Fresenius AG or its affiliates have
leased part of the real property to us, directly, and transferred the

                                        65
<PAGE>

remainder of that real property to two limited partnerships. Fresenius AG is the
sole limited partner of each partnership, and the sole shareholder of the
general partner of each partnership. These limited partnerships, as landlords,
have leased the properties to us and to Fresenius AG, as applicable, for use in
our respective businesses. The aggregate annual rent payable by us under these
leases is approximately E8.6 million, which was approximately $7.6 million as of
December 31, 2001, exclusive of maintenance and other costs, and is subject to
escalation, based upon the German cost of living index for a four-person
employee household. The leases for manufacturing facilities have a ten-year
term, followed by two successive optional renewal terms of ten years each at our
election. The leases for the other facilities have a term of ten years. Based
upon an appraisal, we believe that the rents under the leases represent fair
market value for such properties. For information with respect to our principal
properties in Germany, see "Item 4.D. Property, plants and equipment."

COVENANTS NOT TO COMPETE

     Each of Fresenius AG and W.R. Grace has agreed that, for a period of ten
years after our formation, it will not compete with us in any aspect of the
business of supplying renal care-related goods and services, including
laboratories. However, Fresenius AG may continue its home care business.

TRADEMARKS

     Fresenius AG continues to own the name and mark "Fresenius" and its "F"
logo. Fresenius AG and Fresenius Medical Care Deutschland GmbH, our principal
German subsidiary, have entered into agreements containing the following
provisions. Fresenius AG has granted to our German subsidiary, for our benefit
and that of our affiliates, an exclusive, worldwide, royalty-free, perpetual
license to use "Fresenius Medical Care" in our corporate names, and to use the
Fresenius marks, including some combination marks containing the Fresenius name
that were used by Fresenius AG's dialysis business, and the Fresenius Medical
Care name as a trade name, in all aspects of the renal business. Our German
subsidiary, for our benefit and that of our affiliates, has also been granted a
worldwide, royalty-free, perpetual license:

     -  to use the "Fresenius Medical Care" mark in the then current National
        Medical Care non-renal business if it is used as part of "Fresenius
        Medical Care" together with one or more descriptive words, such as
        "Fresenius Medical Care Home Care" or "Fresenius Medical Care
        Diagnostics";

     -  to use the "F" logo mark in the National Medical Care non-renal
        business, with the consent of Fresenius AG. That consent will not be
        unreasonably withheld if the mark using the logo includes one or more
        additional descriptive words or symbols; and

     -  to use "Fresenius Medical Care" as a trade name in both the renal
        business and the National Medical Care non-renal business.

     We and our affiliates have the right to use "Fresenius Medical Care" as a
trade name in other medical businesses only with the consent of Fresenius AG.
Fresenius AG may not unreasonably withhold its consent. In the U.S. and Canada,
Fresenius AG will not use "Fresenius" or the "F" logo as a trademark or service
mark, except that it is permitted to use "Fresenius" in combination with one or
more additional words such as "Pharma Home Care" as a service mark in connection
with its home care business and may use the "F" logo as a service mark with the
consent of the our principal German subsidiary. Our subsidiary will not
unreasonably withhold its consent if the service mark includes one or more
additional descriptive words or symbols. Similarly, in the U.S. and Canada,
Fresenius AG has the right to use "Fresenius" as a trade name, but not as a
mark, only in connection with its home care and other medical businesses other
than the renal business and only in combination with one or more other
descriptive words, provided that the name used by Fresenius AG is not
confusingly similar to our marks and trade names. After the expiration of
Fresenius AG's ten-year covenant not to compete with us, Fresenius AG may use
"Fresenius" in its corporate names if it is used in combination with one or more
additional descriptive word or words, provided that the name used by Fresenius
AG is not confusingly similar to the Fresenius Medical Care marks or corporate
or trade names.

                                        66
<PAGE>

OTHER INTELLECTUAL PROPERTY

     Some of the patents, patent applications, inventions, know-how and trade
secrets that Fresenius Worldwide Dialysis used prior to our formation were also
used by other divisions of Fresenius AG. For Biofine(R), the polyvinyl
chloride-free packaging material, Fresenius AG has granted to our principal
German subsidiary, for our benefit and for the benefit of our affiliates, an
exclusive license for the renal business and a non-exclusive license for all
other fields except other non-renal medical businesses. Our German subsidiary
and Fresenius AG will share equally any royalties from licenses of the
Biofine(R) intellectual property by either our German subsidiary or by Fresenius
AG to third parties outside the renal business and the other non-renal medical
businesses. In addition, Fresenius AG has transferred to our German subsidiary
the other patents, patent applications, inventions, know-how and trade secrets
that were used predominantly in Fresenius AG's dialysis business. In certain
cases Fresenius Worldwide Dialysis and the other Fresenius AG divisions as a
whole each paid a significant part of the development costs for patents, patent
applications, inventions, know-how and trade secrets that were used by both
prior to the merger. Where our German subsidiary acquired those jointly funded
patents, patent applications, inventions, know-how and trade secrets, our
subsidiary licensed them back to Fresenius AG exclusively in the other non-renal
medical businesses and non-exclusively in all other fields. Where Fresenius AG
retained the jointly funded patents, patent applications, inventions, know-how
and trade secrets, Fresenius AG licensed them to our German subsidiary
exclusively in the renal business and non-exclusively in all other fields.

SUPPLY AGREEMENTS

     We produce most of our products in our own facilities. However, Fresenius
AG manufactures some of our products for us, principally concentrates, at
facilities that Fresenius AG retained. These facilities are located in Brazil
and France. Conversely, a facility in Italy that Fresenius AG transferred to us
produces products for Fresenius Kabi AG, a subsidiary of Fresenius AG.

     Our local subsidiaries and those of Fresenius AG have entered into supply
agreements for the purchase and sale of products from the above facilities.
Prices under the supply agreements include a unit cost component for each
product and an annual fixed cost charge for each facility. The unit cost
component, which is subject to annual review by the parties, is intended to
compensate the supplier for variable costs such as costs of materials, variable
labor and utilities. The fixed cost component generally will be based on an
allocation of the 1995 fixed costs of each facility, such as rent, depreciation,
production scheduling and quality control. The fixed cost component will be
subject to adjustment by good-faith negotiation every twenty-four months. If the
parties cannot agree upon an appropriate adjustment, the adjustment will be made
based on an appropriate consumer price index in the country in which the
facility is located.

     Each supply agreement has a term that is approximately equal to the
estimated average life of the relevant production assets as of September 30,
1996, resulting in terms of four and one-half to five years. Each supply
agreement may be terminated by the purchasing party after specified notice
period, subject to a compensation payment reflecting a portion of the relevant
fixed costs.

     The parties may modify existing or enter into additional supply agreements,
arrangements and transactions. Any future modifications, agreements,
arrangements and transactions will be negotiated between the parties and will be
subject to the approval provisions of the pooling agreements and the regulatory
provisions of German law regarding dominating enterprises.

SERVICES AGREEMENT

     We obtain administrative and other services from Fresenius AG headquarters
and from other divisions and subsidiaries of Fresenius AG. These services relate
to, among other things, data processing, financial and management accounting and
audit, human resources, risk management, quality control, production management,
research and development, marketing and logistics. For 2001, Fresenius AG
charged us approximately $19.1 million for these services. Conversely, we have
provided certain services to other divisions and subsidiaries of Fresenius AG
relating to research and development, plant administration, patent
administration and warehousing. For 2001, we charged approximately $6.1 million
to Fresenius AG's other divisions and subsidiaries for services we rendered to
them.
                                        67
<PAGE>

     We and Fresenius AG may modify existing or enter into additional services
agreements, arrangements and transactions. Any such future modifications,
agreements, arrangements and transactions will be negotiated between the parties
and will be subject to the approval provisions of the pooling agreements and the
regulations of German law regarding dominating enterprises.

FINANCING

     At December 31, 2001, aggregate loans outstanding from Fresenius AG
amounted to $15 million which bore interest at 2.73% at year end. The borrowed
funds were used for general corporate purposes. Interest paid during 2001 was
$6.9 million.

OTHER INTERESTS

     Dr. Gerd Krick, who is Chairman of our supervisory board, is also the
Chairman of the management board of Fresenius AG.

     During 1999, we granted a member of our management board a five-year
unsecured loan in the amount of $2 million, with interest at 6.0% per annum.
Only interest is due during the first four years of the term, with both
principal and interest due during the fifth year. At any time during the term of
the loan, we may call the loan, and the loan can be repaid without penalty.

     Dresdner Bank AG was one of the joint global coordinators of a public
offering of Preference shares made during 2000 and received underwriting
commissions and fees of E11.1 million ($10.4 million). In 2001, affiliates of
the bank served as co-lead manager in the dollar-denominated tranche, and as an
initial purchaser in the euro-denominated tranche, of a global offering of trust
preferred securities. We paid fees and commissions of $6.8 million in total to
the coordinators of the offering. An affiliate of Dresdner Kleinwort Benson
North America LLC is the New York Stock Exchange specialist for the ADSs
evidencing our Ordinary shares. Kleinwort Benson Holdings Inc. and Dresdner
Kleinwort Benson North America LLC are wholly owned subsidiaries of Dresdner
Bank AG. See "-- Security Ownership of Certain Beneficial Owners of Fresenius
AG." Dresdner Bank AG was one of four co-arrangers of our principal credit
agreement and is one of the managing agents under that facility. Prof. Dr. Bernd
Fahrholz, a member of our supervisory board, is the chairman of the managing
board of Dresdner Bank AG and Dr. Manfred Schaudwet, the Executive Manager of
Dresdner Bank AG (retired in 2001), is a member of the supervisory board of
Fresenius AG. Dresdner Bank AG also acts as custodian under the deposit
agreement for the ADSs evidencing the Ordinary shares and under the deposit
agreement for the ADSs evidencing the Preference shares.

     Dr. Dieter Schenk, Deputy Chairman of our supervisory board and a member of
the supervisory board of Fresenius AG, is a partner in the law firm of Norr
Stiefenhofer Lutz, German counsel to Fresenius AG and Fresenius Medical Care in
connection with the offerings of Trust Preferred Securities, prior securities
offerings by us, and other matters. See "-- Security Ownership of Certain
Beneficial Owners of Fresenius AG." Dr. Alfred Stiefenhofer, also a partner of
Norr Stiefenhofer Lutz, is one of the executors of the estate of Mrs. Else
Kroner. The Else Kroner-Fresenius Stiftung, a charitable foundation established
under the will of Mrs. Kroner, owns the majority of the voting shares of
Fresenius AG.

PRODUCTS

     During 2001, we recognized $24.1 million of sales to Fresenius AG and its
affiliates. We made purchases from Fresenius AG in the amount of $19.7 million
during 2001.

ITEM 8.  FINANCIAL INFORMATION

     The information called for by this item commences on Page F-1.

8.A.7.  LEGAL PROCEEDINGS

     The following section describes material legal actions and proceedings
relating to us and our business. While we believe that it is unlikely that any
pending legal proceedings known to us will have a material adverse effect
                                        68
<PAGE>

on our business, financial condition and results of operations, there can be no
assurance, regarding the ultimate outcome of any pending legal proceedings.

Commercial Litigation

     Since 1997, FMCH, NMC, and certain NMC subsidiaries have been engaged in
litigation with Aetna Life Insurance Company and certain of its affiliates
("Aetna") concerning allegations of inappropriate billing practices for
nutritional therapy, diagnostic and clinical laboratory tests and
misrepresentations. In January 2002, FMCH entered into an agreement in principle
with Aetna to establish a process for resolving these claims and our
counterclaims relating to overdue payments for services that FMCH rendered to
Aetna's beneficiaries.

     Other insurance companies have filed claims against FMCH, similar to those
filed by Aetna, that seek unspecified damages and costs. We believe that there
are substantial defenses to the claims asserted, and intend to vigorously defend
all lawsuits. We have filed counterclaims against the plaintiffs in these
matters based on inappropriate claim denials and delays in claim payments. Other
private payors have contacted FMCH and may assert that NMC received excess
payments and, similarly, may join the lawsuits or file their own lawsuit seeking
reimbursement and other damages. Although the ultimate outcome of these
proceedings cannot be predicted at this time, an adverse result could have a
material adverse effect on the our business, financial condition and results of
operations.

     In light of the Aetna agreement in principle we established a pre-tax
accrual of $55,489,000 at December 31, 2001 to provide for the anticipated
settlement of the Aetna lawsuit and estimated legal expenses related to the
continued defense of other commercial insurer claims and resolution of these
claims, including overdue payments for services rendered by the company to these
insurers' beneficiaries (see Note 3). No assurance can be given that the
anticipated Aetna settlement will be consummated or that the costs associated
with such a settlement or a litigated resolution of Aetna's claims and the other
commercial insurers' claims will not exceed the $55,489,000 pre-tax accrual.

     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, certain of our U.S. affiliates and other defendants,
principally alleging that the Merger (described in greater detail in
"Indemnification by W.R. Grace & Co. and Sealed Air Corporation" 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 additional class actions were filed subsequently with
substantially similar allegations; all cases have either been stayed and
transferred to the U.S. District Court or are pending before the U.S. Bankruptcy
Court in Delaware in connection with Grace's Chapter 11 proceeding. We have
requested indemnification from Grace Chemicals pursuant to the Merger agreements
(see "Indemnification by W.R. Grace & Co. and Sealed Air Corporation"). If the
Merger is determined to have been a fraudulent transfer, if material damages are
proved by the plaintiffs, and if we are not able to collect, in whole or in part
on the indemnity, from W.R. Grace & Co., Sealed Air Corporation, or their
affiliates or former affiliates or their insurers, and if the we are not able to
collect against any party that may have received distributions from W.R. Grace &
Co., a judgment could have a material adverse effect on our business, financial
condition and results of operations. We are 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 Centers for Medicare and Medicaid Services (CMS)
(formerly known as the Health Care Financing Administration, or HCFA) 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.

                                        69
<PAGE>

     In April 1995, CMS 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. CMS 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 CMS 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 CMS
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
CMS' retroactive application of the April 1995 rule was legally invalid. CMS
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 CMS' retroactive application of the April 1995 rule legally invalid.
Based on its finding, the Court also permanently enjoined CMS from enforcing and
applying the April 1995 rule retroactively against NMC. The Court took no action
on CMS' 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 CMS' prospective application of the April 1995
rule invalid and permanently enjoin CMS from prospectively enforcing and
applying the April 1995 rule. The Court has not yet ruled on the parties'
motions. CMS elected not to appeal the Court's June 1995 and January 1998
orders. CMS may, however, appeal all rulings at the conclusion of the
litigation. If CMS 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 CMS' 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, our
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. Our
agreement in principle with Aetna establishes a process for resolving these
claims.

Other Litigation and Potential Exposures

     From time to time, we are a party to or may be threatened with other
litigation arising in the ordinary course of our business. Management regularly
analyzes current information including, as applicable, our defenses and
insurance coverage and, as necessary, provides accruals for probable liabilities
for the eventual disposition of these matters. We, like other health care
providers, conduct our operations under intense government regulation and
scrutiny. We 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. We 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 ours or the manner
                                        70
<PAGE>

in which we conduct our 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, we expect that our 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 our compliance with applicable laws and regulations. We
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.

     We operate 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
affiliated companies. We rely upon its management structure, regulatory and
legal resources, and the effective operation of our compliance program to
direct, manage and monitor the activities of these employees. On occasion, we
may identify instances where employees, deliberately or inadvertently, have
submitted inadequate or false billings. The actions of such persons may subject
us and our subsidiaries to liability under the False Claims Act, among other
laws, and we cannot predict whether law enforcement authorities may use such
information to initiate further investigations of the business practices
disclosed or any of our 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. We have been subject
to these suits due to the nature of our business and we expect that those types
of lawsuits may continue. Although we maintain insurance at a level which we
believe to be prudent, we cannot assure that the coverage limits will be
adequate or that insurance will cover all asserted claims. A successful claim
against us or any of our subsidiaries in excess of insurance coverage could have
a material adverse effect upon us and the results of our operations. Any claims,
regardless of their merit or eventual outcome, also may have a material adverse
effect on our reputation and business.

     We have also had claims asserted against us and have had lawsuits filed
against us relating to businesses that we have acquired or divested. These
claims and suits relate both to operation of the businesses and to the
acquisition and divestiture transactions. We have asserted our own claims, and
claims for indemnification. Although the ultimate outcome on us cannot be
predicted at this time, an adverse result could have a material adverse effect
upon our business, financial condition, and results of operations. At December
31, 2001, we recorded a pre-tax accrual to reflect anticipated expenses
associated with the continued defense and resolution of these claims. No
assurances can be given that our actual costs incurred in connection with the
continued defense and resolution of these claims will not exceed the amount of
this accrual.

Indemnification by W. R. Grace & Co. and Sealed Air Corporation

     We were 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,
Grace Chemicals, a subsidiary of W.R. Grace & Co. had, and continues to have,
significant potential liabilities arising out of product-liability related
litigation, pre-merger tax claims and other claims unrelated to NMC, which was
W.R. Grace's dialysis business prior to the Merger. In connection with the
Merger, Grace Chemicals agreed to indemnify us, FMCH, 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 FMCH by
plaintiffs claiming to be creditors of Grace Chemicals, principally alleging
that the Merger was a fraudulent conveyance, violated the uniform fraudulent
transfer act, and constituted a conspiracy. See "-- Legal Proceedings --
Commercial Litigation" above.

     Pre-merger tax claims, or tax claims that would arise if events were to
violate the tax-free nature of the Merger, could ultimately be our obligation.
In particular, W.R. Grace & Co. has disclosed in its filings with the Securities
and Exchange Commission that: its tax returns for the 1993 to 1996 tax years are
under audit by the

                                        71
<PAGE>

Internal Revenue Service (the "Service"); that during those years W.R. Grace &
Co. deducted approximately $122.1 million in interest attributable to corporate
owned life insurance ("COLI") policy loans; that W.R. Grace & Co. has paid $21.2
million of tax and interest related to COLI deductions taken in tax years prior
to 1993 and that a U.S. District Court ruling has denied interest deductions of
a taxpayer in a similar situation. Subject to certain representations made by
W.R. Grace & Co., Fresenius Medical Care and Fresenius AG, W.R. Grace & Co. and
certain of its affiliates agreed to indemnify the Company against this or other
pre-Merger or Merger related tax liabilities.

     Subsequent to the Merger, W.R. Grace & Co. was involved in a multi-step
transaction involving Sealed Air Corporation (formerly known as Grace Holding,
Inc. and the former parent of Grace Chemicals). We are engaged in litigation
with Sealed Air Corporation ("Sealed Air") over the Company's entitlement to
indemnification from Sealed Air for all losses and expenses incurred by the
Company relating to pre-Merger tax liabilities of W.R. Grace and Merger-related
claims.

     Subsequent to the Sealed Air transaction, W.R. Grace & Co. and certain of
its subsidiaries filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code. As a result of our continuing observation and analysis of the
Service's ongoing audit of W.R. Grace & Co.'s pre-Merger tax returns, the Sealed
Air litigation and the W.R. Grace & Co. bankruptcy proceedings, and based on our
current assessment of the potential impact of these matters on us, we recorded a
pre-tax accrual of $172,034,000 at December 31, 2001 to reflect the Company's
estimated exposure for liabilities and legal expenses related to the W.R. Grace
& Co. bankruptcy (see Note 3). We intend to continue to pursue vigorously our
rights to indemnification from W.R. Grace & Co. and its insurers and former and
current affiliates, including Sealed Air, for all of our costs relating to
pre-Merger tax and Merger-related claims.

8.A.8.  DIVIDEND POLICY

     We generally pay annual dividends on both our Preference shares and our
Ordinary shares in amounts that we determine on the basis of the prior year
unconsolidated earnings of Fresenius Medical Care AG as shown in the statutory
financial statements that we prepare under German law, subject to authorization
by a resolution to be passed at our general meeting of shareholders. Under our
articles of association, the minimum dividend payable on the Preference shares
is E 0.12 per share and, if we declare dividends, holders of our Preference
shares must receive E 0.06 per share more than the dividend on an Ordinary
share. Under German law, we must, in all cases, pay the annual dividend declared
on our Preference shares before we pay dividends declared on our Ordinary
shares.

     Our management board and our supervisory board propose dividends and the
shareholders approve dividends for payment in respect of a fiscal year at the
annual general meeting in the following year. Since all of our shares are in
bearer form, we either remit dividends to the depositary bank (Depotbank) on
behalf of the shareholders or, in the case of shareholders holding physical
certificates, we pay dividends through the paying agents that we appoint against
presentation of the relevant dividend coupon. Details of the paying agents are
published in the German Federal Gazette (Bundesanzeiger).

     Our senior credit agreement as well as the senior subordinated indentures
relating to our trust preferred securities restrict our ability to pay
dividends. "Item 5.B. Operating and Financial Review and Prospects -- Liquidity
and Capital Resources" and the notes to our consolidated financial statements
appearing elsewhere in this report discuss this restriction.

     The table below provides information regarding the annual dividend per
share that we paid on our Preference shares and Ordinary shares. The dividends
shown for each year were paid with respect to our operations in the preceding
year. We paid dividends in Deutsche Mark in 1999 for 1998, and the payments have
been translated into euros at the fixed exchange rate of DM1.95583 to E 1.

<Table>
<Caption>
PER SHARE AMOUNT                                               2001      2000      1999
----------------                                              ------    ------    ------
<S>                                                           <C>       <C>       <C>
Preference share............................................  E 0.84    E 0.75    E 0.64
Ordinary share..............................................  E 0.78    E 0.69    E 0.59
</Table>

                                        72
<PAGE>

     Our managing board and our supervisory board have proposed dividends for
2001 payable in 2002 of E 0.91 per Preference share and E 0.85 per Ordinary
share. These dividends are subject to approval by our shareholders at our annual
general meeting to be held on May 22, 2002.

     Except as described herein, holders of ADSs will be entitled to receive
dividends on the Ordinary shares and the Preference shares represented by the
respective ADSs. We will pay any cash dividends payable to such holders to the
depositary in euros and, subject to certain exceptions, the depositary will
convert the dividends into U.S. dollars. Fluctuations in the exchange rate
between the U.S. dollar and the euro will affect the amount of dividends that
ADS holders receive. Dividends paid on the Preference shares and dividends paid
to holders and beneficial holders of the ADSs will be subject to deduction of
German withholding tax. You can find a discussion of German withholding tax
below in "Item 10.E. Taxation".

B.  SIGNIFICANT CHANGES

     On February 14, 2002, we redeemed the entire $360,000 aggregate liquidation
amount outstanding of our 9% Trust Preferred Securities due 2006, utilizing
funds borrowed under our senior credit facility. The terms of the securities,
which were issued in 1996, provided for optional redemption commencing December
1, 2001 at a redemption price of 104.5% of the liquidation amount, plus
distributions accrued to the redemption date. The redemption price was $1,045
per $1,000 liquidation amount plus accrued distributions of $18.25 per $1,000
for a total redemption price of $1,063.25 per $1,000.

     We do business in Argentina through subsidiaries as well as by direct sales
from Germany. In January 2002, the Argentine government announced its intent to
create a dual currency system with an official fixed exchange rate of 1.4 pesos
to 1 U.S. dollar for import and export transactions and a floating exchange rate
for other transactions. Since 1991, the Argentine peso had been pegged to the
U.S. dollar at a rate of 1 Argentine peso to 1 U.S. dollar. In December 2001,
restrictions were placed on certain transactions, and currency exchange activity
was effectively halted. On January 11, 2002, currency exchange activity resumed,
and the floating exchange rate ranged from 1.6 to 1.7 pesos to 1 U.S. dollar. In
accordance with U.S. GAAP, we used the rate of 1.7 pesos to 1 U.S. dollar for
purposes of translating Argentine peso financial statements as of December 31,
2001 and deferred the translation loss in other comprehensive income. As of
February, 2002, the rate was 2.0 pesos to 1 U.S. dollar.

ITEM 9.  THE OFFER AND LISTING DETAILS

A.4. AND C.  INFORMATION REGARDING THE TRADING MARKETS FOR PRICE HISTORY OF OUR
STOCK

TRADING MARKETS

     The principal trading market for the Ordinary shares and the Preference
shares is the Frankfurt Stock Exchange. All Ordinary shares and Preference
shares have been issued in bearer form. Accordingly, we have no way of
determining who our holders of Ordinary and Preference shares are or how many
shares any particular shareholder owns, with the exception of the number of
shares held in ADR form in the United States. For more information regarding
American Depositary Receipts ("ADRs") see "Item 10.B. Memorandum and articles of
association -- Description of American Depositary Receipts." However, under the
German Stock Corporation and Securities Law, holders of voting securities of a
German company listed on a stock exchange within the EU are obligated to notify
the company of certain levels of holdings as described in "Item 7.A. Major
Shareholders". The Ordinary shares have been listed on the Frankfurt Stock
Exchange since October 2, 1996. The Preference shares have been listed on the
Frankfurt Stock Exchange since November 25, 1996.

     Since October 1, 1996, American Depositary Shares ("ADSs"), each
representing one-third of an Ordinary share (the "Ordinary ADSs"), have been
listed and traded on the New York Stock Exchange ("NYSE") under the symbol FMS.
Since November 25, 1996, American Depositary Shares, each representing one-third
of a Preference share (the "Preference ADSs"), have been listed and traded on
the NYSE under the symbol FMS-p. The Depositary for both the Ordinary ADSs and
the Preference ADSs is Morgan Guaranty Trust Company of New York (the
"Depositary").

                                        73
<PAGE>

TRADING ON THE FRANKFURT STOCK EXCHANGE

     Deutsche Borse AG operates the Frankfurt Stock Exchange, which is the most
significant of the eight German stock exchanges. As of December 31, 2000, the
most recent figures available, the shares of 5,694 companies traded on the
official market, regulated market, including the Neuer Markt Segment and the
regulated unofficial market of the Frankfurt Stock Exchange. Of these, 905 were
German companies and 4,789 were foreign companies.

     Trading on the floor of the Frankfurt Stock Exchange begins every business
day at 9:00 a.m. and ends at 8:00 p.m., Central European Time. Securities listed
on the Frankfurt Stock Exchange generally trade in the auction market, but also
change hands in interbank dealer markets. Prices are noted by publicly
commissioned stock brokers who are members of the Frankfurt Stock Exchange, but
who do not as a rule deal with the public. These prices are determined by
out-cry. The prices of actively traded securities, including the shares of large
corporations, are continuously quoted during trading hours. For all securities,
a fixed price (Einheitspreis) is established at approximately midday on each day
the Frankfurt Stock Exchange is open for business.

     Deutsche Borse AG publishes an official daily list of quotations (Amtliches
Kursblatt) containing the fixed prices (Einheitskurse) and other information for
all traded securities on the Internet, webpage http://www.exchange.de.

     In November 1997, to improve the market quality of trading, Deutsche Borse
replaced the IBIS Trading system (Integriertes Borsenhandels- und
Informations-System) with Xetra (Exchange Electronic Trading). The Xetra market
model was developed in collaboration with market participants and essentially
comprises rules for price determination, prioritization of orders and the
provision of information for market participants.

     Transactions on the Frankfurt Stock Exchange (including transactions
through the Xetra system) settle on the second business day following the trade.
Transactions off the Frankfurt Stock Exchange (such as, for example, large
trades or transactions in which one of the parties is foreign) generally also
settle on the second business day following the trade, although a different
period may be agreed to by the parties. Under standard terms and conditions for
securities transactions employed by German banks, customers' orders for listed
securities must be executed on a stock exchange unless the customer gives
specific instructions to the contrary.

     The Frankfurt Stock Exchange can suspend a quotation if orderly trading is
temporarily endangered or if a suspension is deemed to be necessary to protect
the public.

     The Hessian Stock Exchange Supervisory Authority and the Trading Monitoring
Unit of the Frankfurt Stock Exchange, which is under the control of the Stock
Exchange Supervisory Authority, both monitor trading on the Frankfurt Stock
Exchange.

     The Federal Supervisory Authority for Securities Trading
(Bundesaufsichtsamt fur den Wertpapierhandel), an independent federal authority,
is responsible for the general supervision of securities trading pursuant to
provisions of the German Securities Trading Act (Wertpapierhandelsgesetz).

                                        74
<PAGE>

     The table below sets forth for the periods indicated, the high and low
closing sales prices in euro for the Ordinary shares on the Frankfurt Stock
Exchange, as reported by the Frankfurt Stock Exchange. Since January 4, 1999,
all shares on German stock exchanges trade in euro. For the years 1997 and 1998
the share prices were translated at the official deutsche mark/euro exchange
rate. (See the discussion under "Item 11. Quantitative and Qualitative
Disclosures about Market Risk" with respect to the rates of exchange between the
Dollar, euro and deutsche mark).

<Table>
<Caption>
                                                                            PRICE PER
                                                                         ORDINARY SHARE
                                                                         ---------------
                                                                          HIGH      LOW
                                                                         ------    -----
<S>       <C>                                                            <C>       <C>
2002      March.......................................................    70.50    59.00
          February....................................................    68.14    57.06
          January.....................................................    69.50    64.10
2001      December....................................................    73.75    66.77
          November....................................................    75.50    68.06
          October.....................................................    88.30    68.87
2001      Fourth Quarter..............................................    88.30    66.77
          Third Quarter...............................................    92.86    75.40
          Second Quarter..............................................    84.25    69.55
          First Quarter...............................................    90.65    75.62
2000      Fourth Quarter..............................................   103.00    85.40
          Third Quarter...............................................   103.60    83.52
          Second Quarter..............................................    91.56    72.50
          First Quarter...............................................    91.00    72.40
2001      Annual......................................................    92.90    66.77
2000      Annual......................................................   103.60    72.40
1999      Annual......................................................    88.70    47.20
1998      Annual......................................................    73.37    30.73
1997      Annual......................................................    84.36    55.73
</Table>

     The average daily trading volume of the Ordinary shares traded on the
Frankfurt Stock Exchange during 2001 was 247,995 shares. The foregoing numbers
are based on total yearly turnover statistics supplied by the Frankfurt Stock
Exchange. On March 28, 2002, the closing sales price per Ordinary share on the
Frankfurt Stock Exchange was E69.84, equivalent to $60.93 per Ordinary share.

                                        75
<PAGE>

     The table below sets forth for the periods indicated, the high and low
closing sales prices in euro for the Preference shares on the Frankfurt Stock
Exchange, as reported by the Frankfurt Stock Exchange. As all shares on German
stock exchanges trade in euro since January 4, 1999, share prices for the years
1997 and 1998 were translated at the official deutsche mark/euro exchange rate
(see the discussion under "Item 11. Quantitative and Qualitative Disclosures
about Market Risk" with respect to the rates of exchange between the Dollar,
euro and deutsche mark.)

<Table>
<Caption>
                                                                           PRICE PER
                                                                        PREFERENCE SHARE
                                                                        ----------------
                                                                         HIGH      LOW
                                                                        ------    ------
<C>       <S>                                                           <C>       <C>
2002      March.......................................................  53.00     44.23
          February....................................................  50.20     42.60
          January.....................................................  51.90     47.20
2001      December....................................................  52.50     48.00
          November....................................................  54.50     49.00
          October.....................................................  63.80     49.31
2001      Fourth Quarter..............................................  63.80     48.00
          Third Quarter...............................................  65.25     55.70
          Second Quarter..............................................  59.84     46.95
          First Quarter...............................................  56.90     46.01
2000      Fourth Quarter..............................................  58.00     49.11
          Third Quarter...............................................  56.60     42.60
          Second Quarter..............................................  51.00     42.00
          First Quarter...............................................  52.00     38.00
2001      Annual......................................................  65.25     46.01
2000      Annual......................................................  58.00     38.00
1999      Annual......................................................  43.50     30.30
1998      Annual......................................................  58.03     25.56
1997      Annual......................................................  70.97     46.53
</Table>

     The average daily trading volume of the Preference shares traded on the
Frankfurt Stock Exchange during 2001 was 69,839 shares. The foregoing numbers
are based on total yearly turnover statistics supplied by the Frankfurt Stock
Exchange. On March 28, 2002, the closing sales price per Preference share on the
Frankfurt Stock Exchange was E52.50, equivalent to $45.80 per Preference share.

                                        76
<PAGE>

TRADING ON THE NEW YORK STOCK EXCHANGE

     The table below sets forth, for the periods indicated, the high and low
closing sales prices for the Ordinary ADSs on the NYSE:

<Table>
<Caption>
                                                                          PRICE PER
                                                                         ORDINARY ADS
                                                                        --------------
                                                                        HIGH      LOW
                                                                        -----    -----
<C>       <S>                                                           <C>      <C>
2002      March.......................................................  20.70    16.95
          February....................................................  19.90    16.40
          January.....................................................  20.79    18.65
2001      December....................................................  21.75    19.80
          November....................................................  21.95    20.30
          October.....................................................  26.85    20.80
2001      Fourth Quarter..............................................  26.85    19.80
          Third Quarter...............................................  28.30    22.75
          Second Quarter..............................................  25.45    21.00
          First Quarter...............................................  27.94    22.26
2000      Fourth Quarter..............................................  29.87    25.44
          Third Quarter...............................................  30.19    25.62
          Second Quarter..............................................  28.19    22.56
          First Quarter...............................................  29.25    23.00
2001      Annual......................................................  28.30    19.80
2000      Annual......................................................  30.19    22.56
1999      Annual......................................................  29.87    15.81
1998      Annual......................................................  26.87    12.50
1997      Annual......................................................  31.50    20.44
</Table>

     On March 28, 2002, the closing sales price per Ordinary ADS on the NYSE was
$20.20.

                                        77
<PAGE>

     The table below sets forth, for the periods indicated, the high and low
closing sales prices for the Preference ADSs on the NYSE:

<Table>
<Caption>
                                                                          PRICE PER
                                                                        PREFERENCE ADS
                                                                        --------------
                                                                        HIGH      LOW
                                                                        -----    -----
<C>       <S>                                                           <C>      <C>
2002      March.......................................................  15.45    12.80
          February....................................................  14.50    12.55
          January.....................................................  15.13    13.98
2001      December....................................................  15.54    14.55
          November....................................................  15.86    14.65
          October.....................................................  18.25    15.00
2001      Fourth Quarter..............................................  18.25    14.55
          Third Quarter...............................................  19.64    15.75
          Second Quarter..............................................  16.91    14.00
          First Quarter...............................................  17.49    14.75
2000      Fourth Quarter..............................................  16.50    14.25
          Third Quarter...............................................  16.44    13.25
          Second Quarter..............................................  15.62    13.50
          First Quarter...............................................  16.91    13.50
2001      Annual......................................................  19.64    14.00
2000      Annual......................................................  16.91    13.25
1999      Annual......................................................  16.75    11.25
1998      Annual......................................................  21.00    12.25
1997      Annual......................................................  26.75    18.00
</Table>

     On March 28, 2002, the closing sales price per Preference ADS on the NYSE
was $15.30.

ITEM 10.  ADDITIONAL INFORMATION

B.  MEMORANDUM AND ARTICLES OF ASSOCIATION

     Fresenius Medical Care AG is a stock corporation (Aktiengesellschaft)
organized under the laws of Germany. Fresenius Medical Care AG is registered
with the commercial register of the local court (Amtsgericht) of Hof an der
Saale, Germany under HRB 2460. Our registered office (Sitz) is Hof an der Saale,
Germany. Our business address is Else-Kroner-Strasse 1, 61352 Bad Homburg,
Germany, telephone +49-6172-609-0.

CORPORATE PURPOSES

     Under our articles of association, our corporate purposes are:

     -  developing, producing, distributing and selling, health care products,
        systems and procedures, primarily dialysis products and systems;

     -  planning, establishing, acquiring and operating health care businesses,
        including, but not limited to, dialysis clinics, directly or through
        third parties and through participation in joint ventures and other
        entities;

     -  developing, producing and distributing other pharmaceutical products and
        the provision of health care services;

     -  providing advice in the medical and pharmaceutical areas and
        disseminating scientific information and documentation; and

     -  providing laboratory services for dialysis and non-dialysis patients and
        home health services.

     We conduct our business directly and through subsidiaries within and
outside Germany.

                                        78
<PAGE>

DIVIDEND RIGHTS

     Our management board and supervisory board will propose any dividends for
approval at the annual general meeting of shareholders, which must be held
within the first eight months following the end of a fiscal year. Usually the
shareholders vote on a recommendation made by our management board and our
supervisory board as to the amount of dividend to be paid. Any dividends are
paid once a year.

     Under German law, dividends are payable from the prior year unconsolidated
retained earnings of Fresenius Medical Care AG, determined in accordance with
German accounting principles (Bilanzgewinn).

     Dividends are paid on presentation of the relevant dividend coupon to us or
to our paying agent or agents appointed by us from time to time. If the Ordinary
shares and the Preference shares which are entitled to dividend payments are
held in a clearing system, the dividends will be paid in accordance with the
rules of the individual clearing system. We will publish notice of the dividends
paid and the appointment of the paying agent or agents for this purpose in the
German Federal Gazette (Bundesanzeiger).

     In the case of holders of ADRs, the depositary will receive all dividends
and distributions on all deposited securities and will, as promptly as
practicable, distribute the dividends and distributions to the holders of ADRs
entitled to the dividend. See "-- Description of American Depositary Receipts --
Share Dividends and Other Distributions."

     For each fiscal year, our management board and the supervisory board
propose the treatment of all unappropriated profits, including the amount of our
net profits which will be distributed by way of dividends, subject to
shareholder approval. The management board and the supervisory board may
allocate up to 50% of unappropriated profits to our free reserve (that is, they
may determine not to distribute such profits) without shareholder approval, in
which case the shareholders approve the treatment of the balance of such
profits. Under German law, we must pay the annual dividend paid on the
Preference shares, in all cases, before we pay any dividend on the Ordinary
shares.

     At our annual shareholder meeting on June 2, 1999 we requested and received
approval from our shareholders, to convert the denomination of our share capital
from Deutsche mark (DM) to Euro (E) to prepare for the transition by the
European Community to Euro which began January 1, 1999. The exchange rate for DM
to E was set at DM 1.95583 to E 1. As a result, the per share nominal value
changed from DM 5 per share to approximately E 2.55646 per share. For
convenience, shareholders approved an increase to the calculated nominal value
to E 2.56 resulting in a capital stock increase of E 279,789.57. The increase in
value of capital stock was offset by a conversion of reserves into share capital
(Kapitalerhohung aus Gesellschaftsmitteln). No new shares were issued for this
revaluation.

     At that meeting, our shareholders also approved a change in the dividend
premium for the Preference shares from a percentage of the nominal value per
share to an absolute amount. If dividends are declared, the Preference
shareholder will receive E 0.06 per share more than the dividend for an Ordinary
share, but no less than E 0.12 per share.

LIQUIDATION RIGHTS

     In accordance with the German Stock Corporation Act (Aktiengesetz), upon a
liquidation, any liquidation proceeds remaining after paying all of our
liabilities will be distributed among the holders of Preference shares and the
holders of Ordinary shares in proportion to the total number of the shares held
by each holder. The Preference shares are not entitled to a preference in
liquidation.

PREEMPTIVE RIGHTS

     Under the German Stock Corporation Act, an existing stockholder in a stock
corporation, including a holder of Preference shares, has a preferential right
to subscribe for any issue by that corporation of shares, debt instruments
convertible into shares and participating debt instruments in proportion to the
number of shares held by that stockholder in the existing capital of the
corporation. The German Stock Corporation Act provides that this preferential
right can only be excluded by a resolution of the general meeting passed at the
same time as the

                                        79
<PAGE>

resolution authorizing the capital increase. A supermajority of at least three
quarters of the share capital represented at the general meeting is required for
the exclusion. The waiver of the preemptive rights of the holders of Preference
shares requires a vote of these holders of 75% of the capital represented by
Preference shares at the meeting at which the vote is taken. In addition, a
"special justification" by the corporation stating that the goal pursued by the
corporation with the issuance of the new security could not reasonably be
achieved without and outweighs the elimination of preemptive rights, is
generally required for the exclusion. A "special justification" is not required
for any increase in the share capital for contributions in cash if the increase
does not exceed 10% of the existing capital and the issue price is not
materially less than the price for the shares quoted on a stock exchange.

VOTING RIGHTS

     Each Ordinary share entitles the holder thereof to one vote at general
meetings of our shareholders. Resolutions are passed at a general or special
meeting of our shareholders by a majority of the votes cast, unless a higher
vote is required by law or our articles of association.

     The Preference shares do not have any voting rights, except as described in
this paragraph. If we do not pay the minimum annual dividend payable on the
Preference shares for any year in the following year, and we do not pay both the
dividend arrearage and the dividend payable on the Preference shares for the
following year in full in the next following year, then the Preference shares
shall have the same voting rights as the Ordinary shares (one vote for each
share held or for each three ADSs held) until all Preference share dividend
arrearages are fully paid up. In addition, holders of Preference shares are
entitled to vote on any matters affecting their preferential rights, such as
changes in the rate of the preferential dividend. Any such vote requires the
affirmative vote of 75% of the votes cast in a meeting of holders of Preference
shares.

GENERAL MEETING

     Our annual general meeting must be held within the first eight months of
each fiscal year at the location of Fresenius Medical Care AG's registered
office, or in a German city where a stock exchange is situated or at the
location of a registered office of a domestic affiliated company. Each of our
shareholders is entitled to participate in a general meeting regardless of
whether they possess voting rights.

FRESENIUS MEDICAL CARE HOLDINGS CLASS D PREFERRED SHARES

     Our subsidiary, Fresenius Medical Care Holdings, distributed its Class D
Preferred Shares exclusively to W.R. Grace common shareholders in connection
with our formation. The Class D Preferred Shares trade over-the-counter only in
the United States under the symbol FSMEP.OB.

     Holders of Fresenius Medical Care Holdings Class D Preferred Shares were
entitled to a one-time special dividend if (but only if) conditions specified in
the Fresenius Medical Care Holdings certificate of incorporation are met. The
Class D Preferred Shares are not entitled to receive any dividends other than
this special dividend. In particular, the Fresenius Medical Care Holdings Class
D Preferred Shares are not entitled to any dividend that we may pay on our
Preference shares or our ADSs.

     The special dividend is payable only if the cumulative adjusted cash flow
to our ordinary shareholders (defined as our net income plus depreciation and
amortization) from January 1, 1997 through December 31, 2001 exceeds US$3.7
billion. If our cumulative adjusted cash flow meets that threshold, 44.8% of any
amount exceeding US$3.7 billion will be distributed as a special dividend on the
Fresenius Medical Care Holdings Class D Preferred Shares. Based on our
calculations which were reviewed by KPMG Deutsche Treuhand-Gesellschaft,
Fresenius Medical Care's cumulative consolidated adjusted cash flow for the five
year period ended December 31, 2001 was approximately $1.7 billion.
Consequently, no special dividend is due or payable with respect to the Class D
Shares. The Class D Shares are redeemable at any time at the our option at a
redemption price of $0.10 per share. On March 27, 2002, we announced our
intention to redeem the 89 million outstanding Class D Shares at a total
expected redemption price of approximately $9 million in early 2003. This
description of the material terms of the Fresenius Medical Care Holdings Class D
Preferred Shares is not complete and is qualified in its entirety by the terms
of Fresenius Medical Care Holdings' certificate of incorporation. Fresenius
                                        80
<PAGE>

Medical Care Holdings' certificate of incorporation is on file with the
Securities and Exchange Commission, and you may obtain a copy as described under
"Item 10.H. Documents on Display."

DESCRIPTION OF AMERICAN DEPOSITARY RECEIPTS

     Morgan Guaranty Trust Company of New York, a New York banking corporation,
is the depositary for our Ordinary shares and our Preference shares. Each ADS
represents an ownership interest in one- third of one Ordinary share or one
Preference share. We deposit the underlying shares with the custodian, as agent
of the depositary, under the deposit agreements among ourselves, the depositary
and all of the ADR holders of the applicable class. Each ADS also represents any
securities, cash or other property deposited with the depositary but not
distributed by it directly to ADS holders. The ADSs are evidenced by securities
called American depositary receipts or ADRs. An ADR may be issued in either
book-entry or certificated form by the depositary. If an ADR is issued in
book-entry form, owners will receive periodic statements from the depositary
showing their ownership interest in ADSs.

     The depositary's office is located at 60 Wall Street, New York, NY 10260.

     An investor may hold ADSs either directly or indirectly through a broker or
other financial institution. Investors who hold ADSs directly, by having an ADS
registered in their names on the books of the depositary, are ADR holders. This
description assumes an investor holds ADSs directly. Investors who hold ADSs
through their brokers or financial institution nominees must rely on the
procedures of their brokers or financial institutions to assert the rights of an
ADR holder described in this section. Investors should consult with their
brokers or financial institutions to find out what those procedures are.

     Because the depositary's nominee will actually be the registered owner of
the shares, investors must rely on it to exercise the rights of a shareholder on
their behalf. The obligations of the depositary and its agents are set out in
the deposit agreement. The deposit agreement and the ADSs are governed by New
York law.

     The following is a summary of the material terms of the deposit agreements.
Because it is a summary, it does not contain all the information that may be
important to investors. Except as specifically noted, the description covers
both Ordinary ADSs and Preference ADSs. For more complete information, investors
should read the entire applicable deposit agreement and the form of ADR of the
relevant class which contains the terms of the ADSs. Investors may obtain a copy
of the deposit agreements at the SEC's Public Reference Room which is located at
450 Fifth Street, N.W., Washington, D.C. 20549.

SHARE DIVIDENDS AND OTHER DISTRIBUTIONS

     We may make various types of distributions with respect to our Ordinary
shares and our Preference shares. The depositary has agreed to pay to investors
the cash dividends or other distributions it or the custodian receives on the
shares or other deposited securities, after deducting its expenses. Investors
will receive these distributions in proportion to the number of underlying
shares of the applicable class their ADSs represent.

     Except as stated below, to the extent the depositary is legally permitted
it will deliver distributions to ADR holders in proportion to their interests in
the following manner:

     -  Cash.  The depositary shall convert cash distributions from foreign
        currency to U.S. dollars if this is permissible and can be done on a
        reasonable basis. The depositary will endeavor to distribute cash in a
        practicable manner, and may deduct any taxes or other governmental
        charges required to be withheld, any expenses of converting foreign
        currency and transferring funds to the United States, and certain other
        expenses and adjustments. In addition, before making a distribution the
        depositary will deduct any taxes withheld. If exchange rates fluctuate
        during a time when the depositary cannot convert a foreign currency,
        investors may lose some or all of the value of the distribution.

     -  Shares.  If we make a distribution in shares, the depositary will issue
        additional ADRs to evidence the number of ADSs representing the
        distributed shares. Only whole ADSs will be issued. Any shares which
        would result in fractional ADSs will be sold and the net proceeds will
        be distributed to the ADR holders otherwise entitled to receive
        fractional ADSs.

                                        81
<PAGE>

     -  Rights to receive additional shares.  In the case of a distribution of
        rights to subscribe for Ordinary shares, Preference shares or other
        rights, if we provide satisfactory evidence that the depositary may
        lawfully distribute the rights, the depositary may arrange for ADR
        holders to instruct the depositary as to the exercise of the rights.
        However, if we do not furnish the required evidence or if the depositary
        determines it is not practical to distribute the rights, the depositary
        may

       -  sell the rights if practicable and distribute the net proceeds as
          cash, or

       -  allow the rights to lapse, in which case ADR holders will receive
          nothing.

     We have no obligation to file a registration statement under the Securities
Act in order to make any rights available to ADR holders.

     -  Other Distributions.  If we make a distribution of securities or
        property other than those described above, the depositary may either:

       -  distribute the securities or property in any manner it deems fair and
          equitable;

       -  after consultation with us if practicable, sell the securities or
          property and distribute any net proceeds in the same way it
          distributes cash; or

       -  hold the distributed property in which case the ADSs will also
          represent the distributed property.

     Any dollars will be distributed by checks drawn on a bank in the United
States for whole dollars and cents (fractional cents will be withheld without
liability for interest and added to future cash distributions).

     The depositary may choose any practical method of distribution for any
specific ADR holder, including the distribution of foreign currency, securities
or property, or it may retain the items, without paying interest on or investing
them, on behalf of the ADR holder as deposited securities.

     The depositary is not responsible if it decides that it is unlawful or
impractical to make a distribution available to any ADR holders.

     There can be no assurance that the depositary will be able to convert any
currency at a specified exchange rate or sell any property, rights, shares or
other securities at a specified price, or that any of these transactions can be
completed within a specified time period.

DEPOSIT, WITHDRAWAL AND CANCELLATION

     The depositary will issue ADSs if an investor or his broker deposits
Ordinary shares or Preference shares or evidence of rights to receive Ordinary
shares or Preference shares with the custodian. Shares deposited with the
custodian must be accompanied by certain documents, including instruments
showing that such shares have been properly transferred or endorsed to the
person on whose behalf the deposit is being made.

     The custodian will hold all deposited shares for the account of the
depositary. ADR holders thus have no direct ownership interest in the shares and
only have the rights that are contained in the deposit agreement. The custodian
will also hold any additional securities, property and cash received on or in
substitution for the deposited shares. The deposited shares and any additional
items are referred to as "deposited securities."

     Upon each deposit of shares, receipt of related delivery documentation and
compliance with the other provisions of the deposit agreement, including the
payment of the fees and charges of the depositary and any taxes or other fees or
charges owing, the depositary will issue an ADR or ADRs of the applicable class
in the name of the person entitled to them. The ADR or ADRs will evidence the
number of ADSs to which the person making the deposit is entitled. Certificated
ADRs will be delivered at the depositary's principal New York office or any
other location that it may designate as its transfer office.

     All ADSs issued will, unless specifically requested to the contrary, be
part of the depositary's book-entry direct registration system, and a registered
holder will receive periodic statements from the depositary which will show the
number of ADSs registered in the holder's name. An ADR holder can request that
the ADSs not be held

                                        82
<PAGE>

through the depositary's direct registration system and that a certificated ADR
be issued. If ADRs are in book-entry form, a statement setting forth the
holder's ownership interest will be mailed to holders by the depositary.

     When an investor surrenders ADSs at the depositary's office, the depositary
will, upon payment of certain applicable fees, charges and taxes, and upon
receipt of proper instructions, deliver the whole number of shares of the
applicable class represented by the ADSs turned in to the account the investor
directs within Clearstream Banking AG, the central German clearing firm.

     The depositary may only restrict the withdrawal of deposited securities in
connection with:

     -  temporary delays caused by closing our transfer books or those of the
        depositary, or the deposit of shares in connection with voting at a
        shareholders' meeting, or the payment of dividends,

     -  the payment of fees, taxes and similar charges, or

     -  compliance with any U.S. or foreign laws or governmental regulations
        relating to the ADRs.

     This right of withdrawal may not be limited by any other provision of the
applicable deposit agreement.

VOTING RIGHTS

     Only the depositary's nominee is able to exercise voting rights with
respect to deposited shares. Upon receipt of a request from the depositary for
voting instructions, a holder of ADSs may instruct the depositary how to
exercise the voting rights for the shares which underlie their ADSs. After
receiving voting materials from us, the depositary will notify the ADR holders
of any shareholder meeting or solicitation of consents or proxies. This notice
will describe how holders may instruct the depositary to exercise voting rights
for the shares which underlie their ADSs. For instructions to be valid, the
depositary must receive them on or before the date specified in the depositary's
request for instructions. The depositary will try, as far as is practical,
subject to the provisions of and governing the underlying shares or other
deposited securities, to vote or to have its agents vote the shares or other
deposited securities as instructed. The depositary will only vote or attempt to
vote as holders instruct. The depositary will not itself exercise any voting
discretion. Neither the depositary nor its agents are responsible for any
failure to carry out any voting instructions, for the manner in which any vote
is cast or for the effect of any vote.

     Our Preference shares are non-voting, except in a limited number of
circumstances. In those circumstances in which Preference shares are entitled to
vote, the procedures and limitations described above will apply in connection
with the depositary's request for voting instructions from holders of ADSs
representing Preference shares.

     There is no guarantee that holders will receive voting materials in time to
instruct the depositary to vote and it is possible that holders, or persons who
hold their ADSs through brokers, dealers or other third parties, will not have
the opportunity to exercise a right to vote.

C.  MATERIAL CONTRACTS

     For information regarding certain of our material contracts, see "Item 7.B.
Major Shareholders and Related Party Transactions -- Related Party
Transactions." For a description of our stock option plans, see "Item 6.E.
Directors, Senior Management and Employees -- Share Ownership -- Options to
Purchase our Securities." Our material agreements also include the agreements
that FMCH and certain of its subsidiaries entered into with the U.S. government
when we settled the U.S. government investigation. A description of the
financial terms of the Settlement appears in this report under "Item 5.B.
Operating and Financial Review and Prospects -- Liquidity and Capital
Resources." Our Report on Form 6-K filed with the SEC on January 27, 2000
contains a description of the other agreements comprising the Settlement,
including the plea agreements and a corporate integrity agreement in Part II,
Item 5 -- "Other Events -- OIG Investigation," which is incorporated herein by
reference.

                                        83
<PAGE>

D.  EXCHANGE CONTROLS

EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS.

     At the present time, Germany does not restrict the export or import of
capital, except for investments in areas like Iraq, Serbia or Montenegro.
However, for statistical purposes only, every resident individual or corporation
residing in Germany must report to the German Federal Bank (Deutsche
Bundesbank), subject only to certain immaterial exceptions, any payment received
from or made to an individual or a corporation resident outside of Germany if
such payment exceeds DM 5,000, or the equivalent in euro. In addition, residents
must report any claims against, or any liabilities payable to, non-residents
individuals or corporations, if such claims or liabilities, in the aggregate,
exceed DM 500,000, or the equivalent in euro, at the end of any month. Residents
must also report any direct investment made or received from outside Germany if
such investment exceeds DM 100,000 or the equivalent amount in euro.

     There are no limitations imposed by German law or our articles of
association (Satzung) on the right of a non-resident to hold the Preference
shares or the ADSs evidencing Preference shares or Ordinary shares.

E.  TAXATION

     The following is a discussion of the material United States federal income
and German tax consequences to Qualified Holders holding Fresenius Medical Care
Ordinary shares, preference shares or ADS's with respect to such shares
(collectively the "shares"). This discussion is based upon existing United
States federal income and German tax law, including legislation, regulations,
administrative rulings and court decisions, as in effect on the date of this
Annual Report, all of which are subject to change, possibly with retroactive
effect. For purposes of this discussion, in general, a "Qualified Holder" means
a beneficial owner of Fresenius Medical Care shares that (1) is a resident of
the United States for purposes of the United States-Germany income tax treaty
(the "Income Tax Treaty"), which generally includes an individual United States
resident, a corporation created or organized under the laws of the United
States, any state thereof or the District of Columbia and a partnership, estate
or trust, to the extent its income is subject to taxation in the United States
as the income of a United States resident, either in its hands or in the hands
of its partners or beneficiaries, (2) does not hold Fresenius Medical Care
shares as part of the business property of a permanent establishment located in
Germany or as part of a fixed base of an individual located in Germany and used
for the performance of independent personal services and (3) if not an
individual, is not subject to the limitation on benefits restrictions in the
Income Tax Treaty. This discussion assumes that the Qualified Holder holds
Fresenius Medical Care shares as a capital asset. This discussion does not
address all aspects of United States federal income and German taxation that may
be relevant to all Qualified Holders in light of their particular circumstances,
including for example Qualified Holders whose stock was acquired pursuant to the
exercise of an employee stock option or otherwise as compensation or Qualified
Holders who are subject to special treatment under United States federal income
tax laws (for example, financial institutions, insurance companies, tax-exempt
organizations and broker-dealers). This discussion also does not address any
aspects of state, local or non-United States (other than certain German) tax
law.

     EACH QUALIFIED HOLDER IS STRONGLY URGED TO CONSULT HIS OR HER TAX ADVISOR
AS TO THE UNITED STATES FEDERAL INCOME AND GERMAN TAX CONSEQUENCES OF HOLDING
FRESENIUS MEDICAL CARE SHARES, INCLUDING THE PARTICULAR FACTS AND CIRCUMSTANCES
THAT MAY BE UNIQUE TO SUCH QUALIFIED HOLDER, AND AS TO ANY OTHER TAX
CONSEQUENCES OF HOLDING OUR SHARES.

TAXATION OF DIVIDENDS

     For dividends distributed in 2002 out of profits earned in or before 2001,
German corporations are required to withhold German tax on dividends in an
amount equal to 25% of the gross amount paid to resident and non-resident
stockholders. A partial refund of this 25% withholding tax can be obtained by
Qualified Holders under the Income Tax Treaty (subject to certain limitations).
Qualified Holders are generally subject to United States federal income tax on
dividends paid by German corporations. Subject to applicable limitations of
United States federal income tax law, Qualified Holders may be able to claim a
foreign tax credit for certain German income taxes paid. The amount of the
refund of German withholding tax and the determination of the foreign tax credit
                                        84
<PAGE>

allowable against United States federal income tax generally depend on whether
or not the Qualified Holder is a United States corporation owning at least 10%
of the voting stock of Fresenius Medical Care AG (a "10% Holder").

     In the case of any Qualified Holder other than a 10% Holder, the German
withholding tax on the dividends paid in 2002 is partially refunded under the
Income Tax Treaty, effectively reducing the withholding tax to 15% of the gross
amount of the dividend. In addition, since the German imputation system provides
German resident individual stockholders with a tax credit in respect of
dividends paid by German corporations in 2002, the Income Tax Treaty provides
that Qualified Holders (other than 10% Holders) are entitled to an additional
refund equal to 5% of the gross amount of the respective dividend. For United
States federal income tax purposes, the benefit resulting from this additional
5% treaty refund is treated as a refund received by the Qualified Holder with
respect to German corporate taxes equal to 5.88% of the gross amount of the
respective dividend, subject to a German withholding tax of 0.88% (15% of
5.88%). Qualified Holders are not entitled to the dividends received deduction
for United States federal income tax purposes with respect to dividends paid by
non-United States corporations.

     Thus, for each $100 of gross dividend paid by Fresenius Medical Care AG in
2002 to a Qualified Holder (other than a 10% Holder), the dividend after partial
refund of the 25% withholding tax under the Income Tax Treaty will be subject to
a German withholding tax of $15. If the Qualified Holder also applies for the
additional 5% treaty refund, German withholding tax is effectively reduced to
$10; the cash received per $100 of gross dividend is $90. For United States
federal income tax purposes, the Qualified Holder is generally treated as
receiving a total dividend of $105.88 (to the extent paid out of current or
accumulated earnings and profits of Fresenius Medical Care AG as determined for
United States federal income tax purposes), consisting of the $100 gross
dividend and the deemed refund of German corporate tax of $5.88. The notional
$105.88 dividend is deemed to have been subject to German withholding tax of
$15.88. Thus, for each $100 of gross dividend, the Qualified Holder will include
$105.88 in gross income and may be entitled to a foreign tax credit of $15.88,
subject to applicable limitations of United States federal income tax law.

     In the case of a 10% Holder, the 25% German withholding tax on dividends
paid in 2002 is reduced under the Income Tax Treaty to 5% of the gross amount of
the dividend. Such 10% Holders may, therefore, apply for a refund of German
withholding tax on the dividend paid in 2001 in the amount of 20% of the gross
amount of the dividend. Subject to applicable limitations of United States
federal income tax laws, a 10% Holder may be entitled to a foreign tax credit
for the 5% German withholding tax on dividends and for the portion of the total
income taxes (trade income tax and corporation income tax, including any surtax)
paid by Fresenius Medical Care AG attributable to distributed profits.

     The German corporate imputation system that has provided German resident
individual shareholders with a tax credit in respect of dividends paid by German
corporations was recently repealed, effective with respect to dividends paid
after 2001. Consequently, Qualified Holders will no longer be entitled to the
additional 5% treaty refund with respect to such dividends. However, the German
withholding tax will be reduced from 25% to 20% with respect to such dividends.

     Dividends paid in euros to a Qualified Holder of Fresenius Medical Care
shares will be included in income in a dollar amount calculated by reference to
the exchange rate in effect on the date the dividends (including any deemed
refund of German corporate tax) are received or treated as received by such
holder. If dividends paid in euros are converted into dollars on the date
received or treated as received, Qualified Holders generally should not be
required to recognize foreign currency gain or loss in respect of each dividend.

     A surtax on the German withholding tax is currently levied on dividend
distributions paid by a German resident company. The rate of this surtax is
5.5%, which is 1.375% (5.5% (LOGO) 25%) of the gross dividend amount. Under the
Income Tax Treaty, Qualified Holders are entitled to a full refund of this
surtax.

REFUND PROCEDURES

     To claim the refund reflecting the current reduction of the German
withholding tax from 25% to 15%, the additional 5% treaty refund and the refund
of the effective 1.375% German surtax, when applicable, a Qualified Holder must
submit (either directly or, as described below, through the U.S. transfer agent
for Fresenius Medical

                                        85
<PAGE>

Care shares or the Depository Trust Company) a claim for refund to the German
tax authorities, with the original bank voucher (or certified copy thereof)
issued by the paying entity documenting the tax withheld within four years from
the end of the calendar year in which the dividend is received. Claims for
refunds are made on a special German claim for refund form, which must be filed
with the German tax authorities: Bundesamt fur Finanzen, 53221 Bonn-Beuel,
Germany. The German claim for refund forms may be obtained from the German tax
authorities at the same address where the applications are filed or from the
Embassy of the Federal Republic of Germany, 4645 Reservoir Road, N.W.,
Washington, D.C. 20007-1998.

     Qualified Holders must also submit to the German tax authorities
certification (IRS Form 6166) of their last filed United States federal income
tax return. Such certification is obtained from the office of the Director of
the Internal Revenue Service Center by filing a request for the certification
with the Internal Revenue Service -- Philadelphia Service Center, Foreign
Certification Request, P.O. Box 16347, Philadelphia, PA 19114-0447. (Additional
information, including IRS Publication 686, can be obtained from the Internal
Revenue Service website at www.irs.gov.) Requests for certification are to be
made in writing and must include the Qualified Holder's name, social security
number or employer identification number, tax return form number and tax period
for which certification is requested. The Internal Revenue Service will send the
certification directly to the German tax authorities if the Qualified Holder
authorizes the Internal Revenue Service to do so. This certification is valid
for three years and need only be resubmitted in a fourth year in the event of a
subsequent application for refund.

     The U.S. transfer agent will receive and distribute dividends to Qualified
Holders who hold Fresenius Medical Care shares of record and will perform
administrative functions necessary to claim the refund reflecting the current
reduction in German withholding tax from 25% to 15% (to 5% for 10% Holders), the
additional 5% treaty refund and the refund of the effective 1.375% German
surtax, when applicable, for such holders. These arrangements may be amended or
revoked at any time in the future.

     Under a newly implemented simplified and accelerated refund procedure, the
U.S. transfer agent will prepare the German claim for refund forms on behalf of
Qualified Holders and file them electronically with the German tax authorities.
In order for the U.S. transfer agent to file the claim for refund forms, the
U.S. transfer agent will prepare and mail to these Qualified Holders, and the
holders will be requested to sign and return to the U.S. transfer agent, (1) a
statement authorizing the U.S. transfer agent to perform these procedures and
agreeing that the German tax authorities may inform the IRS of any refunds of
German taxes and (2) a written authorization to remit the refund of withholding
to an account other than that of the Qualified Holder. The U.S. transfer agent
will attach the signed statement and the documentation issued by the paying
agency documenting the dividend paid and the tax withheld to the claim for
refund form and file them with the German tax authorities. Qualified Holders
should also request certification (IRS Form 6166) of their last filed United
States federal income tax return from the IRS and have it ready for presentation
to the U.S. transfer agent upon request. If the Qualified Holder fails to
present this certification within a reasonable time after the request, the
refund of the German withholding taxes will be denied.

     A simplified refund procedure for Qualified Holders whose Fresenius Medical
Care shares are registered with brokers participating in the Depository Trust
Company is in effect between the Depository Trust Company and the German tax
authorities. Under this simplified refund procedure, the Depository Trust
Company provides the German tax authorities with electronic certification of the
U.S. taxpayer status of such Qualified Holders based on information it receives
from its broker participants, and claims a refund on behalf of those Qualified
Holders. Accordingly, these Qualified Holders do not need to file refund claim
forms through the U.S. transfer agent.

     The German tax authorities will issue refunds denominated in deutsche
marks. The refunds will be issued in the name of the U.S. transfer agent or the
Depository Trust Company, as the case may be, which will convert the refunds to
dollars and make corresponding refund payments to Qualified Holders and to
brokers. The brokers, in turn, will remit corresponding refund amounts to the
Qualified Holders holding Fresenius Medical Care shares registered with such
brokers. Qualified Holders of Fresenius Medical Care shares who receive a refund
attributable to reduced withholding taxes under the Income Tax Treaty may be
required to recognize foreign currency gain or loss, which will be treated as
income or loss, to the extent that the dollar value of the refund

                                        86
<PAGE>

received or treated as received by the Qualified Holder differs from the U.S.
dollar equivalent of the refund on the date the dividend on which such
withholding taxes were imposed was received or treated as received by the
Qualified Holder.

TAXATION OF CAPITAL GAINS

     Under the Income Tax Treaty, a Qualified Holder will not be liable for
German tax on capital gains realized or accrued on the sale or other disposition
of Fresenius Medical Care shares.

     Upon a sale or other disposition of Fresenius Medical Care shares, a
Qualified Holder will recognize capital gain or loss for United States federal
income tax purposes equal to the difference between the amount realized and the
Qualified Holder's adjusted tax basis in the Fresenius Medical Care shares. In
the case of an individual Qualified Holder of Fresenius Medical Care shares, any
such capital gain will be subject to a maximum United States federal income tax
rate of 20%, if the individual Qualified Holder's holding period in the
Fresenius Medical Care shares is more than 12 months.

GERMAN GIFT AND INHERITANCE TAXES

     The United States-Germany estate tax treaty provides that an individual
whose domicile is determined to be in the United States for purposes of such
treaty will not be subject to German inheritance and gift tax (the equivalent of
the United States federal estate and gift tax) on the individual's death or
making of a gift unless the Fresenius Medical Care shares (1) are part of the
business property of a permanent establishment located in Germany or (2) are
part of the assets of a fixed base of an individual located in Germany and used
for the performance of independent personal services. An individual's domicile
in the United States, however, does not prevent imposition of German inheritance
and gift tax with respect to an heir, donee or other beneficiary who is
domiciled in Germany at the time the individual died or the gift was made.

     The United States-Germany estate tax treaty also provides a credit against
United States federal estate and gift tax liability for the amount of
inheritance and gift tax paid in Germany, subject to certain limitations, in a
case where the Fresenius Medical Care shares are subject to German inheritance
or gift tax and United States federal estate or gift tax.

GERMAN CAPITAL TAX (VERMOGENSTEUER)

     The Income Tax Treaty provides that a Qualified Holder will not be subject
to German capital tax (Vermogensteuer) with respect to the Fresenius Medical
Care shares. As a result of a judicial decision, the German capital tax
(Vermogensteuer) presently is not imposed.

OTHER GERMAN TAXES

     There are no German transfer, stamp or other similar taxes that would apply
to Qualified Holders upon receipt, purchase, holding or sale of Fresenius
Medical Care shares.

UNITED STATES INFORMATION REPORTING AND BACKUP WITHHOLDING

     Dividends on Fresenius Medical Care shares, and payments of the proceeds of
a sale of Fresenius Medical Care shares, paid within the United States or
through certain U.S.-related financial intermediaries are subject to information
reporting and may be subject to backup withholding at a 31% rate unless the
Qualified Holder (1) is a corporation or other exempt recipient or (2) provides
a taxpayer identification number and certifies that no loss of exemption from
backup withholding has occurred.

H.  DOCUMENTS ON DISPLAY

     We file periodic reports and information with the Securities and Exchange
Commission and the New York Stock Exchange. You may inspect a copy of these
reports without charge at the Public Reference Room of the Securities and
Exchange Commission at Room 1024, 450 Fifth Avenue, N.W., Washington, D.C. 20549
or at the Securities and Exchange Commission's regional offices 233 Broadway,
New York, New York 10279 and
                                        87
<PAGE>

500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The public may
obtain information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission also maintains an Internet site that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the Securities and Exchange Commission. The Securities and
Exchange Commission's World Wide Web address is http://www.sec.gov. As a foreign
private issuer, we are not obligated to file registration statements and reports
with the Securities and Exchange Commission in electronic form; however,
commencing with our report on Form 6-K filed November 20, 2000 we have
voluntarily chosen to do so. Accordingly, our report for the nine months ended
September 30, 2000 and our reports for subsequent periods may be obtained from
any source authorized to store and make available electronically filed reports.

     The New York Stock Exchange currently lists American Depositary Shares
representing our Preference shares and American Depositary Shares representing
our Ordinary shares. As a result, we are subject to the periodic reporting
requirements of the Securities Exchange Act of 1934, as amended, and we file
reports and other information with the Securities and Exchange Commission. These
reports, proxy statements and other information and the registration statement
and exhibits and schedules thereto may be inspected without charge at, and
copies thereof may be obtained at prescribed rates from, the public reference
facilities of the Securities and Exchange Commission and the electronic sources
listed in the preceding paragraph. In addition, these materials are available
for inspection and copying at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 1005, USA.

     We prepare annual and quarterly reports, which are then distributed to our
shareholders. Our annual reports contain financial statements examined and
reported upon, with opinions expressed by our independent auditors. The
consolidated financial statements of Fresenius Medical Care included in these
annual reports are prepared in conformity with U.S. generally accepted
accounting principles. Our annual and quarterly reports to our shareholders are
posted on our website at http://www.fmc-ag.com. In furnishing our web site
address in this report, however, we do not intend to incorporate any information
on our web site with this report, and any information on our web site should not
be considered to be part of this report.

     We will also furnish the depositary with all notices of shareholder
meetings and other reports and communications that are made generally available
to our shareholders. The depositary, to the extent permitted by law, shall
arrange for the transmittal to the registered holders of American Depositary
Receipts of all notices, reports and communications, together with the governing
instruments affecting the Preference shares and any amendments thereto,
available for inspection by registered holders of American Depositary Receipts
at the principal office of the depositary, presently located at 60 Wall Street,
New York, New York, 10260, USA.

     Documents referred to in this report which related to us as well as future
annual and interim reports prepared by us may also be inspected at our offices,
Else-Kroner-Strasse 1, 61352 Bad Homburg.

ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK

     Our businesses operate in highly competitive markets and are subject to
changes in business, economic and competitive conditions. Our business is
subject to:

     -  changes in reimbursement rates;

     -  intense competition;

     -  foreign exchange rate fluctuations;

     -  varying degrees of acceptance of new product introductions;

     -  technological developments in our industry;

     -  uncertainties in litigation or investigative proceedings and regulatory
        developments in the health care sector; and

                                        88
<PAGE>

     -  the availability of financing.

     Our business is also subject to other risks and uncertainties that we
describe from time to time in our public filings. Developments in any of these
areas could cause our results to differ materially from the results that we or
others have projected or may project.

REIMBURSEMENT RATES

     We obtained approximately 42% of our worldwide revenue for 2001 from
sources subject to regulations under U.S. government health care programs. In
the past, U.S. budget deficit reduction and health care reform measures have
changed the reimbursement rates under these programs, including the Medicare
composite rate, the reimbursement rate for EPO, and the reimbursement rates for
other dialysis and non-dialysis related services and products, as well as other
material aspects of these programs, and they may change in the future.

     We also obtain a significant portion of our net revenues from reimbursement
by non-government payors. Historically, these payors' reimbursement rates
generally have been higher than government program rates in their respective
countries. However, non-governmental payors are imposing cost containment
measures that are creating significant downward pressure on reimbursement levels
that we receive for our services and products.

INFLATION

     The effects of inflation during the periods covered by the consolidated
financial statements have not been significant to our results of operations.
However, most of our net revenues from dialysis care are subject to
reimbursement rates regulated by governmental authorities, and a significant
portion of other revenues, especially revenues from the U.S., is received from
customers whose revenues are subject to these regulated reimbursement rates.
Non-governmental payors are also exerting downward pressure on reimbursement
rates. Increased operation costs that are subject to inflation, such as labor
and supply costs, may not be recoverable through price increases in the absence
of a compensating increase in reimbursement rates payable to us and our
customers, and could materially adversely affect our business, financial
condition and results of operations. Amgen Inc., our sole source supplier of
EPO, announced a 3.9% increase in its wholesaler acquisition price for EPO
effective May 9, 2001. Our purchase contract with Amgen for 2001 contained
pricing protection such that our purchase price for EPO was unaffected by the
price increase through December 31, 2001. Our current contract with Amgen covers
the period from January 2002 to December 2003, with price guarantees and volume
and outcome discounts.

MANAGEMENT OF CURRENCY AND INTEREST RATE RISKS

     We are primarily exposed to market risk from changes in foreign currency
exchange rates and changes in interest rates. In order to manage the risks from
these foreign currency exchange rate and interest rate fluctuations, we enter
into various hedging transactions with investment grade financial institutions
as authorized by the Management Board. We do not contract for financial
instruments for trading or other speculative purposes.

     We conduct our financial instrument activity under the control of a single
centralized department. We have established guidelines for risk assessment
procedures and controls for the use of financial instruments. They include a
clear segregation of duties with regard to execution on one side and
administration, accounting and controlling on the other.

FOREIGN CURRENCY EXPOSURE

     We conduct our business on a global basis in several major international
currencies, although our operations are primarily in the United States and
Germany. For financial reporting purposes, we have chosen the U.S. dollar as our
reporting currency. Therefore, changes in the rate of exchange between the U.S.
dollar, the euro and the local currencies in which the financial statements of
our international operations are maintained, affect our results of operations
and financial position as reported in our consolidated financial statements. We
have consolidated the balance sheets of our non-U.S. dollar denominated
operations into U.S. dollars at the exchange rates prevailing at the balance
sheet date. Revenues and expenses are translated at the average exchange rates
for the period.

                                        89
<PAGE>

     Our exposure to market risk for changes in foreign exchange rates relates
to transactions such as sales and purchases, and lendings and borrowings,
including intercompany borrowings. We sell significant amounts of products from
our manufacturing facilities in Germany to our other international operations.
In general, our German sales are denominated in euro. Consequently, our
subsidiaries are exposed to fluctuations in the rate of exchange between the
euro and the currency in which their local operations are conducted. We employ,
to a limited extent, forward contracts and options to hedge our currency
exposures. Our policy, which has been consistently followed, is that forward
currency contracts and options be used only for purposes of hedging foreign
currency exposures. We have not used such instruments for purposes other than
hedging.

     Our foreign exchange contracts contain credit risk, in that our bank
counterparties may be unable to meet the terms of the agreements. We monitor the
potential risk of loss with any one party from this type of risk. Our management
does not expect any material losses as a result of default by the other parties.
The table below provides information about our foreign exchange forward
contracts at December 31, 2001. The information is provided in U.S. dollar
equivalent amounts. The table presents the notional amounts, the weighted
average contractual foreign currency exchange rates, and the fair values of the
contracts, which show the unrealized net gain (loss) on existing contracts as of
December 31, 2001. All contracts expire within 36 months after the reporting
date.

<Table>
<Caption>
                                                                         FOREIGN CURRENCY RISK MANAGEMENT
                                                                                DECEMBER 31, 2001
                                                                (USD IN THOUSANDS, EXCEPT AVERAGE CONTRACT RATES)
                                                              ------------------------------------------------------
                                                                                                       FAIR VALUE AT
                                                                                                        DECEMBER 31
FOREIGN CURRENCY FORWARDS                                       2002      2003      2004      TOTAL        2001
-------------------------                                     --------   -------   -------   -------   -------------
<S>                                                           <C>        <C>       <C>       <C>       <C>
Purchases of currencies against dollar
  Euro Notional Amount......................................   566,245   245,914        --   812,159      (18,043)
    Average Contract Rate...................................    0.9079    0.8974        --
  Mexican Peso Notional Amount..............................     8,401        --        --     8,401          492
    Average Contract Rate...................................    9.9992        --        --
                                                              --------   -------   -------   -------      -------
Total.......................................................   574,646   245,914        --   820,560      (17,551)
                                                              ========   =======   =======   =======      =======
Sales of currencies against dollar
  Canadian Dollar Notional Amount...........................     9,000        --        --     9,000          178
    Average Contract Rate...................................    1.5656        --        --
  Euro Notional Amount......................................     8,300        --        --     8,300          133
    Average Contract Rate...................................    0.8923        --        --
                                                              --------   -------   -------   -------      -------
Total.......................................................    17,300        --        --    17,300          311
                                                              ========   =======   =======   =======      =======
Other sales of currencies against euro
  Australian Dollar Notional Amount.........................     4,254        --        --     4,254            8
    Average Contract Rate...................................    1.7276        --        --
  British Pound Notional Amount.............................    15,231        --        --    15,231          (87)
    Average Contract Rate...................................    0.6140        --        --
  Czech Koruna Notional Amount..............................     5,023        --        --     5,023         (348)
    Average Contract Rate...................................   34.3764        --        --
  Hungarian Forint Notional Amount..........................     4,583        --        --     4,583         (125)
    Average Contract Rate...................................    259.01        --        --
  Japanese Yen Notional Amount..............................    35,143        --        --    35,143        2,039
    Average Contract Rate...................................    107.79        --        --
  Korean Won Notional Amount................................    16,269        --        --    16,269           78
    Average Contract Rate...................................   1168.91        --        --
  New Zealand Dollar Notional Amount........................     1,630        --        --     1,630          (22)
    Average Contract Rate...................................    2.1571        --        --
  Singapore Dollar Notional Amount..........................     1,334        --        --     1,334          (18)
    Average Contract Rate...................................    1.6355        --        --
  South African Rand Notional Amount........................       451        --        --       451           91
    Average Contract Rate...................................    8.7910        --        --
  Swiss Franc Notional Amount...............................     7,425       617        --     8,042           70
    Average Contract Rate...................................    1.4608    1.4503
                                                              --------   -------   -------   -------      -------
Total.......................................................    91,343       617        --    91,960        1,686
                                                              ========   =======   =======   =======      =======
</Table>

                                        90
<PAGE>

<Table>
<Caption>
                                                                         FOREIGN CURRENCY RISK MANAGEMENT
                                                                                DECEMBER 31, 2001
                                                                (USD IN THOUSANDS, EXCEPT AVERAGE CONTRACT RATES)
                                                              ------------------------------------------------------
                                                                                                       FAIR VALUE AT
                                                                                                        DECEMBER 31
FOREIGN CURRENCY FORWARDS                                       2002      2003      2004      TOTAL        2001
-------------------------                                     --------   -------   -------   -------   -------------
<S>                                                           <C>        <C>       <C>       <C>       <C>
Other purchases of currencies against euro
  Australian Dollar Notional Amount.........................     3,435        --        --     3,435           53
    Average Contract Rate...................................    1.7563        --        --
  British Pound Notional Amount.............................     4,631        --        --     4,631           74
    Average Contract Rate...................................    0.6185        --        --
  Hungarian Forint Notional Amount..........................     1,140        --        --     1,140            1
    Average Contract Rate...................................    245.92        --        --
  Japanese Yen Notional Amount..............................     1,692        --        --     1,692            6
    Average Contract Rate...................................    115.61        --        --
  New Zealand Dollar Notional Amount........................       681        --        --       681           32
    Average Contract Rate...................................    2.2311        --        --
  Swiss Franc Notional Amount...............................     3,626        --        --     3,626          (20)
    Average Contract Rate...................................    1.4730        --        --
                                                              --------   -------   -------   -------      -------
Total.......................................................    15,205        --        --    15,205          146
                                                              ========   =======   =======   =======      =======
Others Notional Amount......................................     1,689        --        --     1,689          (90)
                                                              ========   =======   =======   =======      =======
</Table>

     A summary of the high and low exchange rates for the Deutsche Mark to U.S.
dollars and the average exchange rates for the last five years is set forth
below. As the Deutsche Mark ("DM") was replaced by the euro ("E") in the foreign
exchange markets since the beginning of 1999, the table includes the respective
rates for the euro/Dollar quotations which were applied to calculate the
respective Deutsche Mark/Dollar values for 1999, 2000, and 2001, using a fixed
conversion rate of DM 1.95583 = E1.

<Table>
<Caption>
                                                  YEAR'S   YEAR'S   YEAR'S    YEAR'S
YEAR ENDING DECEMBER 31,                           HIGH     LOW     AVERAGE   CLOSE
------------------------                          ------   ------   -------   ------
<S>                                               <C>      <C>      <C>       <C>      <C>
1997............................................  0.6468   0.5299   0.5764    0.5580   $ per DM
1998............................................  0.6256   0.5395   0.5685    0.5977   $ per DM
1999............................................  0.6028   0.5121   0.5449    0.5136   $ per DM
                                                  1.1790   1.0015   1.0658    1.0046   $ per E
2000............................................  0.5311   0.4219   0.4722    0.4758   $ per DM
                                                  1.0387   0.8252   0.9236    0.9305   $ per E
2001............................................  0.4880   0.4287   0.4579    0.4506   $ per DM
                                                  0.9545   0.8384   0.8956    0.8813   $ per E
</Table>

Interest Rate Exposure

     We are exposed to changes in interest rates that affect our variable-rate
based borrowings. We enter into debt obligations and into accounts receivable
financings to support our general corporate purposes including capital
expenditures and working capital needs. We enter into derivatives, particularly
interest rate swaps, to protect interest rate exposures arising from long-term
and short-term borrowings and our accounts receivable securitization programs at
floating rates by effectively swapping them into fixed rates. Under interest
rate swaps, we agree with other parties to exchange, at specified intervals, the
difference between fixed-rate and floating-rate interest amounts calculated by
reference to an agreed notional amount.

     Our subsidiary, National Medical Care, has entered into dollar interest
rate swap agreements with various commercial banks for notional amounts totaling
$1,050 million as of December 31, 2001. National Medical Care entered into all
of these agreements for purposes other than trading. Under out senior credit
agreement, National Medical Care has agreed to maintain at least $500 million of
interest rate protection.

     The dollar interest rate swaps effectively change National Medical Care's
interest rate exposure on the majority of its variable-rate loans under our
senior credit agreement ($696 million outstanding as of December 31, 2001),
loans extended to us by Fresenius AG ($15 million outstanding as of December 31,
2001), and the drawdowns under our receivables financing facility (drawn as of
December 31, 2001, $442 million) to a

                                        91
<PAGE>

fixed interest rate of 6.52%. Our accounts receivable financing facility has
been reflected in our consolidated financial statements as a reduction to
accounts receivable.

     The dollar interest rate swap agreements expire at various dates between
November 29, 2003 and November 29, 2007. At December 31, 2001, the fair value of
these agreements is $(66.6) million.

     The table below presents principal amounts and related weighted average
interest rates by year of maturity for the various dollar interest rate swap
agreements and for our significant fixed-rate long-term debt obligations.

                         DOLLAR INTEREST RATE EXPOSURE

                               DECEMBER 31, 2001
                           (U.S. DOLLARS IN MILLIONS)

<Table>
<Caption>
                                                                                                               FAIR VALUE
                                                                                                                DEC. 31,
                                                   2002   2003    2004    2005    2006   THEREAFTER   TOTALS      2001
                                                   ----   -----   -----   -----   ----   ----------   ------   ----------
<S>                                                <C>    <C>     <C>     <C>     <C>    <C>          <C>      <C>
PRINCIPAL PAYMENTS ON SENIOR CREDIT AGREEMENT....  $150   $ 546      --      --     --        --      $  696      $696
  Variable interest rate = 3.21%
INTEREST RATE SWAP AGREEMENTS
  Notional amount................................    --     600     250      --     --       200       1,050       (67)
  Average fixed pay rate = 6.52%.................    --    6.58%   6.32%     --     --      6.61%         --        --
  Receive rate = 3-month $LIBOR
COMPANY OBLIGATED MANDATORILY REDEEMABLE
  PREFERRED SECURITIES OF SUBSIDIARIES FRESENIUS
  MEDICAL CARE CAPITAL TRUSTS
  Fixed interest rate = 9%/issued in 1996........   360      --      --      --     --        --         360       369
  Fixed interest rate = 7.875%/issued in 1998....    --      --      --      --     --       450         450       448
  Fixed interest rate = 7.375%/issued in 1998
    (denominated in DM)..........................    --      --      --      --     --       135         135       133
  Fixed interest rate = 7.875%/issued in 2001....    --      --      --      --     --       225         225       222
  Fixed interest rate = 7.375%/issued in 2001
    (denominated in euro)........................    --      --      --      --     --       264         264       262
</Table>

     Our subsidiary FMC Japan has entered into a Yen denominated interest rate
swap agreement with a commercial bank for a notional amount of JPY 1,249 million
as of December 31, 2001. This swap changes FMC Japan's interest rate exposure on
its variable-rate bank loan (JPY 1,249 million outstanding as of December 31,
2001) to a fixed interest rate of 3.10%. The Yen denominated interest rate swap
agreement expires on March 13, 2009. At December 31, 2001, the fair value of
this agreement is $(0.63) million. The terms of the Yen denominated interest
rate swap agreement, especially the notional amounts outstanding at any specific
point of time, match the terms of the bank loan which has been borrowed from the
same bank that is counterparty in the swap agreement. The bank borrowing and the
notional amount of the swap agreement are required to coincide until March 2009
when the bank debt is completely repaid and the swap expires

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not applicable

                                        92
<PAGE>

                                    PART II

ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     None

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

     None

ITEM 15.  [RESERVED]

ITEM 16.  [RESERVED]

                                    PART III

ITEM 17.  FINANCIAL STATEMENTS

     Not applicable. See "Item 18. Financial Statements."

ITEM 18.  FINANCIAL STATEMENTS

     The information called for by this item commences on Page F-1.

ITEM 19.  EXHIBITS

     Pursuant to the provisions of the Instructions for the filings of Exhibits
to Annual Reports on From 20-F, the Registrant is filing the following exhibits:

     1.1   Amended Memorandum and Articles of Association (Satzung) of Fresenius
Medical Care AG (Incorporated by reference to Exhibit 3.1 to FMC's Registration
Statement on Form F-4, Registration No. 333-66558, filed August 2, 2001).

     2.1   Deposit Agreement between Morgan Guaranty Trust Company and Fresenius
Medical Care AG dated August 5, 1996 relating to Ordinary Share ADSs
(Incorporated by reference to Exhibit a to the Registration Statement on Form
F-6, Registration No. 333-5356, filed August 5, 1996).

     2.2   Deposit Agreement between Morgan Guaranty Trust Company and Fresenius
Medical Care AG dated as of November 22, 1996 relating to Preference Share ADSs
(Incorporated by reference to Exhibit a to the Registration Statement on Form
F-6, Registration No. 333-5928, filed October 30, 1996).

     2.3   FMC Ordinary Shares Pooling Agreement dated September 27, 1996 by and
between Fresenius AG, Fresenius Medical Care AG and the individuals acting from
time to time as Independent Directors. (Incorporated by reference to Exhibit
10.1 to FMC's Registration Statement on Form F-1, Registration No. 333-05922,
filed November 4, 1996).

     2.4   FMC Preference Shares Pooling Agreement dated November 27, 1996, by
and between Fresenius AG, Fresenius Medical Care AG, and the individuals acting
from time to time as Independent Directors. (Incorporated by reference to
Exhibit 2.7 to FMC's Annual Report on Form 20-F for the year ended December 31,
1996, filed April 7, 1997).

     2.5   Senior Subordinated Indenture (U.S. Dollar denominated) dated as of
February 19, 1998, among Fresenius Medical Care AG, FMC Trust Finance S.a.r.l.
Luxembourg, State Street Bank and Trust Company, as Trustee, and the Subsidiary
Guarantors named therein. (Incorporated by reference to Exhibit 2.6 to FMC's
Annual Report on Form 20-F for the year ended December 31, 1997, filed March 27,
1998).

     2.6   Senior Subordinated Indenture (DM denominated) dated as of February
19, 1998, among Fresenius Medical Care AG, FMC Trust Finance S.a.r.l.
Luxembourg, State Street Bank and Trust Company, as Trustee, and the Subsidiary
Guarantors named therein. (Incorporated by reference to Exhibit 2.7 to FMC's
Annual Report on Form 20-F for the year ended December 31, 1997, filed March 27,
1998).

                                        93
<PAGE>

     2.7   Declaration of Trust Establishing Fresenius Medical Care Capital
Trust II, dated February 12, 1998. (Incorporated by reference to Exhibit 2.1 to
FMC's Annual Report on Form 20-F for the year ended December 31, 1997, filed
March 27, 1998).

     2.8   Declaration of Trust Establishing Fresenius Medical Care Capital
Trust III, dated February 12, 1998. (Incorporated by reference to Exhibit 2.2 to
FMC's Annual Report on Form 20-F for the year ended December 31, 1997, filed
March 27, 1998).

     2.9   First Amendment to Declaration of Trust Establishing Fresenius
Medical Care Capital Trust III, dated February 12, 1998. (Incorporated by
reference to Exhibit 2.3 to FMC's Annual Report on Form 20-F for the year ended
December 31, 1997, filed March 27, 1998).

     2.10 Amended and Restated Declaration of Trust of Fresenius Medical Care
Capital Trust II, dated as of February 19, 1998. (Incorporated by reference to
Exhibit 2.4 to FMC's Annual Report on Form 20-F for the year ended December 31,
1997, filed March 27, 1998).

     2.11 Amended and Restated Declaration of Trust of Fresenius Medical Care
Capital Trust III, dated as of February 19, 1998. (Incorporated by reference to
Exhibit 2.5 to FMC's Annual Report on Form 20-F for the year ended December 31,
1997, filed March 27, 1998).

     2.12 Guarantee Agreement dated as of February 19, 1998 between Fresenius
Medical Care AG and State Street Bank and Trust Company as Trustee, with respect
to Fresenius Medical Care Capital Trust II. (Incorporated by reference to
Exhibit 2.8 to FMC's Annual Report on Form 20-F for the year ended December 31,
1997, filed March 27, 1998).

     2.13 Guarantee Agreement dated as of February 19, 1998 between Fresenius
Medical Care AG and State Street Bank and Trust Company as Trustee, with respect
to Fresenius Medical Care Capital Trust III. (Incorporated by reference to
Exhibit 2.9 to FMC's Annual Report on Form 20-F for the year ended December 31,
1997, filed March 27, 1998).

     2.14 Agreement as to Expenses and Liabilities between Fresenius Medical
Care AG and Fresenius Medical Care Capital Trust II dated as of February 19,
1998. (Incorporated by reference to Exhibit 2.10 to FMC's Annual Report on Form
20-F for the year ended December 31, 1997, filed March 27, 1998).

     2.15 Agreement as to Expenses and Liabilities between Fresenius Medical
Care AG and Fresenius Medical Care Capital Trust III dated as of February 19,
1998. (Incorporated by reference to Exhibit 2.11 to FMC's Annual Report on Form
20-F for the year ended December 31, 1997, filed March 27, 1998).

     2.16 Declaration of Trust of Fresenius Medical Care Capital Trust IV, dated
February 12, 1998 (Incorporated by reference to Exhibit no. 4.41 to the
Registration Statement on Form F-4 of Fresenius Medical Care AG et al filed
August 2, 2001, Registration No. 333-66558)

     2.17 First Amendment to Declaration of Trust of Fresenius Medical Care
Capital Trust IV, dated June 5, 2001 (Incorporated by reference to Exhibit no.
4.42 to the Registration Statement on Form F-4 of Fresenius Medical Care AG et
al filed August 2, 2001, Registration No. 333-66558)

     2.18 Declaration of Trust of Fresenius Medical Care Capital Trust V, dated
June 1, 2001 (Incorporated by reference to Exhibit no. 4.43 to the Registration
Statement on Form F-4 of Fresenius Medical Care AG et al filed August 2, 2001,
Registration No. 333-66558)

     2.19 Amended and Restated Declaration of Trust of Fresenius Medical Care
Capital Trust IV, dated as of June 6, 2001 (Incorporated by reference to Exhibit
no. 4.44 to the Registration Statement on Form F-4 of Fresenius Medical Care AG
et al filed August 2, 2001, Registration No. 333-66558)

     2.20 Amended and Restated Declaration of Trust of Fresenius Medical Care
Capital Trust V, dated as of June 15, 2000 (Incorporated by reference to Exhibit
no. 4.45 to the Registration Statement on Form F-4 of Fresenius Medical Care AG
et al filed August 2, 2001, Registration No. 333-66558)

     2.21 Senior Subordinated Indenture (U.S. Dollar denominated) dated as of
June 6, 2001, among Fresenius Medical Care AG, FMC Trust Finance S.a.r.l.
Luxembourg-III, State Street Bank and Trust Company, as Trustee,
                                        94
<PAGE>

and the Subsidiary Guarantors named therein (Incorporated by reference to
Exhibit no. 4.46 to the Registration Statement on Form F-4 of Fresenius Medical
Care AG et al filed August 2, 2001, Registration No. 333-66558)

     2.22 Senior Subordinated Indenture (Euro denominated) dated as of June 15,
2001, among Fresenius Medical Care AG, FMC Trust Finance S.a.r.l.
Luxembourg-III, State Street Bank and Trust Company, as Trustee, and the
Subsidiary Guarantors named therein (Incorporated by reference to Exhibit no.
4.47 to the Registration Statement on Form F-4 of Fresenius Medical Care AG et
al filed August 2, 2001, Registration No. 333-66558)

     2.23 Guarantee Agreement dated as of June 6, 2001 between Fresenius Medical
Care AG and State Street Bank and Trust Company as Trustee, with respect to
Fresenius Medical Care Capital Trust IV (Incorporated by reference to Exhibit
no. 4.48 to the Registration Statement on Form F-4 of Fresenius Medical Care AG
et al filed August 2, 2001, Registration No. 333-66558)

     2.24 Guarantee Agreement dated as of June 15, 2001 between Fresenius
Medical Care AG and State Street Bank and Trust Company as Trustee, with respect
to Fresenius Medical Care Capital Trust V (Incorporated by reference to Exhibit
no. 4.49 to the Registration Statement on Form F-4 of Fresenius Medical Care AG
et al filed August 2, 2001, Registration No. 333-66558)

     2.25 Agreement as to Expenses and Liabilities between Fresenius Medical
Care AG and Fresenius Medical Care Capital Trust IV dated as of June 6, 2001
(Incorporated by reference to Exhibit no. 4.50 to the Registration Statement on
Form F-4 of Fresenius Medical Care AG et al filed August 2, 2001, Registration
No. 333-66558)

     2.26 Agreement as to Expenses and Liabilities between Fresenius Medical
Care AG and Fresenius Medical Care Capital Trust V dated as of June 15, 2001
(Incorporated by reference to Exhibit no. 4.51 to the Registration Statement on
Form F-4 of Fresenius Medical Care AG et al filed August 2, 2001, Registration
No. 333-66558)

     4.1 Agreement and Plan of Reorganization dated as of February 4, 1996
between W.R. Grace & Co. and Fresenius AG. (Incorporated 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).

     4.2 Distribution Agreement by and among W.R. Grace & Co., W.R., Grace &
Co.-Conn. and Fresenius AG dated as of February 4, 1996. (Incorporated 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).

     4.3 Contribution Agreement by and among Fresenius AG, Sterilpharma GmbH and
W.R. Grace & Co.-Conn. dated February 4, 1996. (Incorporated by reference to
Appendix E to the Joint Proxy Statement-Prospectus of Fresenius Medical Care AG,
W.R. Grace & Co. and Fresenius USA, Inc., dated August 2, 1996

     4.4 Post-Closing Covenants Agreement dated September 27, 1996 among
Fresenius AG, W.R. Grace & Co., W.R. Grace & Co.-Conn., and Fresenius Medical
Care AG. (Incorporated by reference to Exhibit 10.11 to FMC's Registration
Statement on Form F-1, filed on November 4, 1996.)

     4.5 Employee Benefits and Compensation Agreement dated September 27, 1996
by among W.R. Grace & Co., National Medical Care, Inc., and W.R. Grace &
Co.-Conn. (Incorporated by reference to Exhibit 10.14 to FMC's Registration
Statement on Form F-1, File No. 333-05922, filed November 4, 1996.)

     4.6   Product Purchase Agreement, effective January 1, 1995, between Baxter
Health Care Corporation and National Medical Care, Inc., including the addendum
thereto. (Incorporated by reference to FMC's Form SE, dated July 29, 1996 and
the exhibits thereto).

     4.7   Lease Agreement for Office Buildings dated September 30, 1996 by and
between Fresenius and AG Fresenius Medical Care Deutschland GmbH. (Incorporated
by reference to Exhibit 10.3 to FMC's Registration Statement on Form F-1,
Registration No. 333-05922, filed November 16, 1996).

     4.8   Lease Agreement for Manufacturing Facilities dated September 30, 1996
by and between Fresenius Immobilien-Verwaltungs-GmbH & Co. Objekt Schweinfurt KG
and Fresenius Medical Care Deutschland GmbH. (Incorporated by reference to
Exhibit 10.4 to FMC's Registration Statement on Form F-1, Registration No.
333-05922, filed November 16, 1996).

                                        95
<PAGE>

     4.9   Lease Agreement for Manufacturing Facilities dated September 30, 1996
by and between Fresenius AG and Fresenius Medical Care Deutschland GmbH.
(Incorporated by reference to Exhibit 10.5 to FMC's Registration Statement on
Form F-1, Registration No. 333-05922, filed November 16, 1996).

     4.10 Transition Services Agreement dated September 27, 1996 by and between
Fresenius AG and Fresenius Medical Care. (Incorporated by reference to Exhibit
10.6 to FMC's Registration Statement on Form F-1, Registration No. 333-05922,
filed November 16, 1996).

     4.11 Forms of Supply Agreements between subsidiaries of Fresenius AG and
subsidiaries of Fresenius Medical Care AG. (Incorporated by reference to Exhibit
10.7 to FMC's Registration Statement on Form F-1, Registration No. 333-05922,
filed November 16, 1996).

     4.12 Trademark License Agreement dated September 27, 1996 by and between
Fresenius AG and Fresenius Medical Care AG. (Incorporated by reference to
Exhibit 10.8 to FMC's Registration Statement on Form F-1, Registration No.
333-05922, filed November 16, 1996).

     4.13 Technology License Agreement (Biofine(TM)) dated September 27, 1996 by
and between Fresenius AG and Fresenius Medical Care AG. (Incorporated by
reference to Exhibit 10.9 to FMC's Registration Statement on Form F-1,
Registration No. 333-05922, filed November 16, 1996).

     4.14 Cross-License Agreement dated September 27, 1996 by and between
Fresenius AG and Fresenius Medical Care AG. (Incorporated by reference to
Exhibit 10.10 to FMC's Registration Statement on Form F-1, Registration No.
333-05922, filed November 16, 1996).

     4.15 Lease Agreement for Office Buildings dated September 30, 1996 by and
between Fresenius AG and Fresenius Medical Care Deutschland GmbH (Daimler Str.).
(Incorporated by reference to Exhibit 2.8 to FMC's Annual Report on Form 20-F
for the year ended December 31, 1996, filed April 7, 1997).

     4.16 Fresenius Medical Care AG 1996 Stock Incentive Plan , (incorporated by
reference to FMC's Registration Statement on Form S-8, dated October 1, 1996).

     4.17 Fresenius Medical Care AG Rollover Stock Option Plan (Incorporated by
reference to FMC's Registration Statement on Form S-8, dated September 30,
1996).

     4.18 Fresenius Medical Care AG 1998 Stock Incentive Plan adopted effective
as of April 6, 1998. (Incorporated by reference to Exhibit 4.8 to FMC's Report
on Form 6-K for the three months ended March 31, 1998, filed May 14, 1998).

     4.19 Fresenius Medical Care AG Stock Option Plan of June 10, 1998 (for
non-North American employees). (Incorporated by reference to Exhibit 1.2 to
FMC's Annual Report on Form 20-F, for the year ended December 31, 1998, filed
March 24, 1999).

     4.20 Fresenius Medical Care Aktiengesellschaft 2001 International Stock
Incentive Plan (Incorporated by reference to Exhibit no. 10.17 to the
Registration Statement on Form F-4 of Fresenius Medical Care AG et al filed
August 2, 2001, Registration No. 333-66558)

     4.21 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, N.A., Dresdner Bank AG and NationsBank, N.A., as Managing
Agents, as amended. (Incorporated by reference to FMC's Report on Form 6-K dated
October 15, 1996)

     4.22 Amendment dated as of November 26, 1996 to 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, N.A., Dresdner Bank AG and
NationsBank, N.A. as Managing Agents, as previously amended. (incorporated by
reference to Exhibit 4.1 to the Form 8-K of Fresenius Medical Care Holdings, Inc
("FMCH") dated December 16, 1996).

                                        96
<PAGE>

     4.23 Amendment No. 2 dated December 12, 1996 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, N.A., Dresdner Bank AG and
NationsBank, N.A. as Managing Agents, as previously amended. (Incorporated by
reference, to Exhibit 4.2 to FMCH's Annual Report on Form 10-K for the year
ended December 31, 1996, filed March 31, 1997).

     4.24 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, N.A., Dresdner Bank AG and
NationsBank, N.A. as Managing Agents, as previously amended. (Incorporated by
reference to Exhibit 10.1 to FMCH's Quarterly Report on Form 10-Q, for the three
months ended September 30, 1997, filed November 14, 1997).

     4.25 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, N.A., Dresdner Bank AG and
NationsBank, N.A. as Managing Agents, as previously amended. (Incorporated by
reference to Exhibit 10.2 to FMCH's Quarterly Report on Form 10-Q, for the three
months ended September 30, 1997, filed November 14, 1997).

     4.26 Amendment No. 5 dated as of 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
NationsBank, N.A., as Managing Agents, as previously amended. (Incorporated by
reference to Exhibit 4.6 to FMCH's Annual Report on Form 10-K, for the year
ended December 31, 1997, filed March 24, 1998).

     4.27 Consents of Majority Banks under the NMC Credit Agreement to increase
additional subordinated indebtedness permitted by Amendment No. 5 from $500
million to $650 million. (Incorporated by reference to Exhibit 1.2 to FMC's
Annual Report on Form 20-F, for the year ended December 31, 1997, filed March
27, 1998).

     4.28 Amendment No. 6, dated as of June 30, 1998, to the Credit Agreement
dated as of September 27, 1996 among National Medical Care, Inc., the other
Borrowers, the Guarantors and the Lenders identified therein, and NationsBank,
N.A., as Paying Agent. (Incorporated by reference to Exhibit 10.1 to FMCH's
Quarterly Report on Form 10-Q, for the three months ended June 30, 1998, filed
August 10, 1998).

     4.29 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,
as Guarantors, the Lenders named therein, NationsBank, N.A., as paying agent,
and the Bank of Nova Scotia, The Chase Manhattan Bank, N.A., Dresdner Bank AG
and NationsBank, N.A., as Managing Agents. (Incorporated by reference to Exhibit
1.1 to FMC's Annual Report on Form 20-F, for the year ended December 31, 1998,
filed March 24, 1999).

     4.30 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,
as Guarantors, the Lenders named therein, NationsBank, N.A., as paying agent,
and the Bank of Nova Scotia, The Chase Manhattan Bank, N.A., Dresdner Bank AG
and NationsBank, N.A., as Managing Agents. (Incorporated by reference to FMCH's
Annual Report on Form 10-K, for the year ended December 31, 1999, filed March
30, 2000).

     4.31 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,
as Guarantors, the Lenders named therein, NationsBank, N.A., as paying agent,
and the Bank of Nova Scotia, The Chase Manhattan Bank, N.A., Dresdner Bank AG
and Bank of America, N.A.

                                        97
<PAGE>

(formerly known as) NationsBank, N.A., as Managing Agents. (Incorporated by
reference to FMCH's Annual Report on Form 10-K, for the year ended December 31,
1999, filed March 30, 2000).

     4.32 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 by reference to FMCH's Quarterly Report on Form 10-Q, for
the quarter ended September 30, 2000, filed November 13, 2000).

     4.33 Amendment No. 11 dated as of May 31, 2001 to the NMC Credit
Agreement(Incorporated by reference to Exhibit no. 4.13 to the Registration
Statement on Form F-4 of Fresenius Medical Care AG et al filed August 2, 2001,
Registration No. 333-66558)

     4.34 Amendment No. 12 dated as of June 30, 2001 to the NMC Credit Agreement
(Incorporated by reference to Exhibit no. 4.14 to the Registration Statement on
Form F-4 of Fresenius Medical Care AG et al filed August 2, 2001, Registration
No. 333-66558)

     4.35 Amendment No. 13 dated as of December 17, 2001 to the NMC Credit
Agreement (Incorporated by reference to FMCH's Annual Report on Form 10-K for
the year ended December 31, 2001 filed April 1, 2002.

     4.36 Receivables Purchase Agreement dated August 28, 1997 between National
Medical Care, Inc. and NMC Funding Corporation. (Incorporated by reference to
Exhibit 10.3 to FMCH's Quarterly Report on Form 10-Q, for the three months ended
September 30, 1997, filed November 14, 1997).

     4.37 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 by
reference to Exhibit 10.1 to FMCH's Quarterly Report on Form 10-Q, for the three
months ended September 30, 1998, filed November 12, 1998).

     4.38 Amended and Restated Transfer and Administration Agreement dated as of
September 27, 1999 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 FMCH's Annual Report on Form 10-K, for the
year ended December 31, 1999, filed with the Commission March 30, 2000).

     4.39 Amendment No. 2 to Amended and Restated Transfer and Administration
Agreement dated as of 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 by reference to FMCH's Annual
Report on Form 10-K, for the year ended December 31, 2000, filed April 2, 2001).

     4.40 Amendment No. 5 to Amended and Restated Transfer and Administration
Agreement dated as of December 21, 2001 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 FMCH's
Annual Report on Form 10-K, for the year ended December 31, 2001, filed April 1,
2002).

     4.41 Subordinated Loan Note dated as of May 18, 1999, among National
Medical Care, Inc and Certain Subsidiaries with Fresenius AG as lender.
(Incorporated by reference to FMCH's Quarterly Report on Form 10-Q, for the
three months ended September 30, 1999, filed November 22, 1999).

     4.42 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).

                                        98
<PAGE>

     4.43 Modification to FUSA Employment Agreement effective as of January 1,
1998 by and between Dr. Ben J. Lipps and Fresenius Medical Care AG.
(Incorporated by reference to Exhibit 10.1 to FMC's Report on Form 6-K, for the
three months ended March 31, 1998, filed May 14, 1998).

     4.44 Corporate Integrity Agreement dated January 18, 2000 between FMCH and
Office of the Inspector General of the Department of Health and Human Services.
(Incorporated by reference to Exhibit 10.1 to FMCH's Current Report on Form 8-K
dated January 21, 2000).

     4.45 Registration Rights Agreement dated as of March 2, 2000 Between
Fresenius Medical Care AG and the Franconia Investors. (Incorporated by
reference to Exhibit 2.3 to FMC's Annual Report on Form 20-F For the year ended
December 31, 1999, filed June 2, 2000).

     8.1   List of Significant Subsidiaries. Our significant subsidiaries are
identified in "Item 4.C. Information on the Company -- Organizational
Structure."

     10.1 Consent of KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft
Wirtschaftsprufungsgesellschaft.

                                        99
<PAGE>

                                   SIGNATURES

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

     DATE: April 3, 2002

                                      FRESENIUS MEDICAL CARE
                                      AKTIENGESELLSCHAFT

                                          /s/ DR. BEN LIPPS
                                      By:
                                      ------------------------------------------

                                         Name: Dr. Ben Lipps
                                         Title:  Chairman of the Management
                                          Board

                                          /s/ DR. ULF M. SCHNEIDER
                                      By:
                                      ------------------------------------------

                                         Name: Dr. Ulf M. Schneider
                                         Title:  Chief Financial Officer

                                       100
<PAGE>

                         INDEX OF FINANCIAL STATEMENTS

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report................................   F-2
Consolidated Statements of Operations for the years ended
  December 31, 2001, 2000 and 1999..........................   F-3
Consolidated Balance Sheets as of December 31, 2001 and
  2000......................................................   F-4
Consolidated Statements of Cash Flows for the years ended
  December 31, 2001, 2000 and 1999..........................   F-5
Consolidated Statement of Shareholders' Equity for the years
  ended December 31, 2001, 2000 and 1999....................   F-6
Notes to Consolidated Financial Statements..................   F-7
Financial Statement Schedule................................   S-1
</Table>

                                       F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Shareholders

Fresenius Medical Care Aktiengesellschaft

Hof an der Saale, Germany:

     We have audited the accompanying consolidated balance sheets of Fresenius
Medical Care Aktiengesellschaft and subsidiaries (the "Company") as of December
31, 2001 and 2000 and the related consolidated statements of operations, cash
flows and shareholders' equity for each of the years in the three-year period
ended December 31, 2001. In connection with our audits of the consolidated
financial statements, we have also audited the financial statement schedule as
listed in the accompanying index. These consolidated financial statements and
the financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and the financial statement schedule based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 2001 and 2000, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the related financial statement schedule, when
considered in relation to the consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.

Frankfurt am Main, Germany

March 5, 2002,

/s/ KPMG
Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprufungsgesellschaft

                                       F-2
<PAGE>

                           FRESENIUS MEDICAL CARE AG

                     CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                       (IN THOUSANDS, EXCEPT SHARE DATA)

<Table>
<Caption>
                                                            2001          2000          1999
                                                         ----------    ----------    ----------
<S>                                                      <C>           <C>           <C>
Net revenue:
  Dialysis Care........................................  $3,557,234    $2,944,625    $2,599,688
  Dialysis Products....................................   1,302,084     1,256,713     1,240,741
                                                         ----------    ----------    ----------
                                                          4,859,318     4,201,338     3,840,429
Costs of revenue:
  Dialysis Care........................................   2,521,075     2,040,627     1,776,604
  Dialysis Products....................................     699,123       693,966       686,551
                                                         ----------    ----------    ----------
                                                          3,220,198     2,734,593     2,463,155
Gross profit...........................................   1,639,120     1,466,745     1,377,274
Operating expenses:
  Selling, general and administrative..................     966,044       813,997       784,572
  Research and development.............................      35,700        31,935        32,488
  Special charge for Legal Matters.....................     258,159            --            --
  Special charge for 1999 Settlement...................          --            --       601,000
                                                         ----------    ----------    ----------
Operating income (loss)................................     379,217       620,813       (40,786)
Other (income) expense:
  Interest income......................................     (14,305)       (9,411)       (8,094)
  Interest expense.....................................     237,234       195,569       226,218
  Interest expense on obligation related to 1999
     Settlement........................................          --        29,947            --
                                                         ----------    ----------    ----------
Income (loss) before income taxes and minority
  interest.............................................     156,288       404,708      (258,910)
Income tax expense (benefit)...........................      91,202       189,772       (12,744)
Minority interest......................................       1,732         2,861         2,378
                                                         ----------    ----------    ----------
Net income (loss)......................................  $   63,354    $  212,075    $ (248,544)
                                                         ==========    ==========    ==========
Basic income (loss) per Ordinary share.................  $     0.65    $     2.37    $    (3.15)
                                                         ==========    ==========    ==========
Fully diluted income (loss) per Ordinary share.........  $     0.64    $     2.36    $    (3.15)
                                                         ==========    ==========    ==========
Basic income (loss) per Preference share...............  $     0.70    $     2.43    $    (3.15)
                                                         ==========    ==========    ==========
Fully diluted income (loss) per Preference share.......  $     0.69    $     2.42    $    (3.15)
                                                         ==========    ==========    ==========
</Table>

          See accompanying notes to consolidated financial statements.
                                       F-3
<PAGE>

                           FRESENIUS MEDICAL CARE AG
                          CONSOLIDATED BALANCE SHEETS
                         AT DECEMBER 31, 2001 AND 2000
                       (IN THOUSANDS, EXCEPT SHARE DATA)

<Table>
<Caption>
                                                                 2001          2000
                                                              ----------    ----------
<S>                                                           <C>           <C>
Assets
Current assets:
  Cash and cash equivalents.................................  $   61,572    $   64,577
  Trade accounts receivable, less allowance for doubtful
     accounts of $138,128 in 2001 and $111,185 in 2000......     884,727       753,674
  Accounts receivable from related parties..................      37,092        46,117
  Inventories...............................................     346,389       320,234
  Prepaid expenses and other current assets.................     222,135       219,715
  Deferred taxes............................................     227,214       177,094
                                                              ----------    ----------
  Total current assets......................................   1,779,129     1,581,411
Property, plant and equipment, net..........................     838,583       738,993
Intangible assets, including goodwill, net..................   3,682,023     3,475,056
Deferred taxes..............................................      35,192        27,205
Other assets................................................     181,083       156,288
                                                              ----------    ----------
  Total assets..............................................  $6,516,010    $5,978,953
                                                              ==========    ==========
Liabilities and shareholders' equity
Current liabilities:
  Accounts payable..........................................  $  198,287    $  203,374
  Accounts payable to related parties.......................      80,454        77,823
  Accrued expenses and other current liabilities............     409,047       391,640
  Accrual for special charge for Legal Matters..............     221,812            --
  Note payable related to 1999 Settlement...................          --        85,920
  Short-term borrowings.....................................      93,411       106,592
  Short-term borrowings from related parties................      15,005       218,333
  Current portion of long-term debt and capital lease
     obligations............................................     164,959       168,231
  Income tax payable........................................     176,249       117,572
  Deferred taxes............................................      17,999        20,967
                                                              ----------    ----------
  Total current liabilities.................................   1,377,223     1,390,452
Long-term debt and capital lease obligations, less current
  portion...................................................     735,769       657,832
Other liabilities...........................................     123,845        31,464
Pension liabilities.........................................      70,582        69,970
Deferred taxes..............................................     142,846       176,487
Company-obligated mandatorily redeemable preferred
  securities of subsidiary Fresenius Medical Care Capital
  Trusts holding solely Company-guaranteed debentures of
  subsidiary................................................   1,428,768       952,727
Minority interest...........................................      20,233        21,271
                                                              ----------    ----------
  Total liabilities.........................................   3,899,266     3,300,203
Shareholders' equity:
Preference shares, no par, E2.56 nominal value, 53,597,700
  shares authorized, 26,176,508 issued and outstanding......      69,512        63,644
Ordinary shares, no par, E2.56 nominal value, 70,000,000
  shares authorized, issued and outstanding.................     229,494       229,494
Additional paid-in capital..................................   2,735,265     2,634,606
Retained deficit............................................     (58,452)      (56,024)
Accumulated other comprehensive loss........................    (359,075)     (192,970)
                                                              ----------    ----------
  Total shareholders' equity................................   2,616,744     2,678,750
                                                              ----------    ----------
  Total liabilities and shareholders' equity................  $6,516,010    $5,978,953
                                                              ==========    ==========
</Table>

          See accompanying notes to consolidated financial statements.

                                       F-4
<PAGE>

                           FRESENIUS MEDICAL CARE AG

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                2001         2000         1999
                                                              ---------    ---------    ---------
<S>                                                           <C>          <C>          <C>
Operating Activities:
  Net income (loss).........................................  $  63,354    $ 212,075    $(248,544)
  Adjustments to reconcile net income (loss) to cash flows
    provided by (used in)
    operating activities:
    Depreciation and amortization...........................    323,503      292,854      284,208
    Write-off of IDPN accounts receivable...................         --           --       94,349
    Change in deferred taxes, net...........................    (46,401)      76,934      (89,925)
    Loss (gain) on sale of fixed assets.....................      1,010         (289)         991
    Compensation expense related to stock options...........      1,153        3,980           --
  Changes in assets and liabilities, net of amounts from
    businesses acquired or disposed of:
    Trade accounts receivable, net..........................   (117,093)    (174,333)    (136,262)
    Inventories.............................................    (30,201)     (23,007)     (15,754)
    Prepaid expenses, other current and non-current
      assets................................................    (28,462)      (8,285)     (36,718)
    Accounts receivable from/ payable to related parties....      8,854      (18,801)     (14,946)
    Accounts payable, accrued expenses and other current and
      non-current liabilities...............................    183,992      (20,689)     488,696
  Income taxes payable......................................     64,539       50,827       28,662
                                                              ---------    ---------    ---------
    Net cash provided by operating activities of continuing
      operations............................................    424,248      391,266      354,757
                                                              ---------    ---------    ---------
    Net cash used in operating activities of discontinued
      operations............................................         --           --       (3,782)
                                                              ---------    ---------    ---------
    Net cash provided by operating activities...............    424,248      391,266      350,975
                                                              ---------    ---------    ---------
Investing Activities:
  Purchases of property, plant and equipment................   (275,225)    (228,037)    (160,276)
  Proceeds from sale of property, plant and equipment.......     24,195       20,724        7,130
  Acquisitions and investments, net of cash acquired........   (216,711)    (274,530)    (101,326)
                                                              ---------    ---------    ---------
    Net cash used in investing activities...................   (467,741)    (481,843)    (254,472)
                                                              ---------    ---------    ---------
Financing Activities:
  Proceeds from short-term borrowings.......................    117,896       38,416       79,580
  Repayments of short-term borrowings.......................   (140,420)     (32,609)     (80,946)
  Proceeds from short-term borrowings from related
    parties.................................................     20,588       26,000      270,000
  Repayments of short-term borrowings from related
    parties.................................................   (223,566)    (141,000)          --
  Proceeds from long-term debt..............................    465,906      255,224       26,895
  Principal payments of long-term debt and capital lease
    obligations.............................................   (517,877)    (221,739)    (310,476)
  Payments on obligation related to 1999 Settlement.........    (85,920)    (386,815)          --
  Retirement of convertible investment securities...........         --           --      (47,664)
  Proceeds from issuance of trust preferred securities......    470,598           --           --
  Proceeds from issuance of preference shares...............         --      556,958           --
  (Decrease) increase of accounts receivable securitization
    program.................................................     (3,464)     111,402       29,400
  Proceeds from exercise of stock options...................      6,391          885        1,719
  Dividends paid............................................    (65,782)     (51,229)     (48,404)
  Change in minority interest...............................       (853)         139          578
                                                              ---------    ---------    ---------
    Net cash provided by (used in) financing activities.....     43,497      155,632      (79,318)
                                                              ---------    ---------    ---------
Effect of exchange rate changes on cash and cash
  equivalents...............................................     (3,009)     (35,238)     (14,292)
                                                              ---------    ---------    ---------
Cash and Cash Equivalents:
  Net (decrease) increase in cash and cash equivalents......     (3,005)      29,817        2,893
  Cash and cash equivalents at beginning of period..........     64,577       34,760       31,867
                                                              ---------    ---------    ---------
  Cash and cash equivalents at end of period................  $  61,572    $  64,577    $  34,760
                                                              =========    =========    =========
</Table>

          See accompanying notes to consolidated financial statements.
                                       F-5
<PAGE>

                           FRESENIUS MEDICAL CARE AG

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                       (IN THOUSANDS, EXCEPT SHARE DATA)
<Table>
<Caption>
                                                                                                          ACCUMULATED OTHER
                               PREFERENCE SHARES        ORDINARY SHARES                                  COMPREHENSIVE LOSS
                             ---------------------   ----------------------                            -----------------------
                                                                              ADDITIONAL   RETAINED      FOREIGN
                              NUMBER OF    NO PAR     NUMBER OF     NO PAR     PAID IN     EARNINGS     CURRENCY     CASH FLOW
                               SHARES       VALUE      SHARES       VALUE      CAPITAL     (DEFICIT)   TRANSLATION    HEDGES
                             -----------   -------   -----------   --------   ----------   ---------   -----------   ---------
<S>                          <C>           <C>       <C>           <C>        <C>          <C>         <C>           <C>
Balance at December 31,
 1998......................   9,023,341    $27,623   70,000,000    $229,494   $2,095,761   $ 80,078     $ (75,990)
Proceeds from exercise of
 options...................                                                       1,719
Dividends paid.............                                                                 (48,404)
Comprehensive loss:
 Net loss..................                                                                (248,544)
 Foreign currency
   translation
   adjustment..............                                                                               (59,420)
Comprehensive loss.........
                             -----------   -------   -----------   --------   ----------   ---------    ---------    --------
Balance at December 31,
 1999......................   9,023,341    $27,623   70,000,000    $229,494   $2,097,480   $(216,870)   $(135,410)   $
Issuance of Preference
 shares....................  14,724,359    35,980                               532,302
Proceeds from exercise of
 options...................      17,393        41                                   844
Compensation expense
 related stock options.....                                                       3,980
Dividends paid.............                                                                 (51,229)
Comprehensive income:
 Net income................                                                                 212,075
 Foreign currency
   translation
   adjustment..............                                                                               (57,560)
Comprehensive income:......
                             -----------   -------   -----------   --------   ----------   ---------    ---------    --------
Balance at December 31,
 2000......................  23,765,093    $63,644   70,000,000    $229,494   $2,634,606   $(56,024)    $(192,970)   $
Issuance of Preference
 shares....................   2,250,000     5,498                                93,485
Proceeds from exercise of
 options...................     161,415       371                                 6,020
Compensation expense
 related to stock
 options...................                                                       1,153
Dividends paid.............                                                                 (65,782)
Comprehensive income
 (loss):
 Net income................                                                                  63,354
 Other comprehensive loss
   related to cash flow
   hedges..................                                                                                           (50,683)
 Foreign currency
   translation
   adjustment..............                                                                              (115,422)
Comprehensive loss:........
                             -----------   -------   -----------   --------   ----------   ---------    ---------    --------
Balance at December 31,
 2001......................  26,176,508    $69,512   70,000,000    $229,494   $2,735,265   $(58,452)    $(308,392)   $(50,683)
                             ===========   =======   ===========   ========   ==========   =========    =========    ========

<Caption>

                               TOTAL
                             ----------
<S>                          <C>
Balance at December 31,
 1998......................  $2,356,966
Proceeds from exercise of
 options...................       1,719
Dividends paid.............     (48,404)
Comprehensive loss:
 Net loss..................    (248,544)
 Foreign currency
   translation
   adjustment..............     (59,420)
                             ----------
Comprehensive loss.........    (307,964)
                             ----------
Balance at December 31,
 1999......................  $2,002,317
Issuance of Preference
 shares....................     568,282
Proceeds from exercise of
 options...................         885
Compensation expense
 related stock options.....       3,980
Dividends paid.............     (51,229)
Comprehensive income:
 Net income................     212,075
 Foreign currency
   translation
   adjustment..............     (57,560)
                             ----------
Comprehensive income:......     154,515
                             ----------
Balance at December 31,
 2000......................  $2,678,750
Issuance of Preference
 shares....................      98,983
Proceeds from exercise of
 options...................       6,391
Compensation expense
 related to stock
 options...................       1,153
Dividends paid.............     (65,782)
Comprehensive income
 (loss):
 Net income................      63,354
 Other comprehensive loss
   related to cash flow
   hedges..................     (50,683)
 Foreign currency
   translation
   adjustment..............    (115,422)
                             ----------
Comprehensive loss:........    (102,751)
                             ----------
Balance at December 31,
 2001......................  $2,616,744
                             ==========
</Table>

          See accompanying notes to consolidated financial statements.
                                       F-6
<PAGE>

                           FRESENIUS MEDICAL CARE AG

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (IN THOUSANDS, EXCEPT SHARE DATA)

1.   THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Fresenius Medical Care AG and subsidiaries ("FMC" or the "Company"), is an
integrated provider of kidney dialysis products and dialysis care. FMC was
created by conversion of Sterilpharma GmbH, a limited liability company
incorporated in 1975, into a stock corporation (Aktiengesellschaft). The
resolutions for this conversion were adopted by a shareholder meeting on April
17, 1996. On September 30, 1996, FMC initiated a series of transactions to
consummate an Agreement and Plan of Reorganization entered into on February 4,
1996 by Fresenius AG and W.R. Grace & Co. ("W.R. Grace"). Pursuant to that
Agreement, Fresenius AG contributed Fresenius Worldwide Dialysis or FWD, its
global dialysis business, including its controlling interest in Fresenius USA,
Inc. ("FUSA"), in exchange for Fresenius Medical Care AG Ordinary shares.
Thereafter, FMC acquired:

     (i)   all of the outstanding Common stock of W.R. Grace, whose sole
           business at the time of the transaction consisted of National Medical
           Care, Inc., its global dialysis business, in exchange for Ordinary
           shares; and

     (ii)   the publicly-held minority interest of Fresenius USA, Inc., in
            exchange for Ordinary shares.

BASIS OF PRESENTATION

     The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America ("U.S. GAAP").

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A)  PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include all material companies in
which the Company has legal or effective control. All significant intercompany
transactions and balances have been eliminated. The equity method of accounting
is used for investments in associated companies (20% to 50% owned). All other
investments are accounted for at cost.

     All assets acquired and liabilities assumed are recorded at fair value. For
business combinations accounted for under the purchase method before June 30,
2001, any excess of the purchase price over the fair value of net assets
acquired is capitalized as goodwill and amortized over the estimated period of
benefit on a straight-line basis. Pursuant to Statement of Financial Accounting
Standards ("SFAS") No. 141, Business Combinations, in connection with SFAS No.
142 Goodwill and Intangible Assets, goodwill arising from business combinations
accounted for as a purchase after June 30, 2001 is no longer amortized.

B)  CLASSIFICATIONS

     Certain items in prior years' consolidated financial statements have been
reclassified to conform with the current year's presentation.

C)   CASH AND CASH EQUIVALENTS

     Cash and cash equivalents represent cash and certificates of deposit with
original maturity dates of three months or less at origination.

D)  INVENTORIES

     Inventories are stated at the lower of cost (determined by using the
average or first-in, first-out method) or market value.

                                       F-7
<PAGE>

E)   PROPERTY, PLANT AND EQUIPMENT

     Property, plant, and equipment are stated at cost. Significant improvements
are capitalized; repairs and maintenance costs that do not extend the useful
lives of the assets are charged to expense as incurred. Property and equipment
under capital leases are stated at the present value of future minimum lease
payments at the inception of the lease. The cost and accumulated depreciation of
assets sold or otherwise disposed are removed from the accounts, and any
resulting gain or loss is included in income when the assets are disposed.
Depreciation on property, plant and equipment is calculated using the
straight-line method over the estimated useful lives of the assets ranging from
5 to 50 years for buildings and improvements with a weighted average life of 11
years and 3 to 15 years for machinery and equipment with a weighted average life
of 7 years. Equipment held under capital leases and leasehold improvements are
amortized using the straight-line method over the shorter of the lease term or
the estimated useful life of the asset. The Company capitalizes interest on
borrowed funds during construction periods. Interest capitalized during 2001,
2000 and 1999 was $3,532, $1,205 and $224, respectively.

F)   INTANGIBLE ASSETS

     In accordance with SFAS No. 141, Business Combinations and SFAS No. 142
Goodwill and Other Intangibles, goodwill and identifiable intangibles with
indefinite lives from business combinations consummated after June 30, 2001 are
not amortized whereas other identified intangibles are amortized. See "Recent
Pronouncements."

     For business combinations consummated on or before June 30, 2001, goodwill
and identifiable assets are amortized. The Company adopted the following useful
lives and amortizes intangible assets using the straight-line method: goodwill
-- 20 to 40 years with weighted average life of 36 years; tradename and patents
-- 6 to 40 years with weighted average life of 37 years; patient relationships,
distribution rights and other intangible assets -- over the estimated period to
be benefited, generally from 5 to 40 years with a weighted average life of 9
years.

G)  DERIVATIVE FINANCIAL INSTRUMENTS

     The Company adopted SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, on January 1, 2001. The Company utilizes derivative
financial instruments including forward currency contracts and interest rate
swaps. SFAS No. 133 requires all derivatives to be recognized as assets or
liabilities at fair value.

     Changes in the fair value of foreign currency forward contracts designated
and qualifying as cash flow hedges of forecasted transactions are reported in
accumulated other comprehensive income. These amounts are subsequently
reclassified into earnings as a component of the forecasted transaction, and in
the same period as the forecasted transaction affects earnings.

     Changes in the fair value of interest rate swaps that are designated as
cash flow hedges and effectively convert variable interest payments into fixed
interest payments are reported in accumulated other comprehensive income. The
interest rate agreements are accounted for on an accrual basis, i.e. the
interest payable and the interest rate receivable under the terms of the swaps
are accrued and recorded as an adjustment to the interest or related expense of
the designated liability or obligation.

     Amounts due from and payable to the counterparties of interest rate swaps
are recorded on an accrual basis at each reporting date at amounts computed by
reference to the respective interest rate swap contract. Realized gains and
losses that occur from the early termination or expiration of contracts are
deferred and recorded in income over the remaining period of the original swap
agreement. Gains and losses arising from interest differential on contracts that
hedge specific borrowings are recorded as a component of interest expense over
the life of the contract. In the event the hedged asset or liability is
terminated, sold, or otherwise disposed of, the timing of the gain or loss on
the interest rate swap would be matched with the offsetting gain or loss of the
related item.

                                       F-8
<PAGE>

H)  FOREIGN CURRENCY TRANSLATION

     For purposes of these consolidated financial statements, the U.S. dollar is
the reporting currency. The Company follows the provisions of SFAS No. 52,
Foreign Currency Translation. Substantially all assets and liabilities of the
parent company and all non-U.S. subsidiaries are translated at year-end exchange
rates, while revenues and expenses are translated at exchange rates prevailing
during the year. Adjustments for foreign currency translation fluctuations are
excluded from earnings and are included in other comprehensive income.

     Gains and losses resulting from the translation of intercompany borrowings,
which are not considered equity investments, are included in selling, general
and administrative expense. Transaction gains amounted to $3,892, $18,370 and
$2,299 for 2001, 2000 and 1999, respectively.

I)   REVENUE RECOGNITION POLICY

     Health care revenues are recognized on the date services and related
products are provided and the payor is obligated to pay at amounts estimated to
be received under reimbursement arrangements with these third party payors.
Medicare and Medicaid programs are billed at pre-determined net realizable rates
per treatment that are established by statute or regulation. Most
non-governmental payors, including contracted managed care payors, are billed at
our standard rates for services net of contractual allowances to reflect the
estimated amounts to be received under reimbursement arrangements with these
payors.

     Product revenues are recognized when title to the product passes to the
customers either at the time of shipment, upon receipt by the customer or upon
any other terms that clearly define passage of title. As product returns are not
typical, no return allowances are established. In the event a return is
required, the appropriate reductions to sales, accounts receivables and cost of
sales are made.

J)   RESEARCH AND DEVELOPMENT EXPENSES

     Research and development expenses are expensed as incurred.

K)  LEGAL COSTS

     The Company accrues for loss contingencies when they are probable and can
be reasonably estimatible. Included in the Company's accrual is an estimate of
the legal costs associated with the contingencies.

L)   INCOME TAXES

     In accordance with SFAS No. 109, Accounting for Income Taxes, deferred tax
assets and liabilities are recognized for the future consequences attributable
to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax basis. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Prior to the German tax law change in 2000, deferred taxes
in Germany were calculated using the "undistributed earnings" tax rate (see Note
12).

M)  IMPAIRMENT

     In accordance with SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, the Company
reviews the carrying value of its long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of assets
may not be recoverable. The Company considers various valuation factors
including discounted cash flows, fair values and replacement costs to assess any
impairment of goodwill and other long-lived assets. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.

                                       F-9
<PAGE>

N)  DEBT ISSUANCE COSTS

     Costs related to the issuance of debt are amortized over the term of the
related obligation.

O)  SELF-INSURANCE PROGRAMS

     A major subsidiary of the Company is self-insured for professional, product
and general liability, auto and worker's compensation claims up to predetermined
amounts above which third-party insurance applies. Estimates are made for both
reported and incurred but not reported claims.

P)  USE OF ESTIMATES

     The preparation of consolidated financial statements in conformity with
U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

Q)  CONCENTRATION OF CREDIT RISK

     The Company is engaged in the manufacture and sale of products for all
forms of kidney dialysis, principally to health care providers throughout the
world, and in providing kidney dialysis treatment, clinical laboratory testing
and other medical ancillary services. The Company performs ongoing evaluations
of its customers' financial condition and, generally, requires no collateral.

     A significant percentage of the Company's health care services revenues are
paid by and subject to regulations under governmental programs, primarily
Medicare and Medicaid, health care programs administered by the United States
government.

R)   EARNINGS PER PREFERENCE SHARE AND ORDINARY SHARE

     Basic net income (loss) per Preference share and basic net income (loss)
per Ordinary share for all years presented have been calculated using the
two-class method required under U.S. GAAP based upon the weighted average number
of Ordinary and Preference shares outstanding. Basic earnings per share are
computed by dividing net income (loss) less preference amounts and distributions
earned by convertible investment securities by the weighted average number of
Ordinary shares and Preference shares outstanding during the year. Diluted
earnings per share include the effect of all potentially dilutive Ordinary
shares and Preference shares that would have been outstanding during the year.

     The awards granted under the FMC stock incentive plans (see Note 17), are
potentially dilutive equity instruments.

S)   STOCK OPTION PLANS

     The Company accounts for its stock option plans in accordance with the
provisions of Accounting Principles Board ("APB") Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations. As such, compensation
expense is recorded only if the current market price of the underlying stock
exceeds the exercise price on the measurement date. For stock incentive plans
which are performance based, the Company recognizes compensation expense over
the vesting periods, based on the then current market values of the underlying
stock. In addition, the Company has adopted the disclosure only provisions
required by SFAS No. 123, Accounting for Stock-Based Compensation.

T)   RECENT PRONOUNCEMENTS

     In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets.
SFAS No. 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001 as well as all purchase
method business combinations completed after June 30, 2001. SFAS No. 141 also
specifies criteria intangible assets

                                       F-10
<PAGE>

acquired in a purchase method business combination must meet to be recognized
and reported apart from goodwill, noting that any purchase price allocable to an
assembled workforce may not be accounted for separately.

     SFAS No. 142 will require that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually. Intangible assets with estimable useful lives will
continue to be amortized over their respective estimated useful lives.

     The Company adopted the provisions of SFAS No. 141 on July 1, 2001, and
will adopt SFAS No. 142 effective January 1, 2002. Furthermore, any goodwill and
any intangible asset determined to have an indefinite useful life acquired in a
purchase business combination completed after June 30, 2001 is not amortized,
but will be evaluated for impairment. Goodwill and intangible assets acquired in
business combinations completed before July 1, 2001 continue to be amortized
prior to the adoption of SFAS No. 142.

     Because of the extensive effort needed to comply with adopting SFAS No. 141
and 142, it is currently not practicable to reasonably estimate all impacts of
adopting these statements on our financial statements at this time, including
whether any transitional impairment losses will be required to be recognized as
the cumulative effect of a change in accounting principle. However, based on our
current assumptions and subject to continuing analysis, had SFAS No. 142 been
effective January 1, 2001, the Company presently estimates that there would have
been a favorable impact to after tax earnings of approximately $99 million.

     In August 2001, the Financial Accounting Standards Board issued SFAS No.
143, Accounting for Asset Retirement Obligations. SFAS No. 143 requires that the
fair value of a liability for an asset retirement obligation be recognized in
the period in which it incurred if a reasonable estimate of fair value can be
made. The associated asset retirement costs are capitalized as part of the
carrying amount of the long lived asset. It applies to legal obligations
associated with the retirement of long-lived assets that result from the
acquisition, construction, development and/or normal operation of a long-lived
asset. The Company is required to adopt SFAS No. 143 for financial statements
issued for fiscal years beginning after June 15, 2002. The Company is currently
determining the impact of adopting this statement.

     In October of 2001, the Financial Accounting Standards Board issued SFAS
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS
No. 144 retains the requirement to recognize an impairment loss only if the
carrying amount of a long-lived asset is not recoverable from its undiscounted
cash flows and measure an impairment loss as the difference between the carrying
amount and fair value of the asset. It eliminates the requirement to allocate
goodwill to long-lived assets to be tested for impairment, and requires that a
long-lived asset to be abandoned, exchanged for a similar productive asset, or
distributed to owners in a spin-off be considered held and used until disposed.
SFAS No. 144 requires the depreciable life of an asset to be abandoned to be
revised. Also, all assets to be disposed of by sale are required to be recorded
at the lower of carrying amount or fair value less cost to sell and to cease
depreciation. Discontinued operations are no longer measured on a net realizable
value basis, and future operating losses are no longer recognized before they
occur. The provisions of this statement are effective for financial statements
issued for fiscal years beginning after December 15, 2001, and all interim
periods within these years. The Company is currently determining the impact of
adopting this statement.

2.   SPECIAL CHARGE FOR 1999 SETTLEMENT

     On January 18, 2000, Fresenius Medical Care Holdings, Inc. ("FMCH"),
National Medical Care, Inc. ("NMC") and certain other affiliated companies
executed definitive agreements with the United States Government to settle (i)
matters concerning violations of federal laws then under investigation and (ii)
National Medical Care, Inc.'s claims with respect to outstanding Medicare
receivables for intradialytic parenteral nutrition therapy (collectively, the
"Settlement"). In anticipation of the Settlement, the Company recorded a special
pre-tax charge against its consolidated earnings in 1999 totaling $601,000
($419,000 after tax).

     In 2001, the FMCH made the final payment to the U.S. Government of $85,900
pursuant to the Settlement. In addition, FMCH received a final payment of $5,200
in the first quarter of 2001 from the U.S. Government,

                                       F-11
<PAGE>

related to FMCH's claims for outstanding Medicare receivables. The letter of
credit, purchased to securitize the settlement payment obligation, was closed
out with the last payment.

3.   SPECIAL CHARGE FOR LEGAL MATTERS

     In the fourth quarter of 2001, the Company recorded a $258,159 ($177,159
after tax) special charge to address 1996 merger related legal matters,
estimated liabilities and legal expenses arising in connection with the W.R.
Grace Chapter 11 proceedings and the cost of resolving pending litigation and
other disputes with certain commercial insurers (Note 18). In January 2001, the
Company reached an agreement in principle to resolve pending litigation with
Aetna Life Insurance Company (Aetna). The special charge is primarily comprised
of three major components relating to (i) the W.R. Grace bankruptcy, (ii)
litigation with commercial insurers and (iii) other legal matters.

     The Company has assessed the extent of potential liabilities as a result of
the W.R. Grace Chapter 11 proceedings (Note 18). The Company accrued $172,034
principally representing a provision for income taxes payable for the years
prior to the 1996 merger for which the Company has been indemnified by W.R.
Grace, but may ultimately be obligated to pay as a result of W.R. Grace's
Chapter 11 filing. In addition, that amount includes the costs of defending the
Company in litigation arising out of W.R. Grace's Chapter 11 filing.

     The Company has entered into an agreement in principle with Aetna to
establish a process for resolving its pending litigation (Note 18). The Company
has included in the special charge the amount of $55,489 to provide for
settlement obligations, legal expenses and the resolution of disputed accounts
receivable for Aetna and the other commercial litigants. If the Company is
unable to settle the pending matters with any of the remaining commercial
insurers, whether on the basis of the Aetna agreement in principle or otherwise,
the Company believes that this charge reasonably estimates the costs and
expenses associated with such litigation.

     The remaining amount of $30,636 was accrued mainly for (i) assets and
receivables that are impaired in connection with other legal matters and (ii)
anticipated expenses associated with the continued defense and resolution of the
legal matters. See also Note 18 -- "Commitment and Contingencies -- Legal
Proceedings."

4.   RELATED PARTY TRANSACTIONS

A)  SHARED SERVICES

     Fresenius AG, the majority shareholder, historically provided services to
and incurred costs on behalf of the Company. The Company entered into service
agreements with Fresenius AG and certain affiliates of Fresenius AG to continue
to receive services, including, but not limited to: administrative services,
management information services, employee benefit administration, legal and
environmental consultation and administration insurance, central purchasing, tax
services and treasury services. In the opinion of management, such expenses are
indicative of the actual expenses that would have been incurred if the Company
had been operating as an independent entity.

     For the years 2001, 2000 and 1999, amounts charged from Fresenius AG to FMC
under the terms of the agreement are $19,117, $19,947 and $16,387, respectively.
FMC also provides certain services to Fresenius AG and certain affiliates of
Fresenius AG, including research and development, plant administration, patent
administration and warehousing. FMC charged amounts of $6,134, $9,984 and $6,821
for services rendered to Fresenius AG in 2001, 2000 and 1999, respectively.

     Related party transactions pertaining to services performed between
affiliated entities are recorded as accounts receivable or payable to related
parties. At December 31, 2001 and 2000 FMC had accounts receivable from related
parties of $37,092 and $46,117 respectively. The FMC accounts payable to related
parties at December 31, 2001 and 2000 were $80,454 and $77,823, respectively.

     Under operating lease agreements entered into with Fresenius AG, FMC paid
Fresenius AG approximately $9,239, $9,472 and $10,642 during 2001, 2000 and
1999, respectively. The majority of the leases expire in 2005 with options for
renewal.

                                       F-12
<PAGE>

B)  FINANCING PROVIDED BY FRESENIUS AG

     At December 31, 2001, the Company had short-term loans outstanding of
$15,000, which bore interest at a LIBOR rate plus a margin, which together was
2.73% at year end. At December 31, 2000, the Company had short-term loans
outstanding of $215,934, of which $209,000 bore interest at varying interest
rates between 7.35% and 7.38%. The remaining loans bore interest at a rate of
4%. Interest expense on these borrowings was, $6,887, $18,571 and $13,037 for
the years 2001, 2000 and 1999, respectively.

C)   PRODUCTS

     During the years ended December 31, 2001, 2000, and 1999, the Company
recognized sales of $24,063, $28,076 and $28,563, respectively, to non-FMC
businesses of Fresenius AG. During 2001, 2000 and 1999, the Company made
purchases from Fresenius AG and affiliates in the amount of $19,703, $25,547 and
$30,056, respectively.

D)  OTHER

     During 1999, the Company granted to a member of the Management Board a
five-year unsecured loan of $2,000 with interest at 6.0% per annum. Only
interest is due during the first four years of the term, with both principal and
interest due in the fifth year. The Company may call the loan at any time and
the loan can be repaid without penalty, at any time during the period of the
loan.

     A member of the Company's Supervisory Board is a partner in a law firm
which provided services to the Company. The Company paid the law firm
approximately $368, $580, and $107 in 2001, 2000 and 1999, respectively.

     A member of the Company's Supervisory Board is the chairman of the
management board of a bank that served as one of two joint global coordinators
of a public offering of Preference shares conducted by the Company in 2000. The
Company paid the bank $10,438 in underwriting discounts and commissions in 2000.
In 2001, affiliates of the bank served as co-lead manager in the
dollar-denominated tranche, and as an initial purchaser in the euro-denominated
tranche, of a global offering of trust preferred securities. The Company paid
fees and commissions of $6,808 in total to the coordinators of the offering. The
bank is also a lender and one of the Managing Agents under the Company's senior
credit agreement (Note 11).

     The Chairman of the Company's Supervisory Board and former Chief Executive
Officer of FMC are members of the Management Board of Fresenius AG, the majority
holder of FMC's Ordinary shares.

5.   ACQUISITIONS AND INVESTMENTS

     The Company acquired certain health care and distribution facilities and
other investments for a total consideration of $461,079, $288,144, and $110,788
in 2001, 2000 and 1999, respectively. In 2001, consideration consisted of cash
of $216,711, assumed debt of $144,889 and $99,479 in Preference shares issued.
In January 2001, the Company acquired Everest Healthcare Services Corporation
("Everest") for $365,000. The Everest operations acquired consist of
approximately 70 clinics facilities providing dialysis therapy to approximately
6,800 patients in the eastern and central United States. Approximately $99,000
was funded by the issuance of 2.25 million Fresenius Medical Care AG Preference
shares to the Everest shareholders. The remaining purchase price was paid with
$131,000 cash and assumption of $135,000 of debt.

     In 2000, consideration consisted of cash of $274,530 and notes for $13,614.
Acquisitions in 2000 included the purchase of substantially all of the
international and non-continental U.S. operations of Total Renal Care Holdings,
Inc. ("TRC"). The purchase price for these operations was $145,000. In 1999,
consideration consisted of cash of $101,326 and notes for $9,462.

     All acquisitions have been accounted for as purchase transactions and,
accordingly, are included in the results of operations from the dates of
acquisition. The excess of the total acquisition costs over the fair value of
the tangible net assets acquired was $367,000, $196,000 and $94,000 for 2001,
2000 and 1999, respectively.

                                       F-13
<PAGE>

6.   SALE OF ACCOUNTS RECEIVABLE

     NMC, a subsidiary of the Company, has an asset securitization facility (the
"accounts receivable facility") whereby receivables of NMC and certain
affiliates are sold to NMC Funding Corporation (the "Transferor"), a
wholly-owned subsidiary of NMC, and subsequently the Transferor transfers and
assigns percentage ownership interests in the receivables to certain bank
investors. NMC Funding Corporation is not consolidated as it does not meet the
control criteria of SFAS No. 140. The retained interest in accounts receivable
is reflected on the face of the balance sheet net of uncollectable accounts to
approximate fair value. NMC has a servicing obligation to act as a collection
agent on behalf of the Transferor. The amount of the accounts receivable
facility was last amended on December 21, 2001, when the Company increased the
accounts receivable facility to $560,000, and extended its maturity to October
24, 2002.

     At December 31, 2001 and 2000, $442,000 and $445,000, respectively, had
been received pursuant to such sales and are reflected as reductions to accounts
receivable. The Transferor pays interest to the bank investors, calculated based
on the commercial paper rates for the particular tranches selected. The
effective interest rate was approximately 2.38% at year-end 2001. Under the
terms of the agreement, new interests in accounts receivable are sold as
collections reduce previously sold accounts receivable. The costs related to
such sales are expensed as incurred and recorded as interest expense and related
financing costs. There were no gains or losses on these transactions.

7.   INVENTORIES

     As of December 31, 2001 and 2000, inventories consisted of the following

<Table>
<Caption>
                                                                2001        2000
                                                              --------    --------
<S>                                                           <C>         <C>
Raw materials and purchased components......................  $ 67,415    $ 73,244
Work in process.............................................    23,744      22,231
Finished goods..............................................   181,846     160,358
Health care supplies........................................    73,384      64,401
                                                              --------    --------
  Inventories...............................................  $346,389    $320,234
                                                              ========    ========
</Table>

     Under the terms of certain unconditional purchase agreements, the Company
is obligated to purchase approximately $338,000 of materials, of which $99,000
is committed at December 31, 2001 for fiscal year 2002. The terms of these
agreements run 2 to 5 years. Inventories as of December 31, 2001 include
approximately $20,234 of EPO which is supplied by a single source supplier in
the United States. Delays, stoppages, or interruptions in the supply of EPO
could adversely affect the operating results of the Company. In 2001, revenues
from EPO accounted for approximately 24% of total revenue in the North America
segment.

8.   PROPERTY, PLANT AND EQUIPMENT

     As of December 31, 2001 and 2000 property, plant and equipment consisted of
the following:

<Table>
<Caption>
                                                                 2001          2000
                                                              ----------    ----------
<S>                                                           <C>           <C>
Land and improvements.......................................  $   23,124    $   21,477
Buildings and improvements..................................     479,107       386,568
Machinery and equipment.....................................     807,544       691,607
Machinery, equipment and rental equipment under capitalized
  leases....................................................      16,884        17,507
Construction in progress....................................      93,144        90,184
                                                              ----------    ----------
                                                               1,419,803     1,207,343
Accumulated depreciation and amortization...................    (581,220)     (468,350)
                                                              ----------    ----------
Property, plant and equipment, net..........................  $  838,583    $  738,993
                                                              ==========    ==========
</Table>

                                       F-14
<PAGE>

     Depreciation and amortization expense for property, plant and equipment
amounted to $147,945, $130,278 and $131,623 for the years ended December 31,
2001, 2000 and 1999 respectively.

     Included in property, plant and equipment as of December 31, 2001 and 2000
were $70,496 and $53,921, respectively, of peritoneal dialysis cycler machines
which the Company leases to customers with end-stage renal disease on a
month-to-month basis and hemodialysis machines which the Company leases to
physicians under operating leases. Identification of the rental income from the
Company's leasing activities is not practicable as the Company's return on the
machines is received through contractual arrangements whereby a premium is
charged for other support equipment sold during the life of the lease.

     Accumulated depreciation related to machinery, equipment and rental
equipment under capital leases was $7,472 and $10,238 at December 31, 2001 and
2000, respectively.

9.   INTANGIBLE ASSETS

     As of December 31, 2001 and 2000, intangible assets consisted of the
following:

<Table>
<Caption>
                                                                 2001          2000
                                                              ----------    ----------
<S>                                                           <C>           <C>
Goodwill....................................................  $3,527,448    $3,252,335
Patient relationships.......................................     241,192       198,147
Tradename and patents.......................................     253,522       252,336
Distribution rights.........................................       8,115         7,619
Other.......................................................     440,460       387,589
                                                              ----------    ----------
                                                               4,470,737     4,098,026
Accumulated amortization....................................    (788,714)     (622,970)
                                                              ----------    ----------
  Intangible assets, net....................................  $3,682,023    $3,475,056
                                                              ==========    ==========
</Table>

     Amortization expense for intangible assets amounted to $176,260, $160,604
and $151,735 for the years ended December 31, 2001, 2000 and 1999, respectively.

10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

     As at December 31, accrued expenses and other current liabilities consisted
of the following:

<Table>
<Caption>
                                                                2001        2000
                                                              --------    --------
<S>                                                           <C>         <C>
Accrued operating expenses..................................  $ 29,754    $ 49,012
Accrued legal and compliance costs..........................     5,204       3,314
Accrued insurance...........................................    39,308      47,074
Accrued salaries and wages..................................    99,639      87,016
Accounts receivable credit balances.........................    57,386      38,215
Accrued interest............................................    31,113      26,926
Accrued restructuring.......................................     2,360       3,450
Accrued physician compensation..............................    17,481      17,649
Bonus and incentive plan compensation.......................     2,335       2,489
Withholding tax and VAT.....................................    21,282      24,138
Commissions.................................................    12,839      12,231
Deferred income.............................................     6,945       6,764
Bonuses and rebates.........................................     4,610       7,331
Accrued other costs related to 1999 Settlement..............        --       4,986
Derivatives.................................................     5,910          --
Other.......................................................    72,881      61,045
                                                              --------    --------
Total accrued expenses and other current liabilities........  $409,047    $391,640
                                                              ========    ========
</Table>

                                       F-15
<PAGE>

11. DEBT AND CAPITAL LEASE OBLIGATIONS

     Short-term borrowings from third parties of $93,411 and $106,592 at
December 31, 2001, and 2000, respectively, represent amounts borrowed by certain
of the Company's subsidiaries under lines of credit with commercial banks. The
average interest rates on these borrowings at December 31, 2001, 2000 and 1999
was 6.26%, 6.0% and 4.6% respectively. At December 31, 2001, FMC had $63,462
available under such commercial bank agreements. These lines of credit are
generally secured by the Company's accounts receivable and contain various
covenants including, but not limited to, requirements for maintaining defined
levels of working capital, net worth, capital expenditures and various financial
ratios.

     For information regarding short-term borrowings from affiliates, see Note
4b.

     As of December 31, long-term debt and capital lease obligations consisted
of the following:

<Table>
<Caption>
                                                                2001         2000
                                                              ---------    ---------
<S>                                                           <C>          <C>
Senior credit agreement.....................................  $ 695,801    $ 732,500
Capital leases..............................................     12,412        6,808
Euro-notes..................................................    113,247           --
Other.......................................................     79,268       86,755
                                                              ---------    ---------
                                                                900,728      826,063
Less current maturities.....................................   (164,959)    (168,231)
                                                              ---------    ---------
                                                              $ 735,769    $ 657,832
                                                              =========    =========
</Table>

SENIOR CREDIT AGREEMENT

     The Company is party to a bank agreement dated September 27, 1996
(hereafter "senior credit agreement") with the Bank of America, N.A., The Bank
of Nova Scotia, The Chase Manhattan Bank, Dresdner Bank Aktiengesellschaft and
certain other lenders (collectively, the "Lenders"), as amended, pursuant to
which the Lenders have made available to the Company and certain subsidiaries
and affiliates two credit facilities:

     -  a revolving credit facility of up to $1,000,000 (of which up to $250,000
        is available for letters of credit, up to $450,000 is available for
        borrowings in certain non-U.S. currencies, up to $50,000 is available as
        swing lines in U.S. dollars and up to $20,000 is available as swing
        lines in certain non-U.S. currencies) expiring on September 30, 2003. At
        December 31, 2001, the Company had $302,545 outstanding balance under
        the revolving credit facility, including $34,445 for letters of credit.

     -  a term loan facility with $427,500 outstanding balance at December 31,
        2001, also expiring September 30, 2003. The terms of the senior credit
        agreement relating to the term loan facility require payments that
        permanently reduce the term loan facility. The repayment began in the
        fourth quarter of 1999 and will continue with quarterly payments of
        $37,500 until the final maturity of the agreement in 2003 when a final
        payment of $202,500 will be made.

     At December 31, 2001, the Company had $697,454 of additional borrowing
capacity available under the revolving credit facility of the senior credit
agreement, including approximately $215,555 for additional letters of credit. No
further borrowings are available under the term loan facility.

     Loans under this senior credit agreement bear interest at a base rate
determined in accordance with the agreement, or at LIBOR, plus in either case an
applicable margin. A fee is payable to the Lenders equal to a percentage per
annum (initially 0.375%) of the portion of the senior credit agreement not used.

     In addition to scheduled principal payments, the senior credit agreement
will be reduced by certain portions of the net cash proceeds from certain sales
of assets, sales of accounts receivable and the issuance of subordinated debt
and equity securities. Prepayments are permitted at any time without penalty,
except in certain defined periods. The senior credit agreement contains
customary affirmative and negative covenants with respect to the Company and its
subsidiaries and other payment restrictions, mainly related to dividends. Under
the terms of the

                                       F-16
<PAGE>

agreement the Company is restricted as to the level of dividends that can be
paid in any calendar year, which was $83,000 in 2001. The Company's dividend
distribution in 2001 for 2000 was $65,782.

     Dividends from Fresenius Medical Care Holdings, Inc., a wholly owned
subsidiary, are limited as a result of a restriction on dividends from its
subsidiary, National Medical Care, Inc, and its subsidiaries. The restriction
limits National Medical Care dividends to 50% of its consolidated net income of
the preceding year. In December 1999, the Company amended certain covenants
including, among other things, financial ratios contained in its senior credit
facility that would have been affected by the impact of the Settlement (see Note
2).

     On May 31, 2001 the senior credit agreement was amended in order to exclude
the proceeds of the Preference share offerings during 2001 (see Note 16) from
any repayment obligations on the term loan. On June 30, 2001 the senior credit
agreement was amended again to increase the allowed other indebtedness of FMCH
and its subsidiaries. On November 26, 2001, the Company amended the payment
restrictions on its senior credit facility to allow for the redemption of
$360,000 of 9% Trust Preferred Securities on February 14, 2002 (see Notes 14 and
22).

     On February 25, 2002, the Company amended its senior credit facility to
clarify the impact of the special charge for legal matters (see Note 3) and the
effects of certain legal proceedings on covenant computations under the
facility. The Company is in compliance with all such covenants.

EURO-NOTES

     Between July 13, 2001 and December 5, 2001 the Company issued four tranches
of senior notes totaling E128,500. The first two tranches were issued on July
13, 2001 with the first for E80,000 with a fixed rate of 6.16% and the second
for E28,500 with a floating rate which was at the time of issuance 5.837%. The
third tranche was issued on September 15, 2001 for E15,000 at a floating rate of
5.077% at time of issue. The final tranche was issued on December 5, 2001 for
E5,000 at a fixed rate of 5.33%. All four tranches have a maturity date of July
13, 2005. The floating rates are tied to EURIBOR.

     Aggregate annual payments applicable to the senior credit agreement, term
loan, capital leases and other borrowings for the five years subsequent to
December 31, 2001 (excluding borrowings underlying the Company's trust preferred
securities (see Note 14) are:

<Table>
<S>                                                           <C>
2002........................................................  $164,959
2003........................................................   554,971
2004........................................................     8,541
2005........................................................   121,983
2006........................................................    10,374
Thereafter..................................................    39,901
                                                              --------
                                                              $900,729
                                                              ========
</Table>

12. INCOME TAXES

     Income (loss) before income taxes and minority interest is attributable to
the following geographic locations:

<Table>
<Caption>
                                                               2001        2000        1999
                                                             --------    --------    ---------
<S>                                                          <C>         <C>         <C>
Germany....................................................  $123,141    $106,475    $  93,653
United States..............................................   (60,930)    220,176     (408,060)
Other......................................................    94,077      78,058       55,497
                                                             --------    --------    ---------
                                                             $156,288    $404,708    $(258,910)
                                                             ========    ========    =========
</Table>

                                       F-17
<PAGE>

     Income tax expense (benefit) for the years ended December 31, consisted of
the following:

<Table>
<Caption>
                                                                2001        2000        1999
                                                              --------    --------    --------
<S>                                                           <C>         <C>         <C>
Current:
  German corporation and trade income taxes.................  $ 30,094    $ 66,754    $ 43,876
  United States income taxes................................    87,923      23,132      12,088
  Other income taxes........................................    31,079      29,971      28,797
                                                              --------    --------    --------
                                                               149,097     119,857      84,761
                                                              --------    --------    --------
Deferred:
  Germany...................................................     7,651     (14,902)        791
  United States.............................................   (72,455)     81,553     (92,907)
  Other income taxes........................................     6,909       3,264      (5,389)
                                                              --------    --------    --------
                                                               (57,895)     69,915     (97,505)
                                                              --------    --------    --------
                                                              $ 91,202    $189,772    $(12,744)
                                                              ========    ========    ========
</Table>

     In 2000, the German government enacted new tax legislation which, among
other changes, reduced the Company's statutory corporate tax rate for German
companies from 40% on retained earnings and 30% on distributed earnings to a
uniform 25%, effective for the Company's year beginning January 1, 2001. In
1999, various changes to the German corporation tax law were made effective,
including the reduction of the tax rate applied to undistributed earnings from
45% to 40%. The effects of the reductions in the tax rate and other tax law
changes on the deferred tax assets and liabilities of the Company's German
subsidiaries were recognized in the year of enactment and resulted in a deferred
tax benefit for 2000 and 1999 of $2,227 and $850, respectively. As part of the
above mentioned tax reform, the German tax credit system has been abolished for
dividend distributions out of earnings attributable to years after 2000. Under
the new German corporate tax system, during a 15 year transitional period which
began on January 1, 2001, the Company will continue to receive a refund or pay
additional taxes on the distribution of retained earnings which existed as of
December 31, 2000.

     Prior to the effective date of the 2000 tax law changes, German corporation
tax law applied a split rate imputation system to the income taxation of a
corporation and its shareholders. Upon distribution of retained earnings in the
form of a dividend, shareholders subject to German tax received a credit for
corporation taxes paid by the corporation on such distributed earnings. In
addition, the corporation received a tax refund to the extent such earnings had
been initially subjected to a corporation income tax in excess of 30%. The tax
refund was also distributable to the shareholder.

     Giving effect to a surcharge of 5.5% on federal taxes payable, the federal
corporate tax rate was 26.375% for 2001 and 42.2% for 2000 and 1999. For 2000
and 1999, upon distribution of certain retained earnings generated in Germany to
stockholders, the corporate income tax rate on the earnings was adjusted to 30%,
plus a solidarity surcharge of 5.5%, for a total of 31.65% for each year, by
means of a refund to the Company for taxes previously paid. For 2000 and 1999
the income tax expense reflects the credit related to the actual amount of
distribution for that year. Such credit of tax described above is reflected in
the income tax expense reconciliation presented below.

                                       F-18
<PAGE>

     For the years ended December 31, 2001, 2000, and 1999 income tax expense
differed from the amounts computed by applying the German federal corporation
income tax and the solidarity surcharge rate of 26.375% for 2001 and 42.2% for
both 2000 and 1999 to income (loss) before income taxes and minority interest as
a result of the following:

<Table>
<Caption>
                                                               2001        2000        1999
                                                              -------    --------    ---------
<S>                                                           <C>        <C>         <C>
Computed "expected" income tax (benefit) expense at the
  undistributed earnings rate...............................  $41,221    $170,786    $(109,260)
Dividend distributions credit...............................       --      (9,077)      (7,797)
Trade income taxes, net of German federal corporation income
  tax benefit...............................................   13,663      12,688        8,758
Tax free income.............................................   (5,327)          0            0
Non-deductible portion of special charge for Legal
  Matters...................................................   14,908          --
Amortization of non-tax deductible goodwill.................   19,678      28,380       28,057
Foreign tax rate differential...............................    7,957     (20,811)      (2,687)
Non-deductible portion of special charge for Settlement.....       --          --       71,622
Other.......................................................     (898)      7,805       (1,437)
                                                              -------    --------    ---------
Provision for income taxes..................................  $91,202    $189,772    $ (12,744)
                                                              =======    ========    =========
Effective tax rate..........................................     58.4%       46.9%        (4.9%)
                                                              =======    ========    =========
</Table>

     The tax effects of the temporary differences that give rise to deferred tax
assets and liabilities at December 31 are presented below:

<Table>
<Caption>
                                                                2001        2000
                                                              --------    --------
<S>                                                           <C>         <C>
Deferred tax assets:
Accounts receivable, primarily due to allowance for doubtful
  accounts..................................................  $ 27,155    $ 28,083
Inventory, primarily due to additional costs capitalized for
  tax purposes, and inventory reserve accounts..............    19,287      23,479
Accrued expenses and other liabilities for financial
  accounting purposes, not currently tax deductible.........   133,578     119,439
Capital leases, principally due to capitalization of costs
  for tax purposes..........................................     1,738         955
Special charge for Legal Matters............................   104,880          --
Government Settlement.......................................        --       5,302
Net operating loss carryforwards............................    23,732      30,546
Interest rate swaps.........................................    26,514          --
Other.......................................................     4,774       5,821
                                                              --------    --------
Total deferred tax assets...................................  $341,657    $213,625
Less: valuation allowance...................................    (6,428)     (9,292)
                                                              --------    --------
Net deferred tax assets.....................................  $335,230    $204,333
                                                              --------    --------
Deferred tax liabilities:
Accounts receivable, primarily due to allowance for doubtful
  accounts..................................................  $  4,019    $  3,526
Inventory, primarily due to inventory reserve accounts for
  tax purposes..............................................     4,224       5,329
Accrued expenses and other liabilities deductible for tax
  prior to financial accounting recognition.................    22,416      31,037
Plant and equipment, principally due to differences in
  depreciation..............................................   161,936     154,605
Special charge for Legal Matters............................    36,938          --
Other.......................................................     4,136       2,991
                                                              --------    --------
Total deferred tax liabilities..............................   233,669     197,488
                                                              --------    --------
Net deferred tax asset......................................  $101,561    $  6,845
                                                              ========    ========
</Table>

                                       F-19
<PAGE>

     During 2001, the valuation allowance decreased by $2,864 attributable to
the utilization of operating losses mainly in Japan. Whereas during 2000 the
valuation allowance increased by $2,932 primarily attributable to losses,
principally arising in Japan, and partially offset by utilization of operating
losses.

     At December 31, 2001 the Company had approximately $65,889 of net operating
losses, of which $3,680 will expire in 2002, $5,544 in 2003, $3,987 in 2004,
$11,245 in 2005, $7,833 in 2006, $2895 in 2007 and $2,133 in 2008. Substantially
all of the remaining $28,572 of net operating losses are not subject to an
expiration period.

     In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities and projected future taxable
income in making this assessment. Based upon the level of historical taxable
income and projections for future taxable income over the periods which the
deferred tax assets are deductible, management believes it is more likely than
not the Company will realize the benefits of these deductible differences, net
of the existing valuation allowances at December 31, 2001.

     Provision has not been made for additional taxes on approximately $119,000
undistributed earnings of foreign subsidiaries. The majority of these earnings
have been, and will continue to be, permanently reinvested. The earnings could
become subject to additional tax if remitted or deemed remitted as dividends.
The Company estimates that the distribution of these earnings would result in
$4,218 of additional withholding and corporation income taxes.

13. EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT PENSION PLANS

     Plan benefits are generally based on employee years of service and final
salary. Consistent with normal business custom in the Federal Republic of
Germany, FMC's pension obligations in Germany are unfunded. In the United
States, substantially all U.S. employees are covered by NMC non-contributory,
defined benefit pension plan. Each year, NMC contributes to this plan at least
the minimum amount required by law. Plan assets consist principally of publicly
traded common stock, fixed income securities and cash equivalents. In addition,
NMC also sponsors a supplemental executive retirement plan to provide certain
key executives with benefits in excess of normal pension benefits. On February
15, 2002, NMC informed its employees that the defined benefit plan will be
curtailed. The following provides a reconciliation of benefit obligations, plan
assets, and funded status of the plans. Benefits paid as shown in the
reconciliation of plan assets include only benefit payments from the Company's
funded benefit plans.

<Table>
<Caption>
                                                               2001        2000        1999
                                                             --------    --------    --------
<S>                                                          <C>         <C>         <C>
Change in benefit obligation:
Benefit obligation at beginning of year....................  $132,451    $111,753    $111,832
Translation loss (gain)....................................    (1,482)     (1,748)     (3,611)
Service cost...............................................    12,792      11,465      10,040
Interest cost..............................................     9,397       8,148       7,300
Amendments.................................................        --          --          (5)
Transfer of plan participants..............................       (34)         (6)      3,706
Actuarial loss (gain)......................................     5,955       5,940     (15,826)
Benefits paid..............................................    (3,388)     (3,103)     (1,683)
                                                             --------    --------    --------
Benefit obligation at end of year..........................  $155,691    $132,451    $111,753
                                                             ========    ========    ========
</Table>

                                       F-20
<PAGE>

<Table>
<Caption>
                                                               2001        2000        1999
                                                             --------    --------    --------
<S>                                                          <C>         <C>         <C>
Change on plan assets:
Fair value of plan assets at beginning of year.............  $ 81,948    $ 86,794    $ 77,019
Actual return on plan assets...............................    (4,558)     (2,098)     11,179
Employee contributions.....................................     9,012          --          --
Benefits paid..............................................    (3,048)     (2,748)     (1,404)
                                                             --------    --------    --------
Fair value of plan assets at end of year...................  $ 83,354    $ 81,948    $ 86,794
                                                             ========    ========    ========
Funded status:.............................................  $(72,338)   $(50,503)   $(24,961)
Unrecognized net gain......................................     7,628     (12,593)    (31,441)
Unrecognized prior service cost............................        (3)         (4)         (4)
Unrecognized transition obligation.........................       143         226         326
                                                             --------    --------    --------
Accrued benefit costs......................................  $(64,570)   $(62,875)   $(56,079)
                                                             ========    ========    ========
Weighted -- average assumptions as of December 31,
Discount rate..............................................     7.20%       7.70%       7.28%
Expected return of plan assets.............................    10.00%       9.70%       9.70%
Rate of compensation increase..............................     4.50%       4.90%       4.60%
Components of net period benefit cost:
Service cost...............................................  $ 12,793    $ 11,465    $ 10,040
Interest cost..............................................     9,398       8,148       7,300
Expected return on plan assets.............................    (8,430)     (8,345)     (7,401)
Amortization of transition obligation......................        73          75          87
Amortization unrealized losses.............................         4          --          61
Net amortization...........................................    (1,377)     (2,430)       (521)
                                                             --------    --------    --------
Net periodic benefit costs.................................  $ 12,461    $  8,913    $  9,566
                                                             ========    ========    ========
</Table>

     In addition to the principal pension plans, certain of the Company's other
subsidiaries offer separate retirement plans. The total accrued pension cost for
these plans was $6,012, $7,095, and $5,499 at December 31, 2001, 2000 and 1999,
respectively. The Company does not provide any post-retirement benefits to its
employees other than those provided under its pension plans and supplemental
executive retirement plan.

DEFINED CONTRIBUTION PLANS

     National Medical Care and FUSA sponsor defined contribution plans. Total
contributions for the years ended December 31, 2001, 2000 and 1999 were $6,506,
$8,786 and $7,298, respectively.

14. MANDATORILY REDEEMABLE TRUST PREFERRED SECURITIES

     The Company issued Trust Preferred Securities through five Fresenius
Medical Care Capital Trusts, statutory business trusts organized under the laws
of the State of Delaware. FMC owns all of the common securities of these trusts.
The sole asset of the trusts is a senior subordinated note of a wholly-owned
subsidiary of FMC and related guarantees by FMC, Fresenius Medical Care
Deutschland GmbH ("D-GmbH") and FMCH; D-GmbH and FMCH being the "Subsidiary
Guarantors." The Trust Preferred Securities are guaranteed by FMC through a
series of undertakings by the Company and the Subsidiary Guarantors.

     The Trust Preferred Securities entitle the holders to distributions at a
fixed annual rate of the stated amount and are mandatorily redeemable after 10
years. Earlier redemption may occur upon a change of control, a rating decline
or defined events of default including a failure to pay interest. Upon
liquidation of the trusts, the holders of Trust Preferred Securities are
entitled to a distribution equal to the stated amount. The Trust Preferred
Securities do not hold voting rights in the trust except under limited
circumstances.

                                       F-21
<PAGE>

     The Trust Preferred Securities outstanding as of December 31 are as
follows:

<Table>
<Caption>
                                                                                 MANDATORY
                                              YEAR      STATED     INTEREST      REDEMPTION
                                             ISSUED     AMOUNT       RATE           DATE            2001        2000
                                             ------   ----------   --------   ----------------   ----------   --------
<S>                                          <C>      <C>          <C>        <C>                <C>          <C>
Fresenius Medical Care Capital Trust.......   1996      $360,000      9%      December 1, 2006   $  360,000   $360,000(1)
Fresenius Medical Care Capital Trust II....   1998      $450,000   7 7/8%     February 1, 2008      450,000    450,000
Fresenius Medical Care Capital Trust III...   1998    DM 300,000   7 3/8%     February 1, 2008      135,180    142,727
Fresenius Medical Care Capital Trust IV....   2001      $225,000   7 7/8%        June 15, 2011      221,382         --
Fresenius Medical Care Capital Trust V.....   2001      E300,000   7 3/8%        June 15, 2011      262,205         --
                                                                                                 ----------   --------
                                                                                                 $1,428,767   $952,727
                                                                                                 ==========   ========
</Table>

---------------

(1) Redeemed February 14, 2002

15. MINORITY INTERESTS

     At December 31, 2001 and 2000, minority interests were as follows:

<Table>
<Caption>
                                                               2001       2000
                                                              -------    -------
<S>                                                           <C>        <C>
FMCH Preferred Stock:
Preferred Stock, $100 par value
  6% Cumulative; 40,000 shares authorized; 36,460
     outstanding............................................  $ 3,646    $ 3,646
  8% Cumulative Class A; 50,000 shares authorized; 16,176
     outstanding............................................    1,618      1,618
  8% Noncumulative Class B; 40,000 shares authorized; 21,483
     outstanding............................................    2,148      2,148
Preferred Stock, $0.10 par value
  Noncumulative Class D; 100,000,000 shares authorized;
     89,062,316 outstanding.................................    8,906      8,906
                                                              -------    -------
Sub-total FMCH minority interest............................   16,318     16,318
Other minority interest.....................................    3,915      4,953
                                                              -------    -------
Total minority interest.....................................  $20,233    $21,271
                                                              =======    =======
</Table>

     In conjunction with the formation of FMC, each holder of W.R. Grace common
stock received one share of a Class D Preferred stock of Fresenius Medical Care
Holdings for each share of stock previously held. The Class D Preferred stock
entitled the holder to receive a one-time special dividend if (but only if) the
cumulative adjusted cash flow to ordinary shareholders (defined as net income
plus depreciation and amortization) from January 1, 1997 through December 31,
2001 exceeded $3,700,000. The cumulative adjusted cash flow threshold has not
been met, accordingly no special dividends will be paid. The Class D Preferred
stock is redeemable by FMCH at any time at its sole option at a redemption price
of $0.10 per share.

16. SHAREHOLDERS' EQUITY

Franconia Transaction

     On March 2, 2000, the Company issued 8,974,359 non-voting Preference shares
to a limited number of institutional and other accredited investors in exchange
for the investors' interests in Franconia Acquisition LLC, an entity formed to
acquire dialysis clinics and other related businesses. For financial reporting
purposes, the transaction, which generated net proceeds of approximately
$344,000, has been accounted for as a financing at fair value. The investors
have agreed not to effect sales or transfers of the Preference shares for a
period of 24 months after issuance except as permitted by the contribution
agreement. After this period, commencing March 3, 2002, the investors will have
rights to require, under specific conditions, that the Company provides its best
efforts to register these Preference shares for sale under the Securities Act of
1933, as amended, and that the Company provide assistance to them in connection
with public offerings of their Preference shares outside the United States.

                                       F-22
<PAGE>

FMC 2000 Public Offering

     In July 2000, the Company completed a global public offering of 5,750,000
Preference shares, including the underwriters' overallotment option, for total
net proceeds of approximately $213,000.

Everest Acquisition

     In January of 2001, the Company issued 2,250,000 preference shares with the
nominal amount of E 5,750 as partial payment for the acquisition of Everest (see
Note 5).

Approved Capital

     The Company may exclude statutory preemptive rights in connection with the
issuance of Preference shares using Approved Capital II if the shares are issued
against a contribution in kind to acquire a company or an interest in a company
or if the shares are issued for cash and the issue price is not materially lower
than the price of the shares on the stock exchange.

FMC 2000 Approved Capital

     By resolution of the annual general meeting on May 30, 2000, the
authorization of the existing Approved Capital I and Approved Capital II was
revoked, however, the Management Board, with the approval of the Supervisory
Board, was authorized to increase share capital by a maximum amount of:

     -  E 30,720, corresponding to 12,000,000 Preference shares, by issuing new
        non-voting Preference shares for cash, new Approved Capital I.

     -  E 20,480, corresponding to 8,000,000 Preference shares, by issuing new
        non-voting Preference shares for cash or against contributions in kind,
        new Approved Capital II. The approved Capital II was subsequently used
        for the FMC 2000 public offering and the Everest Acquisition.

FMC 2001 Approved Capital

     By resolution of the annual general meeting on May 23, 2001, the Management
Board, with the approval of the Supervisory Board, was authorized to increase
share capital by a maximum amount of E 20,480, corresponding to 8,000,000
Preference shares, by issuing new non-voting Preference shares for cash or
against contributions in kind, new Approved Capital II. The authorizations of
Approved Capital I and Approved Capital II are effective until May 29, 2005 and
May 22, 2006, respectively.

Conditional Capital

     By resolution of the general meeting on May 23, 2001, FMC's share capital
was conditionally increased by up to E 10,240, divided into a maximum of
4,000,000 new non-voting Preference shares. This conditional capital increase
may be effected only upon exercise of subscription rights granted under the FMC
2001 International Stock Incentive Plan.

Dividends

     Cash dividends of $65,782 for 2000 in the amount of E 0.84 on each
Preference share and E 0.78 on each Ordinary share were paid on May 24, 2001.

     Under the German Stock Corporation Act, the amount of dividends available
for distribution to shareholders is based upon the unconsolidated retained
earnings of Fresenius Medical Care AG as reported in its balance sheet
determined in accordance with the German Commercial Code (Handelsgesetzbuch).

     If no dividend is declared for two consecutive years after the year for
which the Preference shares are entitled to dividends, then the holders of such
Preference shares will be entitled to the same voting rights as holders of
Ordinary shares until all arrearages are paid. In addition, the payment of
dividends by FMC is subject to limitations under the senior credit agreement
(see Note 11).

                                       F-23
<PAGE>

Earnings per Share

     The following table is a reconciliation of the numerators and denominators
of the basic and diluted earnings per share computations. Stock options granted
under the FMC 1998 Plan 2 are subject to performance criteria. At December 31,
1999, the performance criteria for the 1998 and 1999 stock options granted had
not been met. Therefore, the stock options granted have been excluded from the
diluted earnings per share computations. On May 30, 2000, the Company's
shareholders approved a change to the FMC 98 Plan 2 whereby the impact of the
special charge for the 1999 Settlement (see Note 2) was excluded from the
Company's performance criteria relative to the EBIT growth requirements in the
plan. Therefore, at December 31, 2000, the performance criteria had been met and
the stock options granted are included in the diluted earnings per share
computation for 2000. At December 31, 2001, the performance criteria for the
2000 stock options granted had not been met. Due to this, the stock options
granted are excluded from the diluted earnings per share computations.

<Table>
<Caption>
                                                         2001           2000           1999
                                                      -----------    -----------    -----------
<S>                                                   <C>            <C>            <C>
Numerators:
Net income (loss)...................................  $    63,354    $   212,075    $  (248,544)
less:
  Preference on Preference shares...................        1,399          1,056             --
                                                      -----------    -----------    -----------
Income available to Preference shares only..........        1,399          1,056             --
Net income (loss) available to all class of
  shares............................................  $    61,955    $   211,019    $  (248,544)
                                                      ===========    ===========    ===========
Denominators:
Weighted average number of:
  Ordinary shares outstanding.......................   70,000,000     70,000,000     70,000,000
  Preference shares outstanding.....................   26,035,330     19,002,118      9,023,341
                                                      -----------    -----------    -----------
  Total weighted average shares outstanding.........   96,035,330     89,002,118     79,023,341
  Potentially dilutive Preference shares............      399,697        302,824             --
                                                      -----------    -----------    -----------
  Total weighted average shares outstanding assuming
     dilution.......................................   96,435,027     89,304,942     79,023,341
  Total weighted average Preference shares
     outstanding assuming dilution..................   26,435,027     19,304,942      9,023,341
Basic income (loss) per Ordinary share..............  $      0.65    $      2.37    $     (3.15)
Plus preference per Preference share................         0.05           0.06           0.00
                                                      -----------    -----------    -----------
Basic income (loss) per Preference Share............  $      0.70    $      2.43    $     (3.15)
                                                      ===========    ===========    ===========
Fully diluted income (loss) per Ordinary share......  $      0.64    $      2.36    $     (3.15)
Plus preference per Preference share assuming
  dilution..........................................         0.05           0.06           0.00
                                                      -----------    -----------    -----------
Fully diluted income (loss) per Preference share....  $      0.69    $      2.42    $     (3.15)
                                                      ===========    ===========    ===========
</Table>

17. STOCK OPTIONS

     In connection with the formation of Fresenius Medical Care in 1996, certain
options outstanding under stock option plans of W.R. Grace and FUSA were
exchanged, for equivalent options with respect to FMC Ordinary shares (the "FMC
Rollover Plan").

     During the year ended December 31, 2001, 38,167 FMC Rollover Plan options
were exercised by employees. In connection therewith, Fresenius AG transferred
12,722 Ordinary shares to employees and remitted $301 to the Company. The $301
has been accounted for as a capital contribution within additional paid in
capital. Rollover Plan options for 145,839 Ordinary ADSs were exercisable as of
December 31, 2001 at an weighted average exercise price of $7.87.

                                       F-24
<PAGE>

FMC Plan

     Immediately prior to the formation of Fresenius Medical Care, FMC adopted a
stock incentive plan (the "FMC Plan") for FMC's key management and executive
employees. As of December 31, 2001, 63,389 preference shares were available and
exercisable with an average price range between $55.59 and $78.33 per share.
Effective September 2001, no additional awards are granted under the FMC Plan.

FMC 98 Plan 1 and Plan 2

     During 1998, the Company adopted two stock incentive plans ("FMC 98 Plan 1"
and "FMC 98 Plan 2") for FMC's key management and executive employees. Under FMC
98 Plan 1, eligible employees have the right to acquire Preference shares of the
Company. The maximum number of Preference shares that may be issued under this
plan is 2,443,333 less any shares issued, or subject to issue, under the FMC
Plan. Any shares available due to forfeiture of Grants under the FMC Plan would
be considered available under FMC 98 Plan 1 as long as the total Preference
shares issued under both plans does not exceed the 2,443,333 shares noted above.
Under FMC 98 Plan 2, eligible employees have the right to acquire Preference
shares (the "Options") of the Company. The share price of the Preference share
shall be equal to the average of the official daily quotation prices of the
Preference shares on the Frankfurt Stock Exchange on the thirty days (30) of
trading immediately prior to the date of grant of the Option. One third of an
Option vests on each of the second, third and fourth anniversary of the award
date, provided that the Company achieves certain performance criteria for the
full fiscal year following the grant date in comparison to its performance for
the full fiscal year preceding the grant date. On May 30, 2000, the Company's
shareholders approved a change to the FMC 98 Plan 2 whereby the impact of the
special charge for the 1999 Settlement (see Note 2) was excluded from the
Company's performance criteria relative to the EBIT growth requirements in the
plan. Options granted under FMC 98 Plan 2 have a 10-year term. The maximum
number of Preference shares that may be issued under this plan is 2,500,000
shares, of which 500,000 are designated for Management Board members and
2,000,000 are for other managerial staff. Each option is exercisable into one
Preference share.

                                       F-25
<PAGE>

     The following table shows the number of Preference shares available and the
average price range (in $ and E) under FMC 98 Plan 1 and FMC 98 Plan 2.

<Table>
<Caption>
                                                         SHARES           AVERAGE         AVERAGE
                                                     (IN THOUSANDS)     PRICE RANGE     PRICE RANGE
                                                    ----------------    ------------    ------------
<S>                                                 <C>                 <C>             <C>
FMC 98 Plan 1
Balance at December 31, 1997....................            --
  Granted.......................................         1,024          E42.44-56.24    $37.40-49.56
                                                         -----          ------------    ------------
Balance at December 31, 1998....................         1,024           42.44-56.24     37.40-49.56
                                                         -----          ------------    ------------
  Granted.......................................           572                 32.90           28.99
  Forfeited.....................................           140           32.90-56.24     28.99-49.56
                                                         -----          ------------    ------------
Balance at December 31, 1999....................         1,456           32.90-56.24     28.99-49.56
                                                         -----          ------------    ------------
  Granted.......................................           653           40.70-49.00     35.87-43.98
  Exercised.....................................            13           32.90-42.44     28.99-37.40
  Forfeited.....................................           303           32.90-56.24     28.99-49.56
                                                         -----          ------------    ------------
Balance at December 31, 2000....................         1,793           32.90-56.24     28.99-49.56
                                                         -----          ------------    ------------
  Granted.......................................           183           48.81-52.30     43.02-46.09
  Exercised.....................................           132           32.90-56.24     28.99-48.56
  Forfeited.....................................           154           32.90-56.24     28.99-49.56
                                                         -----          ------------    ------------
Balance at December 31, 2001....................         1,690          E32.90-56.24    $28.99-49.56
                                                         =====          ============    ============
Exercisable at December 31, 2001................         1,000          E32.90-56.24    $28.99-49.56
                                                         =====          ============    ============
FMC 98 Plan 2
Balance at December 31, 1997....................            --
  Granted.......................................           258          E      44.66    $      39.36
                                                         -----          ------------    ------------
Balance at December 31, 1998....................           258                 44.66           39.36
                                                         -----          ------------    ------------
  Granted.......................................           297                 32.41           28.56
  Forfeited.....................................             5           32.41-44.66     28.56-39.36
                                                         -----          ------------    ------------
Balance at December 31, 1999....................           550           32.41-44.66     28.56-39.36
                                                         -----          ------------    ------------
  Granted.......................................           321                 47.64           41.99
  Exercised.....................................             7                 44.66           39.36
  Forfeited.....................................            40           32.41-47.64     28.56-41.99
                                                         -----          ------------    ------------
Balance at December 31, 2000....................           824           32.41-47.64     28.56-41.99
                                                         -----          ------------    ------------
  Granted.......................................            --
  Exercised.....................................            26           32.41-44.66     28.56-39.36
  Forfeited.....................................             9           32.41-47.64     28.56-41.99
                                                         -----          ------------    ------------
Balance at December 31, 2001....................           789          E32.41-47.64    $28.56-41.99
                                                         =====          ============    ============
Exercisable at December 31, 2001................           222          E32.41-44.66    $28.56-39.36
                                                         =====          ============    ============
</Table>

     Proceeds totaling $6,090 from exercise of 161,415 shares under FMC 98 Plan
1 and FMC 98 Plan 2 in 2001 were recorded as a capital contribution. Effective
September 2001, no additional Grants or Options will be awarded under FMC Plan
98 1 or FMC Plan 98 2.

FMC 2001 International Stock Incentive Plan

     On May 23, 2001, by resolution of the annual general meeting, the FMC 98
Plans were replaced by a new plan. The Management Board was empowered to issue
convertible bonds with a total value of E 10,240 to the members of the
Management Board and to other employees of the Company entitling a total
subscription of up to 4 million non-voting Preference shares. The convertible
bonds have a par value of E 2.56 and are interest bearing at a rate of 5.5%.
Purchase of the bonds is funded by a non-recourse loan secured by the bond with
respect to

                                       F-26
<PAGE>

which the loan was made. The Company has the right to offset its obligation on a
convertible bond against the employee obligation on the related loan; therefore,
the convertible bond obligations and employee loan receivables are not reflected
in the Company's consolidated financial statements. The bonds mature in ten
years and are generally fully convertible after three years. The bonds may be
issued either as convertible bonds which are subject to a stock price target or
convertible bonds without a stock price target. In the case of convertible bonds
which are subject to a stock price target the conversion right is exercisable
only if the market price of the Preference shares increased by 25% or more over
the grant-date price subsequent to the day of grant for at least one day prior
to exercise. Participants have the right to opt for convertible bonds with or
without the stock price target. In order to create an incentive to select
convertible bonds which depend on the stock price target, the number of
convertible bonds awarded to those employees who select the bonds without a
stock price target will be reduced by 15%. Each convertible bond entitles the
holder thereof, upon payment of a conversion price to convert the bond into one
Preference share. The conversion price of the convertible bonds which are not
subject to the stock price target is determined by the average price of the
Preference shares during the last 30 trading days prior to the date of grant.
The conversion price of the convertible bonds which depend on the stock price
target corresponds to the closing price of the Preference shares the day the
target was reached.

     The Managing Board and Supervisory Board are authorized to issue up to 20%
of the total number of convertible bonds each year through May 22, 2006. The
plan is valid until the last convertible bond issued under this plan is
terminated or converted.

     The following table shows the number of Preference shares available and the
average price range (in $ and E) under the FMC 2001 International Stock
Incentive Plan. Of the 723,785 shares outstanding at December 31, 2001, 126,443
shares were issued under the plan with the stock price target.

<Table>
<Caption>
                                                                        AVERAGE         AVERAGE
                                                        SHARES        PRICE RANGE     PRICE RANGE
                                                    (IN THOUSANDS)    ------------    ------------
<S>                                                 <C>               <C>             <C>
FMC International Plan
Balance at December 31, 2000......................        --
  Granted.........................................       729           58.98-73.72     51.98-64.97
  Forfeited.......................................         5           58.98-73.72     51.98-64.97
                                                         ---          ------------    ------------
Balance at December 31, 2001......................       724           58.98-73.72     51.98-64.97
                                                         ===          ============    ============
Exercisable at December 31, 2001..................         0          E58.98-73.72    $51.98-64.97
                                                         ===          ============    ============
</Table>

FAIR VALUE STOCK OPTIONS

     The per share weighted-average fair value of stock options granted during
2001, 2000 and 1999 was $19.74, $16.76 and $13.06, respectively, on the date of
the grant using the Black-Scholes option-pricing model with the weighted-average
assumptions presented below.

<Table>
<Caption>
                                                               2001         2000         1999
                                                             ---------    ---------    ---------
<S>                                                          <C>          <C>          <C>
Weighted-average assumptions:
  Expected dividend yield..................................      1.50%        1.50%        1.00%
  Risk-free interest rate..................................      4.90%        5.50%        5.56%
  Expected volatility......................................     40.00%       40.00%       35.00%
  Expected life of option..................................  5.3 years    5.3 years    5.3 years
</Table>

                                       F-27
<PAGE>

     The Company applies APB Opinion No. 25 in accounting for stock compensation
and, accordingly, recognized compensation expense of approximately $1,153 for
stock options granted in 2001, 2000 and 1999. Had the Company determined
compensation cost based on the fair value at the grant date for its stock
options under SFAS No. 123, the Company's net income (loss) would have been
reduced to the pro forma amounts indicated below:

<Table>
<Caption>
                                                               2001        2000        1999
                                                              -------    --------    ---------
<S>                                                           <C>        <C>         <C>
Net income (loss)
  As reported...............................................  $63,354    $212,075    $(248,544)
  Effect of FMC Plan benefit (expense)......................      (37)       (295)        (247)
  Effect of FMC 98 Plans (expense)..........................   (4,311)     (3,581)      (2,253)
  Effect of 1999 option grants..............................   (1,267)         25         (615)
  Effect of 2000 option grants..............................   (3,409)     (4,242)          --
  Effect of 2001 option grants..............................   (3,046)         --           --
                                                              -------    --------    ---------
  Pro forma.................................................  $51,284    $203,982    $(251,659)
Basic net income (loss) per:
  Ordinary share
     As reported............................................  $  0.65    $   2.37    $   (3.15)
     Pro forma..............................................  $  0.52    $   2.28    $   (3.19)
  Preference share
     As reported............................................  $  0.70    $   2.43    $   (3.15)
     Pro forma..............................................  $  0.57    $   2.34    $   (3.19)
Fully diluted net income (loss) per:
  Ordinary share
     As reported............................................  $  0.64    $   2.36    $   (3.15)
     Pro forma..............................................  $  0.52    $   2.27    $   (3.19)
  Preference share
     As reported............................................  $  0.69    $   2.42    $   (3.15)
     Pro forma..............................................  $  0.57    $   2.33    $   (3.19)
</Table>

18. COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

     The Company leases buildings and machinery and equipment under various
lease agreements expiring on dates through 2016. Rental expense recorded for
operating leases for the years ended December 31, 2001, 2000, and 1999 was
$237,174, $192,910, and $160,624, respectively.

     Future minimum rental payments under noncancelable operating leases for the
five years succeeding December 31, 2001 are:

<Table>
<S>                                                           <C>
2002........................................................  $145,808
2003........................................................   130,094
2004........................................................   154,531
2005........................................................    92,694
2006........................................................    71,602
Thereafter..................................................   148,987
                                                              --------
                                                              $743,716
                                                              ========
</Table>

                                       F-28
<PAGE>

LEGAL PROCEEDINGS

Commercial Litigation

     Since 1997, FMCH, NMC, and certain NMC subsidiaries have been engaged in
litigation with Aetna Life Insurance Company and certain of its affiliates
("Aetna") concerning allegations of inappropriate billing practices for
nutritional therapy, diagnostic and clinical laboratory tests and
misrepresentations. In January 2002, FMCH entered into an agreement in principle
with Aetna to establish a process for resolving these claims and the Company's
counterclaims relating to overdue payments for services rendered by the Company
to Aetna's beneficiaries.

     Other insurance companies have filed claims against FMCH, similar to those
filed by Aetna, that seek unspecified damages and costs. The Company, FMCH, NMC
and its subsidiaries believe that there are substantial defenses to the claims
asserted, and intend to vigorously defend all lawsuits. The Company has filed
counterclaims against the plaintiffs in these matters based on inappropriate
claim denials and delays in claim payments. Other private payors have contacted
FMCH and may assert that NMC received excess payments 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 results of operations.

     In light of the Aetna agreement in principle the Company established a
pre-tax accrual of $55,489 at December 31, 2001 to provide for the anticipated
settlement of the Aetna lawsuit and estimated legal expenses related to the
continued defense of other commercial insurer claims and resolution of these
claims, including overdue payments for services rendered by the company to these
insurers' beneficiaries (see Note 3). No assurance can be given that the
anticipated Aetna settlement will be consummated or that the costs associated
with such a settlement or a litigated resolution of Aetna's claims and the other
commercial insurers' claims will not exceed the $55,489 pre-tax accrual.

     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, certain U.S. affiliates of the Company and other
defendants, principally alleging that the Merger (described in greater detail in
"Indemnification by W.R. Grace & Co. and Sealed Air Corporation" 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 additional class actions were filed subsequently with
substantially similar allegations; all cases have either been stayed and
transferred to the U.S. District Court or are pending before the U.S. Bankruptcy
Court in Delaware in connection with Grace's Chapter 11 proceeding. The Company
has requested indemnification from Grace Chemicals pursuant to the Merger
agreements (see "Indemnification by W.R. Grace & Co. and Sealed Air
Corporation"). 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., Sealed
Air Corporation, or their affiliates or former affiliates or their insurers, and
if the Company is not able to collect against any party that may have received
distributions 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 Centers for Medicare and Medicaid Services (CMS)
(formerly known as the Health Care Financing Administration, or HCFA) 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.

                                       F-29
<PAGE>

     In April 1995, CMS 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. CMS 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 CMS 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 CMS
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
CMS' retroactive application of the April 1995 rule was legally invalid. CMS
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 CMS' retroactive application of the April 1995 rule legally invalid.
Based on its finding, the Court also permanently enjoined CMS from enforcing and
applying the April 1995 rule retroactively against NMC. The Court took no action
on CMS' 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 CMS' prospective application of the April 1995
rule invalid and permanently enjoin CMS from prospectively enforcing and
applying the April 1995 rule. The Court has not yet ruled on the parties'
motions. CMS elected not to appeal the Court's June 1995 and January 1998
orders. CMS may, however, appeal all rulings at the conclusion of the
litigation. If CMS 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 CMS' 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. The
Company's agreement in principle with Aetna establishes a process for resolving
these claims.

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 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
                                       F-30
<PAGE>

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 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
affiliated 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. At December 31, 2001, the Company recorded a pre-tax
accrual to reflect anticipated expenses associated with the continued defense
and resolution of these claims (see Note 3). No assurances can be given that the
actual costs incurred by the Company in connection with the continued defense
and resolution of these claims will not exceed the amount of this accrual.

Indemnification by W.R. Grace & Co. and Sealed Air Corporation

     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, Grace Chemicals, a subsidiary of W.R. Grace & Co. had, and continues to
have, significant potential liabilities arising out of product-liability related
litigation, pre-merger tax claims and other claims unrelated to NMC, which was
W.R. Grace's dialysis business prior to the Merger. In connection with the
Merger, Grace Chemicals agreed to indemnify the Company, FMCH, 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 FMCH by
plaintiffs claiming to be creditors of Grace Chemicals, principally alleging
that the Merger was a fraudulent conveyance, violated the uniform fraudulent
transfer act, and constituted a conspiracy. See "Legal Proceedings -- Commercial
Litigation" above.

                                       F-31
<PAGE>

     Pre-merger tax claims, or tax claims that would arise if events were to
violate the tax-free nature of the Merger, could ultimately be the obligation of
the Company. In particular, W.R. Grace & Co. has disclosed in its filings with
the Securities and Exchange Commission that: its tax returns for the 1993 to
1996 tax years are under audit by the Internal Revenue Service (the "Service");
that during those years W.R. Grace & Co. deducted approximately $122,100 in
interest attributable to corporate owned life insurance ("COLI") policy loans;
that W.R. Grace & Co. has paid $21,2000 of tax and interest related to COLI
deductions taken in tax years prior to 1993 and that a U.S. District Court
ruling has denied interest deductions of a taxpayer in a similar situation.
Subject to certain representations made by W.R. Grace & Co., the Company and
Fresenius AG, W.R. Grace & Co. and certain of its affiliates agreed to indemnify
the Company against this or other pre-Merger or Merger related tax liabilities.

     Subsequent to the Merger, W.R. Grace & Co. was involved in a multi-step
transaction involving Sealed Air Corporation (formerly known as Grace Holding,
Inc. and the former parent of Grace Chemicals). The Company is engaged in
litigation with Sealed Air Corporation ("Sealed Air") over the Company's
entitlement to indemnification from Sealed Air for all losses and expenses
incurred by the Company relating to pre-Merger tax liabilities of W.R. Grace and
Merger-related claims.

     Subsequent to the Sealed Air transaction, W.R. Grace & Co. and certain of
its subsidiaries filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code. As a result of the Company's continuing observation and
analysis of the Service's ongoing audit of W.R. Grace & Co.'s pre-Merger tax
returns, the Sealed Air litigation and the W.R. Grace & Co. bankruptcy
proceedings, and based on its current assessment of the potential impact of
these matters on the Company, the Company recorded a pre-tax accrual of $172,034
at December 31, 2001 to reflect the Company's estimated exposure for liabilities
and legal expenses related to the W.R. Grace & Co. bankruptcy (see Note 3). The
Company intends to continue to pursue vigorously its rights to indemnification
from W.R. Grace & Co. and its insurers and former and current affiliates,
including Sealed Air, for all costs incurred by the Company relating to
pre-Merger tax and Merger-related claims.

19. FINANCIAL INSTRUMENTS

ADOPTION OF SFAS NO. 133 -- TRANSITION

     The Company adopted SFAS No. 133 Accounting for Derivative Instruments and
Hedging Activities and the related amendments of SFAS No. 138, on January 1,
2001. Upon adoption of this Statement, the Company recorded a net transition
adjustment loss of $2,935 ($4,974 pretax) in accumulated other comprehensive
income. In addition the Company recorded a net transition adjustment gain of
$267 (net of income tax expense of $194) in net income. Because of corresponding
entries concerning the hedged items, the net effect on earnings was immaterial.

MARKET RISK

     The Company is exposed to market risk from changes in interest rates and
foreign exchange rates. In order to manage the risk of interest rate and
currency exchange rate fluctuations, the Company enters into various hedging
transactions with investment grade financial institutions as authorized by the
Company's Management Board. The Company does not use financial instruments for
trading purposes.

     The Company conducts its financial instrument activity under the control of
a single centralized department. The Company established guidelines for risk
assessment procedures and controls for the use of financial instruments. They
include a clear segregation of duties with regard to execution on one side and
administration, accounting and controlling on the other.

FOREIGN EXCHANGE RISK MANAGEMENT

     The Company conducts business on a global basis in several international
currencies, though its operations are mainly in Germany and the United States.
For financial reporting purposes, the Company has chosen the U.S. dollar as its
reporting currency. Therefore, changes in the rate of exchange between the U.S.
dollar, the euro and the local currencies in which the financial statements of
the Company's international operations are

                                       F-32
<PAGE>

maintained, affect its results of operations and financial position as reported
in its consolidated financial statements. The Company employs, to a limited
extent, forward contracts to hedge its currency exposure. The Company's policy,
which has been consistently followed, is that forward currency contracts and
options be used only for the purpose of hedging foreign currency exposure.

     The Company's exposure to market risk for changes in foreign exchange rates
relates to transactions such as sales and purchases, and lending and borrowings,
including intercompany borrowings. The Company sells significant amounts of
products from its manufacturing facilities in Germany to its other international
operations. In general, the German sales are denominated in euro. This exposes
the subsidiaries to fluctuations in the rate of exchange between the euro and
the currency in which their local operations are conducted.

     Changes in the value of foreign currency forward contracts designated and
qualifying as cash flow hedges of forecasted product purchases are reported in
accumulated other comprehensive income. These amounts are subsequently
reclassified into earnings as a component of cost of revenues, in the same
period in which the hedged transaction affects earnings. After tax losses of
$650 ($1,167 pretax) for the year ended December 31, 2001 are deferred in
accumulated other comprehensive income and will be reclassified into earnings
during 2002 and 2003. During 2001, the Company reclassified $1,134 of pretax net
gains (after tax gains of $748) from accumulated other comprehensive income into
the statement of operations. As of December 31, 2001, the Company had purchased
derivative financial instruments with a maximum maturity of 15 months to hedge
its exposure to the variability in future cash flows associated with forecasted
product purchases.

     Changes in the fair value of foreign currency forward contracts designated
and qualifying as cash flow hedges for forecasted intercompany financing
transactions are reported in accumulated other comprehensive income. After tax
losses of $10,038 ($17,015 pretax) for the year ended December 31, 2001 were
deferred in accumulated other comprehensive income. As of December 31, 2001, the
Company had purchased foreign exchange forward contracts with a maximum maturity
of 24 months. As of December 31, 2001, the notional volume of foreign currency
forwards hedging intercompany loans and forecasted intercompany transactions
totaled $815,396. There is no material impact on earnings due to hedge
ineffectiveness.

     The Company's foreign exchange contracts contain credit risk in that its
bank counterparties may be unable to meet the terms of the agreements. The
potential risk of loss with any one party resulting from this type of credit
risk is monitored. Management does not expect any material losses as a result of
default by other parties

INTEREST RATE RISK MANAGEMENT

     The Company enters into derivatives, particularly interest rate swaps, to
protect interest rate exposures arising from long-term and short-term borrowings
and accounts receivable securitization programs at floating rates by effectively
swapping them into fixed rates. Under interest rate swaps, the Company agrees
with other parties to exchange, at specified intervals, the difference between
fixed-rate and floating-rate interest amounts calculated by reference to an
agreed notional amount.

     The Company enters into interest rate swap agreements that are designated
as cash flow hedges effectively converting certain variable interest rate
payments denominated in U.S. dollars into fixed interest rate payments. After
taxes losses of $39,628 ($66,269 pretax) for the year ended December 31, 2001,
were deferred in accumulated other comprehensive loss. Interest payable and
interest receivable under the swap terms are accrued and recorded as an
adjustment to interest expense at each reporting date. There is no material
impact on earnings due to hedge ineffectiveness.

     As of December 31, 2001, the notional volume of dollar interest rate
hedging contracts totaled $1,050,000. Those swap agreements, which expire at
various dates between 2003 and 2007, effectively fix the Company's variable
interest rate exposure on the majority of the dollar-denominated revolving loans
and outstanding obligations under the accounts receivable securitization program
at an interest rate of 6.52%. Under the senior credit agreement, the Company has
agreed to maintain at least $500 million of interest rate protection.

     The Company enters into interest rate swap agreements that are designated
as cash flow hedges effectively converting certain variable interest rate
payments denominated in yen into fixed interest rate payments. After

                                       F-33
<PAGE>

taxes losses of $367 ($632 pretax) for the year ended December 31, 2001, were
deferred in accumulated other comprehensive income. There is no material impact
on earnings due to hedge ineffectiveness.

     As of December 31, 2001, the notional volume of yen-denominated interest
rate hedging contracts entered into in connection with a Yen-denominated
floating rate borrowing by the Company's Japanese subsidiary totaled $9,544. The
bank borrowing and the notional amount of the swap agreement are required to
coincide until March 2009 when the bank debt is completely repaid and the swap
expires.

     FMC is exposed to credit-related losses in the event of nonperformance by
counterparties to financial instruments but does not expect any counterparties
to fail to meet their obligations. The current credit exposure of derivatives is
represented by the fair value of contracts with a positive fair value at the
reporting date.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following table presents the carrying amounts and fair values of the
Company's financial instruments at December 31, 2001 and 2000. FASB Statement
No. 107, Disclosures about Fair Value of Financial Instruments, defines the fair
value of a financial instrument as the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a
forced or liquidation sale.

<Table>
<Caption>
                                                         2001                      2000
                                               ------------------------    --------------------
                                                CARRYING        FAIR       CARRYING      FAIR
                                                 AMOUNT        VALUE        AMOUNT      VALUE
                                               ----------    ----------    --------    --------
                                                               ($ IN THOUSANDS)
<S>                                            <C>           <C>           <C>         <C>
Non derivatives
Assets
  Cash and cash equivalents..................  $   61,572    $   61,572    $ 64,577    $ 64,577
  Receivables................................     884,727       884,727     753,674     753,674
  IDPN receivables...........................          --            --       5,189       5,189
Liabilities
  Accounts payable...........................     278,741       278,741     281,197     281,197
  Income taxes payable.......................     176,249       176,249     117,572     117,572
  Debt.......................................     900,728       900,728     826,063     826,063
  Trust Preferred Securities.................   1,428,768     1,433,274     952,727     897,827
  Notes......................................     113,247       114,144          --          --
Derivatives:
  Foreign exchange contracts.................     (15,498)      (15,498)     12,197      25,269
  Dollar interest rate hedges................     (66,603)      (66,603)         --     (24,619)
  Yen interest rate hedges...................        (632)         (632)         --        (527)
</Table>

     The carrying amounts in the table are included in the statement of
financial position under the indicated captions, except for derivative asset
amounts, which are included in other assets.

ESTIMATION OF FAIR VALUES

     The significant methods and assumptions used in estimating the fair values
of financial instruments are as follows:

     Short-term financial instruments are valued at their carrying amounts
included in the statement of financial position, which are reasonable estimates
of fair value due to the relatively short period to maturity of the instruments.
This approach applies to cash and cash equivalents, receivables, accounts
payable and income taxes payable.

     Because the Company's long-term bank debt represents borrowings from a
syndicated bank credit facility, the long-term bank debt is valued at its
carrying amount because the actual drawings under the facility carry interest on
a variable basis which reflects actual money market conditions, plus specific
margins which represent

                                       F-34
<PAGE>

Company-related performance ratios as well as the entire set of terms and
conditions including covenants as determined in the senior credit agreement.

     The fair value of the Trust Preferred Securities is based upon market
quotes.

     The fair value of the notes is calculated as difference between the coupon
of the notes and the market quotes at the reporting date which include the
Company-related margin. The margin is reasonably estimated to be unchanged at
the reporting date from the dates when the notes were issued because of the
relatively short period of time between the reporting date and the issue dates.

     The fair value of derivatives generally reflects the estimated amounts that
the Company would receive or pay to terminate the contracts at the reporting
date, thereby taking into account the current unrealized gains or losses of open
contracts. Dealer quotes are available for all of the Company's derivatives.

20. BUSINESS SEGMENT INFORMATION

     Commencing with the period ended March 31, 1999, the Company has identified
three segments, North America, International, and Asia Pacific, which were
determined based upon how the Company manages its businesses. All segments are
primarily engaged in providing kidney dialysis and manufacturing and
distributing products and equipment for the treatment of end-stage renal
disease. Additionally, the North America segment engages in performing clinical
laboratory testing and renal diagnostic services. The Company has aggregated the
International and Asia Pacific operating segments as "International". The
segments are aggregated due to their similar economic characteristics. These
characteristics include the same products sold, the same type patient
population, similar methods of distribution of products and services and similar
economic environments.

     Management evaluates each segment using a measure that reflects all of the
segment's controllable revenues and expenses. Management believes that the most
appropriate measure in this regard is earnings before interest and taxes (EBIT).
In addition to EBIT, management believes that earnings before interest, taxes,
depreciation and amortization (EBITDA) is helpful for investors as a measurement
of the segment's and the Company's ability to generate cash and to service its
financing obligations. EBITDA is also the basis for determining compliance with
certain covenants contained in the Company's principal senior bank credit
agreement and indentures relating to the Trust Preferred Securities. Management
has excluded the effects of the special charge for Settlement in 1999 and of the
special charge for legal matters in 2001 in the calculation of EBIT and EBITDA.

     EBITDA should not be construed as an alternative to net earnings determined
in accordance with generally accepted accounting principles or to cash flow from
operations, investing activities or financing activities or as a measure of cash
flows. The Company believes its EBIT calculation is the functional equivalent of
operating income. Because EBITDA and EBIT are not calculated consistently by all
companies, the presentation herein may not be comparable to other similarly
titled measures of other companies.

     Approximately 42% of the Company's worldwide revenue is derived from
sources subject to regulations under U.S. governmental programs.

                                       F-35
<PAGE>

     Information pertaining to the Company's business segments is set forth
below:

     Reconciliation of measures to consolidated totals excluding special
charges.

<Table>
<Caption>
                                                NORTH
                                               AMERICA      INTERNATIONAL    CORPORATE      TOTAL
                                              ----------    -------------    ---------    ----------
<S>                                           <C>           <C>              <C>          <C>
2001
  Net revenue external customers............  $3,602,468     $1,256,851      $     --     $4,859,319
  Inter-segment revenue.....................       1,702         24,344       (26,046)            --
                                              ----------     ----------      --------     ----------
  Total net revenue.........................   3,604,170      1,281,195       (26,046)     4,859,319
                                              ----------     ----------      --------     ----------
  EBITDA....................................     692,906        292,147       (24,174)       960,879
  Depreciation and amortization.............    (246,791)       (75,847)         (865)      (323,503)
                                              ----------     ----------      --------     ----------
  EBIT......................................     446,115        216,300       (25,039)       637,376
                                              ----------     ----------      --------     ----------
  Segment assets............................   5,017,131      1,444,776        52,923      6,514,830
  Capital expenditures and
     acquisitions(1)........................     346,358        174,852           727        521,937
2000
  Net revenue external customers............  $3,081,825     $1,119,513      $     --     $4,201,338
  Inter-segment revenue.....................       2,226         36,677       (38,903)            --
                                              ----------     ----------      --------     ----------
  Total net revenue.........................   3,084,051      1,156,190       (38,903)     4,201,338
                                              ----------     ----------      --------     ----------
  EBITDA....................................     652,212        263,281        (1,825)       913,668
  Depreciation and amortization.............    (222,769)       (68,460)       (1,626)      (292,855)
                                              ----------     ----------      --------     ----------
  EBIT......................................     429,443        194,821        (3,451)       620,813
                                              ----------     ----------      --------     ----------
  Segment assets............................   4,571,069      1,375,526        32,358      5,978,953
  Capital expenditures and
     acquisitions(2)........................     228,177        274,290           100        502,567
1999
  Net revenue external customers............  $2,804,264     $1,036,165      $     --     $3,840,429
  Inter-segment revenue.....................       4,195         42,853       (47,048)            --
                                              ----------     ----------      --------     ----------
  Total net revenue.........................   2,808,459      1,079,018       (47,048)     3,840,429
                                              ----------     ----------      --------     ----------
  EBITDA....................................     619,581        235,270       (10,429)       844,422
  Depreciation and amortization.............    (217,881)       (64,377)       (1,950)      (284,208)
                                              ----------     ----------      --------     ----------
  EBIT......................................     401,700        170,893       (12,379)       560,214
                                              ----------     ----------      --------     ----------
  Segment assets............................   4,653,058      1,064,108        35,217      5,752,383
  Capital expenditures and
     acquisitions(3)........................     146,498        114,774           330        261,602
</Table>

---------------

(1) North America and International acquisitions exclude $233,895 and $10,473,
    respectively, of non-cash acquisitions for 2001

(2) International acquisitions exclude $ 13,614 of non-cash acquisitions for
    2000

(3) International acquisitions exclude $ 9,462 of non-cash acquisitions for 1999

                                       F-36
<PAGE>

<Table>
<Caption>
                                                             2001         2000         1999
                                                           ---------    ---------    ---------
<S>                                                        <C>          <C>          <C>
Reconciliation of measures to consolidated totals.
  Total EBITDA of reporting segments.....................  $ 985,053    $ 915,492    $ 854,851
  Total depreciation and amortization....................   (323,503)    (292,855)    (284,208)
  Special charge for Legal Matters.......................   (258,159)          --           --
  Special charge for 1999 Settlement.....................         --           --     (601,000)
  Corporate expenses.....................................    (24,174)      (1,825)     (10,429)
  Interest expense.......................................   (237,234)    (195,569)    (226,218)
  Interest expense on obligation related to 1999
  Settlement.............................................         --      (29,947)          --
  Interest income........................................     14,305        9,411        8,094
                                                           ---------    ---------    ---------
  Total income (loss) before income taxes and minority
     interest............................................  $ 156,288    $ 404,707    $(258,910)
                                                           =========    =========    =========
  Total EBIT of reporting segments.......................    662,415      624,264      572,593
  Special charge for legal matters.......................   (258,159)          --           --
  Special charge for 1999 Settlement.....................         --           --     (601,000)
  Corporate expenses.....................................    (25,039)      (3,451)     (12,379)
  Interest expense.......................................   (237,234)    (195,569)    (226,218)
  Interest expense on obligation related to 1999
     Settlement..........................................         --      (29,947)          --
  Interest income........................................     14,305        9,411        8,094
                                                           ---------    ---------    ---------
  Total income (loss) before income taxes and minority
     interest............................................  $ 156,288    $ 404,708    $(258,910)
                                                           =========    =========    =========
Depreciation and amortization
  Total depreciation and amortization of reporting
     segments............................................   (322,638)     291,228      282,258
  Corporate depreciation and amortization................       (865)       1,626        1,950
                                                           ---------    ---------    ---------
  Total depreciation and amortization....................  $(323,503)   $ 292,854    $ 284,208
                                                           =========    =========    =========
</Table>

     For the geographic presentation, revenues are attributed to specific
countries based on the end user's location for products and the country in which
the service is provided. Information with respect to the Company's geographic
operations is set forth in the table below:

<Table>
<Caption>
                                                         UNITED STATES     REST OF
                                             GERMANY      AND CANADA      THE WORLD       TOTAL
                                             --------    -------------    ----------    ----------
<S>                                          <C>         <C>              <C>           <C>
2001
Net revenue external customers.............  $196,022     $3,602,468      $1,060,828    $4,859,318
Long-lived assets..........................    96,622        614,441         308,603     1,019,666
2000
Net revenue external customers.............  $193,857     $3,081,824      $  925,657    $4,201,338
Long-lived assets..........................    79,670        520,614         294,997       895,281
1999
Net revenue external customers.............  $213,209     $2,804,264      $  822,956    $3,840,429
Long-lived assets..........................    83,384        483,872         180,041       747,297
</Table>

                                       F-37
<PAGE>

21. SUPPLEMENTARY CASH FLOW INFORMATION

     The following additional information is provided with respect to the
Consolidated Statements of Cash Flows:

<Table>
<Caption>
                                                               2001        2000        1999
                                                             --------    --------    --------
<S>                                                          <C>         <C>         <C>
Supplementary cash flow information Cash paid for
  interest.................................................  $219,681    $222,826    $215,836
                                                             --------    --------    --------
Cash paid for income taxes, net............................  $ 62,747    $ 44,715    $ 27,954
                                                             --------    --------    --------
Supplemental disclosures of cash flow information
  Details for acquisitions:
  Assets acquired..........................................  $540,241    $346,378    $124,598
  Liabilities assumed......................................    75,024      52,843      13,186
  Debt issued in connection with acquisition...............   144,889      13,613       9,462
  Preference shares issued in connection with
     acquisition...........................................    99,479          --          --
                                                             --------    --------    --------
  Cash paid................................................   220,849     279,922     101,950
  Less cash acquired.......................................     4,138       5,392         624
                                                             --------    --------    --------
  Net cash paid for acquisitions...........................  $216,711    $274,530    $101,326
                                                             ========    ========    ========
</Table>

22. SUBSEQUENT EVENTS

     On February 14, 2002, FMC redeemed the entire $360,000 aggregate
liquidation amount outstanding of its 9% Trust Preferred Securities due 2006,
utilizing funds borrowed under FMC's senior credit facility. The terms of the
securities, which were issued in 1996, provide for optional redemption
commencing December 1, 2001 at a redemption price of 104.5% of the liquidation
amount, plus distributions accrued to the redemption date. On January 15, 2002,
State Street Bank and Trust Company, as trustee, issued a redemption notice to
security holders announcing that FMC had exercised its option to redeem and
would redeem the securities on February 14, 2002 at a price of $1,045 per $1,000
liquidation amount plus accrued distributions of $18.25 per $1,000 for a total
redemption price of $1,063.25 per $1,000.

     The Company is doing business in Argentina through subsidiaries as well as
direct sales from Germany. In January 2002, the Argentine government announced
its intent to create a dual currency system with an official fixed exchange rate
of 1.4 pesos to 1 U.S. dollar for import and export transactions and a floating
exchange rate for other transactions. Since 1991, the Argentine peso had been
pegged to the U.S. dollar at a rate of 1 Argentine peso to 1 U.S. dollar. In
December 2001, restrictions were placed on certain transactions, and currency
exchange activity was effectively halted. On January 11, 2002, currency exchange
activity resumed, and the floating exchange rate ranged from 1.6 to 1.7 pesos to
1 U.S. dollar. The Company, in accordance with U.S. GAAP, used the rate of 1.7
pesos to 1 U.S. dollar for purposes of translating Argentine peso financial
statements as of December 31, 2001 and deferred the translation loss in other
comprehensive income. As of February, 2002, the rate was 2.0 pesos to 1 U.S.
dollar.

23. SUPPLEMENTAL CONDENSED COMBINING INFORMATION

     FMC Trust Finance S.a.r.l. Luxembourg, a wholly-owned subsidiary of FMC AG,
has assumed or issued senior subordinated debt securities which were fully and
unconditionally guaranteed, jointly and severally, on a senior subordinated
basis, by FMC AG and by D-GmbH, a wholly-owned subsidiary of FMC AG, and by
FMCH, a substantially wholly-owned subsidiary of FMC AG (D-GmbH and FMCH being
the "Guarantor Subsidiaries"). The following is combining financial information
for the Company as of December 31, 2001 and 2000 and for the years ended
December 31, 2001, 2000 and 1999, segregated between FMC AG, D-GmbH, FMCH and
each of the Company's other businesses (the "Non-Guarantor Subsidiaries"). For
purposes of the condensed combining information, FMC AG and the Guarantor
Subsidiaries carry their investments under the equity method. Other (income)
expense includes income (loss) related to investments in consolidated
subsidiaries recorded under the equity method for purposes of the condensed
combining information. In addition, other (income) expense includes income and
losses from profit and loss transfer agreements as well as dividends received.
Separate

                                       F-38
<PAGE>

financial statements and other disclosures concerning D-GmbH are not presented
herein because management believes that they are not material to investors. FMCH
is currently subject to the periodic reporting requirements of the United States
Securities Exchange Act of 1934, as amended, and in accordance therewith files
consolidated financial statements with the United States Securities and Exchange
Commission.

     Additionally, as discussed in Note 11, dividends from Fresenius Medical
Care Holdings, Inc., a wholly owned subsidiary, are limited as a result of a
restriction on dividends from its subsidiary, National Medical Care, Inc., and
its subsidiaries. As a result of this restriction, parent company only financial
information is presented under the column FMC AG

<Table>
<Caption>
                                                              FOR THE YEAR ENDED DECEMBER 31, 2001
                                           --------------------------------------------------------------------------
                                                            GUARANTOR
                                                           SUBSIDIARIES
                                                       --------------------   NON-GUARANTOR   COMBINING     COMBINED
                                            FMC AG      D-GMBH      FMCH      SUBSIDIARIES    ADJUSTMENT     TOTAL
                                           ---------   --------   ---------   -------------   ----------   ----------
<S>                                        <C>         <C>        <C>         <C>             <C>          <C>
Net revenue..............................  $      --   $620,730   $      --    $4,865,630     $(627,042)   $4,859,318
Cost of revenue..........................         --   367,771           --     3,471,425      (618,998)    3,220,198
                                           ---------   --------   ---------    ----------     ---------    ----------
  Gross profit...........................         --   252,959           --     1,394,205        (8,044)    1,639,120
                                           ---------   --------   ---------    ----------     ---------    ----------
Operating expenses:
  Selling, general and administrative....      5,012    97,530           --       855,786         7,716       966,044
  Research and development...............        344    26,868           --         8,488            --        35,700
  Special charge for Legal Matters.......         --        --           --       258,159            --       258,159
                                           ---------   --------   ---------    ----------     ---------    ----------
Operating (loss) income..................     (5,356)  128,561           --       271,772       (15,760)      379,217
                                           ---------   --------   ---------    ----------     ---------    ----------
Other (income) expense:
  Interest, net..........................     14,028     4,047       58,584       175,652       (29,382)      222,929
  Other, net.............................   (128,411)   72,969       44,106            --        11,336            --
                                           ---------   --------   ---------    ----------     ---------    ----------
Income before income taxes and minority
  interest...............................    109,027    51,545     (102,690)       96,120         2,286       156,288
  Income tax expense.....................     45,673    47,647      (23,434)       71,275       (49,959)       91,202
                                           ---------   --------   ---------    ----------     ---------    ----------
Income (loss) before minority interest...     63,354     3,898      (79,256)       24,845        52,245        65,086
Minority interest........................         --        --           --            --         1,732         1,732
                                           ---------   --------   ---------    ----------     ---------    ----------
Net income (loss)........................  $  63,354   $ 3,898    $ (79,256)   $   24,845     $  50,513    $   63,354
                                           =========   ========   =========    ==========     =========    ==========
</Table>

<Table>
<Caption>
                                                              FOR THE YEAR ENDED DECEMBER 31, 2000
                                           --------------------------------------------------------------------------
                                                            GUARANTOR
                                                           SUBSIDIARIES
                                                       --------------------   NON-GUARANTOR   COMBINING     COMBINED
                                            FMC AG      D-GMBH      FMCH      SUBSIDIARIES    ADJUSTMENT     TOTAL
                                           ---------   --------   ---------   -------------   ----------   ----------
<S>                                        <C>         <C>        <C>         <C>             <C>          <C>
Net revenue..............................  $      --   $552,747   $      --    $4,141,565     $(492,974)   $4,201,338
Cost of revenue..........................         --   320,287           --     2,891,592      (477,286)    2,734,593
                                           ---------   --------   ---------    ----------     ---------    ----------
  Gross profit...........................         --   232,460           --     1,249,973       (15,688)    1,466,745
                                           ---------   --------   ---------    ----------     ---------    ----------
Operating expenses:
  Selling, general and administrative....     15,519    88,923           --       714,751        (5,196)      813,997
  Research and development...............         --    25,902           --         6,033            --        31,935
                                           ---------   --------   ---------    ----------     ---------    ----------
  Operating (loss) income................    (15,519)  117,635           --       529,189       (10,492)      620,813
                                           ---------   --------   ---------    ----------     ---------    ----------
Other (income) expense:
  Interest, net..........................     (2,501)    5,917       58,681       155,118        (1,110)      216,105
  Other, net.............................   (286,260)   60,173     (140,459)       38,118       328,428            --
                                           ---------   --------   ---------    ----------     ---------    ----------
Income before income taxes and minority
  interest...............................    273,242    51,545       81,778       335,953      (337,810)      404,708
  Income tax expense (benefit)...........     61,167    46,019      (23,472)      155,909       (49,851)      189,772
                                           ---------   --------   ---------    ----------     ---------    ----------
Income before minority interest..........    212,075     5,526      105,250       180,044      (287,959)      214,936
Minority interest........................         --        --           --            --         2,861         2,861
                                           ---------   --------   ---------    ----------     ---------    ----------
Net income...............................  $ 212,075   $ 5,526    $ 105,250    $  180,044     $(290,820)   $  212,075
                                           =========   ========   =========    ==========     =========    ==========
</Table>

                                       F-39
<PAGE>

<Table>
<Caption>
                                                              FOR THE YEAR ENDED DECEMBER 31, 1999
                                           --------------------------------------------------------------------------
                                                            GUARANTOR
                                                           SUBSIDIARIES
                                                       --------------------   NON-GUARANTOR   COMBINING     COMBINED
                                            FMC AG      D-GMBH      FMCH      SUBSIDIARIES    ADJUSTMENT     TOTAL
                                           ---------   --------   ---------   -------------   ----------   ----------
<S>                                        <C>         <C>        <C>         <C>             <C>          <C>
Net revenue..............................  $      --   $556,354   $      --    $3,733,213     $(449,138)   $3,840,429
Cost of revenue..........................         --   348,923           --     2,548,748      (434,516)    2,463,155
                                           ---------   --------   ---------    ----------     ---------    ----------
  Gross profit...........................         --   207,431           --     1,184,465       (14,622)    1,377,274
                                           ---------   --------   ---------    ----------     ---------    ----------
Operating expenses:
  Selling, general and administrative....     13,701    74,149           --       701,719        (4,998)      784,572
  Research and development...............         --    24,527           --         7,961            --        32,488
  Special charge for 1999 Settlement.....         --        --           --       601,000            --       601,000
                                           ---------   --------   ---------    ----------     ---------    ----------
  Operating (loss) income................    (13,701)  108,754           --      (126,215)       (9,624)      (40,786)
                                           ---------   --------   ---------    ----------     ---------    ----------
Other (income) expense:
  Interest, net..........................        171     5,604       58,382       153,967            --       218,124
  Other, net.............................    188,727    56,364      291,998            --      (537,089)           --
                                           ---------   --------   ---------    ----------     ---------    ----------
(Loss) income before income taxes and
  minority interest......................   (202,599)   46,786     (350,380)     (280,182)      527,465      (258,910)
  Income tax expense (benefit)...........     36,562    43,654      (23,353)      (24,309)      (45,298)      (12,744)
                                           ---------   --------   ---------    ----------     ---------    ----------
(Loss) income before minority interest...   (239,161)    3,132     (327,027)     (255,873)      572,763      (246,166)
Minority interest........................         --        --           --            --         2,378         2,378
                                           ---------   --------   ---------    ----------     ---------    ----------
Net (loss) income........................  $(239,161)  $ 3,132    $(327,027)   $ (255,873)    $ 570,385    $ (248,544)
                                           =========   ========   =========    ==========     =========    ==========
</Table>

                                       F-40
<PAGE>

<Table>
<Caption>
                                                                          AT DECEMBER 31, 2001
                                              -----------------------------------------------------------------------------
                                                                 GUARANTOR
                                                               SUBSIDIARIES
                                                           ---------------------   NON-GUARANTOR    COMBINING     COMBINED
                                                FMC AG      D-GMBH       FMCH      SUBSIDIARIES    ADJUSTMENT      TOTAL
                                              ----------   --------   ----------   -------------   -----------   ----------
                                                                    (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                           <C>          <C>        <C>          <C>             <C>           <C>
Current assets:
  Cash and cash equivalents.................  $       16   $    33    $       --    $   61,523     $       --    $   61,572
  Trade accounts receivable, less allowance
    for doubtful accounts...................          --    75,863            --       808,864             --       884,727
  Accounts receivable from related
    parties.................................     363,304   205,155        70,344       574,062     (1,175,773)       37,092
  Inventories...............................          --    75,598            --       303,610        (32,819)      346,389
  Prepaid expenses and other current
    assets..................................      11,366    19,355            --       189,990          1,424       222,135
  Deferred taxes............................          --        --            --       198,698         28,516       227,214
                                              ----------   --------   ----------    ----------     -----------   ----------
    Total current assets....................     374,686   376,004        70,344     2,136,747     (1,178,652)    1,779,129
Property, plant and equipment, net..........         123    59,585            --       801,145        (22,270)      838,583
Intangible assets, including goodwill,
  net.......................................         966     6,863            --     3,674,194             --     3,682,023
Deferred taxes..............................          --        --            --        22,823         12,369        35,192
Other assets................................   3,034,888    12,120     2,704,775     1,358,693     (6,929,393)      181,083
                                              ----------   --------   ----------    ----------     -----------   ----------
  Total assets..............................  $3,410,663   $454,572   $2,775,119    $7,993,602     $(8,117,946)  $6,516,010
                                              ==========   ========   ==========    ==========     ===========   ==========
Current liabilities:
  Accounts payable..........................  $       78   $17,180    $       --    $  181,029     $       --    $  198,287
  Accounts payable to related parties.......     176,152   218,348       332,754       639,969     (1,286,769)       80,454
  Accrued expenses and other current
    liabilities.............................       9,051    46,932            --       352,162            902       409,047
  Accrual for special charge for Legal
    Matters.................................          --        --            --       221,812             --       221,812
  Short-term borrowings.....................         618        --            --        92,793             --        93,411
  Short-term borrowings from related
    parties.................................          --        --        17,504        15,005        (17,504)       15,005
  Current portion of long-term debt and
    capital lease obligations...............          --     1,669            --       163,290             --       164,959
  Income tax payable........................      76,469        --            --        99,780             --       176,249
  Deferred taxes............................      13,629     3,276            --        (4,043)         5,137        17,999
                                              ----------   --------   ----------    ----------     -----------   ----------
    Total current liabilities...............     275,997   287,405       350,258     1,761,797     (1,298,234)    1,377,223
Long term debt and capital lease
  obligations, less current portion.........     249,184     3,101       827,099       759,202     (1,102,817)      735,769
Long term borrowings from related parties...     265,766        --            --          (226)      (265,540)           --
Other liabilities...........................          --     3,342            --       115,447          5,056       123,845
Pension liabilities.........................         376    26,541            --        43,665             --        70,582
Deferred taxes..............................       2,596     3,724            --       136,526             --       142,846
Company obligated mandatorily redeemable
  preferred securities of subsidiary
  Fresenius Medical Care Capital Trusts
  holding solely Company-guaranteed
  debentures of subsidiary..................          --        --            --     1,428,768             --     1,428,768
Minority interest...........................          --        --        16,318            --          3,915        20,233
                                              ----------   --------   ----------    ----------     -----------   ----------
    Total liabilities.......................     793,919   324,113     1,193,675     4,245,179     (2,657,620)    3,899,266
Shareholders' equity:.......................   2,616,744   130,459     1,581,444     3,748,423     (5,460,326)    2,616,744
                                              ----------   --------   ----------    ----------     -----------   ----------
  Total liabilities and shareholders'
    equity..................................  $3,410,663   $454,572   $2,775,119    $7,993,602     $(8,117,946)  $6,516,010
                                              ==========   ========   ==========    ==========     ===========   ==========
</Table>

                                       F-41
<PAGE>

<Table>
<Caption>
                                                                          AT DECEMBER 31, 2000
                                              -----------------------------------------------------------------------------
                                                                 GUARANTOR
                                                               SUBSIDIARIES
                                                           ---------------------   NON-GUARANTOR    COMBINING     COMBINED
                                                FMC AG      D-GMBH       FMCH      SUBSIDIARIES    ADJUSTMENT      TOTAL
                                              ----------   --------   ----------   -------------   -----------   ----------
<S>                                           <C>          <C>        <C>          <C>             <C>           <C>
Current assets:
  Cash and cash equivalents.................  $      137   $   100    $       --    $   64,340     $       --    $   64,577
  Trade accounts receivable, less allowance
    for doubtful accounts...................          --    72,775            --       680,899             --       753,674
  Accounts receivable from related
    parties.................................     132,463   193,640        51,487       531,874       (863,347)       46,117
  Inventories...............................          --    67,988            --       286,199        (33,953)      320,234
  Prepaid expenses and other current
    assets..................................       2,539    20,237            --       195,515          1,424       219,715
  Deferred taxes............................         388     1,945            --       156,732         18,029       177,094
                                              ----------   --------   ----------    ----------     -----------   ----------
    Total current assets....................     135,527   356,685        51,487     1,915,559       (877,847)    1,581,411
Property, plant and equipment, net..........         205    49,460            --       705,353        (16,025)      738,993
Intangible assets, including goodwill,
  net.......................................         789     6,006            --     3,468,261             --     3,475,056
Loans to related parties....................      78,206        --       185,529       827,099     (1,090,834)           --
Deferred taxes..............................          --     3,011            --        13,949         10,245        27,205
Other assets................................   2,681,199    12,119     2,589,842       117,641     (5,244,513)      156,288
                                              ----------   --------   ----------    ----------     -----------   ----------
  Total assets..............................  $2,895,926   $427,281   $2,826,858    $7,047,862     $(7,218,974)  $5,978,953
                                              ==========   ========   ==========    ==========     ===========   ==========
Current liabilities:
  Accounts payable..........................  $      506   $16,356    $       --    $  186,512     $       --    $  203,374
  Accounts payable to related parties.......     113,406   180,997       257,566       372,978       (847,124)       77,823
  Accrued expenses and other current
    liabilities.............................       9,740    52,916            --       328,395            589       391,640
  Note payable related to 1999 Settlement...          --        --            --        85,920             --        85,920
  Short-term borrowings.....................         627       465            --       105,500             --       106,592
  Short-term borrowings from related
    parties.................................          --        --            --       218,333             --       218,333
  Current portion of long-term debt and
    capital lease obligations...............          --       516            --       167,715             --       168,231
  Income tax payable........................      87,277        --            --        30,295             --       117,572
  Deferred taxes............................         223     6,102            --        11,902          2,740        20,967
                                              ----------   --------   ----------    ----------     -----------   ----------
    Total current liabilities...............     211,779   257,352       257,566     1,507,550       (843,795)    1,390,452
Long term debt and capital lease
  obligations, less current portion.........       4,206     1,882       843,322       915,479     (1,107,057)      657,832
Other liabilities...........................          --     3,688            --        23,312          4,464        31,464
Pension liabilities.........................         327    24,682            --        44,961             --        69,970
Deferred taxes..............................         864     5,238            --       170,385             --       176,487
Company obligated mandatorily redeemable
  preferred securities of subsidiary
  Fresenius Medical Care Capital Trusts
  holding solely Company-guaranteed
  debentures of subsidiary..................          --        --            --       952,727             --       952,727
Minority interest...........................          --        --        16,318            --          4,953        21,271
                                              ----------   --------   ----------    ----------     -----------   ----------
    Total liabilities.......................     217,176   292,842     1,117,206     3,614,414     (1,941,435)    3,300,203
Shareholders' equity:.......................   2,678,750   134,439     1,709,652     3,433,448     (5,277,539)    2,678,750
                                              ----------   --------   ----------    ----------     -----------   ----------
  Total liabilities and shareholders'
    equity..................................  $2,895,926   $427,281   $2,826,858    $7,047,862     $(7,218,974)  $5,978,953
                                              ==========   ========   ==========    ==========     ===========   ==========
</Table>

                                       F-42
<PAGE>

<Table>
<Caption>
                                                                  FOR THE YEAR ENDED DECEMBER 31, 2001
                                                -------------------------------------------------------------------------
                                                                 GUARANTOR
                                                                SUBSIDIARIES
                                                            --------------------   NON-GUARANTOR   COMBINING    COMBINED
                                                 FMC AG      D-GMBH      FMCH      SUBSIDIARIES    ADJUSTMENT     TOTAL
                                                ---------   --------   ---------   -------------   ----------   ---------
<S>                                             <C>         <C>        <C>         <C>             <C>          <C>
Operating Activities:
  Net income (loss)...........................  $  63,354   $ 3,898    $ (79,256)    $  24,845     $  50,513    $  63,354
  Adjustments to reconcile net income (loss)
    to cash flows provided by (used in)
    operating activities:
  Equity affiliate income.....................      8,849        --       44,106            --       (52,955)          --
    Depreciation and amortization.............        864    19,193           --       308,285        (4,839)     323,503
    Change in deferred taxes, net.............     15,815       969           --       (60,018)       (3,167)     (46,401)
    (Gain) loss on sale of fixed assets.......         --      (484)          --         1,494            --        1,010
    Gain on sale of investments...............     (6,685)       --           --            --         6,685           --
    Compensation expense related to stock
      options.................................      1,153        --           --            --            --        1,153
  Changes in assets and liabilities, net of
    amounts from businesses acquired or
    disposed of:
    Trade accounts receivable, net............         --    (7,049)          --      (110,044)           --     (117,093)
    Inventories...............................         --   (11,388)          --       (19,565)          752      (30,201)
    Prepaid expenses, other current and
      non-current assets......................    (11,723)     (827)       1,491       (25,857)        8,454      (28,462)
    Accounts receivable from/ payable to
      related parties.........................   (114,829)   26,219       57,613        58,725       (18,874)       8,854
    Accounts payable, accrued expenses and
      other current and non-current
      liabilities.............................     (4,803)      899           --       187,140           756      183,992
    Income taxes payable......................     (6,294)       --      (23,434)       94,267            --       64,539
                                                ---------   --------   ---------     ---------     ---------    ---------
      Net cash (used in) provided by operating
        activities............................    (54,299)   31,430          520       459,272       (12,675)     424,248
                                                ---------   --------   ---------     ---------     ---------    ---------
Investing Activities:
  Purchases of property, plant and
    equipment.................................       (727)  (33,628)          --      (252,755)       11,885     (275,225)
  Proceeds from sale of property, plant and
    equipment.................................         23     1,180           --        22,992            --       24,195
  Disbursement of loans to related parties....   (460,652)       --           --            --       460,652           --
  Acquisitions and investments, net of cash
    acquired..................................    (50,297)     (417)          --      (205,242)       39,245     (216,711)
                                                ---------   --------   ---------     ---------     ---------    ---------
      Net cash used in investing activities...   (511,653)  (32,865)          --      (435,005)      511,782     (467,741)
                                                ---------   --------   ---------     ---------     ---------    ---------
Financing Activities:
  Short-term borrowings, net..................       (518)     (448)          --      (224,536)           --     (225,502)
  Payments on obligation related to 1999
    Settlement................................         --        --           --       (85,920)           --      (85,920)
  Long-term debt and capital lease
    obligations, net..........................    625,877     2,539           --      (219,735)     (460,652)     (51,971)
  Proceeds from issuance of trust preferred
    securities................................         --        --           --       477,169        (6,571)     470,598
  Decrease of accounts receivable
    securitization program....................         --        --           --        (3,464)           --       (3,464)
  Proceeds from exercise of stock options.....      6,391        --           --            --            --        6,391
  Capital increase of
    Non-Guarantor-Subsidiaries................         --        --           --        38,330       (38,330)          --
  Dividends paid..............................    (65,782)       --           --        (4,714)        4,714      (65,782)
  Change in minority interest.................         --        --         (520)       (2,065)        1,732         (853)
                                                ---------   --------   ---------     ---------     ---------    ---------
      Net cash provided by (used in) financing
        activities............................    565,968     2,091         (520)      (24,935)     (499,107)      43,497
                                                ---------   --------   ---------     ---------     ---------    ---------
Effect of exchange rate changes on cash and
  cash equivalents............................       (137)     (723)          --        (2,149)           --       (3,009)
Cash and Cash Equivalents:
Net decrease in cash and cash equivalents.....       (121)      (67)          --        (2,817)           --       (3,005)
Cash and cash equivalents at beginning of
  period......................................        137       100           --        64,340            --       64,577
                                                ---------   --------   ---------     ---------     ---------    ---------
Cash and cash equivalents at end of period....  $      16   $    33    $      --     $  61,523     $      --    $  61,572
                                                =========   ========   =========     =========     =========    =========
</Table>

                                       F-43
<PAGE>

<Table>
<Caption>
                                                                 FOR THE YEAR ENDED DECEMBER 31, 2000
                                                ----------------------------------------------------------------------
                                                                GUARANTOR
                                                              SUBSIDIARIES
                                                           -------------------   NON-GUARANTOR   COMBINING    COMBINED
                                                 FMC AG     D-GMBH      FMCH     SUBSIDIARIES    ADJUSTMENT    TOTAL
                                                --------   --------   --------   -------------   ----------   --------
<S>                                             <C>        <C>        <C>        <C>             <C>          <C>
Operating Activities:
  Net income..................................  $212,075   $ 5,526    $105,250     $180,044      $(290,820)   $212,075
  Adjustments to reconcile net income to cash
    flows provided by (used in) operating
    activities:
  Equity affiliate income.....................  (87,521)        --                 (140,459)        38,118     189,862
    Depreciation and amortization.............    1,625     19,512          --      274,841         (3,124)    292,854
    Change in deferred taxes, net.............  (12,514)    (1,298)         --       93,049         (2,303)     76,934
    (Gain) loss on sale of fixed assets.......      (40)    (1,239)         --          990             --        (289)
    Gain on sale of investments...............  (66,189)        --          --           --         66,189          --
    Compensation expense related to stock
      options.................................    3,980         --          --           --             --       3,980
  Changes in assets and liabilities, net of
    amounts from businesses acquired or
    disposed of:
    Trade accounts receivable, net............       --      2,865          --     (177,198)            --    (174,333)
    Inventories...............................       --    (10,527)         --      (17,945)         5,465     (23,007)
    Prepaid expenses, other current and
      non-current assets......................    5,241    (11,377)      1,491       (4,272)           632      (8,285)
    Accounts receivable from/ payable to
      related parties.........................  (56,306)     6,884      56,809      (44,492)        18,304     (18,801)
    Accounts payable, accrued expenses and
      other current and non-current
      liabilities.............................    5,716     14,285          --      (39,895)          (795)    (20,689)
    Income taxes payable......................   52,846         --     (23,472)      21,453             --      50,827
                                                --------   --------   --------     --------      ---------    --------
      Net cash provided by (used in) operating
        activities............................   58,913     24,631        (381)     324,693        (16,590)    391,266
                                                --------   --------   --------     --------      ---------    --------
Investing Activities:
  Purchases of property, plant and
    equipment.................................     (100)   (23,992)         --     (213,466)         9,521    (228,037)
  Proceeds from sale of property, plant and
    equipment.................................       49      2,352          --       18,323             --      20,724
  Acquisitions and investments, net of cash
    acquired..................................  (314,421)   (2,619)         --     (268,028)       310,538    (274,530)
  Disbursement of loans to related parties,
    net.......................................  (240,139)       --          --           --        240,139          --
                                                --------   --------   --------     --------      ---------    --------
      Net cash used in investing activities...  (554,611)  (24,259)         --     (463,171)       560,198    (481,843)
                                                --------   --------   --------     --------      ---------    --------
Financing Activities:
  Short-term borrowings, net..................   (6,577)       441          --     (103,057)            --    (109,193)
  Long-term debt and capital lease
    obligations, net..........................       --       (740)        901      257,858       (224,534)     33,485
  Payments on obligation related to 1999
    Settlement................................       --         --                 (386,815)            --    (386,815)
  Proceeds from issuance of preference
    shares....................................  556,958         --          --           --             --     556,958
  Increase of accounts receivable
    securitization program....................       --         --          --      111,402             --     111,402
  Proceeds from exercise of stock options.....      885         --          --           --             --         885
  Capital increase of
    Non-Guarantor-Subsidiaries................       --         --          --      312,352       (312,352)         --
  Dividends paid..............................  (51,229)        --          --       (6,385)         6,385     (51,229)
  Change in minority interest.................       --         --        (520)          --            659         139
                                                --------   --------   --------     --------      ---------    --------
      Net cash provided by (used in) financing
        activities............................  500,037       (299)        381      185,355       (529,842)    155,632
                                                --------   --------   --------     --------      ---------    --------
Effect of exchange rate changes on cash and
  cash equivalents............................   (4,357)       (10)         --      (17,105)       (13,766)    (35,238)
Cash and Cash Equivalents:
Net (decrease) increase in cash and cash
  equivalents.................................      (18)        63          --       29,772             --      29,817
Cash and cash equivalents at beginning of
  period......................................      155         37          --       34,568             --      34,760
                                                --------   --------   --------     --------      ---------    --------
Cash and cash equivalents at end of period....  $   137    $   100    $     --     $ 64,340      $      --    $ 64,577
                                                ========   ========   ========     ========      =========    ========
</Table>

                                       F-44
<PAGE>

<Table>
<Caption>
                                                                  FOR THE YEAR ENDED DECEMBER 31, 1999
                                               --------------------------------------------------------------------------
                                                                 GUARANTOR
                                                               SUBSIDIARIES
                                                           ---------------------   NON-GUARANTOR   COMBINING    COMBINED
                                                FMC AG      D-GMBH       FMCH      SUBSIDIARIES    ADJUSTMENT     TOTAL
                                               ---------   ---------   ---------   -------------   ----------   ---------
<S>                                            <C>         <C>         <C>         <C>             <C>          <C>
Operating Activities:
  Net (loss) income..........................  $(239,161)  $   3,132   $(327,027)    $(255,873)    $ 570,385    $(248,544)
  Adjustments to reconcile net (loss) income
    to cash flows provided by (used in)
    operating activities:
  Equity affiliate loss......................    305,430          --     291,998            --      (597,428)          --
    Depreciation and amortization............      2,981      22,330          --       264,005        (5,108)     284,208
    Write-off of IDPN accounts receivable....         --          --          --        94,349            --       94,349
    Change in deferred taxes, net............     (3,276)        119          --       (81,956)       (4,812)     (89,925)
    Loss on sale of fixed assets.............        163          --          --           828            --          991
  Changes in assets and liabilities, net of
    amounts from businesses acquired or
    disposed of:
    Trade accounts receivable, net...........         --     (18,485)         --      (117,777)           --     (136,262)
    Inventories..............................         --        (562)         --       (22,145)        6,953      (15,754)
    Prepaid expenses, other current and
      non-current assets.....................     (5,578)     (4,062)      1,491       (35,243)        6,674      (36,718)
    Accounts receivable from/ payable to
      related parties........................    (30,345)     (6,391)     56,560       (35,540)          770      (14,946)
    Accounts payable, accrued expenses and
      other current and non-current
      liabilities............................      1,340      28,778          --       455,438         3,140      488,696
    Income taxes payable.....................     23,936          --     (23,353)       28,079            --       28,662
                                               ---------   ---------   ---------     ---------     ---------    ---------
      Net cash provided by (used in)
        operating activities of continuing
        operations...........................     55,490      24,859        (331)      294,165       (19,426)     354,757
                                               ---------   ---------   ---------     ---------     ---------    ---------
      Net cash used in operating activities
        of discontinued operations...........         --          --          --        (3,782)           --       (3,782)
                                               ---------   ---------   ---------     ---------     ---------    ---------
      Net cash provided by (used in)
        operating activities.................     55,490      24,859        (331)      290,383       (19,426)     350,975
                                               ---------   ---------   ---------     ---------     ---------    ---------
Investing Activities:
  Purchases of property, plant and
    equipment................................       (326)    (23,611)         --      (140,208)        3,869     (160,276)
  Proceeds from sale of property, plant and
    equipment................................         92       1,065          --         5,973            --        7,130
  Acquisitions and investments, net of cash
    acquired.................................     (9,002)         --          --      (100,288)        7,964     (101,326)
                                               ---------   ---------   ---------     ---------     ---------    ---------
      Net cash used in investing
        activities...........................     (9,236)    (22,546)         --      (234,523)       11,833     (254,472)
                                               ---------   ---------   ---------     ---------     ---------    ---------
Financing activities:
  Short-term borrowings, net.................     (3,595)       (456)         --       272,685            --      268,634
  Long-term debt and capital lease
    obligations, net.........................      4,817      (1,836)        851      (286,948)         (465)    (283,581)
  Retirement of convertible investment
    securities...............................         --          --          --       (47,664)           --      (47,664)
  Increase of accounts receivable
    securitization program...................         --          --          --        29,400            --       29,400
  Proceeds from exercise of stock options....      1,719          --          --            --            --        1,719
  Capital Increase of
    Non-Guarantor-Subsidiaries...............         --          --          --         8,556        (8,556)          --
  Dividends paid.............................    (48,404)         --          --       (15,516)       15,516      (48,404)
  Change in minority interest................         --          --        (520)           --         1,098          578
                                               ---------   ---------   ---------     ---------     ---------    ---------
      Net cash (used in) provided by
        financing activities.................    (45,463)     (2,292)        331       (39,487)        7,593      (79,318)
                                               ---------   ---------   ---------     ---------     ---------    ---------
Effect of exchange rate changes on cash and
  cash equivalents...........................     (1,665)         (6)         --       (12,621)           --      (14,292)
Cash and Cash Equivalents:
Net (decrease) increase in cash and cash
  equivalents................................       (874)         15          --         3,752            --        2,893
Cash and cash equivalents at beginning of
  period.....................................      1,029          22          --        30,816            --       31,867
                                               ---------   ---------   ---------     ---------     ---------    ---------
Cash and cash equivalents at end of period...  $     155   $      37   $      --     $  34,568     $      --    $  34,760
                                               =========   =========   =========     =========     =========    =========
</Table>

                                       F-45
<PAGE>

                                                                     SCHEDULE II

                           FRESENIUS MEDICAL CARE AG

                       VALUATIONS AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                              (REDUCTION)
                                                BALANCE AT     CHARGE TO     DEDUCTIONS/     BALANCE
                                                BEGINNING      COSTS AND     WRITE-OFFS/     AT END
                                                OF PERIOD      EXPENSES      RECOVERIES     OF PERIOD
                                                ----------    -----------    -----------    ---------
<S>                                             <C>           <C>            <C>            <C>
Allowance for doubtful accounts:
  Year ended December 31, 2001................   $111,181       $100,083       $73,136      $138,128
  Year ended December 31, 2000................   $101,262       $69,967        $60,048      $111,181
  Year ended December 31, 1999................   $ 78,167       $46,418        $23,323      $101,262
</Table>

                                       S-1