##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 20-F/A


Amendment No. 1




|  |                                                                   
|- | ------------------------------------------------------------------
|o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR
    (g) OF THE

SECURITIES EXCHANGE ACT
OF 1934


OR




|  |                                                     
|- | ----------------------------------------------------
|þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT
OF 1934


For the fiscal year ended December 31, 2004


OR




|  |                                                             
|- | ------------------------------------------------------------
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE

SECURITIES EXCHANGE ACT
OF 1934


Commission file number 001-14444





FRESENIUS MEDICAL CARE


AKTIENGESELLSCHAFT




FRESENIUS MEDICAL CARE CORPORATION




Germany







Else-Kröner Strasse 1, 61352 Bad Homburg, Germany




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


|                                                                                                                                                                                                                                                                                                                                                     |  |                                          
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------
|Title of each class                                                                                                                                                                                                                                                                                                                                  |  | Name of each exchange on which registered
|                                                                                                                                                                                                                                                                                                                                                     |  |                                          
|American Depositary Shares representing Preference Shares                                                                                                                                                                                                                                                                                            |  | New York Stock Exchange                  
|                                                                                                                                                                                                                                                                                                                                                    
|Preference Shares, no par value                                                                                                                                                                                                                                                                                                                      |  | New York Stock
    Exchange(1)           
|                                                                                                                                                                                                                                                                                                                                                    
|American Depositary Shares representing Ordinary Shares                                                                                                                                                                                                                                                                                              |  | New York Stock Exchange                  
|                                                                                                                                                                                                                                                                                                                                                    
|Ordinary Shares, no par value                                                                                                                                                                                                                                                                                                                        |  | New York Stock
    Exchange(1)           
|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:
    77/8%
    USD Trust Preferred Securities due 2008,
    73/8%
    DM Trust Preferred Securities due 2008,
    77/8%
    USD Trust Preferred Securities due 2011,
    73/8%
    Euro Trust Preferred Securities due 2011 and related
    guarantees






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









þ o




o þ










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TABLE OF CONTENTS


|                          |  |     |  |                                                                                  |  |      |    | 
|------------------------- |  | --- |  | -------------------------------------------------------------------------------- |  | ---- | -- | 
|                          |  |     |  |                                                                                  |  | Page |   
|                          |  |     |  |                                                                                  |  |      |   
|INTRODUCTION              |  |     |  |                                                                                  |  |      |    | 
|PART I                    |  |     |  |                                                                                  |  |      |    | 
|Item 1.                   |  | N/A |  | Identity of Directors, Senior Management
    and Advisors                        |  |      | 2  | 
|Item 2.                   |  | N/A |  | 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                                 |  |      | 34 | 
|Item 6.                   |  |     |  | Directors, Senior Management and
    Employees                                   |  |      | 54 | 
|Item 7.                   |  |     |  | Major Shareholders and Related Party
    Transactions                            |  |      | 60 | 
|Item 8.                   |  |     |  | Financial Information                                                            |  |      | 64 | 
|Item 9.                   |  |     |  | The Offer and Listing Details                                                    |  |      | 67 | 
|Item 10.                  |  |     |  | Additional Information                                                           |  |      | 71 | 
|Item 11.                  |  |     |  | Quantitative and Qualitative Disclosures
    About Market Risk                   |  |      | 80 | 
|Item 12.                  |  | N/A |  | Description of Securities other than Equity
    Securities                       |  |      | 83 | 
|PART II                   |  |     |  |                                                                                  |  |      |    | 
|Item 13.                  |  | N/A |  | Defaults, Dividend Arrearages and
    Delinquencies                              |  |      | 83 | 
|Item 14.                  |  | N/A |  | Material Modifications to the Rights of
    Security Holders and Use of Proceeds |  |      | 83 | 
|Item 15.                  |  |     |  | Controls and Procedures                                                          |  |      | 83 | 
|Item 16A.                 |  |     |  | Audit Committee Financial Expert                                                 |  |      | 84 | 
|Item 16B.                 |  |     |  | Code of Ethics                                                                   |  |      | 84 | 
|Item 16C.                 |  |     |  | Principal Accountant Fees and Services                                           |  |      | 84 | 
|Item 16D.                 |  | N/A |  | Exemptions from the Listing Standards for
    Audit Committees                   |  |      | 85 | 
|Item 16E.                 |  | N/A |  | Purchase of Equity Securities by the Issuer
    and Affiliated Purchasers        |  |      | 85 | 
|PART III                  |  |     |  |                                                                                  |  |      |    | 
|Item 17.                  |  | N/A |  | Financial Statements                                                             |  |      | 85 | 
|Item 18.                  |  |     |  | Financial Statements                                                             |  |      | 85 | 
|Item 19.                  |  |     |  | Exhibits                                                                         |  |      | 85 | 
|N/A means: Not applicable |  |     |  |                                                                                 
|Exhibit 12.1             
|Exhibit 12.2             
|Exhibit 13.1             



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INTRODUCTION


Forward Looking Statements






| |   |                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our business development, operating development and financial
    condition;                                                                                
|
| |  | our expectations of growth in the patient population regarding
    renal dialysis products and services;                                                    
|
| |  | our ability to remain competitive in the markets for our
    products and services;                                                                         
|
| |  | the effects of regulatory developments, legal and tax
    proceedings and any resolution of government investigations into
    our business;                
|
| |  | changes in government reimbursement policies and those of
    private payors;                                                                               
|
| |  | changes in pharmaceutical administration patterns or
    reimbursement policies;                                                                            
|
| |  | 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.







1



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##### Table of Contents






PART I





Item 1.  Identity of Directors, Senior
Management and Advisors







Item 2.  Other Statistics and Expected
Timetable







Item 3.  Key Information


Selected Financial Data




|                                                      |                               |               |       |            |         |   |       |            |  |   |         |            |  |      |       |            |  |   |       |            | 
|----------------------------------------------------- | ----------------------------- | ------------- | ----- | ---------- | ------- | - | ----- | ---------- |  | - | ------- | ---------- |  | ---- | ----- | ---------- |  | - | ----- | ---------- | 
|                                                      |                               | 2004(A)       |       |            | 2003(A) |   |       | 2002(A)    |  |   | 2001(B) |            |  | 2000 |      
|                                                      |                               |               |       |            |         |   |       |            |  |   |         |            |  |      |      
|                                                      |                               | (In millions) |      
|Statement of Operations Data:                         |                               |               |       |            |         |   |       |            |  |   |         |            |  |      |       |            |  |   |       |           
|Net revenues                                          |                               | $             | 6,228 |            |         | $ | 5,528 |            |  | $ | 5,084   |            |  | $    | 4,859 |            |  | $ | 4,201 |           
|Cost of revenues                                      |                               |               | 4,142 |            |         |   | 3,699 |            |  |   | 3,428   |            |  |      | 3,220 |            |  |   | 2,734 |           
|                                                      |                               |               |       |            |         |   |       |            |  |   |         |            |  |      |      
|Gross profit                                          |                               |               | 2,086 |            |         |   | 1,829 |            |  |   | 1,656   |            |  |      | 1,639 |            |  |   | 1,467 |           
|Selling, general and administrative                   |                               |               | 1,183 |            |         |   | 1,022 |            |  |   | 914     |            |  |      | 966   |            |  |   | 814   |           
|Research and development                              |                               |               | 51    |            |         |   | 50    |            |  |   | 47      |            |  |      | 36    |            |  |   | 32    |           
|Special charge                                        |                               |               |      |            |         |   |      |            |  |   |        |            |  |      | 258   |            |  |   |      |           
|                                                      |                               |               |       |            |         |   |       |            |  |   |         |            |  |      |      
|Operating income                                      |                               |               | 852   |            |         |   | 757   |            |  |   | 695     |            |  |      | 379   |            |  |   | 621   |           
|Interest expense, net                                 |                               |               | 183   |            |         |   | 211   |            |  |   | 226     |            |  |      | 223   |            |  |   | 216   |           
|                                                      |                               |               |       |            |         |   |       |            |  |   |         |            |  |      |      
|Income before income taxes                            |                               |               | 669   |            |         |   | 546   |            |  |   | 469     |            |  |      | 156   |            |  |   | 405   |           
|Net income                                            |                               | $             | 402   |            |         | $ | 331   |            |  | $ | 290     |            |  | $    | 63    |            |  | $ | 212   |           
|                                                      |                               |               |       |            |         |   |       |            |  |   |         |            |  |      |      
|Weighted average of:                                  |                               |               |       |            |         |   |       |            |  |   |         |            |  |      |       |            |  |   |       |           
|                                                      | Preference shares outstanding |               |       | 26,243,059 |         |   |       | 26,191,011 |  |   |         | 26,185,178 |  |      |       | 26,035,330 |  |   |       | 19,002,118 | 
|                                                      | Ordinary shares outstanding   |               |       | 70,000,000 |         |   |       | 70,000,000 |  |   |         | 70,000,000 |  |      |       | 70,000,000 |  |   |       | 70,000,000 | 
|Basic income per Ordinary share                       |                               | $             | 4.16  |            |         | $ | 3.42  |            |  | $ | 3.00    |            |  | $    | 0.65  |            |  | $ | 2.37  |           
|Fully diluted income per Ordinary share               |                               |               | 4.14  |            |         |   | 3.42  |            |  |   | 3.00    |            |  |      | 0.64  |            |  |   | 2.36  |           
|Basic income per Preference share                     |                               |               | 4.23  |            |         |   | 3.49  |            |  |   | 3.06    |            |  |      | 0.70  |            |  |   | 2.43  |           
|Fully diluted income per Preference share             |                               |               | 4.21  |            |         |   | 3.49  |            |  |   | 3.06    |            |  |      | 0.69  |            |  |   | 2.42  |           
|Basic and fully diluted net income per Ordinary ADS   |                               |               | 1.39  |            |         |   | 1.14  |            |  |   | 1.00    |            |  |      | 0.22  |            |  |   | 0.79  |           
|Basic and fully diluted net income per Preference ADS |                               |               | 1.41  |            |         |   | 1.16  |            |  |   | 1.02    |            |  |      | 0.23  |            |  |   | 0.81  |           
|Dividends declared per Ordinary share
    ()(a)      |                               |               | 1.12  | (b)        |         |   | 1.02  |            |  |   | 0.94    |            |  |      | 0.85  |            |  |   | 0.78  |           
|Dividends declared per Preference share
    ()(a)    |                               |               | 1.18  | (b)        |         |   | 1.08  |            |  |   | 1.00    |            |  |      | 0.91  |            |  |   | 0.84  |           
|Dividends declared per Ordinary share
    ($)(a)      |                               |               |      |            |         |   | 1.25  |            |  |   | 1.10    |            |  |      | 0.78  |            |  |   | 0.72  |           
|Dividends declared per Preference share
    ($)(a)    |                               |               |      |            |         |   | 1.32  |            |  |   | 1.17    |            |  |      | 0.84  |            |  |   | 0.78  |           

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|                                                      |  |               |       |  |         |   |       |         |  |   |         |  |  |      |       |  |  |   |       | 
|----------------------------------------------------- |  | ------------- | ----- |  | ------- | - | ----- | ------- |  | - | ------- |  |  | ---- | ----- |  |  | - | ----- | 
|                                                      |  | 2004(A)       |       |  | 2003(A) |   |       | 2002(A) |  |   | 2001(B) |  |  | 2000 |      
|                                                      |  |               |       |  |         |   |       |         |  |   |         |  |  |      |      
|                                                      |  | (In millions) |      
|Balance Sheet Data                                    |  |               |       |  |         |   |       |         |  |   |         |  |  |      |       |  |  |   |       | 
|Working capital                                       |  | $             | 508   |  |         | $ | 794   |         |  | $ | 526     |  |  | $    | 402   |  |  | $ | 191   | 
|Total assets                                          |  |               | 7,962 |  |         |   | 7,503 |         |  |   | 6,780   |  |  |      | 6,516 |  |  |   | 5,979 | 
|Total long-term
    debt(c)                           |  |               | 1,824 |  |         |   | 2,354 |         |  |   | 2,234   |  |  |      | 2,165 |  |  |   | 1,611 | 
|Shareholders equity (net assets)                     |  |               | 3,635 |  |         |   | 3,244 |         |  |   | 2,807   |  |  |      | 2,617 |  |  |   | 2,679 | 
|Capital Stock  Preference shares  Nominal
    Value |  |               | 70    |  |         |   | 70    |         |  |   | 70      |  |  |      | 70    |  |  |   | 64    | 
|Capital Stock  Ordinary shares  Nominal
    Value   |  |               | 229   |  |         |   | 229   |         |  |   | 229     |  |  |      | 229   |  |  |   | 229   | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(A) | Includes the effect of an accounting change in 2002 relating to
    the adoption of SFAS No. 142, Goodwill and Other
    Intangible Assets, as of January 1, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(B) | 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 Notes 6 & 16 of the
    Notes to our Consolidated Financial Statements.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(a) | Amounts shown for each year from 2000 to 2003 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 Annual General Meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(b) | Our Management Board and our Supervisory Board have proposed
    dividends for 2004 of
    1.12 per
    Ordinary share and
    1.18 per
    Preference share. These dividends are subject to approval by our
    shareholders at our Annual General Meeting to be held on
    May 24, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(c) | Total long-term debt represents long-term debt and capital lease
    obligations, less current portions and (i) 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, (ii) at
    December 31, 2002, 2003 and 2004, the mandatorily
    redeemable preferred securities of 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.

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






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A reduction in U.S. government reimbursement for dialysis
care could materially decrease our revenues and operating
profit




A change in reimbursement for or utilization of EPO could
materially reduce our revenue 
 and operating profit




Creditors of W.R. Grace & Co. Conn. have asserted
claims against us






4



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As health maintenance organizations and other managed care
plans grow, amounts paid for our services and products by
non-governmental payors could decrease








Proposals for health care reform could decrease our
revenues and operating profit






5



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Risks Relating to our Business


Our competitors proposed combination could foreclose
certain business opportunities




Our competitors could develop superior technology or
impact our product sales








We face products liability and other claims which could
result in significant liability






If physicians and other referral sources cease referring
patients to our dialysis clinics or cease purchasing our
dialysis products, our revenues would decrease




6



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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




We face additional costs and uncertainties from
international operations








| |   |                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------
| |  | Worsening of economic situation in Latin America                                                                               
|
| |  | Fluctuations in exchange rates could adversely affect
    profitability;                                                       
|
| |  | We could face difficulties in enforcing and collecting accounts
    receivable under some countries legal systems;            
|
| |  | Local regulations could 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 could 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.                                       

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Other Risks


Our significant indebtedness may limit our ability to pay
dividends or implement certain elements of our business
strategy








Because we are not organized under U.S. law, we are
subject to certain less detailed disclosure requirements under
U.S. federal securities laws




8



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|        |                           
|------- | --------------------------
|Item 4. | Information on the Company

A.  History and Development of the Company


General


(Amtsgericht) (Sitz)


History


(Aktiengesellschaft)






| |   |                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                                                                                                     



Capital Expenditures




|                                                       |               |               |                            |     |        |     |   |      |    |     |      |     |    |     |  |  |   |         | 
|------------------------------------------------------ | ------------- | ------------- | -------------------------- | --- | ------ | --- | - | ---- | -- | --- | ---- | --- | -- | --- |  |  | - | ------- | 
|                                                       |               | Actual        |                            |     |       
|                                                       |               | (in millions) |                            |     |       
|                                                       |               |               |                            |     | Budget |    
|                                                       |               | 2004          |                            |     | 2003   |     |   | 2002 |    |     | 2005 |    
|                                                       |               |               |                            |     |        |     |   |      |    |     |      |    
|Acquisitions                                           |               |               |                            |     |        |     |   |      |    |     |      |     |    |     |  | 
|                                                       | North America |               | $                          | 65  |        |     | $ | 43   |    |     | $    | 38  |    |     |  |  |  
|                                                       | International |               |                            |     |        |     |   |      |    |     |      |     |    |     |  |  |  
|                                                       |               | Germany       |                            |     |       |     |   |      | 13 |     |      |     |   |     |  |  |   |        
|                                                       |               | Rest of World |                            |     | 55     |     |   |      | 45 |     |      |     | 50 |     |  |  |   |        
|                                                       |               |               |                            |     |        |     |   |      |    |     |      |    
|                                                       |               |               | Total Acquisitions         |     | $      | 120 |   |      | $  | 101 |      |     | $  | 88  |  |  | $ | 200-250 | 
|                                                       |               |               |                            |     |        |     |   |      |    |     |      |    
|Capital expenditures for property, plant and equipment |               |               |                            |     |        |     |   |      |    |     |      |     |    |     |  | 
|                                                       | North America |               | $                          | 163 |        |     | $ | 177  |    |     | $    | 130 |    |     |  |  |  
|                                                       | International |               |                            |     |        |     |   |      |    |     |      |     |    |     |  |  |  
|                                                       |               | Germany       |                            |     | 37     |     |   |      | 28 |     |      |     | 27 |     |  |  |   |        
|                                                       |               | Rest of World |                            |     | 79     |     |   |      | 86 |     |      |     | 82 |     |  |  |   |        
|                                                       |               |               |                            |     |        |     |   |      |    |     |      |    
|                                                       |               |               | Total Capital Expenditures |     | $      | 279 |   |      | $  | 291 |      |     | $  | 239 |  |  | $ | 350-400 | 
|                                                       |               |               |                            |     |        |     |   |      |    |     |      |    

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|   |                  
|-- | -----------------
|B. | Business Overview

Our Business






|              |                          |               |       |       |      |  |       |       |  |  |       |       | 
|------------- | ------------------------ | ------------- | ----- | ----- | ---- |  | ----- | ----- |  |  | ----- | ----- | 
|              |                          | 2004          |       |       | 2003 |  |       | 2002  | 
|              |                          |               |       |       |      |  |       |       | 
|              |                          | (in millions) |      
|North America |                          |               |       |       |      |  |       |       |  |  |       |      
|              | Dialysis Care            |               | $     | 3,795 |      |  | $     | 3,429 |  |  | $     | 3,294 | 
|              | Dialysis
    Products(1) |               |       | 421   |      |  |       | 426   |  |  |       | 454   | 
|              |                          |               |       |       |      |  |       |       | 
|              |                          |               | 4,216 |       |      |  | 3,855 |       |  |  | 3,748 |      
|             
|International |                          |               |       |       |      |  |       |       |  |  |       |      
|              | Dialysis Care            |               |       | 706   |      |  |       | 550   |  |  |       | 415   | 
|              | Dialysis Products        |               |       | 1,306 |      |  |       | 1,123 |  |  |       | 921   | 
|              |                          |               |       |       |      |  |       |       | 
|              |                          |               | 2,012 |       |      |  | 1,673 |       |  |  | 1,336 |      






|    |                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | We evaluate North America product sales based on net available
    external market. See Item 5.A. Operating
    Results for explanation and analysis.

Renal Industry Overview


End-Stage Renal Disease




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| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | 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 makes life-prolonging dialysis
    available to a larger patient population;  
|
| |  | greater access to treatment in developing countries.                                                            
|
| |  | better treatment and survival of patients with hypertension,
    diabetes and other illnesses that lead to ESRD.

Dialysis Treatment Options for ESRD


Hemodialysis.






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Peritoneal Dialysis.


Our Strategy






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Differentiated Patient Care Programs from those of Our
    Competitors. We believe that our UltraCare® Patient
    Care program offered at our North America dialysis facilities
    will distinguish and differentiate our patient care programs
    from those of our competitors. UltraCare® therapy employs
    single-use high flux polysulfone dialyzers, on-line quality
    measurement, and Ultra Pure Dialysate, all of which we feel
    improve mortality and increase the quality of patient care. The
    change to single-use dialyzers has increased our per treatment
    dialyzer costs relative to use of multi-use dialyzers. These
    cost increases have been offset, however, by our ability to
    achieve economies of scale in the production of these dialyzers,
    due to our large-scale single-use dialyzer manufacturing
    capacity. Moreover, we have implemented a staffing model based
    on single-use that reduces our personnel costs per treatment.
    Finally, automated controls in our 2008 Series dialysis
    machine reduces concentrate usage and associated costs.
|
| |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | 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 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 approximately 40% of
    the ESRD patients in the U.S. We have developed disease state
    management methodologies, which involve the coordination of
    total patient care for ESRD patients and which we believe are
    attractive to managed care payors. We have formed Optimal Renal
    Care, LLC, a joint venture                                                                                                                                                                                                                                                                                                                                        

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | with The Permanente Federation. We also formed Renaissance
    Health Care as a joint venture with participating nephrologists.
    Renaissance provides ESRD and Chronic Kidney Disease programs to
    more than 3,000 patients. We also operate a surgical center for
    the management and care of vascular access for patients, which
    decreases hospitalization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | 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
    approximately 350 full time equivalents as members of our
    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.

Dialysis Care


Dialysis Services








| |   |                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                        





13



---



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Fresenius UltraCare® Program




Laboratory Services




14



---



##### Table of Contents





Acquisitions








Quality Assurance in Dialysis Care










Sources of U.S. Dialysis Care Net Revenue




15



---



##### Table of Contents



|                                      |  |                         |        |  |      |  |        |      |  |  |        | 
|------------------------------------- |  | ----------------------- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                                      |  | Year Ended December 31, |       
|                                      |  |                         |       
|                                      |  | 2004                    |        |  | 2003 |  |        | 2002 | 
|                                      |  |                         |        |  |      |  |        |      | 
|Medicare ESRD program                 |  |                         | 58.3%  |  |      |  | 61.0%  |      |  |  | 61.5%  | 
|Private/alternative payors            |  |                         | 30.0%  |  |      |  | 29.2%  |      |  |  | 29.5%  | 
|Medicaid and other government sources |  |                         | 4.1%   |  |      |  | 3.9%   |      |  |  | 4.5%   | 
|Hospitals                             |  |                         | 7.6%   |  |      |  | 5.9%   |      |  |  | 4.5%   | 
|                                      |  |                         |        |  |      |  |        |      | 
|Total                                 |  |                         | 100.0% |  |      |  | 100.0% |      |  |  | 100.0% | 
|                                      |  |                         |        |  |      |  |        |      | 



Patient, Physician and Other Relationships






Competition


Dialysis Services.






Laboratory Services.


16



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Other Services.


Dialysis Products




Overview




|                             |  |                            |         |  |       |  |       |          |  |   |         |       |  |          |     |  |       |   |         |  |  |  |     | 
|---------------------------- |  | -------------------------- | ------- |  | ----- |  | ----- | -------- |  | - | ------- | ----- |  | -------- | --- |  | ----- | - | ------- |  |  |  | --- | 
|                             |  | Year Ended December 31,    |        
|                             |  |                            |        
|                             |  | 2004                       |         |  | 2003  |  |       | 2002     | 
|                             |  |                            |         |  |       |  |       |          | 
|                             |  | Total                      |         |  |       |  | Total |          |  |   |         | Total |  |          |    
|                             |  | Product                    |         |  | % of  |  |       | Product  |  |   | % of    |       |  | Product  |     |  | % of  |  
|                             |  | Revenues                   |         |  | Total |  |       | Revenues |  |   | Total   |       |  | Revenues |     |  | Total |  
|                             |  |                            |         |  |       |  |       |          |  |   |         |       |  |          |     |  |       |  
|                             |  | (U.S. dollars in millions) |        
|Hemodialysis Products        |  | $                          | 1,453.0 |  |       |  | 84    |          |  | $ | 1,326.1 |       |  |          | 85  |  |       | $ | 1,181.0 |  |  |  | 86  | 
|Peritoneal Dialysis Products |  |                            | 242.9   |  |       |  | 14    |          |  |   | 211.5   |       |  |          | 14  |  |       |   | 194.2   |  |  |  | 14  | 
|Adsorber                     |  |                            | 30.9    |  |       |  | 2     |          |  |   | 11.6    |       |  |          | 1   |  |       |   | 0.0     |  |  |  | 0   | 
|                             |  |                            |         |  |       |  |       |          |  |   |         |       |  |          |     |  |       |  
|Total                        |  | $                          | 1,726.8 |  |       |  | 100   |          |  | $ | 1,549.2 |       |  |          | 100 |  |       | $ | 1,375.2 |  |  |  | 100 | 
|                             |  |                            |         |  |       |  |       |          |  |   |         |       |  |          |     |  |       |  

Hemodialysis Products




Dialysis Machines.




| |   |                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 efficient 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 replacing the entire machine;                                                                                                                           
|
| |  | Specialized modules that provide monitoring and response
    capability for selected bio-physical patient parameters, such as
    body temperature and relative blood volume. 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.

17



---



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| |   |                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 up to 20 minutes following a
    power failure;                                                                                                                                                                           
|
| |  | Online clearance, measurement of dialyzer clearance for quality
    assurance with On-Line Clearance Monitoring, providing immediate
    effective clearance information, real time treatment outcome
    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® system. Our systems
    enable us to:                                                                                                                                                                              



| |   |                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                                                                            

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 and
    low flux, as well as ultra flux for acute dialysis, and allows
    tailoring of dialysis therapy to individual patients.

Other Hemodialysis Products




Peritoneal Dialysis Therapy




18



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##### Table of Contents



CAPD Therapy:




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Fewer possibilities for touch contamination.The unique
    PIN and DISC technology was designed to reduce the number of
    steps in the fluid exchange process and by doing so has lessened
    the risk of infection. This is emphasized in the disconnection
    step where a PIN is inserted into the patient connector to bring
    about automatic closure without the need for manual
    intervention. This technology is used in the
    staysafe® product line and is also
    incorporated in the
    A.N.D.Y.® l disc
    system. Both systems make up the vast majority of systems being
    used worldwide. The North American version of
    staysafe, utilizing polyvinyl chloride (PVC),
    was introduced in 2004.
|
| |  | Improved biocompatibility.The new balance and
    bicaVera® solutions are pH neutral, have very low
    glucose degradation products (GDPs) and therefore offer the
    possibility of protecting the peritoneal membrane, thus
    improving technique survival.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Environmentally friendly material:The
    staysafe® system is made of Biofine®.
    This is a material, developed by Fresenius,  and is
    composed of polyolefines. Upon combustion Biofine® is
    reduced to carbon dioxide and water. In addition to this
    environmental benefit Biofine® does not contain any
    plasticizers, thus the overall ecological advantages are
    maximized.                                                                                                                                                                                                                                                                                                                                    

APD Therapy:




| |   |                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Improved quality of life.The patient is treated at night
    and therefore is free to lead a normal life during the day.                                                                                                                                                                                                                        
|
| |  | Improved adequacy of dialysis.By adjusting the
    parameters of treatment the possibility exists to provide more
    dialysis to the patient compared to conventional CAPD therapy.
    This therapy offers important options to physicians such as
    treating patients with larger body sizes or those who have
    ultrafiltration failure.





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | sleepsafe:The sleepsafe machine has
    been used since 1999. It has automated connection technology
    thus further reducing the risk on touch contamination. Another
    key safety feature is the barcode recognition system for the
    types of solution bags used. This improves compliance and
    ensures that the prescribed dosage is administered to the
    patient. There is also a pediatric option for the treatment of
    small infants.
|
| |  | North American cycler portfolio:This includes the
    (a) Freedom® and 90/2® cyclers for pediatric and
    acute markets, (b) the Freedom® Cycler PD+ with
    IQ card and (c) the Newton IQ Cycler.                                                                                                                                                                                                                                                      



| |   |                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Freedom® and 90/2® Cyclers offer advantages for
    acute and pediatric therapy.                                                                                                                                                                                            
|
| |  | The Freedom® Cycler PD+ with IQcard offers the
    advantage of a credit card-sized IQcard which can provide
    the physician actual treatment details and results for
    compliance monitoring.                                                                            
|
| |  | The Newton IQ Cycler also offers the advantage of the
    IQ card and allows the ability to upload the
    patients prescription into the machine via the card. In
    addition there is the added convenience of pumping the waste
    dialysate directly into a receptacle.

Patient Management Software:


19



---



##### Table of Contents





Marketing, Distribution and Service








Manufacturing Operations








Sources of Supply




20



---



##### Table of Contents







New Product Introductions








| |   |                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 2008K@Home  converting the 2008K dialysis machine for
    the U.S. home hemodialysis market, including task oriented
    prompts, integrated leakage and pulse sensors and devices for
    remote monitoring.
|
| |  | POL  PatientOnLine improved software covering all
    aspects of PD, including management of medical data,
    prescription editor and adequacy tests.                                                       
|
| |  | Improved PD Product Line  including new connectology
    and color coding for ease of identification of glucose and
    calcium concentrations.                                                              
|
| |  | sleep.safe BicaVera  sleep.safe with a more
    biocompatible PD solution containing bicarbonate as a buffer.                                                                                                

Patents, Trademarks and Licenses












21



---



##### Table of Contents





Competition




Regulatory and Legal Matters


Regulatory Overview








| |   |                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.



22



---



##### Table of Contents







Product Regulation


U.S.




Germany and Other Non-U.S.




(Arzneimittelgesetz)






23



---



##### Table of Contents





(Medizinproduktegesetz)




Conformité
Européenne,




Facilities and Operational Regulation


U.S.






24



---



##### Table of Contents











Germany and Other Non-U.S.










25



---



##### Table of Contents



Reimbursement


U.S.


Dialysis Services.










26



---



##### Table of Contents







Laboratory Tests.






Erythropoetin (EPO).




27



---



##### Table of Contents







| |   |                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------
| |  | future changes in the EPO reimbursement rate without offsetting
    changes to the Medicare composite rate;
|
| |  | inclusion of EPO in the Medicare composite rate without
    offsetting increases to such rate;             
|
| |  | changes in the typical dosage per administration;                                                          
|
| |  | increases in the cost of EPO after our current supply contract
    expires; or                             
|
| |  | reduction by the manufacturer of EPO of the amount of overfill
    in the EPO vials.                       

Coordination of Benefits.




Possible Changes in Medicare.


Germany and Other Non-U.S.










28



---



##### Table of Contents













Anti-kickback Statutes, False Claims Act, Health Care Fraud,
Stark Law and Fraud and Abuse Laws in North America




Anti-kickback Statutes




29



---



##### Table of Contents







False Claims Act and Related Criminal Provisions




The Health Insurance Portability and Accountability Act of
1996










30



---



##### Table of Contents



Balanced Budget Act of 1997






Stark Law








Other Fraud and Abuse Laws




31



---



##### Table of Contents







Health Care Reform




C.  Organizational Structure







32



---



##### Table of Contents



D.  Property, plant and equipment


Property




|                        |  |                |        |           |              |  |        |            |  |                               |  |                                                                                                                   
|----------------------- |  | -------------- | ------ | --------- | ------------ |  | ------ | ---------- |  | ----------------------------- |  | ------------------------------------------------------------------------------------------------------------------
|                        |  |                |        | Currently |              |  |        |            | 
|                        |  |                |        | Owned     |              |  |        |            | 
|                        |  | Floor Area     |        |           | or Leased    |  |        |            |  |                              
|                        |  | (Approximate   |        |           | by Fresenius |  |        | Lease      |  |                              
|Location                |  | Square Meters) |        |           | Medical Care |  |        | Expiration |  | Use                          
|                        |  |                |        |           |              |  |        |            |  |                              
|Bad Homburg, Germany    |  |                | 11,524 |           |              |  | leased |            |  | December 2006                 |  | Corporate headquarters and administration                                                                         
|St. Wendel, Germany     |  |                | 49,732 |           |              |  | leased |            |  | December 2006                 |  | Manufacture of polysulfone membranes, dialyzers and peritoneal
    dialysis solutions; research and development   
|Schweinfurt, Germany    |  |                | 19,605 |           |              |  | leased |            |  | December 2006                 |  | Manufacture of hemodialysis machines and peritoneal dialysis
    cyclers; research and development                
|Palazzo Pignano, Italy  |  |                | 70,212 |           |              |  | owned  |            |  |                               |  | Manufacture of bloodlines and tubing                                                                              
|LArbresle, France      |  |                | 13,524 |           |              |  | owned  |            |  |                               |  | Manufacture of polysulfone dialyzers, special filters and dry
    hemodialysis concentrates                       
|Nottinghamshire, UK     |  |                | 5,110  |           |              |  | owned  |            |  |                               |  | Manufacture of hemodialysis concentrate solutions                                                                 
|Barcelona, Spain        |  |                | 2,000  |           |              |  | owned  |            |  |                               |  | Manufacture of hemodialysis concentrate solutions                                                                 
|Antalya, Turkey         |  |                | 8,676  |           |              |  | leased |            |  | December 2022                 |  | Manufacture of bloodlines                                                                                         
|Ankara, Turkey          |  |                | 1,000  |           |              |  | leased |            |  | February 2009                 |  | Manufacture of hemodialysis concentrate solutions                                                                 
|Casablanca, Morocco     |  |                | 2,823  |           |              |  | owned  |            |  |                               |  | Manufacture of hemodialysis concentrate solutions                                                                 
|Guadalajara, México     |  |                | 26,984 |           |              |  | owned  |            |  |                               |  | Manufacture of peritoneal dialysis bags                                                                           
|Buenos Aires, Argentina |  |                | 10,100 |           |              |  | owned  |            |  |                               |  | Manufacture of hemodialysis concentrate solutions, dry
    hemodialysis concentrates, bloodlines and desinfectants
|São Paulo, Brazil       |  |                | 5,734  |           |              |  | owned  |            |  |                               |  | Manufacture of hemodialysis concentrate solutions                                                                 
|Bogotá, Colombia        |  |                | 5,700  |           |              |  | owned  |            |  |                               |  | Manufacture of hemodialysis concentrate solutions, peritoneal
    dialysis bags, intravenous solutions            
|Hong Kong               |  |                | 1,013  |           |              |  | Leased |            |  | February 2006                 |  | Corporate headquarters and administration 
    Asia-Pacific                                                      
|Hong Kong               |  |                | 3,515  |           |              |  | Leased |            |  | November 2005  November 2006 |  | various leases of Warehouse facility                                                                              
|Taiwan                  |  |                | 1,315  |           |              |  | leased |            |  | November  December 2006      |  | Sales & Technical & Administration office-FMC &
    Nephrocare                                                    
|Milson Point, Australia |  |                | 557    |           |              |  | leased |            |  | November 2007                 |  | Administration                                                                                                    
|Smithfield, Australia   |  |                | 5,350  |           |              |  | owned  |            |  |                               |  | Manufacture of hemodialysis                                                                                       
|Altona VIC, Australia   |  |                | 2,400  |           |              |  | leased |            |  | June 2006                     |  | Warehouse                                                                                                         
|Petaling Jaya, Malaysia |  |                | 1,173  |           |              |  | leased |            |  | November 2007                 |  | Administration & Warehouse                                                                                        
|Seoul, South Korea      |  |                | 2,425  |           |              |  | leased |            |  | March 2005 and August 2005    |  | Administration                                                                                                    
|South Korea             |  |                | 1,067  |           |              |  | leased |            |  | March 2005  March 2006       |  | Branch offices                                                                                                    
|South Korea             |  |                | 3,306  |           |              |  | leased |            |  | March 2005 and December 2005  |  | Warehouses                                                                                                        
|Bangkok, Thailand       |  |                | 800    |           |              |  | leased |            |  | December 2006                 |  | Warehouse                                                                                                         

33



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|                         |  |                |        |           |              |  |        |            |  |                                                                                               |  |                                                                                                                    
|------------------------ |  | -------------- | ------ | --------- | ------------ |  | ------ | ---------- |  | --------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------
|                         |  |                |        | Currently |              |  |        |            | 
|                         |  |                |        | Owned     |              |  |        |            | 
|                         |  | Floor Area     |        |           | or Leased    |  |        |            |  |                                                                                              
|                         |  | (Approximate   |        |           | by Fresenius |  |        | Lease      |  |                                                                                              
|Location                 |  | Square Meters) |        |           | Medical Care |  |        | Expiration |  | Use                                                                                          
|                         |  |                |        |           |              |  |        |            |  |                                                                                              
|Tokyo, Japan             |  |                | 1,153  |           |              |  | leased |            |  | December 2006 with 3-year renewal option                                                      |  | Headquarter and administration                                                                                     
|Inukai, Japan            |  |                | 3,598  |           |              |  | owned  |            |  |                                                                                               |  | Manufacture of filters                                                                                             
|Buzen, Japan             |  |                | 8,369  |           |              |  | owned  |            |  |                                                                                               |  | Manufacture of solutions                                                                                           
|Fukuoka, Japan           |  |                | 4,541  |           |              |  | leased |            |  | November 2005 with 1-year renewal option (terminated already at
    the end of February 2005) |  | Warehouse                                                                                                          
|Saga, Japan              |  |                | 4,970  |           |              |  | leased |            |  | March 2010 with 5-Year renewal option                                                         |  | Warehouse                                                                                                          
|Lexington, Massachusetts |  |                | 20,258 |           |              |  | leased |            |  | October 2007 with 5-year renewal option                                                       |  | Corporate headquarters and administration  North
    America                                                      
|Newport Beach            |  |                | 143    |           |              |  | leased |            |  | February 2007 with 2-year renewal option                                                      |  | General office use and administration  North America                                                              
|Walnut Creek, California |  |                | 9,522  |           |              |  | leased |            |  | June 2012 with 5-year renewal option                                                          |  | Manufacture of Hemodialysis machines and peritoneal dialysis
    cyclers; research and development; warehouse space
|Ogden, Utah              |  |                | 41,807 |           |              |  | owned  |            |  |                                                                                               |  | Manufacture polysulfone membranes and dialyzers and peritoneal
    dialysis solutions; research and development    
|Oregon, Ohio             |  |                | 13,934 |           |              |  | leased |            |  | April 2019                                                                                    |  | Manufacture of liquid hemodialysis concentrate solutions                                                           
|Perrysburg, Ohio         |  |                | 3,252  |           |              |  | leased |            |  | August 2008                                                                                   |  | Manufacture of dry hemodialysis concentrates                                                                       
|Livingston, California   |  |                | 2,973  |           |              |  | leased |            |  | October 2011 with a 5-year renewal option                                                     |  | Manufacture of liquid hemodialysis concentrates                                                                    
|Freemont, California     |  |                | 6,645  |           |              |  | leased |            |  | August 2007 with 2-year renewal option                                                        |  | Clinical laboratory testing  3 Buildings                                                                          
|Rockleigh, New Jersey    |  |                | 7,897  |           |              |  | leased |            |  | June 2007 with two 5-year renewal options                                                     |  | Clinical laboratory testing                                                                                        
|Irving, Texas            |  |                | 6,506  |           |              |  | leased |            |  | December 2010                                                                                 |  | Manufacture of liquid hemodialysis solution                                                                        
|Reynosa, Mexico          |  |                | 13,936 |           |              |  | leased |            |  | June 2013                                                                                     |  | Manufacture of bloodlines                                                                                          
|Reynosa, Mexico          |  |                | 4,645  |           |              |  | owned  |            |  |                                                                                               |  | Warehouse                                                                                                          
|Pharr, Texas             |  |                | 511    |           |              |  | leased |            |  | Month to Month                                                                                |  | Warehouse                                                                                                          
|Redmond, Washington      |  |                | 1,904  |           |              |  | leased |            |  | December 2008                                                                                 |  | Manufacture of Prosorba Columns                                                                                    








Item 5.  Operating and Financial Review and
Prospects





34



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Critical Accounting Policies




Recoverability of Goodwill and Intangible Assets




Goodwill and Other Intangible
Assets








Legal Contingencies






35



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Accounts Receivable and Allowance for Doubtful
Accounts














36



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Composition of trade accounts receivable as at
December 31, 2004


|                                                    |       |  |     |      | 
|--------------------------------------------------- | ----- |  | --- | ---- | 
|U.S. Medicare and Medicaid Programs                 |       |  | 22% |     
|U.S. Commercial Payors                              |       |  | 21% |     
|U.S. Hospitals                                      |       |  | 7%  |     
|Self-Pay of U.S. patients                           |       |  | 1%  |     
|Others                                              |       |  | 1%  |     
|International product customers and dialysis payors |       |  | 48% |     
|                                                    |       |  |    
|                                                    | Total |  |     | 100% | 
|                                                    |       |  |    

Self-Insurance Programs




Financial Condition and Results of Operations


Overview




37



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38



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|   |                      
|-- | ---------------------
|A. | Results of Operations



|                              |               |                                  |      |       |       |   |      |       |       |   |      |       |       | 
|----------------------------- | ------------- | -------------------------------- | ---- | ----- | ----- | - | ---- | ----- | ----- | - | ---- | ----- | ----- | 
|                              |               | For the years ended December 31, |     
|                              |               |                                  |     
|                              |               | 2004                             |      |       | 2003  |   |      | 2002  |      
|                              |               |                                  |      |       |       |   |      |       |      
|                              |               | (in millions)                    |     
|Total revenue                 |               |                                  |      |       |       |   |      |       |       |   |      |      
|                              | North America |                                  | $    | 4,218 |       |   | $    | 3,857 |       |   | $    | 3,750 |      
|                              | International |                                  |      | 2,051 |       |   |      | 1,709 |       |   |      | 1,363 |      
|                              |               |                                  |      |       |       |   |      |       |      
|                              |               | Totals                           |      |       | 6,269 |   |      |       | 5,566 |   |      |       | 5,113 | 
|                              |               |                                  |      |       |       |   |      |       |      
|Inter-segment revenue         |               |                                  |      |       |       |   |      |       |       |   |      |      
|                              | North America |                                  |      | 2     |       |   |      | 2     |       |   |      | 2     |      
|                              | International |                                  |      | 39    |       |   |      | 36    |       |   |      | 27    |      
|                              |               |                                  |      |       |       |   |      |       |      
|                              |               | Totals                           |      |       | 41    |   |      |       | 38    |   |      |       | 29    | 
|                              |               |                                  |      |       |       |   |      |       |      
|Total net revenue             |               |                                  |      |       |       |   |      |       |       |   |      |      
|                              | North America |                                  |      | 4,216 |       |   |      | 3,855 |       |   |      | 3,748 |      
|                              | International |                                  |      | 2,012 |       |   |      | 1,673 |       |   |      | 1,336 |      
|                              |               |                                  |      |       |       |   |      |       |      
|                              |               | Totals                           |      |       | 6,228 |   |      |       | 5,528 |   |      |       | 5,084 | 
|                              |               |                                  |      |       |       |   |      |       |      
|Amortization and depreciation |               |                                  |      |       |       |   |      |       |       |   |      |      
|                              | North America |                                  |      | 126   |       |   |      | 120   |       |   |      | 139   |      
|                              | International |                                  |      | 105   |       |   |      | 95    |       |   |      | 70    |      
|                              | Corporate     |                                  |      | 2     |       |   |      | 2     |       |   |      | 2     |      
|                              |               |                                  |      |       |       |   |      |       |      
|                              |               | Totals                           |      |       | 233   |   |      |       | 217   |   |      |       | 211   | 
|                              |               |                                  |      |       |       |   |      |       |      
|Operating Income              |               |                                  |      |       |       |   |      |       |       |   |      |      
|                              | North America |                                  |      | 590   |       |   |      | 532   |       |   |      | 491   |      
|                              | International |                                  |      | 298   |       |   |      | 254   |       |   |      | 222   |      
|                              | Corporate     |                                  |      | (36   | )     |   |      | (29   | )     |   |      | (18   | )    
|                              |               |                                  |      |       |       |   |      |       |      
|                              |               | Totals                           |      |       | 852   |   |      |       | 757   |   |      |       | 695   | 
|                              |               |                                  |      |       |       |   |      |       |      
|Interest income               |               |                                  | 14   |       |       |   | 19   |       |       |   | 18   |      
|Interest expense              |               |                                  | (197 | )     |       |   | (230 | )     |       |   | (244 | )    
|Income tax expense            |               |                                  | (266 | )     |       |   | (213 | )     |       |   | (175 | )    
|Minority interest             |               |                                  | (1   | )     |       |   | (2   | )     |       |   | (4   | )    
|                              |               |                                  |      |       |       |   |      |       |      
|Net income                    |               | $                                | 402  |       |       | $ | 331  |       |       | $ | 290  |      
|                              |               |                                  |      |       |       |   |      |       |      

Year ended December 31, 2004 compared to year ended
December 31, 2003


Highlights




39



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Consolidated Financials


Key Indicators for Consolidated Financials


|                                                          |  |      |            |   |      |             |            |          |             |  |                |  |  |  |     | 
|--------------------------------------------------------- |  | ---- | ---------- | - | ---- | ----------- | ---------- | -------- | ----------- |  | -------------- |  |  |  | --- | 
|                                                          |  |      |            |   |      | Change in % |           
|                                                          |  |      |            |   |      |             |           
|                                                          |  |      |            |   |      | as          |            |          | at constant | 
|                                                          |  | 2004 |            |   | 2003 |             |            | reported |             |  | exchange rates | 
|                                                          |  |      |            |   |      |             |            |          |             |  |                | 
|Number of treatments                                      |  |      | 18,794,109 |   |      |             | 17,821,185 |          |             |  | 5%             |  |  |  |     | 
|Same store treatment growth in %                          |  |      | 3.6        | % |      |             | 4.9        | %        |             |  |                |  |  |  |     | 
|Revenue in $ million                                      |  |      | 6,228      |   |      |             | 5,528      |          |             |  | 13%            |  |  |  | 10% | 
|Gross profit in % of revenue                              |  |      | 33.5       | % |      |             | 33.1       | %        |             |  |                |  |  |  |     | 
|Selling, general and administrative costs in % of revenue |  |      | 19.0       | % |      |             | 18.5       | %        |             |  |                |  |  |  |     | 
|Net income in $ million                                   |  |      | 402        |   |      |             | 331        |          |             |  | 21%            |  |  |  |     | 















40



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The following discussions pertain to our business segments
and the measures we use to manage these segments


North America Segment


Key Indicators for North America Segment


|                                           |  |      |            |   |      |  |            |             |  |  |     | 
|------------------------------------------ |  | ---- | ---------- | - | ---- |  | ---------- | ----------- |  |  | --- | 
|                                           |  | 2004 |            |   | 2003 |  |            | Change in % | 
|                                           |  |      |            |   |      |  |            |             | 
|Number of treatments                       |  |      | 12,908,788 |   |      |  | 12,366,028 |             |  |  | 4%  | 
|Same store treatment growth in %           |  |      | 3.1        | % |      |  | 3.8        | %           |  |  |     | 
|Revenue in $ million                       |  |      | 4,216      |   |      |  | 3,855      |             |  |  | 9%  | 
|Depreciation and amortization in $ million |  |      | 126        |   |      |  | 120        |             |  |  | 6%  | 
|Operating income in $ million              |  |      | 590        |   |      |  | 532        |             |  |  | 11% | 
|Operating income margin in %               |  |      | 14.0       | % |      |  | 13.8       | %           |  |  |     | 

Revenue












|                                    |                                                                                                                          |                   |     |     |                   |   |     |     |  
|----------------------------------- | ------------------------------------------------------------------------------------------------------------------------ | ----------------- | --- | --- | ----------------- | - | --- | --- | -
|                                    |                                                                                                                          | Year ended        |     |     | Year ended        |  
|                                    |                                                                                                                          | December 31, 2004 |     |     | December 31, 2003 |  
|                                    |                                                                                                                          |                   |     |     |                   |  
|                                    |                                                                                                                          | (in millions)     |    
|Dialysis product sales              |                                                                                                                          | $                 | 421 |     |                   | $ | 426 |    
|                                    | less sales to other vertically integrated dialysis companies and
    to leasing company of dialysis machines leased back |                   |     | (28 | )                 |   |     | (34 | )
|                                    | less sales related to adsorber business                                                                                  |                   |     | (5  | )                 |   |     | (3  | )
|                                    |                                                                                                                          |                   |     |     |                   |  
|Net available external market sales |                                                                                                                          | $                 | 388 |     |                   | $ | 389 |    
|                                    |                                                                                                                          |                   |     |     |                   |  

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Operating income




International Segment


Key Indicators for International Segment


|                                           |  |      |           |   |      |             |           |          |             |  |                |   |  |  |    |  
|------------------------------------------ |  | ---- | --------- | - | ---- | ----------- | --------- | -------- | ----------- |  | -------------- | - |  |  | -- | -
|                                           |  |      |           |   |      | Change in % |          
|                                           |  |      |           |   |      |             |          
|                                           |  |      |           |   |      | as          |           |          | at constant | 
|                                           |  | 2004 |           |   | 2003 |             |           | reported |             |  | exchange rates |  
|                                           |  |      |           |   |      |             |           |          |             |  |                |  
|Number of treatments                       |  |      | 5,885,321 |   |      |             | 5,455,157 |          |             |  | 8              | % |  |  |    |  
|Same store treatment growth in %           |  |      | 4.6       | % |      |             | 7.7       | %        |             |  |                |   |  |  |    |  
|Revenue in $ million                       |  |      | 2,012     |   |      |             | 1,673     |          |             |  | 20             | % |  |  | 11 | %
|Depreciation and amortization in $ million |  |      | 105       |   |      |             | 95        |          |             |  | 10             | % |  |  |    |  
|Operating income in $ million              |  |      | 298       |   |      |             | 254       |          |             |  | 17             | % |  |  |    |  
|Operating income margin in %               |  |      | 14.8      | % |      |             | 15.2      | %        |             |  |                |   |  |  |    |  

Revenue












Operating income




42



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Latin America






Corporate






The following discussions pertain to our total Company
costs.


Interest




Income Taxes




Year ended December 31, 2003 compared to year ended
December 31, 2002


Highlights






| |   |                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | improving operating margin in North America. After significant
    investments into our UltraCare program, which included the
    conversion to single-use dialyzers, the program now provides
    returns which contributed to an improvement of the operating
    margin in North America from 13.1% in 2002 to 13.8% in 2003.
|
| |  | price pressure in Germany, impact from the politically unstable
    situation in the Middle East and changes in the distribution
    system in Asia Pacific which led to a reduction of the operating
    margins in the International segment from 16.6% in 2002 to 15.2%
    in 2003.                                         



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Consolidated Financials


Key Indicators for Consolidated Financials


|                                                          |  |      |            |   |      |             |            |          |             |  |                |   |  |  |   |  
|--------------------------------------------------------- |  | ---- | ---------- | - | ---- | ----------- | ---------- | -------- | ----------- |  | -------------- | - |  |  | - | -
|                                                          |  |      |            |   |      | Change in % |           
|                                                          |  |      |            |   |      |             |           
|                                                          |  |      |            |   |      | as          |            |          | at constant | 
|                                                          |  | 2003 |            |   | 2002 |             |            | reported |             |  | exchange rates |  
|                                                          |  |      |            |   |      |             |            |          |             |  |                |  
|Number of treatments                                      |  |      | 17,821,185 |   |      |             | 16,383,615 |          |             |  | 9              | % |  |  |   |  
|Same store treatment growth in %                          |  |      | 4.9        | % |      |             | 4.8        | %        |             |  |                |   |  |  |   |  
|Revenue in $ million                                      |  |      | 5,528      |   |      |             | 5,084      |          |             |  | 9              | % |  |  | 5 | %
|Gross profit in % of revenue                              |  |      | 33.1       | % |      |             | 32.6       | %        |             |  |                |   |  |  |   |  
|Selling, general and administrative costs in % of revenue |  |      | 18.5       | % |      |             | 18.0       | %        |             |  |                |   |  |  |   |  
|Net income in $ million                                   |  |      | 331        |   |      |             | 290        |          |             |  | 14             | % |  |  |   |  















44



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The following discussions pertain to our business segments
and the measures we use to manage these segments.


North America Segment


Key Indicators for North America Segment


|                                           |  |      |            |   |      |  |            |             |  |  |     |  
|------------------------------------------ |  | ---- | ---------- | - | ---- |  | ---------- | ----------- |  |  | --- | -
|                                           |  | 2003 |            |   | 2002 |  |            | Change in % | 
|                                           |  |      |            |   |      |  |            |             | 
|Number of treatments                       |  |      | 12,366,028 |   |      |  | 11,638,740 |             |  |  | 6   | %
|Same store treatment growth in %           |  |      | 3.8        | % |      |  | 3.6        | %           |  |  |     |  
|Revenue in $ million                       |  |      | 3,855      |   |      |  | 3,748      |             |  |  | 3   | %
|Depreciation and amortization in $ million |  |      | 120        |   |      |  | 139        |             |  |  | -14 | %
|Operating income in $ million              |  |      | 532        |   |      |  | 491        |             |  |  | 8   | %
|Operating income margin in %               |  |      | 13.8       | % |      |  | 13.1       | %           |  |  |     |  

Revenue










45



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|                                           |                                                                                                                          |                   |     |     |                   |   |     |     |  
|------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------ | ----------------- | --- | --- | ----------------- | - | --- | --- | -
|                                           |                                                                                                                          | Year ended        |     |     | Year ended        |  
|                                           |                                                                                                                          | December 31, 2003 |     |     | December 31, 2002 |  
|                                           |                                                                                                                          |                   |     |     |                   |  
|                                           |                                                                                                                          | (in millions)     |    
|Dialysis product sales                     |                                                                                                                          | $                 | 426 |     |                   | $ | 454 |    
|                                           | less sales to other vertically integrated dialysis companies and
    to leasing company of dialysis machines leased back |                   |     | (34 | )                 |   |     | (42 | )
|                                           | less method II and other                                                                                                 |                   |     |    |                   |   |     | (37 | )
|                                           | less sales related to adsorber business                                                                                  |                   |     | (3  | )                 |   |     |    |  
|                                           |                                                                                                                          |                   |     |     |                   |  
|Product sales to available external market |                                                                                                                          | $                 | 389 |     |                   | $ | 375 |    
|                                           |                                                                                                                          |                   |     |     |                   |  

Operating income




International Segment


Key Indicators for International Segment


|                                           |  |      |           |   |      |             |           |          |             |  |                |   |  |  |    |  
|------------------------------------------ |  | ---- | --------- | - | ---- | ----------- | --------- | -------- | ----------- |  | -------------- | - |  |  | -- | -
|                                           |  |      |           |   |      | Change in % |          
|                                           |  |      |           |   |      |             |          
|                                           |  |      |           |   |      | as          |           |          | at constant | 
|                                           |  | 2003 |           |   | 2002 |             |           | reported |             |  | exchange rates |  
|                                           |  |      |           |   |      |             |           |          |             |  |                |  
|Number of treatments                       |  |      | 5,455,157 |   |      |             | 4,744,875 |          |             |  | 15             | % |  |  |    |  
|Same store treatment growth in %           |  |      | 7.7       | % |      |             | 8.1       | %        |             |  |                |   |  |  |    |  
|Revenue in $ million                       |  |      | 1,673     |   |      |             | 1,336     |          |             |  | 25             | % |  |  | 11 | %
|Depreciation and amortization in $ million |  |      | 95        |   |      |             | 70        |          |             |  | 37             | % |  |  |    |  
|Operating income in $ million              |  |      | 254       |   |      |             | 222       |          |             |  | 14             | % |  |  |    |  
|Operating income margin in %               |  |      | 15.2      | % |      |             | 16.6      | %        |             |  |                |   |  |  |    |  

Revenue










46



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Operating income




Latin America






Corporate






The following discussions pertain to our total Company
costs.


Interest




Income Taxes




B.  Liquidity and Capital Resources


Liquidity




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Development of Days Sales Outstanding


|              |       |               |     |    |               |  |     |    | 
|------------- | ----- | ------------- | --- | -- | ------------- |  | --- | -- | 
|              |       | As at         |     |    | As at         | 
|              |       | Dec. 31, 2004 |     |    | Dec. 31, 2003 | 
|              |       |               |     |    |               | 
|North America |       |               | 67  |    |               |  | 72  |   
|International |       |               | 119 |    |               |  | 127 |   
|              |       |               |     |    |               | 
|              | Total |               |     | 84 |               |  |     | 89 | 
|              |       |               |     |    |               | 











48



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Dividends


    


Analysis of Cash Flow


Year ended December 31, 2004 compared to year ended
December 31, 2003


Operations




Investing




49



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Financing












EBITDA




50



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##### Table of Contents







|                                            |  |      |           |   |      |   |          |      |  |   |          |  
|------------------------------------------- |  | ---- | --------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                            |  | 2004 |           |   | 2003 |   |          | 2002 | 
|                                            |  |      |           |   |      |   |          |      | 
|Total EBITDA of reporting segments          |  | $    | 1,084,931 |   |      | $ | 973,813  |      |  | $ | 905,522  |  
|Interest expense, net                       |  |      | (183,746  | ) |      |   | (211,759 | )    |  |   | (226,517 | )
|Income tax expense, net                     |  |      | (265,415  | ) |      |   | (212,714 | )    |  |   | (175,074 | )
|Deferred income taxes                       |  |      | 34,281    |   |      |   | 91,312   |      |  |   | 58,449   |  
|Changes in operating assets and liabilities |  |      | 141,979   |   |      |   | (17,910  | )    |  |   | (47,011  | )
|Cash inflow from Hedging                    |  |      | 14,514    |   |      |   | 131,654  |      |  |   | 24,542   |  
|Other items, net                            |  |      | 1,299     |   |      |   | (377     | )    |  |   | 10,007   |  
|                                            |  |      |           |   |      |   |          |      | 
|Net cash provided by operating activities   |  | $    | 827,843   |   |      | $ | 754,019  |      |  | $ | 549,918  |  
|                                            |  |      |           |   |      |   |          |      | 

Year ended December 31, 2003 compared to year ended
December 31, 2002


Operations




Investing






Financing






51



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Obligations




|                                   |  |       |       |                           |        |   |     |           |  |   |              |  |  |   |     | 
|---------------------------------- |  | ----- | ----- | ------------------------- | ------ | - | --- | --------- |  | - | ------------ |  |  | - | --- | 
|                                   |  |       |       | Payments due by period of |       
|                                   |  |       |       |                           |       
|Contractual Cash Obligations       |  | Total |       |                           | 1 Year |   |     | 2-5 Years |  |   | Over 5 Years | 
|                                   |  |       |       |                           |        |   |     |           |  |   |              | 
|Trust Preferred Securities         |  | $     | 1,279 |                           |        | $ |    |           |  | $ | 650          |  |  | $ | 629 | 
|Long Term Debt                     |  |       | 769   |                           |        |   | 227 |           |  |   | 466          |  |  |   | 76  | 
|Capital Lease Obligations          |  |       | 7     |                           |        |   | 3   |           |  |   | 3            |  |  |   | 1   | 
|Operating Leases                   |  |       | 1,048 |                           |        |   | 239 |           |  |   | 542          |  |  |   | 267 | 
|Unconditional Purchase Obligations |  |       | 151   |                           |        |   | 87  |           |  |   | 64           |  |  |   |    | 
|Other Long-term Obligations        |  |       | 2     |                           |        |   | 2   |           |  |   |             |  |  |   |    | 
|Letters of Credit                  |  |       | 80    |                           |        |   | 80  |           |  |   |             |  |  |   |    | 
|                                   |  |       |       |                           |        |   |     |           |  |   |              | 
|                                   |  | $     | 3,336 |                           |        | $ | 638 |           |  | $ | 1,725        |  |  | $ | 973 | 
|                                   |  |       |       |                           |        |   |     |           |  |   |              | 

|                               |  |       |     |                          |        |   |     |           |  |              |   |  |  |   |     | 
|------------------------------ |  | ----- | --- | ------------------------ | ------ | - | --- | --------- |  | ------------ | - |  |  | - | --- | 
|                               |  |       |     | Expiration per period of |       
|                               |  |       |     |                          |       
|Available Sources of Liquidity |  | Total |     |                          | 1 Year |   |     | 2-5 Years |  | Over 5 Years |  
|                               |  |       |     |                          |        |   |     |           |  |              |  
|Unused Senior Credit Lines     |  | $     | 635 |                          |        | $ |    |           |  | $            |  |  |  | $ | 635 | 
|Other Unused Lines of Credit   |  |       | 128 |                          |        |   | 128 |           |  |              |  |  |  |   |    | 
|                               |  |       |     |                          |        |   |     |           |  |              |   | 
|                               |  | $     | 763 |                          |        | $ | 128 |           |  | $            |  |  |  | $ | 635 | 
|                               |  |       |     |                          |        |   |     |           |  |              |   | 



Borrowings






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    


Recently Issued Accounting Standards


Inventory Costs  an
amendment of ARB No. 43, Chapter 4


Share-Based
Payment




|   |                         
|-- | ------------------------
|C. | Research and development



53



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| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| |  | 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



|   |                  
|-- | -----------------
|D. | Trend information






Item 6.  Directors, Senior Management and
Employees




|   |                                
|-- | -------------------------------
|A. | Directors and senior management

General




Our Supervisory Board








| |   |                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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;



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|                                   |  |              |    | 
|---------------------------------- |  | ------------ | -- | 
|                                   |  | Age as of    |   
|                                   |  | December 31, |   
|Name                               |  | 2004         |   
|                                   |  |              |   
|Dr. Gerd Krick,
    Chairman(1)    |  |              | 66 | 
|Dr. Dieter Schenk, Deputy Chairman |  |              | 52 | 
|Dr. Ulf M. Schneider               |  |              | 39 | 
|Prof. Dr. Bernd Fahrholz           |  |              | 57 | 
|Walter L.
    Weisman(1)(3)        |  |              | 69 | 
|John Gerhard
    Kringel(1)(2)(3)  |  |              | 65 | 
|Stephen M.
    Peck(3)(4)          |  |              |    | 

| | 
| | 
| | 



| |     |                                                                                                           
| | --- | ----------------------------------------------------------------------------------------------------------
| | (1) | Members of Audit Committee                                                                                
|
| | (2) | Registered by Court on Oct. 20, 2004 and to be submitted for
    shareholder approval at AGM, May 24, 2005
|
| | (3) | Independent Director for purposes of our pooling agreement                                                
|
| | (4) | Deceased March 30, 2004                                                                                   







55



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Management Board






|                   |  |           |    |  |          |                                                                                                                             |         |  |      | 
|------------------ |  | --------- | -- |  | -------- | --------------------------------------------------------------------------------------------------------------------------- | ------- |  | ---- | 
|                   |  | Age as of |    |  |          |                                                                                                                             | Year    | 
|                   |  | Dec. 31,  |    |  |          |                                                                                                                             | Term    | 
|Name               |  | 2004      |    |  | Position |                                                                                                                             | Expires | 
|                   |  |           |    |  |          |                                                                                                                             |         | 
|Dr. Ben J. Lipps   |  |           | 64 |  |          | Chairman of the management board, Chief Executive Officer
    of our Company                                                |         |  | 2008 | 
|Roberto Fusté      |  |           | 53 |  |          | Chief Executive Officer for Asia Pacific                                                                                    |         |  | 2006 | 
|Dr. Emanuele Gatti |  |           | 49 |  |          | Chief Executive Officer for Europe, Middle East, Africa and
    Latin America                                               |         |  | 2005 | 
|Lawrence A. Rosen  |  |           | 47 |  |          | Chief Financial Officer                                                                                                     |         |  | 2006 | 
|Dr. Rainer Runte   |  |           | 45 |  |          | General Counsel and Chief Compliance Officer                                                                                |         |  | 2010 | 
|Rice Powell        |  |           | 49 |  |          | Co-Chief Executive Officer, Fresenius Medical Care North America
    and President Products & Hospital Group                |         |  | 2006 | 
|Mats Wahlstrom     |  |           | 50 |  |          | Co-Chief Executive Officer, Fresenius Medical Care North America
    and President Fresenius Medical Services North America |         |  | 2006 | 



56



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57



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B.  Compensation


Compensation of Our Management Board and our Supervisory
Board




  




C.  Board Practices






| |   |                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | overseeing managements conduct or our financial reporting
    process and the internal accounting and financial control
    systems and auditing of our financial statements;                                           
|
| |  | monitoring our internal controls risk program;                                                                                                                                                                           
|
| |  | monitoring the independence and performance of our outside
    auditors;                                                                                                                                                 
|
| |  | providing an avenue of communication among the outside auditors,
    management and the Supervisory Board;                                                                                                               
|
| |  | retaining the services of our independent auditors (subject to
    the approval by our shareholders at our Annual General Meeting)
    and approval of their fees; and                                                   
|
| |  | pre-approval of all audit and non-audit services performed by
    KPMG Deutsche Treuhand-Gesellschaft AG
    Wirtschaftsprüfungsgesellschaft, the accounting firm which
    audits our consolidated financial statements.

Governance Matters




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D.  Employees




|              |                   |      |        |        |      |  |        |        |  |  |        |        | 
|------------- | ----------------- | ---- | ------ | ------ | ---- |  | ------ | ------ |  |  | ------ | ------ | 
|              |                   | 2004 |        |        | 2003 |  |        | 2002   | 
|              |                   |      |        |        |      |  |        |        | 
|North America |                   |      |        |        |      |  |        |        |  |  |        |       
|              | Dialysis Care     |      |        | 23,258 |      |  |        | 21,986 |  |  |        | 21,628 | 
|              | Dialysis Products |      |        | 4,896  |      |  |        | 4,967  |  |  |        | 4,861  | 
|              |                   |      |        |        |      |  |        |        | 
|              |                   |      | 28,154 |        |      |  | 26,953 |        |  |  | 26,489 |       
|International |                   |      |        |        |      |  |        |        |  |  |        |       
|              | Dialysis Care     |      |        | 9,739  |      |  |        | 7,788  |  |  |        | 6,924  | 
|              | Dialysis Products |      |        | 6,633  |      |  |        | 6,356  |  |  |        | 5,851  | 
|              |                   |      |        |        |      |  |        |        | 
|              |                   |      | 16,372 |        |      |  | 14,144 |        |  |  | 12,775 |       



E.  Share ownership





Options to Purchase Our Securities


Stock Option Plans


 




59



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##### Table of Contents













Item 7.  Major Shareholders and Related
Party Transactions


A.  Major Shareholders


Security Ownership of Certain Beneficial Owners of
Fresenius Medical Care


(Wertpapierhandelsgesetz) (amtlicher Handel)




Security Ownership of Certain Beneficial Owners of
Fresenius AG




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(amtlicher Handel)




B.  Related party transactions










| |   |                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the term we (or us) and our affiliates refers
    onlyto Fresenius Medical Care AG and its
    subsidiaries; and                                                        
|
| |  | the term Fresenius AG and its affiliates refers
    onlyto Fresenius AG and affiliates of Fresenius AG
    other thanFresenius Medical Care AG and its
    subsidiaries.

Real Property Lease





Covenants Not to Compete




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Trademarks






| |   |                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                                                                                                                                        



Other Intellectual Property




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Supply Agreements










Services Agreement






Financing




Other Interests




63



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Products









|        |                      
|------- | ---------------------
|Item 8. | Financial information



8.A.7.     Legal Proceedings




Commercial Litigation






64



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Fresenius USA, Inc., et al., v. Baxter
International Inc., et al.


Other Litigation and Potential Exposures








65



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Accrued Special Charge for Legal Matters




8.A.8.     Dividend Policy


 


66



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##### Table of Contents





Depotbank Bundesanzeiger






|                 |  |      |      |  |      |   |      |      |  |   |      | 
|---------------- |  | ---- | ---- |  | ---- | - | ---- | ---- |  | - | ---- | 
|Per Share Amount |  | 2004 |      |  | 2003 |   |      | 2002 | 
|                 |  |      |      |  |      |   |      |      | 
|Preference share |  |     | 1.08 |  |      |  | 1.00 |      |  |  | 0.91 | 
|Ordinary share   |  |     | 1.02 |  |      |  | 0.94 |      |  |  | 0.85 | 

 




B.  Significant Changes









|        |                              
|------- | -----------------------------
|Item 9. | The Offer and Listing Details

A.4. and C.     Information
regarding the trading markets for price history of our stock


Trading Markets






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Trading on the Frankfurt Stock Exchange
















Bundesaufsichtsamt für den Wertpapierhandel Wertpapierhandelsgesetz


68



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|     |  |                |  |                    |        |  |     |  |       | 
|---- |  | -------------- |  | ------------------ | ------ |  | --- |  | ----- | 
|     |  |                |  | Price per          |       
|     |  |                |  | ordinary share () |       
|     |  |                |  |                    |       
|     |  |                |  | High               |        |  | Low | 
|     |  |                |  |                    |        |  |     | 
|2005 |  | February       |  |                    | 67.66  |  |     |  | 61.23 | 
|     |  | January        |  |                    | 62.17  |  |     |  | 57.37 | 
|2004 |  | December       |  |                    | 59.45  |  |     |  | 55.72 | 
|     |  | November       |  |                    | 62.90  |  |     |  | 58.48 | 
|     |  | October        |  |                    | 63.63  |  |     |  | 59.50 | 
|     |  | September      |  |                    | 62.47  |  |     |  | 59.62 | 
|2004 |  | Fourth Quarter |  |                    | 63.63  |  |     |  | 55.72 | 
|     |  | Third Quarter  |  |                    | 62.60  |  |     |  | 58.55 | 
|     |  | Second Quarter |  |                    | 63.33  |  |     |  | 53.55 | 
|     |  | First Quarter  |  |                    | 57.42  |  |     |  | 49.46 | 
|2003 |  | Fourth Quarter |  |                    | 57.00  |  |     |  | 48.25 | 
|     |  | Third Quarter  |  |                    | 53.77  |  |     |  | 42.00 | 
|     |  | Second Quarter |  |                    | 50.90  |  |     |  | 39.32 | 
|     |  | First Quarter  |  |                    | 48.79  |  |     |  | 38.00 | 
|2004 |  | Annual         |  |                    | 63.63  |  |     |  | 49.46 | 
|2003 |  | Annual         |  |                    | 57.00  |  |     |  | 38.00 | 
|2002 |  | Annual         |  |                    | 73.00  |  |     |  | 19.98 | 
|2001 |  | Annual         |  |                    | 92.90  |  |     |  | 66.77 | 
|2000 |  | Annual         |  |                    | 103.60 |  |     |  | 72.40 | 






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| |      |  |  |                      |  |  |       |  |  |  |       | 
| | ---- |  |  | -------------------- |  |  | ----- |  |  |  | ----- | 
| |      |  |  | Price per            | 
| |      |  |  | preference share () | 
| |      |  |  |                      | 
| |      |  |  | High                 |  |  | Low   | 
| |      |  |  |                      |  |  |       | 
| | 2005 |  |  | February             |  |  | 47.90 |  |  |  | 44.17 | 
| |      |  |  | January              |  |  | 44.60 |  |  |  | 41.60 | 
| | 2004 |  |  | December             |  |  | 42.65 |  |  |  | 39.35 | 
| |      |  |  | November             |  |  | 44.60 |  |  |  | 41.18 | 
| |      |  |  | October              |  |  | 44.92 |  |  |  | 42.05 | 
| |      |  |  | September            |  |  | 44.00 |  |  |  | 42.20 | 
| | 2004 |  |  | Fourth Quarter       |  |  | 44.92 |  |  |  | 39.35 | 
| |      |  |  | Third Quarter        |  |  | 44.81 |  |  |  | 41.98 | 
| |      |  |  | Second Quarter       |  |  | 45.45 |  |  |  | 36.64 | 
| |      |  |  | First Quarter        |  |  | 40.95 |  |  |  | 33.73 | 
| | 2003 |  |  | Fourth Quarter       |  |  | 41.00 |  |  |  | 35.01 | 
| |      |  |  | Third Quarter        |  |  | 40.50 |  |  |  | 30.09 | 
| |      |  |  | Second Quarter       |  |  | 36.00 |  |  |  | 28.50 | 
| |      |  |  | First Quarter        |  |  | 35.60 |  |  |  | 27.36 | 
| | 2004 |  |  | Annual               |  |  | 45.45 |  |  |  | 33.73 | 
| | 2003 |  |  | Annual               |  |  | 41.00 |  |  |  | 28.50 | 
| | 2002 |  |  | Annual               |  |  | 53.90 |  |  |  | 15.17 | 
| | 2001 |  |  | Annual               |  |  | 65.25 |  |  |  | 46.01 | 
| | 2000 |  |  | Annual               |  |  | 58.00 |  |  |  | 38.00 | 




Trading on the New York Stock Exchange




| |      |  |  |                  |  |  |       |  |  |  |       | 
| | ---- |  |  | ---------------- |  |  | ----- |  |  |  | ----- | 
| |      |  |  | Price per        | 
| |      |  |  | ordinary ADS ($) | 
| |      |  |  |                  | 
| |      |  |  | High             |  |  | Low   | 
| |      |  |  |                  |  |  |       | 
| | 2005 |  |  | February         |  |  | 29.88 |  |  |  | 26.59 | 
| |      |  |  | January          |  |  | 26.97 |  |  |  | 25.09 | 
| | 2004 |  |  | December         |  |  | 26.94 |  |  |  | 24.74 | 
| |      |  |  | November         |  |  | 27.23 |  |  |  | 25.80 | 
| |      |  |  | October          |  |  | 26.83 |  |  |  | 25.45 | 
| |      |  |  | September        |  |  | 25.71 |  |  |  | 24.13 | 
| | 2004 |  |  | Fourth Quarter   |  |  | 27.23 |  |  |  | 24.74 | 
| |      |  |  | Third Quarter    |  |  | 25.75 |  |  |  | 24.13 | 
| |      |  |  | Second Quarter   |  |  | 25.79 |  |  |  | 21.82 | 
| |      |  |  | First Quarter    |  |  | 24.59 |  |  |  | 20.41 | 
| | 2003 |  |  | Fourth Quarter   |  |  | 23.54 |  |  |  | 18.80 | 
| |      |  |  | Third Quarter    |  |  | 20.20 |  |  |  | 16.00 | 
| |      |  |  | Second Quarter   |  |  | 18.00 |  |  |  | 15.33 | 
| |      |  |  | First Quarter    |  |  | 17.49 |  |  |  | 13.20 | 
| | 2004 |  |  | Annual           |  |  | 27.23 |  |  |  | 20.41 | 
| | 2003 |  |  | Annual           |  |  | 23.54 |  |  |  | 13.20 | 
| | 2002 |  |  | Annual           |  |  | 21.60 |  |  |  | 6.70  | 
| | 2001 |  |  | Annual           |  |  | 28.30 |  |  |  | 19.80 | 
| | 2000 |  |  | Annual           |  |  | 30.19 |  |  |  | 22.56 | 



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| |      |  |  |                    |  |  |       |  |  |  |       | 
| | ---- |  |  | ------------------ |  |  | ----- |  |  |  | ----- | 
| |      |  |  | Price per          | 
| |      |  |  | preference ADS ($) | 
| |      |  |  |                    | 
| |      |  |  | High               |  |  | Low   | 
| |      |  |  |                    |  |  |       | 
| | 2005 |  |  | February           |  |  | 20.90 |  |  |  | 19.26 | 
| |      |  |  | January            |  |  | 19.20 |  |  |  | 18.16 | 
| | 2004 |  |  | December           |  |  | 19.15 |  |  |  | 17.50 | 
| |      |  |  | November           |  |  | 18.90 |  |  |  | 18.20 | 
| |      |  |  | October            |  |  | 18.50 |  |  |  | 17.80 | 
| |      |  |  | September          |  |  | 17.70 |  |  |  | 17.09 | 
| | 2004 |  |  | Fourth Quarter     |  |  | 19.15 |  |  |  | 17.50 | 
| |      |  |  | Third Quarter      |  |  | 18.24 |  |  |  | 17.09 | 
| |      |  |  | Second Quarter     |  |  | 18.40 |  |  |  | 14.91 | 
| |      |  |  | First Quarter      |  |  | 17.10 |  |  |  | 13.86 | 
| | 2003 |  |  | Fourth Quarter     |  |  | 16.68 |  |  |  | 13.74 | 
| |      |  |  | Third Quarter      |  |  | 15.00 |  |  |  | 11.50 | 
| |      |  |  | Second Quarter     |  |  | 12.60 |  |  |  | 10.90 | 
| |      |  |  | First Quarter      |  |  | 12.35 |  |  |  | 9.85  | 
| | 2004 |  |  | Annual             |  |  | 19.15 |  |  |  | 13.86 | 
| | 2003 |  |  | Annual             |  |  | 16.68 |  |  |  | 9.85  | 
| | 2002 |  |  | Annual             |  |  | 15.70 |  |  |  | 4.90  | 
| | 2001 |  |  | Annual             |  |  | 19.64 |  |  |  | 14.00 | 
| | 2000 |  |  | Annual             |  |  | 16.91 |  |  |  | 13.25 | 






Item 10.  Additional information


B.  Articles of Association


(Amtsgericht) (Sitz)


Corporate Purposes






| |   |                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                                                                                                    



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Voting Rights






Dividend Rights




Bilanzgewinn


Bundesanzeiger






Liquidation Rights


Aktiengesetz


Preemptive Rights




72



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General Meeting




Description of American Depositary Receipts












73



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Share Dividends and Other Distributions








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               





| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                    









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Deposit, Withdrawal and Cancellation
















| |   |                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                                                                           



Voting Rights






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Description of the Pooling Agreements




C.  Material contracts






D.  Exchange controls


Exchange Controls and Other Limitations Affecting Security
Holders.


Deutsche
Bundesbank  


Satzung


E.  Taxation




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Taxation of Dividends












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Refund Procedures


http://www.bff-online.de/ Steuer Vordrucke/
KSt KapSt/ AntragErstattungKapE USA.pdf










78



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Taxation of Capital Gains






German Gift and Inheritance Taxes






United States Information Reporting and Backup Withholding






|   |                     
|-- | --------------------
|H. | Documents on display

http://www.sec.gov.


79



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http://www.fmc-ag.com











|         |                                                               
|-------- | --------------------------------------------------------------
|Item 11. | Quantitative and Qualitative Disclosures About Market
    Risk

Market Risk






| |   |                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------
| |  | 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
|
| |  | the availability of financing.                                                                                         



Reimbursement Rates




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Inflation




Management of Currency and Interest Rate Risks






Foreign Currency Exposure








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Foreign Currency Risk Management


December 31, 2004


(USD in thousands)


|                               |  |                |         |  |      |   |         |        |  |   |           |  |  |      |         |   |  |   |        | 
|------------------------------ |  | -------------- | ------- |  | ---- | - | ------- | ------ |  | - | --------- |  |  | ---- | ------- | - |  | - | ------ | 
|                               |  | Nominal Amount |         |  |      |   |        
|                               |  |                |         |  | Fair |   |         | Credit | 
|                               |  | 2005           |         |  | 2006 |   |         | Total  |  |   | Value     |  |  | Risk |        
|                               |  |                |         |  |      |   |         |        |  |   |           |  |  |      |        
|Purchase of EUR against USD    |  | $              | 173,899 |  |      | $ | 393,672 |        |  | $ | 567,571   |  |  | $    | 57,292  |   |  | $ | 57,292 | 
|Sale of EUR against USD        |  |                | 11,764  |  |      |   | 391,056 |        |  |   | 402,820   |  |  |      | (41,669 | ) |  |   | 1      | 
|Purchase of EUR against others |  |                | 241,986 |  |      |   | 11,620  |        |  |   | 253,606   |  |  |      | 2,557   |   |  |   | 5,796  | 
|Sale of EUR against others     |  |                | 33,939  |  |      |   |        |        |  |   | 33,939    |  |  |      | (4      | ) |  |   | 75     | 
|Others                         |  |                | 60,970  |  |      |   | 19,118  |        |  |   | 80,088    |  |  |      | (1,196  | ) |  |   | 1,932  | 
|                               |  |                |         |  |      |   |         |        |  |   |           |  |  |      |        
|Total                          |  | $              | 522,558 |  |      | $ | 815,466 |        |  | $ | 1,338,024 |  |  | $    | 16,980  |   |  | $ | 65,096 | 
|                               |  |                |         |  |      |   |         |        |  |   |           |  |  |      |        



|                         |  |        |        |  |        |  |        |         |  |  |        |  |  |  |        | 
|------------------------ |  | ------ | ------ |  | ------ |  | ------ | ------- |  |  | ------ |  |  |  | ------ | 
|                         |  | Years |        |  | Years |  |        | Years  |  |  | Years | 
|Year ending December 31, |  | High   |        |  | Low    |  |        | Average |  |  | Close  | 
|                         |  |        |        |  |        |  |        |         |  |  |        | 
|2000 $ per              |  |        | 1.0388 |  |        |  | 0.8252 |         |  |  | 0.9236 |  |  |  | 0.9305 | 
|2001 $ per              |  |        | 0.9545 |  |        |  | 0.8384 |         |  |  | 0.8956 |  |  |  | 0.8813 | 
|2002 $ per              |  |        | 1.0487 |  |        |  | 0.8578 |         |  |  | 0.9454 |  |  |  | 1.0487 | 
|2003 $ per              |  |        | 1.2630 |  |        |  | 1.0377 |         |  |  | 1.1312 |  |  |  | 1.2630 | 
|2004 $ per              |  |        | 1.3633 |  |        |  | 1.1802 |         |  |  | 1.2439 |  |  |  | 1.3621 | 

Interest Rate Exposure












82



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Dollar Interest Rate Exposure


December 31, 2004


(U.S. dollars in millions)


|                                                                                       |                                             |                       |     |   |      |  |     |      |   |  |      |       |  |      |     |            |            |  |     |        |   |  |      |     |  |   |     |      |   |   |     |     |   | 
|-------------------------------------------------------------------------------------- | ------------------------------------------- | --------------------- | --- | - | ---- |  | --- | ---- | - |  | ---- | ----- |  | ---- | --- | ---------- | ---------- |  | --- | ------ | - |  | ---- | --- |  | - | --- | ---- | - | - | --- | --- | - | 
|                                                                                       |                                             |                       |     |   |      |  |     |      |   |  |      |       |  |      |     | Fair Value |           
|                                                                                       |                                             |                       |     |   |      |  |     |      |   |  |      |       |  |      |     | Dec. 31,   |           
|                                                                                       |                                             | 2005                  |     |   | 2006 |  |     | 2007 |   |  | 2008 |       |  | 2009 |     |            | Thereafter |  |     | Totals |   |  | 2004 |    
|                                                                                       |                                             |                       |     |   |      |  |     |      |   |  |      |       |  |      |     |            |            |  |     |        |   |  |      |    
|Principal payments on Senior Credit Agreement                                          |                                             | $                     | 25  |   |      |  | 100 |      |   |  | 100  |       |  |      | 100 |            |            |  | 100 |        |   |  | 60   |     |  | $ | 485 |      |   | $ | 485 |    
|                                                                                       | Variable interest rate = 3.47%              |                       |     |   |      |  |     |      |   |  |      |       |  |      |     |            |            |  |     |        |   |  |      |     |  |   |     |      |   |   |     |     |  
|Accounts receivable facility                                                           |                                             |                       | 336 |   |      |  |     |      |   |  |      |       |  |      |     |            |            |  |     |        |   |  |      |     |  |   | 336 |      |   |   | 336 |    
|                                                                                       | Variable interest rate = 2.27%              |                       |     |   |      |  |     |      |   |  |      |       |  |      |     |            |            |  |     |        |   |  |      |     |  |   |     |      |   |   |     |     |  
|Interest rate swap agreements                                                          |                                             |                       |     |   |      |  |     |      |   |  |      |       |  |      |     |            |            |  |     |        |   |  |      |     |  |   |     |      |   |   |     |    
|                                                                                       | Notional amount                             |                       |     |  |      |  |     | 250  |   |  |      | 200   |  |      |     | 100        |            |  |     | 250    |   |  |      |    |  |   |     | 800  |   |   |     | (39 | )
|                                                                                       | Average fixed pay rate =5.26 %              |                       |     |   |      |  |     | 4.60 | % |  |      | 6.61% |  |      |     | 4.86       | %          |  |     | 4.99   | % |  |      |     |  |   |     | 5.26 | % |   |     |     |  
|                                                                                       | Receive rate = 3-month $LIBOR               |                       |     |   |      |  |     |      |   |  |      |       |  |      |     |            |            |  |     |        |   |  |      |     |  |   |     |      |   |   |     |     |  
|Company obligated mandatorily redeemable preferred securities
    of Fresenius Medical |                                             |                       |     |   |      |  |     |      |   |  |      |       |  |      |     |            |            |  |     |        |   |  |      |     |  |   |     |      |   |   |     |    
|Care Capital Trusts                                                                    |                                             |                       |     |   |      |  |     |      |   |  |      |       |  |      |     |            |            |  |     |        |   |  |      |     |  |   |     |      |   |   |     |    
|                                                                                       | Fixed interest rate = 7.875%/issued in 1998 |                       |     |   |      |  |     |      |   |  |      |       |  |      |     | 441        |            |  |     |        |   |  |      |     |  |   |     | 441  |   |   |     | 497 |  
|                                                                                       | Fixed interest rate = 7.375%/issued in 1998 |                       |     |   |      |  |     |      |   |  |      |       |  |      |     | 209        |            |  |     |        |   |  |      |     |  |   |     | 209  |   |   |     | 229 |  
|                                                                                       |                                             | (denominated in DM)   |     |   |      |  |     |      |   |  |      |       |  |      |     |            |            |  |     |        |   |  |      |     |  |   |     |      |   |   |     |     |   | 
|                                                                                       | Fixed interest rate = 7.875%/issued in 2001 |                       |     |   |      |  |     |      |   |  |      |       |  |      |     |            |            |  |     |        |   |  |      | 223 |  |   |     | 223  |   |   |     | 251 |  
|                                                                                       | Fixed interest rate = 7.375%/issued in 2001 |                       |     |   |      |  |     |      |   |  |      |       |  |      |     |            |            |  |     |        |   |  |      | 406 |  |   |     | 406  |   |   |     | 468 |  
|                                                                                       |                                             | (denominated in euro) |     |   |      |  |     |      |   |  |      |       |  |      |     |            |            |  |     |        |   |  |      |     |  |   |     |      |   |   |     |     |   | 
|Interest rate swap agreements                                                          |                                             |                       |     |   |      |  |     |      |   |  |      |       |  |      |     |            |            |  |     |        |   |  |      |     |  |   |     |      |   |   |     |    
|                                                                                       | Notional amount                             |                       |     |   |      |  |     |      |   |  |      |       |  |      |     | 450        |            |  |     |        |   |  |      |     |  |   |     | 450  |   |   |     | (9  | )
|                                                                                       | Average fixed pay rate =3.50 %              |                       |     |   |      |  |     |      |   |  |      |       |  |      |     | 3.50       | %          |  |     |        |   |  |      |     |  |   |     | 3.50 | % |   |     |     |  
|                                                                                       | Pay rate = 6-month $LIBOR                   |                       |     |   |      |  |     |      |   |  |      |       |  |      |     |            |            |  |     |        |   |  |      |     |  |   |     |      |   |   |     |     |  






|         |                                                           
|-------- | ----------------------------------------------------------
|Item 12. | Description of Securities other than Equity
    Securities






PART II







|         |                                                
|-------- | -----------------------------------------------
|Item 13. | Defaults, Dividend Arrearages and Delinquencies








|         |                                                                                 
|-------- | --------------------------------------------------------------------------------
|Item 14. | Material Modifications to the Rights of Security Holders
    and Use of Proceeds








|         |                        
|-------- | -----------------------
|Item 15. | Controls and Procedures



83



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|          |                                 
|--------- | --------------------------------
|Item 16A. | Audit Committee Financial Expert








|          |               
|--------- | --------------
|Item 16B. | Code of Ethics

Code of
Business Conduct









|          |                                       
|--------- | --------------------------------------
|Item 16C. | Principal Accountant Fees and Services



|                   |  |      |       |  |      |   |       | 
|------------------ |  | ---- | ----- |  | ---- | - | ----- | 
|                   |  | 2004 |       |  | 2003 |  
|                   |  |      |       |  |      |  
|Audit fees         |  | $    | 4,435 |  |      | $ | 3,114 | 
|Audit related fees |  |      | 1,572 |  |      |   | 329   | 
|Tax fees           |  |      | 685   |  |      |   | 834   | 
|Other fees         |  |      | 0     |  |      |   | 224   | 
|                   |  |      |       |  |      |  
|Total              |  | $    | 6,692 |  |      | $ | 4,501 | 
|                   |  |      |       |  |      |  



Audit Committees pre-approval policies and
procedures






84



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##### Table of Contents










|          |                                                               
|--------- | --------------------------------------------------------------
|Item 16D. | Exemptions from the Listing Standards for Audit
    Committees








|          |                                                                          
|--------- | -------------------------------------------------------------------------
|Item 16E. | Purchase of Equity Securities by the Issuer and Affiliated
    Purchasers






PART III







|         |                     
|-------- | --------------------
|Item 17. | Financial Statements








|         |                     
|-------- | --------------------
|Item 18. | Financial Statements








|         |         
|-------- | --------
|Item 19. | Exhibits



Satzung)














85



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86



---



##### Table of Contents















(1)


(1)












87



---



##### Table of Contents





(2)


(2)




(1)














88



---



##### Table of Contents



























(1)(2)






89



---



##### Table of Contents

















(1)









|    |                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to the exhibit having the same number
    filed with the Companys Annual Report on Form 20-F
    for the year ended December 31, 2004 (filed March 1,
    2005).
|   
|(2) | Confidential treatment has been requested as to certain portions
    of this document in accordance with the applicable rules of the
    Securities and Exchange Commission.               

90



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##### Table of Contents



SIGNATURES








| |                       
| | ----------------------
| | Fresenius Medical Care
| | Aktiengesellschaft    



| |     |                  
| | --- | -----------------
| | By: | /s/ Dr. Ben Lipps

| |                                     
| | ------------------------------------
| |                                     
| | Name: Dr. Ben Lipps                 
| | Title:  Chief Executive Officer and 
| | Chairman
    of the Management Board



| |     |                   
| | --- | ------------------
| | By: | /s/ Lawrence Rosen

| |                                
| | -------------------------------
| |                                
| | Name: Lawrence Rosen           
| | Title:  Chief Financial Officer

91



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INDEX OF FINANCIAL STATEMENTS


|                                                                                                        |  |      |     | 
|------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                        |  | Page |    
|                                                                                                        |  |      |    
|Audited Consolidated Financial Statements                                                               |  |      |     | 
|Report of Independent Registered Public Accounting Firm                                                 |  |      | F-2 | 
|Consolidated Statements of Income for the years ended
    December 31, 2004, 2003 and 2002              |  |      | F-3 | 
|Consolidated Balance Sheets as of December 31, 2004 and 2003                                            |  |      | F-4 | 
|Consolidated Statements of Cash Flows for the years ended
    December 31, 2004, 2003 and 2002          |  |      | F-5 | 
|Consolidated Statement of Shareholders Equity for the
    years ended December 31, 2004, 2003 and 2002 |  |      | F-6 | 
|Notes to Consolidated Financial Statements                                                              |  |      | F-7 | 
|Financial Statement Schedule                                                                            |  |      | S-1 | 

F-1



---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


























F-2



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##### Table of Contents



Fresenius Medical Care AG


Consolidated Statements of Income


For the years ended December 31, 2004, 2003 and 2002


(in thousands, except share data)


|                                          |                                                  |      |           |           |      |   |           |           |   |   |           |           |  
|----------------------------------------- | ------------------------------------------------ | ---- | --------- | --------- | ---- | - | --------- | --------- | - | - | --------- | --------- | -
|                                          |                                                  | 2004 |           |           | 2003 |   |           | 2002      |  
|                                          |                                                  |      |           |           |      |   |           |           |  
|Net revenue:                              |                                                  |      |           |           |      |   |           |           |   |   |           |          
|                                          | Dialysis Care                                    |      | $         | 4,501,197 |      |   | $         | 3,978,344 |   |   | $         | 3,708,903 |  
|                                          | Dialysis Products                                |      |           | 1,726,805 |      |   |           | 1,549,165 |   |   |           | 1,375,194 |  
|                                          |                                                  |      |           |           |      |   |           |           |  
|                                          |                                                  |      | 6,228,002 |           |      |   | 5,527,509 |           |   |   | 5,084,097 |          
|Costs of revenue:                         |                                                  |      |           |           |      |   |           |           |   |   |           |          
|                                          | Dialysis Care                                    |      |           | 3,232,185 |      |   |           | 2,871,592 |   |   |           | 2,713,341 |  
|                                          | Dialysis Products                                |      |           | 909,932   |      |   |           | 827,014   |   |   |           | 714,736   |  
|                                          |                                                  |      |           |           |      |   |           |           |  
|                                          |                                                  |      | 4,142,117 |           |      |   | 3,698,606 |           |   |   | 3,428,077 |          
|Gross profit                              |                                                  |      | 2,085,885 |           |      |   | 1,828,903 |           |   |   | 1,656,020 |          
|Operating expenses:                       |                                                  |      |           |           |      |   |           |           |   |   |           |          
|                                          | Selling, general and administrative              |      |           | 1,182,176 |      |   |           | 1,021,781 |   |   |           | 913,620   |  
|                                          | Research and development                         |      |           | 51,364    |      |   |           | 49,687    |   |   |           | 47,433    |  
|                                          |                                                  |      |           |           |      |   |           |           |  
|Operating income                          |                                                  |      | 852,345   |           |      |   | 757,435   |           |   |   | 694,967   |          
|Other (income) expense:                   |                                                  |      |           |           |      |   |           |           |   |   |           |          
|                                          | Interest income                                  |      |           | (13,418   | )    |   |           | (19,089   | ) |   |           | (18,053   | )
|                                          | Interest expense                                 |      |           | 197,164   |      |   |           | 230,848   |   |   |           | 244,570   |  
|                                          |                                                  |      |           |           |      |   |           |           |  
|                                          | Income before income taxes and minority interest |      |           | 668,599   |      |   |           | 545,676   |   |   |           | 468,450   |  
|Income tax expense                        |                                                  |      | 265,415   |           |      |   | 212,714   |           |   |   | 175,074   |          
|Minority interest                         |                                                  |      | 1,186     |           |      |   | 1,782     |           |   |   | 3,586     |          
|                                          |                                                  |      |           |           |      |   |           |           |  
|Net income                                |                                                  | $    | 401,998   |           |      | $ | 331,180   |           |   | $ | 289,790   |          
|                                          |                                                  |      |           |           |      |   |           |           |  
|Basic income per Ordinary share           |                                                  | $    | 4.16      |           |      | $ | 3.42      |           |   | $ | 3.00      |          
|                                          |                                                  |      |           |           |      |   |           |           |  
|Fully diluted income per Ordinary share   |                                                  | $    | 4.14      |           |      | $ | 3.42      |           |   | $ | 3.00      |          
|                                          |                                                  |      |           |           |      |   |           |           |  
|Basic income per Preference share         |                                                  | $    | 4.23      |           |      | $ | 3.49      |           |   | $ | 3.06      |          
|                                          |                                                  |      |           |           |      |   |           |           |  
|Fully diluted income per Preference share |                                                  | $    | 4.21      |           |      | $ | 3.49      |           |   | $ | 3.06      |          
|                                          |                                                  |      |           |           |      |   |           |           |  



F-3



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##### Table of Contents



Fresenius Medical Care AG


Consolidated Balance Sheets


At December 31, 2004 and 2003


(in thousands, except share data)


|                                                                                                                                                                                       |                                                                                                              |      |           |           |      |   |           |           | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | ---- | --------- | --------- | ---- | - | --------- | --------- | 
|                                                                                                                                                                                       |                                                                                                              | 2004 |           |           | 2003 |  
|                                                                                                                                                                                       |                                                                                                              |      |           |           |      |  
|Assets                                                                                                                                                                                 |                                                                                                              |      |           |           |      |   |           |          
|Current assets:                                                                                                                                                                        |                                                                                                              |      |           |           |      |   |           |          
|                                                                                                                                                                                       | Cash and cash equivalents                                                                                    |      | $         | 58,966    |      |   | $         | 48,427    | 
|                                                                                                                                                                                       | Trade accounts receivable, less allowance for doubtful accounts
    of $179,917 in 2004 and $166,385 in 2003 |      |           | 1,462,847 |      |   |           | 1,229,503 | 
|                                                                                                                                                                                       | Accounts receivable from related parties                                                                     |      |           | 51,760    |      |   |           | 50,456    | 
|                                                                                                                                                                                       | Inventories                                                                                                  |      |           | 442,919   |      |   |           | 444,738   | 
|                                                                                                                                                                                       | Prepaid expenses and other current assets                                                                    |      |           | 244,093   |      |   |           | 253,365   | 
|                                                                                                                                                                                       | Deferred taxes                                                                                               |      |           | 185,385   |      |   |           | 179,639   | 
|                                                                                                                                                                                       |                                                                                                              |      |           |           |      |  
|                                                                                                                                                                                       | Total current assets                                                                                         |      |           | 2,445,970 |      |   |           | 2,206,128 | 
|Property, plant and equipment, net                                                                                                                                                     |                                                                                                              |      | 1,181,927 |           |      |   | 1,089,146 |          
|Intangible assets                                                                                                                                                                      |                                                                                                              |      | 602,048   |           |      |   | 582,103   |          
|Goodwill                                                                                                                                                                               |                                                                                                              |      | 3,445,152 |           |      |   | 3,288,348 |          
|Deferred taxes                                                                                                                                                                         |                                                                                                              |      | 58,123    |           |      |   | 35,541    |          
|Other assets                                                                                                                                                                           |                                                                                                              |      | 228,321   |           |      |   | 302,054   |          
|                                                                                                                                                                                       |                                                                                                              |      |           |           |      |  
|                                                                                                                                                                                       | Total assets                                                                                                 |      | $         | 7,961,541 |      |   | $         | 7,503,320 | 
|                                                                                                                                                                                       |                                                                                                              |      |           |           |      |  
|Liabilities and shareholders equity                                                                                                                                                   |                                                                                                              |      |           |           |      |   |           |          
|Current liabilities:                                                                                                                                                                   |                                                                                                              |      |           |           |      |   |           |          
|                                                                                                                                                                                       | Accounts payable                                                                                             |      | $         | 192,552   |      |   | $         | 177,824   | 
|                                                                                                                                                                                       | Accounts payable to related parties                                                                          |      |           | 113,444   |      |   |           | 128,703   | 
|                                                                                                                                                                                       | Accrued expenses and other current liabilities                                                               |      |           | 741,075   |      |   |           | 691,984   | 
|                                                                                                                                                                                       | Short-term borrowings                                                                                        |      |           | 419,148   |      |   |           | 89,417    | 
|                                                                                                                                                                                       | Short-term borrowings from related parties                                                                   |      |           | 5,766     |      |   |           | 30,000    | 
|                                                                                                                                                                                       | Current portion of long-term debt and capital lease obligations                                              |      |           | 230,179   |      |   |           | 90,365    | 
|                                                                                                                                                                                       | Income tax payable                                                                                           |      |           | 230,530   |      |   |           | 178,111   | 
|                                                                                                                                                                                       | Deferred taxes                                                                                               |      |           | 5,159     |      |   |           | 26,077    | 
|                                                                                                                                                                                       |                                                                                                              |      |           |           |      |  
|                                                                                                                                                                                       | Total current liabilities                                                                                    |      |           | 1,937,853 |      |   |           | 1,412,481 | 
|Long-term debt and capital lease obligations, less current
    portion                                                                                                                 |                                                                                                              |      | 545,570   |           |      |   | 1,111,624 |          
|Other liabilities                                                                                                                                                                      |                                                                                                              |      | 156,122   |           |      |   | 128,615   |          
|Pension liabilities                                                                                                                                                                    |                                                                                                              |      | 108,125   |           |      |   | 100,052   |          
|Deferred taxes                                                                                                                                                                         |                                                                                                              |      | 282,261   |           |      |   | 250,446   |          
|Company-obligated mandatorily redeemable preferred securities of
    subsidiary Fresenius Medical Care Capital Trusts holding solely
    Company-guaranteed debentures of subsidiaries |                                                                                                              |      | 1,278,760 |           |      |   | 1,242,317 |          
|Minority interest                                                                                                                                                                      |                                                                                                              |      | 18,034    |           |      |   | 14,105    |          
|                                                                                                                                                                                       |                                                                                                              |      |           |           |      |  
|                                                                                                                                                                                       | Total liabilities                                                                                            |      |           | 4,326,725 |      |   |           | 4,259,640 | 
|Shareholders equity:                                                                                                                                                                  |                                                                                                              |      |           |           |      |   |           |          
|Preference shares, no par,
    2.56 nominal
    value, 53,597,700 shares authorized, 26,296,086 issued and
    outstanding                                                            |                                                                                                              |      | 69,878    |           |      |   | 69,616    |          
|Ordinary shares, no par,
    2.56 nominal
    value, 70,000,000 shares authorized, issued and outstanding                                                                             |                                                                                                              |      | 229,494   |           |      |   | 229,494   |          
|Additional paid-in capital                                                                                                                                                             |                                                                                                              |      | 2,746,473 |           |      |   | 2,741,362 |          
|Retained earnings                                                                                                                                                                      |                                                                                                              |      | 657,906   |           |      |   | 378,014   |          
|Accumulated other comprehensive loss                                                                                                                                                   |                                                                                                              |      | (68,935   | )         |      |   | (174,806  | )        
|                                                                                                                                                                                       |                                                                                                              |      |           |           |      |  
|Total shareholders equity                                                                                                                                                             |                                                                                                              |      | 3,634,816 |           |      |   | 3,243,680 |          
|                                                                                                                                                                                       |                                                                                                              |      |           |           |      |  
|Total liabilities and shareholders equity                                                                                                                                             |                                                                                                              | $    | 7,961,541 |           |      | $ | 7,503,320 |          
|                                                                                                                                                                                       |                                                                                                              |      |           |           |      |  



F-4



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##### Table of Contents



Fresenius Medical Care AG


Consolidated Statements of Cash Flows


For the years ended December 31, 2004, 2003 and 2002


(in thousands)


|                                                             |                                                                                                                  |                                                                                      |      |          |          |   |        |          |          |   |      |          |          |  
|------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ---- | -------- | -------- | - | ------ | -------- | -------- | - | ---- | -------- | -------- | -
|                                                             |                                                                                                                  | 2004                                                                                 |      |          | 2003     |   |        | 2002     |         
|                                                             |                                                                                                                  |                                                                                      |      |          |          |   |        |          |         
|Operating Activities:                                        |                                                                                                                  |                                                                                      |      |          |          |   |        |          |          |   |      |         
|                                                             | Net income                                                                                                       |                                                                                      | $    | 401,998  |          |   | $      | 331,180  |          |   | $    | 289,790  |         
|                                                             | Adjustments to reconcile net income to cash and cash equivalents
    provided by (used in) operating activities: |                                                                                      |      |          |          |   |        |          |          |   |      |          |         
|                                                             |                                                                                                                  | Depreciation and amortization                                                        |      |          | 232,585  |   |        |          | 216,377  |   |      |          | 210,555  |  
|                                                             |                                                                                                                  | Loss on early redemption of trust preferred securities, net of
    tax               |      |          |         |   |        |          |         |   |      |          | 11,777   |  
|                                                             |                                                                                                                  | Change in deferred taxes, net                                                        |      |          | 34,281   |   |        |          | 91,312   |   |      |          | 58,449   |  
|                                                             |                                                                                                                  | Loss (gain) on sale of fixed assets                                                  |      |          | 735      |   |        |          | (50      | ) |      |          | 690      |  
|                                                             |                                                                                                                  | Compensation expense related to stock options                                        |      |          | 1,751    |   |        |          | 1,456    |   |      |          | 1,126    |  
|                                                             |                                                                                                                  | Cash inflow from Hedging                                                             |      |          | 14,514   |   |        |          | 131,654  |   |      |          | 24,542   |  
|                                                             | Changes in assets and liabilities, net of amounts from
    businesses acquired:                                  |                                                                                      |      |          |          |   |        |          |          |   |      |          |         
|                                                             |                                                                                                                  | Trade accounts receivable, net                                                       |      |          | (7,886   | ) |        |          | 53,563   |   |      |          | (13,124  | )
|                                                             |                                                                                                                  | Inventories                                                                          |      |          | 27,245   |   |        |          | (22,993  | ) |      |          | (6,519   | )
|                                                             |                                                                                                                  | Prepaid expenses, other current and non-current assets                               |      |          | 70,033   |   |        |          | 60,155   |   |      |          | 17,670   |  
|                                                             |                                                                                                                  | Accounts receivable from/ payable to related parties                                 |      |          | (22,686  | ) |        |          | 7,199    |   |      |          | 3,228    |  
|                                                             |                                                                                                                  | Accounts payable, accrued expenses and other current and
    non-current liabilities |      |          | 36,157   |   |        |          | (92,316  | ) |      |          | (42,518  | )
|                                                             |                                                                                                                  | Income tax payable                                                                   |      |          | 39,116   |   |        |          | (23,518  | ) |      |          | (5,748   | )
|                                                             |                                                                                                                  |                                                                                      |      |          |          |   |        |          |         
|                                                             |                                                                                                                  | Net cash provided by operating activities                                            |      |          | 827,843  |   |        |          | 754,019  |   |      |          | 549,918  |  
|                                                             |                                                                                                                  |                                                                                      |      |          |          |   |        |          |         
|Investing Activities:                                        |                                                                                                                  |                                                                                      |      |          |          |   |        |          |          |   |      |         
|                                                             | Purchases of property, plant and equipment                                                                       |                                                                                      |      | (278,732 | )        |   |        | (291,260 | )        |   |      | (239,160 | )       
|                                                             | Proceeds from sale of property, plant and equipment                                                              |                                                                                      |      | 18,358   |          |   |        | 14,826   |          |   |      | 37,783   |         
|                                                             | Acquisitions and investments, net of cash acquired                                                               |                                                                                      |      | (104,493 | )        |   |        | (92,190  | )        |   |      | (79,835  | )       
|                                                             |                                                                                                                  |                                                                                      |      |          |          |   |        |          |         
|                                                             |                                                                                                                  | Net cash used in investing activities                                                |      |          | (364,867 | ) |        |          | (368,624 | ) |      |          | (281,212 | )
|                                                             |                                                                                                                  |                                                                                      |      |          |          |   |        |          |         
|Financing Activities:                                        |                                                                                                                  |                                                                                      |      |          |          |   |        |          |          |   |      |         
|                                                             | Proceeds from short-term borrowings                                                                              |                                                                                      |      | 70,484   |          |   |        | 102,678  |          |   |      | 88,639   |         
|                                                             | Repayments of short-term borrowings                                                                              |                                                                                      |      | (86,850  | )        |   |        | (153,911 | )        |   |      | (68,255  | )       
|                                                             | Proceeds from short-term borrowings from related parties                                                         |                                                                                      |      | 55,539   |          |   |        | 94,787   |          |   |      | 49,120   |         
|                                                             | Repayments of short-term borrowings from related parties                                                         |                                                                                      |      | (80,000  | )        |   |        | (70,787  | )        |   |      | (58,125  | )       
|                                                             | Proceeds from long-term debt                                                                                     |                                                                                      |      | 369,369  |          |   |        | 982,825  |          |   |      | 417,098  |         
|                                                             | Principal payments of long-term debt and capital lease
    obligations                                           |                                                                                      |      | (840,131 | )        |   |        | (968,888 | )        |   |      | (246,566 | )       
|                                                             | Redemption of trust preferred securities                                                                         |                                                                                      |      |         |          |   |        |         |          |   |      | (376,200 | )       
|                                                             | Increase (decrease) of accounts receivable securitization program                                                |                                                                                      |      | 177,767  |          |   |        | (287,251 | )        |   |      | 3,249    |         
|                                                             | Proceeds from exercise of stock options                                                                          |                                                                                      |      | 3,622    |          |   |        | 1,600    |          |   |      | 550      |         
|                                                             | Dividends paid                                                                                                   |                                                                                      |      | (122,106 | )        |   |        | (107,761 | )        |   |      | (76,743  | )       
|                                                             | Redemption of Series D Preferred Stock of subsidiary                                                             |                                                                                      |      |         |          |   |        | (8,906   | )        |   |      |         |         
|                                                             | Change in minority interest                                                                                      |                                                                                      |      | 389      |          |   |        | (266     | )        |   |      | 2,095    |         
|                                                             |                                                                                                                  |                                                                                      |      |          |          |   |        |          |         
|                                                             |                                                                                                                  | Net cash used in financing activities                                                |      |          | (451,917 | ) |        |          | (415,880 | ) |      |          | (265,138 | )
|                                                             |                                                                                                                  |                                                                                      |      |          |          |   |        |          |         
|Effect of exchange rate changes on cash and cash equivalents |                                                                                                                  |                                                                                      | (520 | )        |          |   | 14,119 |          |          |   | (347 | )       
|                                                             |                                                                                                                  |                                                                                      |      |          |          |   |        |          |         
|Cash and Cash Equivalents:                                   |                                                                                                                  |                                                                                      |      |          |          |   |        |          |          |   |      |         
|                                                             | Net increase (decrease) in cash and cash equivalents                                                             |                                                                                      |      | 10,539   |          |   |        | (16,366  | )        |   |      | 3,221    |         
|                                                             | Cash and cash equivalents at beginning of period                                                                 |                                                                                      |      | 48,427   |          |   |        | 64,793   |          |   |      | 61,572   |         
|                                                             |                                                                                                                  |                                                                                      |      |          |          |   |        |          |         
|                                                             | Cash and cash equivalents at end of period                                                                       |                                                                                      | $    | 58,966   |          |   | $      | 48,427   |          |   | $    | 64,793   |         
|                                                             |                                                                                                                  |                                                                                      |      |          |          |   |        |          |         



F-5



---



##### Table of Contents



Fresenius Medical Care AG


Consolidated Statements of Shareholders Equity


For the years ended December 31, 2004, 2003 and 2002


(in thousands, except share data)


|                                                   |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   |           |         |  
|-------------------------------------------------- | --------------------------------------------- | ----------------- | ---------- |  | --------------- | - | ------ | ---------- |  | --------------------------- | ---------- |  |  | ----------------- | ------- |  | --------- | - | --------- | ----------- |  | - | --------- | ------- |  | --------- | -------- | ------- | ----- | - | ------- | ------- | - | - | ------- | ------- | - | - | --------- | ------- | -
|                                                   |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  | Accumulated Other |         |  |          
|                                                   |                                               |                   |            |  |                 |   |        |            |  | Comprehensive Income (Loss) |            |  | 
|                                                   |                                               | Preference Shares |            |  | Ordinary Shares |   |        |            |  |                             |            |  |  |                   |        
|                                                   |                                               |                   |            |  |                 |   |        | Additional |  |                             | Retained   |  |  | Foreign           |         |  |           |   | Minimum   |             |  |  
|                                                   |                                               | Number of         |            |  | No Par          |   |        | Number of  |  |                             | No Par     |  |  | Paid in           |         |  | Earnings  |   |           | Currency    |  |   | Cash Flow |         |  | Pension   |          |         |      
|                                                   |                                               | Shares            |            |  | Value           |   |        | Shares     |  |                             | Value      |  |  | Capital           |         |  | (Deficit) |   |           | Translation |  |   | Hedges    |         |  | Liability |          |         | Total |  
|                                                   |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |  
|Balance at December 31, 2001                       |                                               |                   | 26,176,508 |  |                 | $ | 69,512 |            |  |                             | 70,000,000 |  |  | $                 | 229,494 |  |           | $ | 2,735,265 |             |  | $ | (58,452   | )       |  | $         | (308,392 | )       |       | $ | (50,683 | )       |   | $ |        |         |   | $ | 2,616,744 |        
|Proceeds from exercise of options                  |                                               |                   | 12,067     |  |                 |   | 28     |            |  |                             |            |  |  |                   |         |  |           |   | 522       |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   | 550       |        
|Compensation expense related to stock options      |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   | 1,126     |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   | 1,126     |        
|Dividends paid                                     |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   | (76,743   | )       |  |           |          |         |       |   |         |         |   |   |         |         |   |   | (76,743   | )      
|Comprehensive income (loss)                        |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   |           |        
|                                                   | Net income                                    |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           | 289,790 |  |           |          |         |       |   |         |         |   |   |         |         |   |   |           | 289,790 |  
|                                                   | Other comprehensive income (loss) related to: |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   |           |         |  
|                                                   | Cash flow hedges                              |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         | 33,501  |   |   |         |         |   |   |           | 33,501  |  
|                                                   | Foreign currency translation adjustment       |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          | (38,432 | )     |   |         |         |   |   |         |         |   |   |           | (38,432 | )
|                                                   | Minimum pension liability                     |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         | (19,357 | ) |   |           | (19,357 | )
|                                                   |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |  
|Comprehensive income                               |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   | 265,502   |        
|                                                   |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |  
|Balance at December 31, 2002                       |                                               |                   | 26,188,575 |  |                 | $ | 69,540 |            |  |                             | 70,000,000 |  |  | $                 | 229,494 |  |           | $ | 2,736,913 |             |  | $ | 154,595   |         |  | $         | (346,824 | )       |       | $ | (17,182 | )       |   | $ | (19,357 | )       |   | $ | 2,807,179 |        
|Proceeds from exercise of options                  |                                               |                   | 25,404     |  |                 |   | 76     |            |  |                             |            |  |  |                   |         |  |           |   | 1,524     |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   | 1,600     |        
|Compensation expense related to stock options      |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   | 1,456     |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   | 1,456     |        
|Dividends paid                                     |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   | (107,761  | )       |  |           |          |         |       |   |         |         |   |   |         |         |   |   | (107,761  | )      
|Transaction under common control with Fresenius AG |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   | 1,469     |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   | 1,469     |        
|Comprehensive income (loss)                        |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   |           |        
|                                                   | Net income                                    |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           | 331,180 |  |           |          |         |       |   |         |         |   |   |         |         |   |   |           | 331,180 |  
|                                                   | Other comprehensive income (loss) related to: |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   |           |         |  
|                                                   | Cash flow hedges                              |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         | 22,029  |   |   |         |         |   |   |           | 22,029  |  
|                                                   | Foreign currency translation adjustment       |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          | 200,578 |       |   |         |         |   |   |         |         |   |   |           | 200,578 |  
|                                                   | Minimum pension liability                     |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         | (14,050 | ) |   |           | (14,050 | )
|                                                   |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |  
|Comprehensive income                               |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   | 539,737   |        
|                                                   |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |  
|Balance at December 31, 2003                       |                                               |                   | 26,213,979 |  |                 | $ | 69,616 |            |  |                             | 70,000,000 |  |  | $                 | 229,494 |  |           | $ | 2,741,362 |             |  | $ | 378,014   |         |  | $         | (146,246 | )       |       | $ | 4,847   |         |   | $ | (33,407 | )       |   | $ | 3,243,680 |        
|Proceeds from exercise of options                  |                                               |                   | 82,107     |  |                 |   | 262    |            |  |                             |            |  |  |                   |         |  |           |   | 3,360     |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   | 3,622     |        
|Compensation expense related to stock options      |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   | 1,751     |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   | 1,751     |        
|Dividends paid                                     |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   | (122,106  | )       |  |           |          |         |       |   |         |         |   |   |         |         |   |   | (122,106  | )      
|Comprehensive income (loss)                        |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   |          |        
|                                                   | Net income                                    |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           | 401,998 |  |           |          |         |       |   |         |         |   |   |         |         |   |   |           | 401,998 |  
|                                                   | Other comprehensive income (loss) related to: |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   |           |        |  
|                                                   | Cash flow hedges                              |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         | (29,011 | ) |   |         |         |   |   |           | (29,011 | )
|                                                   | Foreign currency translation adjustment       |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          | 144,784 |       |   |         |         |   |   |         |         |   |   |           | 144,784 |  
|                                                   | Minimum pension liability                     |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         | (9,902  | ) |   |           | (9,902  | )
|                                                   |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |  
|Comprehensive income                               |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |   |         |         |   |   |         |         |   |   | 507,869   |        
|                                                   |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |  
|Balance at December 31, 2004                       |                                               |                   | 26,296,086 |  |                 | $ | 69,878 |            |  |                             | 70,000,000 |  |  | $                 | 229,494 |  |           | $ | 2,746,473 |             |  | $ | 657,906   |         |  | $         | (1,462   | )       |       | $ | (24,164 | )       |   | $ | (43,309 | )       |   | $ | 3,634,816 |        
|                                                   |                                               |                   |            |  |                 |   |        |            |  |                             |            |  |  |                   |         |  |           |   |           |             |  |   |           |         |  |           |          |         |       |  



F-6



---



##### Table of Contents



Fresenius Medical Care AG


Notes to Consolidated Financial Statements


(in thousands, except share data)


1.   The Company and Summary of Significant
Accounting Policies




Basis of Presentation




Summary of Significant Accounting Policies


a)  Principles of Consolidation










b)  Classifications




c)   Cash and Cash Equivalents




d)  Allowance for Doubtful Accounts




F-7



---



##### Table of Contents





e)   Inventories




f)   Property, Plant and Equipment




g)  Goodwill and Other Intangible Assets










h)  Derivative Financial Instruments


Accounting for
Derivative Instruments and Hedging Activities,




F-8



---



##### Table of Contents





i)   Foreign Currency Translation


Foreign Currency
Translation.


j)   Revenue Recognition Policy








k)  Research and Development expenses




l)   Income Taxes


Accounting for
Income Taxes,


m)  Impairment


Accounting for the Impairment or Disposal of Long-Lived
Assets.


F-9



---



##### Table of Contents







n)  Debt Issuance Costs




o)  Self-Insurance Programs




p)  Use of Estimates




q)  Concentration of Risk






r)   Earnings per Ordinary share and
Preference share






s)   Stock Option Plans


Accounting for Stock Issued to Employees,


F-10



---



##### Table of Contents





Fair Value of Stock Options






|                              |                          |      |  |            |      |  |  |            |  |  |  |            | 
|----------------------------- | ------------------------ | ---- |  | ---------- | ---- |  |  | ---------- |  |  |  | ---------- | 
|                              |                          | 2004 |  |            | 2003 |  |  | 2002       | 
|                              |                          |      |  |            |      |  |  |            | 
|Weighted-average assumptions: |                          |      |  |            |      |  |  |            |  |  |  |           
|                              | Expected dividend yield  |      |  | 2.87%      |      |  |  | 2.60%      |  |  |  | 2.20%      | 
|                              | Risk-free interest rate  |      |  | 3.50%      |      |  |  | 3.80%      |  |  |  | 3.80%      | 
|                              | Expected volatility      |      |  | 40.00%     |      |  |  | 40.00%     |  |  |  | 40.00%     | 
|                              | Expected life of options |      |  | 5.3  years |      |  |  | 5.3  years |  |  |  | 5.3  years | 



|                          |                                                                                                                                               |             |   |         |      |  |   |         |      |  |   |         |      | 
|------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | - | ------- | ---- |  | - | ------- | ---- |  | - | ------- | ---- | 
|                          |                                                                                                                                               | 2004        |   |         | 2003 |  |   | 2002    |     
|                          |                                                                                                                                               |             |   |         |      |  |   |         |     
|Net income:               |                                                                                                                                               |             |   |         |      |  |   |         |      |  |   |        
|                          | As reported                                                                                                                                   |             | $ | 401,998 |      |  | $ | 331,180 |      |  | $ | 289,790 |     
|                          | Add: Stock-based employee compensation expense included in
    reported net income, net of related tax effects                                |             |   | 1,751   |      |  |   | 1,456   |      |  |   | 1,126   |     
|                          | Deduct: Total stock-based employee compensation expense
    determined under fair value method for all awards, net of
    related tax effects |             |   | (8,835  | )    |  |   | (9,583  | )    |  |   | (11,951 | )   
|                          |                                                                                                                                               |             |   |         |      |  |   |         |     
|                          | Pro forma                                                                                                                                     |             | $ | 394,914 |      |  | $ | 323,053 |      |  | $ | 278,965 |     
|                          |                                                                                                                                               |             |   |         |      |  |   |         |     
|Basic income per:         |                                                                                                                                               |             |   |         |      |  |   |         |      |  |   |        
|                          | Ordinary share                                                                                                                                |             |   |         |      |  |   |         |      |  |   |         |     
|                          |                                                                                                                                               | As reported |   | $       | 4.16 |  |   | $       | 3.42 |  |   | $       | 3.00 | 
|                          |                                                                                                                                               | Pro forma   |   | $       | 4.08 |  |   | $       | 3.34 |  |   | $       | 2.88 | 
|                          | Preference share                                                                                                                              |             |   |         |      |  |   |         |      |  |   |         |     
|                          |                                                                                                                                               | As reported |   | $       | 4.23 |  |   | $       | 3.49 |  |   | $       | 3.06 | 
|                          |                                                                                                                                               | Pro forma   |   | $       | 4.16 |  |   | $       | 3.41 |  |   | $       | 2.94 | 
|Fully diluted income per: |                                                                                                                                               |             |   |         |      |  |   |         |      |  |   |        
|                          | Ordinary share                                                                                                                                |             |   |         |      |  |   |         |      |  |   |         |     
|                          |                                                                                                                                               | As reported |   | $       | 4.14 |  |   | $       | 3.42 |  |   | $       | 3.00 | 
|                          |                                                                                                                                               | Pro forma   |   | $       | 4.06 |  |   | $       | 3.34 |  |   | $       | 2.88 | 
|                          | Preference share                                                                                                                              |             |   |         |      |  |   |         |      |  |   |         |     
|                          |                                                                                                                                               | As reported |   | $       | 4.21 |  |   | $       | 3.49 |  |   | $       | 3.06 | 
|                          |                                                                                                                                               | Pro forma   |   | $       | 4.14 |  |   | $       | 3.41 |  |   | $       | 2.94 | 

t)   Recent Pronouncements and Accounting
Changes


Inventory Costs  an
amendment of ARB No. 43, Chapter 4


F-11



---



##### Table of Contents





Share-Based
Payment


2.   Related Party Transactions


a)  Service Agreements






b)  Financing Provided by Fresenius AG




c)   Products




d)  Acquisitions




F-12



---



##### Table of Contents





e)   Other










3.   Inventories




|                                       |             |      |         |         |      |   |         |         | 
|-------------------------------------- | ----------- | ---- | ------- | ------- | ---- | - | ------- | ------- | 
|                                       |             | 2004 |         |         | 2003 |  
|                                       |             |      |         |         |      |  
|Raw materials and purchased components |             | $    | 90,268  |         |      | $ | 86,653  |        
|Work in process                        |             |      | 36,586  |         |      |   | 33,778  |        
|Finished goods                         |             |      | 240,296 |         |      |   | 244,355 |        
|Health care supplies                   |             |      | 75,769  |         |      |   | 79,952  |        
|                                       |             |      |         |         |      |  
|                                       | Inventories |      | $       | 442,919 |      |   | $       | 444,738 | 
|                                       |             |      |         |         |      |  



4.   Property, Plant and Equipment




|                                                                       |  |      |            |   |      |   |           |  
|---------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | --------- | -
|                                                                       |  | 2004 |            |   | 2003 |  
|                                                                       |  |      |            |   |      |  
|Land and improvements                                                  |  | $    | 29,258     |   |      | $ | 28,109    |  
|Buildings and improvements                                             |  |      | 770,103    |   |      |   | 694,327   |  
|Machinery and equipment                                                |  |      | 1,349,373  |   |      |   | 1,191,708 |  
|Machinery, equipment and rental equipment under capitalized
    leases |  |      | 59,183     |   |      |   | 54,101    |  
|Construction in progress                                               |  |      | 91,227     |   |      |   | 58,509    |  
|                                                                       |  |      |            |   |      |  
|                                                                       |  |      | 2,299,144  |   |      |   | 2,026,754 |  
|Accumulated depreciation                                               |  |      | (1,117,217 | ) |      |   | (937,608  | )
|                                                                       |  |      |            |   |      |  
|Property, plant and equipment, net                                     |  | $    | 1,181,927  |   |      | $ | 1,089,146 |  
|                                                                       |  |      |            |   |      |  



F-13



---



##### Table of Contents





5.   Goodwill and other Intangible Assets




|                              |  |                   |         |  |                   |   |          |        |  |       |          |  |  |              |         |  |  |   |          |  
|----------------------------- |  | ----------------- | ------- |  | ----------------- | - | -------- | ------ |  | ----- | -------- |  |  | ------------ | ------- |  |  | - | -------- | -
|                              |  | December 31, 2004 |         |  | December 31, 2003 |  
|                              |  |                   |         |  |                   |  
|                              |  | Gross             |         |  |                   |   | Average  |        |  | Gross |          |  | 
|                              |  | Carrying          |         |  | Accumulated       |   |          | Useful |  |       | Carrying |  |  | Accumulated  |        
|                              |  | Amount            |         |  | Amortization      |   |          | Life   |  |       | Amount   |  |  | Amortization |        
|                              |  |                   |         |  |                   |   |          |        |  |       |          |  |  |              |        
|Amortizable Intangible Assets |  |                   |         |  |                   |   |          |        |  |       |          |  |  |              |         |  |  |   |          |  
|Patient relationships         |  | $                 | 276,673 |  |                   | $ | (225,545 | )      |  |       | 17       |  |  | $            | 258,408 |  |  | $ | (208,890 | )
|Patents                       |  |                   | 28,508  |  |                   |   | (16,239  | )      |  |       | 18       |  |  |              | 18,178  |  |  |   | (15,056  | )
|Distribution rights           |  |                   | 25,306  |  |                   |   | (10,390  | )      |  |       | 20       |  |  |              | 23,920  |  |  |   | (9,548   | )
|Other                         |  |                   | 183,076 |  |                   |   | (100,129 | )      |  |       | 12       |  |  |              | 170,320 |  |  |   | (86,318  | )
|                              |  |                   |         |  |                   |   |          |        |  |       |          |  |  |              |        
|                              |  | $                 | 513,563 |  |                   | $ | (352,303 | )      |  |       | 15       |  |  | $            | 470,826 |  |  | $ | (319,812 | )
|                              |  |                   |         |  |                   |   |          |        |  |       |          |  |  |              |        

|                                  |  |          |         |  |  |  |  |  |          |  |  |  |  |   |         |  |  |  |  | 
|--------------------------------- |  | -------- | ------- |  |  |  |  |  | -------- |  |  |  |  | - | ------- |  |  |  |  | 
|                                  |  | Carrying |         |  |  |  |  |  | Carrying |  |  | 
|                                  |  | Amount   |         |  |  |  |  |  | Amount   |  |  | 
|                                  |  |          |         |  |  |  |  |  |          |  |  | 
|Non-amortizable Intangible Assets |  |          |         |  |  |  |  |  |          |  |  |  |  |   |         |  |  |  |  | 
|Tradename                         |  | $        | 222,289 |  |  |  |  |  |          |  |  |  |  | $ | 221,720 |  |  |  |  | 
|Management contracts              |  |          | 218,499 |  |  |  |  |  |          |  |  |  |  |   | 209,369 |  |  |  |  | 
|                                  |  |          |         |  |  |  |  |  |          |  |  |  |  |   |        
|                                  |  | $        | 440,788 |  |  |  |  |  |          |  |  |  |  | $ | 431,089 |  |  |  |  | 
|                                  |  |          |         |  |  |  |  |  |          |  |  |  |  |   |        
|Total Intangible Assets           |  | $        | 602,048 |  |  |  |  |  |          |  |  |  |  | $ | 582,103 |  |  |  |  | 
|                                  |  |          |         |  |  |  |  |  |          |  |  |  |  |   |        



Aggregate Amortization Expense


|                                     |  |   |        | 
|------------------------------------ |  | - | ------ | 
|For the year ended December 31, 2002 |  | $ | 52,429 | 
|                                     |  |   |       
|For the year ended December 31, 2003 |  | $ | 34,217 | 
|                                     |  |   |       
|For the year ended December 31, 2004 |  | $ | 32,853 | 
|                                     |  |   |       

Estimated Amortization Expense


|                                     |  |   |        | 
|------------------------------------ |  | - | ------ | 
|For the year ended December 31, 2005 |  | $ | 30,250 | 
|                                     |  |   |       
|For the year ended December 31, 2006 |  | $ | 25,919 | 
|                                     |  |   |       
|For the year ended December 31, 2007 |  | $ | 16,479 | 
|                                     |  |   |       
|For the year ended December 31, 2008 |  | $ | 11,227 | 
|                                     |  |   |       
|For the year ended December 31, 2009 |  | $ | 7,978  | 
|                                     |  |   |       

Goodwill




F-14



---



##### Table of Contents





|                                |                      |         |           |         |               |   |         |        |   |   |           |         |  
|------------------------------- | -------------------- | ------- | --------- | ------- | ------------- | - | ------- | ------ | - | - | --------- | ------- | -
|                                |                      | North   |           |         |               |   |        
|                                |                      | America |           |         | International |   |         | Total  |  
|                                |                      |         |           |         |               |   |         |        |  
|Balance as of January 1, 2003   |                      | $       | 2,940,326 |         |               | $ | 252,325 |        |   | $ | 3,192,651 |        
|                                | Goodwill acquired    |         |           | 24,925  |               |   |         | 35,813 |   |   |           | 60,738  |  
|                                | Reclassifications    |         |           | (14,398 | )             |   |         | (865   | ) |   |           | (15,263 | )
|                                | Currency Translation |         |           |        |               |   |         | 50,222 |   |   |           | 50,222  |  
|                                |                      |         |           |         |               |   |         |        |  
|Balance as of December 31, 2003 |                      | $       | 2,950,853 |         |               | $ | 337,495 |        |   | $ | 3,288,348 |        
|                                |                      |         |           |         |               |   |         |        |  
|                                | Goodwill acquired    |         |           | 69,172  |               |   |         | 53,782 |   |   |           | 122,954 |  
|                                | Reclassifications    |         |           | 501     |               |   |         | 2,879  |   |   |           | 3,380   |  
|                                | Currency Translation |         |           |        |               |   |         | 30,470 |   |   |           | 30,470  |  
|                                |                      |         |           |         |               |   |         |        |  
|Balance as of December 31, 2004 |                      | $       | 3,020,526 |         |               | $ | 424,626 |        |   | $ | 3,445,152 |        
|                                |                      |         |           |         |               |   |         |        |  

6.   Accrued Expenses and Other Current
Liabilities




|                                                     |  |      |         |  |      |   |         | 
|---------------------------------------------------- |  | ---- | ------- |  | ---- | - | ------- | 
|                                                     |  | 2004 |         |  | 2003 |  
|                                                     |  |      |         |  |      |  
|Accrued salaries and wages                           |  | $    | 193,469 |  |      | $ | 143,747 | 
|Special charge for legal matters                     |  |      | 122,085 |  |      |   | 138,154 | 
|Unapplied cash and receivable credits                |  |      | 66,591  |  |      |   | 65,624  | 
|Accrued insurance                                    |  |      | 56,584  |  |      |   | 45,015  | 
|Accrued interest                                     |  |      | 49,820  |  |      |   | 39,448  | 
|Accrued operating expenses                           |  |      | 47,306  |  |      |   | 41,236  | 
|Withholding tax and VAT                              |  |      | 37,124  |  |      |   | 25,818  | 
|Accrued physician compensation                       |  |      | 21,112  |  |      |   | 19,844  | 
|Commissions                                          |  |      | 21,050  |  |      |   | 17,568  | 
|Derivatives                                          |  |      | 13,532  |  |      |   | 51,446  | 
|Bonuses and Rebates                                  |  |      | 10,728  |  |      |   | 10,122  | 
|Deferred income                                      |  |      | 10,031  |  |      |   | 10,336  | 
|Accrued legal and compliance costs                   |  |      | 8,732   |  |      |   | 7,767   | 
|Other                                                |  |      | 82,911  |  |      |   | 75,859  | 
|                                                     |  |      |         |  |      |  
|Total accrued expenses and other current liabilities |  | $    | 741,075 |  |      | $ | 691,984 | 
|                                                     |  |      |         |  |      |  









F-15



---



##### Table of Contents







7.   Short-term Borrowings, Longterm
Debt and Capital Lease Obligations




|                                 |  |      |         |  |      |   |        | 
|-------------------------------- |  | ---- | ------- |  | ---- | - | ------ | 
|                                 |  | 2004 |         |  | 2003 |  
|                                 |  |      |         |  |      |  
|Borrowings under lines of credit |  | $    | 83,383  |  |      | $ | 89,417 | 
|Accounts receivable facility     |  |      | 335,765 |  |      |   |       | 
|                                 |  |      |         |  |      |  
|                                 |  | $    | 419,148 |  |      | $ | 89,417 | 
|                                 |  |      |         |  |      |  



|                          |  |      |          |   |      |   |           |  
|------------------------- |  | ---- | -------- | - | ---- | - | --------- | -
|                          |  | 2004 |          |   | 2003 |  
|                          |  |      |          |   |      |  
|Senior Credit Agreement   |  | $    | 484,500  |   |      | $ | 912,300   |  
|Capital lease obligations |  |      | 6,987    |   |      |   | 9,919     |  
|Euro-notes                |  |      | 175,030  |   |      |   | 162,296   |  
|Other                     |  |      | 109,232  |   |      |   | 117,474   |  
|                          |  |      |          |   |      |  
|                          |  |      | 775,749  |   |      |   | 1,201,989 |  
|Less current maturities   |  |      | (230,179 | ) |      |   | (90,365   | )
|                          |  |      |          |   |      |  
|                          |  | $    | 545,570  |   |      | $ | 1,111,624 |  
|                          |  |      |          |   |      |  

Short-term borrowings




Lines of Credit






Accounts Receivable Facility




F-16



---



##### Table of Contents









Long-term debt


Euro Notes


    


2003 Senior Credit Agreement






F-17



---



##### Table of Contents





|                 |  |                          |           |  |                     |   |           |      |  |   |         |  |  |   |         | 
|---------------- |  | ------------------------ | --------- |  | ------------------- | - | --------- | ---- |  | - | ------- |  |  | - | ------- | 
|                 |  | Maximum Amount Available |           |  | Balance Outstanding |  
|                 |  | December 31,             |           |  | December 31,        |  
|                 |  |                          |           |  |                     |  
|                 |  | 2004                     |           |  | 2003                |   |           | 2004 |  |   | 2003    | 
|                 |  |                          |           |  |                     |   |           |      |  |   |         | 
|Revolving Credit |  | $                        | 750,000   |  |                     | $ | 500,000   |      |  | $ | 34,500  |  |  | $ | 14,300  | 
|Term Loan A      |  |                          |          |  |                     |   | 500,000   |      |  |   |        |  |  |   | 500,000 | 
|Term Loan A-1    |  |                          | 450,000   |  |                     |   |          |      |  |   | 450,000 |  |  |   |        | 
|Term Loan C      |  |                          |          |  |                     |   | 398,000   |      |  |   |        |  |  |   | 398,000 | 
|                 |  |                          |           |  |                     |   |           |      |  |   |         | 
|                 |  | $                        | 1,200,000 |  |                     | $ | 1,398,000 |      |  | $ | 484,500 |  |  | $ | 912,300 | 
|                 |  |                          |           |  |                     |   |           |      |  |   |         | 





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a revolving credit facility of up to $750,000 (of which up to
    $250,000 is available for letters of credit, up to $300,000 is
    available for borrowings in certain non-U.S. currencies, up
    to $75,000 is available as swing line in U.S. dollars, up
    to $250,000 is available as a competitive loan facility and up
    to $50,000 is available as swing line in certain
    non-U.S. currencies, the total of which cannot exceed
    $750,000) which will be due and payable on February 28,
    2010.
|
| |  | a term loan facility (Loan A-1) of $450,000,
    also maturing on February  28, 2010. The terms of the
    2003 Senior Credit Agreement require payments that permanently
    reduce the term loan facility. The repayment begins in the
    fourth quarter of 2005 and amounts to $25,000 per quarter.
    The remaining amount outstanding is due on February 28,
    2010.                                                                                                                                       





F-18



---



##### Table of Contents



Annual Payments




|           |  |   |         | 
|---------- |  | - | ------- | 
|2005       |  | $ | 230,179 | 
|2006       |  |   | 120,911 | 
|2007       |  |   | 128,566 | 
|2008       |  |   | 112,290 | 
|2009       |  |   | 106,784 | 
|Thereafter |  |   | 77,019  | 
|           |  |   |        
|           |  | $ | 775,749 | 
|           |  |   |        

8.   Employee Benefit Plans


Defined Benefit Pension Plans




|                                               |  |      |         |   |      |   |         |      |  |   |         |  
|---------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                               |  | 2004 |         |   | 2003 |   |         | 2002 | 
|                                               |  |      |         |   |      |   |         |      | 
|Change in benefit obligation:                  |  |      |         |   |      |   |         |      |  |   |         |  
|Benefit obligation at beginning of year        |  | $    | 241,240 |   |      | $ | 184,468 |      |  | $ | 169,623 |  
|Translation loss                               |  |      | 4,939   |   |      |   | 8,870   |      |  |   | 6,484   |  
|Service cost                                   |  |      | 4,269   |   |      |   | 3,486   |      |  |   | 5,137   |  
|Interest cost                                  |  |      | 14,816  |   |      |   | 13,419  |      |  |   | 11,208  |  
|Curtailment                                    |  |      |        |   |      |   |        |      |  |   | (22,216 | )
|Transfer of plan participants                  |  |      | (261    | ) |      |   | 1,356   |      |  |   | 84      |  
|Actuarial loss                                 |  |      | 28,165  |   |      |   | 33,563  |      |  |   | 17,764  |  
|Benefits paid                                  |  |      | (4,306  | ) |      |   | (3,922  | )    |  |   | (3,616  | )
|                                               |  |      |         |   |      |   |         |      | 
|Benefit obligation at end of year              |  | $    | 288,862 |   |      | $ | 241,240 |      |  | $ | 184,468 |  
|                                               |  |      |         |   |      |   |         |      | 
|Change on plan assets:                         |  |      |         |   |      |   |         |      |  |   |         |  
|Fair value of plan assets at beginning of year |  | $    | 135,247 |   |      | $ | 83,191  |      |  | $ | 89,845  |  
|Actual return on plan assets                   |  |      | 9,642   |   |      |   | 13,898  |      |  |   | (9,799  | )
|Employer contributions                         |  |      | 25,633  |   |      |   | 41,481  |      |  |   | 6,313   |  
|Benefits paid                                  |  |      | (3,570  | ) |      |   | (3,323  | )    |  |   | (3,168  | )
|                                               |  |      |         |   |      |   |         |      | 
|Fair value of plan assets at end of year       |  | $    | 166,952 |   |      | $ | 135,247 |      |  | $ | 83,191  |  
|                                               |  |      |         |   |      |   |         |      | 

F-19



---



##### Table of Contents



|                                                                                                |                                                |      |         |         |      |   |         |         |   |   |         |         | 
|----------------------------------------------------------------------------------------------- | ---------------------------------------------- | ---- | ------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------- | 
|                                                                                                |                                                | 2004 |         |         | 2003 |   |         | 2002    |  
|                                                                                                |                                                |      |         |         |      |   |         |         |  
|Funded status:                                                                                  |                                                | $    | 121,910 |         |      | $ | 105,994 |         |   | $ | 101,277 |        
|Unrecognized net loss                                                                           |                                                |      | (85,945 | )       |      |   | (61,595 | )       |   |   | (37,302 | )      
|Unrecognized transition obligation                                                              |                                                |      |         |         |      |   |        |         |   |   | (85     | )      
|                                                                                                |                                                |      |         |         |      |   |         |         |  
|Net amount recognized                                                                           |                                                | $    | 35,965  |         |      | $ | 44,399  |         |   | $ | 63,890  |        
|                                                                                                |                                                |      |         |         |      |   |         |         |  
|Amounts recognized in statement of financial position
    consist of:                           |                                                |      |         |         |      |   |         |         |   |   |         |        
|Accrued benefit costs                                                                           |                                                | $    | 108,125 |         |      | $ | 100,052 |         |   | $ | 96,152  |        
|Accumulated other comprehensive income                                                          |                                                |      | (72,160 | )       |      |   | (55,653 | )       |   |   | (32,262 | )      
|                                                                                                |                                                |      |         |         |      |   |         |         |  
|Net amount recognized                                                                           |                                                | $    | 35,965  |         |      | $ | 44,399  |         |   | $ | 63,890  |        
|                                                                                                |                                                |      |         |         |      |   |         |         |  
|Calculation of Additional Minimum Liability*                                                    |                                                |      |         |         |      |   |         |         |   |   |         |        
|                                                                                                | Fair Value of plan assets                      |      | $       | 166,952 |      |   | $       | 135,247 |   |   | $       | 83,191  | 
|                                                                                                | Accumulated benefit obligation (ABO)           |      |         | 213,995 |      |   |         | 184,489 |   |   |         | 142,893 | 
|                                                                                                |                                                |      |         |         |      |   |         |         |  
|Minimum Liability                                                                               |                                                | $    | 47,043  |         |      | $ | 49,242  |         |   | $ | 59,702  |        
|                                                                                                |                                                |      |         |         |      |   |         |         |  
|                                                                                                | Accrued benefit costs                          |      | $       | (25,117 | )    |   | $       | (6,411  | ) |   | $       | 27,440  | 
|                                                                                                |                                                |      |         |         |      |   |         |         |  
|Additional Minimum Liability                                                                    |                                                | $    | 72,160  |         |      | $ | 55,653  |         |   | $ | 32,262  |        
|                                                                                                |                                                |      |         |         |      |   |         |         |  
|                                                                                                | Thereof accumulated other comprehensive income |      | $       | 72,160  |      |   | $       | 55,653  |   |   | $       | 32,262  | 
|                                                                                                |                                                |      |         |         |      |   |         |         |  
|Total pension liability (at December 31)                                                        |                                                | $    | 108,125 |         |      | $ | 100,052 |         |   | $ | 96,152  |        
|                                                                                                |                                                |      |         |         |      |   |         |         |  
|Weighted  average assumptions for benefit obligation
    as of December 31:                    |                                                |      |         |         |      |   |         |         |   |   |         |        
|Discount rate                                                                                   |                                                |      | 5.62    | %       |      |   | 6.14    | %       |   |   | 6.53    | %      
|Rate of compensation increase                                                                   |                                                |      | 4.25    | %       |      |   | 4.27    | %       |   |   | 4.28    | %      
|Components of net period benefit cost:                                                          |                                                |      |         |         |      |   |         |         |   |   |         |        
|Service cost                                                                                    |                                                | $    | 4,269   |         |      | $ | 3,486   |         |   | $ | 5,137   |        
|Interest cost                                                                                   |                                                |      | 14,816  |         |      |   | 13,419  |         |   |   | 11,208  |        
|Expected return on plan assets                                                                  |                                                |      | (10,219 | )       |      |   | (7,688  | )       |   |   | (8,102  | )      
|Amortization of transition obligation                                                           |                                                |      |        |         |      |   | 92      |         |   |   | 77      |        
|Amortization unrealized losses                                                                  |                                                |      | 4,712   |         |      |   | 3,971   |         |   |   | 183     |        
|Curtailment gain                                                                                |                                                |      |        |         |      |   |        |         |   |   | (12,620 | )      
|                                                                                                |                                                |      |         |         |      |   |         |         |  
|Net periodic benefit costs                                                                      |                                                | $    | 13,578  |         |      | $ | 13,280  |         |   | $ | (4,117  | )      
|                                                                                                |                                                |      |         |         |      |   |         |         |  
|Weighted  average assumptions for net periodic
    benefit cost for the year ended December 31 |                                                |      |         |         |      |   |         |         |   |   |         |        
|Discount rate                                                                                   |                                                |      | 6.00    | %       |      |   | 6.52    | %       |   |   | 7.12    | %      
|Expected return of plan assets                                                                  |                                                |      | 7.50    | %       |      |   | 8.50    | %       |   |   | 9.00    | %      
|Rate of compensation increase                                                                   |                                                |      | 4.25    | %       |      |   | 4.27    | %       |   |   | 4.28    | %      






|  |                                                                                
|- | -------------------------------------------------------------------------------
|* | this calculation refers only to companies with ABO in excess of
    plan assets

Plan Investment Policy and Strategy






F-20



---



##### Table of Contents





Defined benefit pension plans: plan assets


|                          |                   |                 |     |    |                 |  |     |                   |   |  |     |    |  
|------------------------- | ----------------- | --------------- | --- | -- | --------------- |  | --- | ----------------- | - |  | --- | -- | -
|                          |                   | Allocation 2004 |     |    | Allocation 2003 |  |     | Target allocation |  
|                          |                   | in %            |     |    | in %            |  |     | in %              |  
|                          |                   |                 |     |    |                 |  |     |                   |  
|Categories of plan assets |                   |                 |     |    |                 |  |     |                   |   |  |     |   
|                          | Equity securities |                 |     | 52 | %               |  |     | 52                | % |  |     | 50 | %
|                          | Debt securities   |                 |     | 48 | %               |  |     | 48                | % |  |     | 50 | %
|                          |                   |                 |     |    |                 |  |     |                   |  
|Total                     |                   |                 | 100 | %  |                 |  | 100 | %                 |   |  | 100 | % 
|                          |                   |                 |     |    |                 |  |     |                   |  

|                                                     |  |  |  |  |  |   |        |   |  |  |  | 
|---------------------------------------------------- |  |  |  |  |  | - | ------ | - |  |  |  | 
|Overall expected long-term return rate               |  |  |  |  |  |   | 7.5    | % |  |  |  | 
|                                                     |  |  |  |  |  |   |        |   | 
|Expected total contributions to plan assets for 2005 |  |  |  |  |  | $ | 20,000 |   |  |  |  | 
|                                                     |  |  |  |  |  |   |        |   | 



|                  |  |   |        | 
|----------------- |  | - | ------ | 
|2005              |  | $ | 4,797  | 
|2006              |  |   | 5,631  | 
|2007              |  |   | 6,309  | 
|2008              |  |   | 7,440  | 
|2009              |  |   | 9,186  | 
|2010 through 2014 |  |   | 62,417 | 



Defined Contribution Plans




9.   Mandatorily Redeemable
Trust Preferred Securities








F-21



---



##### Table of Contents









|                                         |  |        |      |  |        |  |           |           |  |  |            |  |  |      |                  |  |      |   |           |  |  |   |           | 
|---------------------------------------- |  | ------ | ---- |  | ------ |  | --------- | --------- |  |  | ---------- |  |  | ---- | ---------------- |  | ---- | - | --------- |  |  | - | --------- | 
|                                         |  |        |      |  |        |  |           | Mandatory |  |  |            |  | 
|                                         |  | Year   |      |  | Stated |  |           | Interest  |  |  | Redemption |  |  |      |                  | 
|                                         |  | Issued |      |  | Amount |  |           | Rate      |  |  | Date       |  |  | 2004 |                  |  | 2003 |  
|                                         |  |        |      |  |        |  |           |           |  |  |            |  |  |      |                  |  |      |  
|Fresenius Medical Care Capital Trust II  |  |        | 1998 |  |        |  | $450,000  |           |  |  | 77/8%      |  |  |      | February 1, 2008 |  |      |   | 440,965   |  |  |   | 450,000   | 
|Fresenius Medical Care Capital Trust III |  |        | 1998 |  |        |  | DM300,000 |           |  |  | 73/8%      |  |  |      | February 1, 2008 |  |      |   | 208,929   |  |  |   | 193,728   | 
|Fresenius Medical Care Capital Trust IV  |  |        | 2001 |  |        |  | $225,000  |           |  |  | 77/8%      |  |  |      | June 15, 2011    |  |      |   | 222,533   |  |  |   | 222,150   | 
|Fresenius Medical Care Capital Trust V   |  |        | 2001 |  |        |  | 300,000  |           |  |  | 73/8%      |  |  |      | June 15, 2011    |  |      |   | 406,333   |  |  |   | 376,439   | 
|                                         |  |        |      |  |        |  |           |           |  |  |            |  |  |      |                  |  |      |  
|                                         |  |        |      |  |        |  |           |           |  |  |            |  |  |      |                  |  |      | $ | 1,278,760 |  |  | $ | 1,242,317 | 
|                                         |  |        |      |  |        |  |           |           |  |  |            |  |  |      |                  |  |      |  



|    |                   
|--- | ------------------
|10. | Minority Interests



|                                                                                        |  |      |        |  |      |   |        | 
|--------------------------------------------------------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                                                                                        |  | 2004 |        |  | 2003 |  
|                                                                                        |  |      |        |  |      |  
|FMCH Preferred Stock:                                                                   |  |      |        |  |      |   |        | 
|Preferred Stock, $100 par value                                                         |  |      |        |  |      |   |        | 
| 6% Cumulative; 40,000 shares authorized; 36,460
    issued and outstanding            |  | $    | 3,646  |  |      | $ | 3,646  | 
| 8% Cumulative Class A; 50,000 shares
    authorized; 16,176 issued and outstanding    |  |      | 1,618  |  |      |   | 1,618  | 
| 8% Noncumulative Class B; 40,000 shares
    authorized; 21,483 issued and outstanding |  |      | 2,148  |  |      |   | 2,148  | 
|                                                                                        |  |      |        |  |      |  
|Sub-total FMCH minority interest                                                        |  |      | 7,412  |  |      |   | 7,412  | 
|Other minority interest                                                                 |  |      | 10,622 |  |      |   | 6,693  | 
|                                                                                        |  |      |        |  |      |  
|Total minority interest                                                                 |  | $    | 18,034 |  |      | $ | 14,105 | 
|                                                                                        |  |      |        |  |      |  







F-22



---



##### Table of Contents





|    |                     
|--- | --------------------
|11. | Shareholders Equity



| |              
| | -------------
| | Capital Stock

 









| |                 
| | ----------------
| | Approved Capital









Conditional Capital








Dividends


Handelsgesetzbuch




F-23



---



##### Table of Contents





 


 


 




|    |                   
|--- | ------------------
|12. | Earnings Per Share



|                                                       |                                                                            |      |         |            |      |   |         |            |  |   |         |            | 
|------------------------------------------------------ | -------------------------------------------------------------------------- | ---- | ------- | ---------- | ---- | - | ------- | ---------- |  | - | ------- | ---------- | 
|                                                       |                                                                            | 2004 |         |            | 2003 |   |         | 2002       | 
|                                                       |                                                                            |      |         |            |      |   |         |            | 
|Numerators:                                            |                                                                            |      |         |            |      |   |         |            |  |   |         |           
|Net income                                             |                                                                            | $    | 401,998 |            |      | $ | 331,180 |            |  | $ | 289,790 |           
|less:                                                  |                                                                            |      |         |            |      |   |         |            |  |   |         |           
|                                                       | Preference on Preference shares                                            |      |         | 1,959      |      |   |         | 1,778      |  |   |         | 1,485      | 
|                                                       |                                                                            |      |         |            |      |   |         |            | 
|Income available to all class of shares                |                                                                            | $    | 400,039 |            |      | $ | 329,402 |            |  | $ | 288,305 |           
|                                                       |                                                                            |      |         |            |      |   |         |            | 
|Denominators:                                          |                                                                            |      |         |            |      |   |         |            |  |   |         |           
|Weighted average number of:                            |                                                                            |      |         |            |      |   |         |            |  |   |         |           
|                                                       | Ordinary shares outstanding                                                |      |         | 70,000,000 |      |   |         | 70,000,000 |  |   |         | 70,000,000 | 
|                                                       | Preference shares outstanding                                              |      |         | 26,243,059 |      |   |         | 26,191,011 |  |   |         | 26,185,178 | 
|                                                       |                                                                            |      |         |            |      |   |         |            | 
|                                                       | Total weighted average shares outstanding                                  |      |         | 96,243,059 |      |   |         | 96,191,011 |  |   |         | 96,185,178 | 
|                                                       | Potentially dilutive Preference shares                                     |      |         | 421,908    |      |   |         | 145,861    |  |   |         | 66,120     | 
|                                                       |                                                                            |      |         |            |      |   |         |            | 
|                                                       | Total weighted average shares outstanding assuming dilution                |      |         | 96,664,967 |      |   |         | 96,336,872 |  |   |         | 96,251,298 | 
|                                                       | Total weighted average Preference shares outstanding assuming
    dilution |      |         | 26,664,967 |      |   |         | 26,336,872 |  |   |         | 26,251,298 | 
|Basic income per Ordinary share                        |                                                                            | $    | 4.16    |            |      | $ | 3.42    |            |  | $ | 3.00    |           
|Plus preference per Preference share                   |                                                                            |      | 0.07    |            |      |   | 0.07    |            |  |   | 0.06    |           
|                                                       |                                                                            |      |         |            |      |   |         |            | 
|Basic income per Preference Share                      |                                                                            | $    | 4.23    |            |      | $ | 3.49    |            |  | $ | 3.06    |           
|                                                       |                                                                            |      |         |            |      |   |         |            | 
|Fully diluted income per Ordinary share                |                                                                            | $    | 4.14    |            |      | $ | 3.42    |            |  | $ | 3.00    |           
|Plus preference per Preference share assuming dilution |                                                                            |      | 0.07    |            |      |   | 0.07    |            |  |   | 0.06    |           
|                                                       |                                                                            |      |         |            |      |   |         |            | 
|Fully diluted income per Preference share              |                                                                            | $    | 4.21    |            |      | $ | 3.49    |            |  | $ | 3.06    |           
|                                                       |                                                                            |      |         |            |      |   |         |            | 



|    |              
|--- | -------------
|13. | Stock Options

 


F-24



---



##### Table of Contents











|                             |           |                |       |          |          |  |          |          |  |         |                |       |  |  |       |  | 
|---------------------------- | --------- | -------------- | ----- | -------- | -------- |  | -------- | -------- |  | ------- | -------------- | ----- |  |  | ----- |  | 
|                             |           |                |       | Weighted |          |  | Weighted |          |  |        
|                             |           |                |       | Average  |          |  | Average  |          |  | Options |               
|                             |           | Options        |       |          | Exercise |  |          | Exercise |  |         | Exercisable    |      
|                             |           | (In thousands) |       |          | Price    |  |          | Price    |  |         | (In thousands) |      
|                             |           |                |       |          |          |  |          |          |  |         |                |      
|Balance at December 31, 2001 |           |                | 3,255 |          |          |  | 49.12   |          |  | $       | 51.51          |       |  |  |       | 
|                             |           |                |       |          |          |  |          |          |  |         |                |      
|                             | Granted   |                |       | 771      |          |  |          | 31.31    |  |         |                | 32.83 |  |  |       |  | 
|                             | Exercised |                |       | 12       |          |  |          | 35.65    |  |         |                | 37.38 |  |  |       |  | 
|                             | Forfeited |                |       | 399      |          |  |          | 47.90    |  |         |                | 50.23 |  |  |       |  | 
|                             |           |                |       |          |          |  |          |          |  |         |                |      
|Balance at December 31, 2002 |           |                | 3,615 |          |          |  | 45.51    |          |  |         | 47.72          |       |  |  | 1,769 | 
|                             |           |                |       |          |          |  |          |          |  |         |                |      
|                             | Granted   |                |       | 622      |          |  |          | 33.16    |  |         |                | 41.88 |  |  |       |  | 
|                             | Exercised |                |       | 25       |          |  |          | 32.58    |  |         |                | 41.14 |  |  |       |  | 
|                             | Forfeited |                |       | 223      |          |  |          | 48.91    |  |         |                | 61.77 |  |  |       |  | 
|                             |           |                |       |          |          |  |          |          |  |         |                |      
|Balance at December 31, 2003 |           |                | 3,989 |          |          |  | 43.34    |          |  |         | 54.74          |       |  |  | 2,147 | 
|                             |           |                |       |          |          |  |          |          |  |         |                |      
|                             | Granted   |                |       | 1,021    |          |  |          | 44.81    |  |         |                | 61.03 |  |  |       |  | 
|                             | Exercised |                |       | 83       |          |  |          | 33.92    |  |         |                | 46.20 |  |  |       |  | 
|                             | Forfeited |                |       | 266      |          |  |          | 46.74    |  |         |                | 63.66 |  |  |       |  | 
|                             |           |                |       |          |          |  |          |          |  |         |                |      
|Balance at December 31, 2004 |           |                | 4,661 |          |          |  | 43.60   |          |  | $       | 59.39          |       |  |  | 2,393 | 
|                             |           |                |       |          |          |  |          |          |  |         |                |      

F-25



---



##### Table of Contents





|                |  |                 |              |             |           |          |             |             |          |          |       |          |          |       |        |  |           |          |        |          |          |  |           |  |  |  |        |  |  |   |        | 
|--------------- |  | --------------- | ------------ | ----------- | --------- | -------- | ----------- | ----------- | -------- | -------- | ----- | -------- | -------- | ----- | ------ |  | --------- | -------- | ------ | -------- | -------- |  | --------- |  |  |  | ------ |  |  | - | ------ | 
|                |  |                 |              | Outstanding |           |          | Exercisable |            
|                |  |                 |              |             |           |          |             |            
|                |  |                 |              |             |           | Weighted |             |             | Weighted |          |       | Weighted |          |       |        |  | Weighted  |          |        | Weighted |         
|                |  |                 |              |             |           | Average  |             |             | Average  |          |       | Average  |          |       |        |  | Average   |          |        | Average  |         
|Range of        |  | Range of        |              |             |           |          | Remaining   |             |          | Exercise |       |          | Exercise |       |        |  |           | Exercise |        |          | Exercise | 
|Exercise Prices |  | Exercise Prices |              |             | Number of |          |             | Contractual |          |          | Price |          |          | Price |        |  | Number of |          |        | Price    |          |  | Price     | 
|in             |  | in $            |              |             | Options   |          |             | Life        |          |          | Euro  |          |          | USD   |        |  | Options   |          |        | Euro     |          |  | USD       | 
|                |  |                 |              |             |           |          |             |             |          |          |       |          |          |       |        |  |           |          |        |          |          |  |           | 
|25.01-35.00    |  | $               | 34.01-48.00  |             |           |          | 1,703,099   |             |          |          | 7.10  |          |          |       | 31.37 |  |           | $        | 42.73  |          |          |  | 703,460   |  |  |  | 31.91 |  |  | $ | 43.47  | 
|35.01-40.00    |  | $               | 48.01-55.00  |             |           |          | 111,446     |             |          |          | 8.65  |          |          |       | 39.20  |  |           |          | 53.39  |          |          |  |          |  |  |  |       |  |  |   |       | 
|40.01-45.00    |  | $               | 55.01-62.00  |             |           |          | 1,145,660   |             |          |          | 7.77  |          |          |       | 43.65  |  |           |          | 59.63  |          |          |  | 363,083   |  |  |  | 43.00  |  |  |   | 59.02  | 
|45.01-50.00    |  | $               | 62.01-69.00  |             |           |          | 432,314     |             |          |          | 5.62  |          |          |       | 48.96  |  |           |          | 66.68  |          |          |  | 432,314   |  |  |  | 48.96  |  |  |   | 66.68  | 
|50.01-55.00    |  | $               | 69.01-75.00  |             |           |          | 31,421      |             |          |          | 6.91  |          |          |       | 52.81  |  |           |          | 71.93  |          |          |  | 24,045    |  |  |  | 52.60  |  |  |   | 71.64  | 
|55.01-60.00    |  | $               | 75.01-82.00  |             |           |          | 1,126,708   |             |          |          | 4.25  |          |          |       | 57.19  |  |           |          | 77.90  |          |          |  | 795,774   |  |  |  | 57.33  |  |  |   | 78.08  | 
|70.01-75.00    |  | $               | 95.01-103.00 |             |           |          | 110,789     |             |          |          | 6.60  |          |          |       | 73.72  |  |           |          | 100.41 |          |          |  | 73,868    |  |  |  | 73.72  |  |  |   | 100.41 | 
|                |  |                 |              |             |           |          |             |             |          |          |       |          |          |       |        |  |           |          |        |          |          |  |           | 
|                |  |                 |              |             |           |          | 4,661,437   |             |          |          | 6.82  |          |          |       | 43.60 |  |           | $        | 59.39  |          |          |  | 2,392,544 |  |  |  | 46.63 |  |  | $ | 63.51  | 
|                |  |                 |              |             |           |          |             |             |          |          |       |          |          |       |        |  |           |          |        |          |          |  |           | 





|    |             
|--- | ------------
|14. | Income Taxes



|              |  |      |         |  |      |   |         |      |  |   |         | 
|------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|              |  | 2004 |         |  | 2003 |   |         | 2002 | 
|              |  |      |         |  |      |   |         |      | 
|Germany       |  | $    | 146,070 |  |      | $ | 78,124  |      |  | $ | 86,701  | 
|United States |  |      | 447,197 |  |      |   | 368,382 |      |  |   | 289,954 | 
|Other         |  |      | 75,332  |  |      |   | 99,170  |      |  |   | 91,795  | 
|              |  |      |         |  |      |   |         |      | 
|              |  | $    | 668,599 |  |      | $ | 545,676 |      |  | $ | 468,450 | 
|              |  |      |         |  |      |   |         |      | 



|          |               |      |         |         |      |   |         |         |   |   |         |        | 
|--------- | ------------- | ---- | ------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------ | 
|          |               | 2004 |         |         | 2003 |   |         | 2002    |  
|          |               |      |         |         |      |   |         |         |  
|Current:  |               |      |         |         |      |   |         |         |   |   |         |       
|          | Germany       |      | $       | 55,034  |      |   | $       | 51,849  |   |   | $       | 29,367 | 
|          | United States |      |         | 129,445 |      |   |         | 22,346  |   |   |         | 53,878 | 
|          | Other         |      |         | 40,316  |      |   |         | 35,505  |   |   |         | 32,124 | 
|          |               |      |         |         |      |   |         |         |  
|          |               |      | 224,796 |         |      |   | 109,700 |         |   |   | 115,369 |       
|          |               |      |         |         |      |   |         |         |  
|Deferred: |               |      |         |         |      |   |         |         |   |   |         |       
|          | Germany       |      |         | 5,147   |      |   |         | (1,280  | ) |   |         | 10,069 | 
|          | United States |      |         | 34,958  |      |   |         | 102,142 |   |   |         | 47,437 | 
|          | Other         |      |         | 513     |      |   |         | 2,152   |   |   |         | 2,198  | 
|          |               |      |         |         |      |   |         |         |  
|          |               |      | 40,619  |         |      |   | 103,014 |         |   |   | 59,705  |       
|          |               |      |         |         |      |   |         |         |  
|          |               | $    | 265,415 |         |      | $ | 212,714 |         |   | $ | 175,074 |       
|          |               |      |         |         |      |   |         |         |  





F-26



---



##### Table of Contents





|                                                                             |  |      |         |   |      |   |         |      |  |   |         |  
|---------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                             |  | 2004 |         |   | 2003 |   |         | 2002 | 
|                                                                             |  |      |         |   |      |   |         |      | 
|Expected corporate income tax expense                                        |  | $    | 176,376 |   |      | $ | 152,571 |      |  | $ | 123,554 |  
|Trade income taxes, net of German federal corporation income tax
    benefit |  |      | 20,623  |   |      |   | 15,486  |      |  |   | 12,184  |  
|U.S. State income taxes, net of federal tax benefit                          |  |      | 16,067  |   |      |   | 13,535  |      |  |   | 10,740  |  
|Tax free income                                                              |  |      | (11,796 | ) |      |   | (12,155 | )    |  |   | (11,078 | )
|Foreign tax rate differential                                                |  |      | 55,596  |   |      |   | 29,904  |      |  |   | 25,929  |  
|Non-deductible expenses                                                      |  |      | 7,933   |   |      |   | 6,993   |      |  |   | 7,827   |  
|Other                                                                        |  |      | 617     |   |      |   | 6,380   |      |  |   | 5,918   |  
|                                                                             |  |      |         |   |      |   |         |      | 
|Actual income tax expense                                                    |  | $    | 265,415 |   |      | $ | 212,714 |      |  | $ | 175,074 |  
|                                                                             |  |      |         |   |      |   |         |      | 
|Effective tax rate                                                           |  |      | 39.7    | % |      |   | 39.0    | %    |  |   | 37.4    | %
|                                                                             |  |      |         |   |      |   |         |      | 



|                                                                                                              |  |      |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                                                              |  | 2004 |         |   | 2003 |  
|                                                                                                              |  |      |         |   |      |  
|Deferred tax assets:                                                                                          |  |      |         |   |      |   |         |  
|Accounts receivable, primarily due to allowance for doubtful
    accounts                                     |  | $    | 26,289  |   |      | $ | 30,939  |  
|Inventory, primarily due to additional costs capitalized for tax
    purposes, and inventory reserve accounts |  |      | 30,547  |   |      |   | 28,126  |  
|Accrued expenses and other liabilities for financial accounting
    purposes, not currently tax deductible    |  |      | 181,080 |   |      |   | 159,120 |  
|Net operating loss carryforwards                                                                              |  |      | 48,170  |   |      |   | 40,237  |  
|Derivatives                                                                                                   |  |      | 53,521  |   |      |   | 27,685  |  
|Other                                                                                                         |  |      | 1,378   |   |      |   | 5,327   |  
|                                                                                                              |  |      |         |   |      |  
|Total deferred tax assets                                                                                     |  | $    | 340,985 |   |      | $ | 291,432 |  
|Less: valuation allowance                                                                                     |  |      | (44,564 | ) |      |   | (28,084 | )
|                                                                                                              |  |      |         |   |      |  
|Net deferred tax assets                                                                                       |  | $    | 296,421 |   |      | $ | 263,348 |  
|                                                                                                              |  |      |         |   |      |  
|Deferred tax liabilities:                                                                                     |  |      |         |   |      |   |         |  
|Accounts receivable, primarily due to allowance for doubtful
    accounts                                     |  | $    | 10,872  |   |      | $ | 32,003  |  
|Inventory, primarily due to inventory reserve accounts for tax
    purposes                                   |  |      | 8,148   |   |      |   | 8,706   |  
|Accrued expenses and other liabilities deductible for tax prior
    to financial accounting recognition       |  |      | 38,009  |   |      |   | 19,212  |  
|Plant and equipment, principally due to differences in
    depreciation                                       |  |      | 250,035 |   |      |   | 213,907 |  
|Derivatives                                                                                                   |  |      | 18,696  |   |      |   | 36,612  |  
|Other                                                                                                         |  |      | 14,573  |   |      |   | 14,251  |  
|                                                                                                              |  |      |         |   |      |  
|Total deferred tax liabilities                                                                                |  |      | 340,334 |   |      |   | 324,691 |  
|                                                                                                              |  |      |         |   |      |  
|Net deferred tax liabilities                                                                                  |  | $    | 43,913  |   |      | $ | 61,343  |  
|                                                                                                              |  |      |         |   |      |  



F-27



---



##### Table of Contents





|           |  |   |         | 
|---------- |  | - | ------- | 
|2005       |  | $ | 12,458  | 
|2006       |  |   | 7,347   | 
|2007       |  |   | 7,711   | 
|2008       |  |   | 8,768   | 
|2009       |  |   | 22,992  | 
|2010       |  |   | 8,368   | 
|2011       |  |   | 16,335  | 
|2012       |  |   | 1,757   | 
|2013       |  |   |        | 
|2014       |  |   | 6,671   | 
|Thereafter |  |   | 40,715  | 
|           |  |   |        
|Total      |  | $ | 133,123 | 
|           |  |   |        











|    |                 
|--- | ----------------
|15. | Operating Leases







F-28



---



##### Table of Contents





|           |  |   |           | 
|---------- |  | - | --------- | 
|2005       |  | $ | 238,728   | 
|2006       |  |   | 201,884   | 
|2007       |  |   | 145,003   | 
|2008       |  |   | 110,527   | 
|2009       |  |   | 85,076    | 
|Thereafter |  |   | 266,725   | 
|           |  |   |          
|           |  | $ | 1,047,943 | 
|           |  |   |          



|    |                  
|--- | -----------------
|16. | Legal Proceedings



| |                      
| | ---------------------
| | Commercial Litigation









F-29



---



##### Table of Contents





Fresenius USA, Inc., et al., v. Baxter
International Inc., et al.




| |                                         
| | ----------------------------------------
| | Other Litigation and Potential Exposures







F-30



---



##### Table of Contents









Accrued Special Charge for Legal Matters






|    |                      
|--- | ---------------------
|17. | Financial Instruments

Market Risk






Foreign Exchange Risk Management




F-31



---



##### Table of Contents















Interest Rate Risk Management




Cash Flow Hedges of Variable Rate Debt




F-32



---



##### Table of Contents





Fair Value Hedges of Fixed Rate Debt






Fair Value of Financial Instruments


Disclosures about Fair Value of Financial Instruments,


|                |                                      |                  |   |           |            |  |          |           |   |  |            |           |   |  |   |           |  
|--------------- | ------------------------------------ | ---------------- | - | --------- | ---------- |  | -------- | --------- | - |  | ---------- | --------- | - |  | - | --------- | -
|                |                                      | 2004             |   |           | 2003       | 
|                |                                      |                  |   |           |            | 
|                |                                      | Carrying         |   |           |            |  | Carrying |           |   | 
|                |                                      | Amount           |   |           | Fair Value |  |          | Amount    |   |  | Fair Value |          
|                |                                      |                  |   |           |            |  |          |           |   |  |            |          
|                |                                      | ($ in thousands) |  
|Non-derivatives |                                      |                  |   |           |            |  |          |           |   |  |            |           |   |  |   |          
|Assets          |                                      |                  |   |           |            |  |          |           |   |  |            |           |   |  |   |          
|                | Cash and cash equivalents            |                  | $ | 58,966    |            |  | $        | 58,966    |   |  | $          | 48,427    |   |  | $ | 48,427    |  
|                | Receivables                          |                  |   | 1,462,847 |            |  |          | 1,462,847 |   |  |            | 1,229,503 |   |  |   | 1,229,503 |  
|               
|Liabilities     |                                      |                  |   |           |            |  |          |           |   |  |            |           |   |  |   |          
|                | Accounts payable                     |                  |   | 305,996   |            |  |          | 305,996   |   |  |            | 306,527   |   |  |   | 306,527   |  
|                | Income taxes payable                 |                  |   | 230,530   |            |  |          | 230,530   |   |  |            | 178,111   |   |  |   | 178,111   |  
|                | Long term debt, excluding Euro-notes |                  |   | 600,719   |            |  |          | 600,719   |   |  |            | 1,039,693 |   |  |   | 1,039,693 |  
|                | Trust Preferred Securities           |                  |   | 1,278,760 |            |  |          | 1,436,306 |   |  |            | 1,242,317 |   |  |   | 1,324,736 |  
|                | Notes                                |                  |   | 175,030   |            |  |          | 176,090   |   |  |            | 162,296   |   |  |   | 165,730   |  
|               
|Derivatives     |                                      |                  |   |           |            |  |          |           |   |  |            |           |   |  |   |          
|                | Foreign exchange contracts           |                  |   | 16,980    |            |  |          | 16,980    |   |  |            | 102,184   |   |  |   | 102,184   |  
|                | Dollar interest rate hedges          |                  |   | (48,093   | )          |  |          | (48,093   | ) |  |            | (71,255   | ) |  |   | (71,255   | )
|                | Yen interest rate hedges             |                  |   | (381      | )          |  |          | (381      | ) |  |            | (469      | ) |  |   | (469      | )



F-33



---



##### Table of Contents





| |                          
| | -------------------------
| | Estimation of Fair Values













|    |                                  
|--- | ---------------------------------
|18. | Other Comprehensive Income (Loss)



|                                                                          |                                                             |                         |         |         |                         |   |        |                         |  |   |         |         |   |        |         |        |     |     |         |         |   |   |         |        |  |     |         |        |  |   |         |         |   |   |         |        | 
|------------------------------------------------------------------------- | ----------------------------------------------------------- | ----------------------- | ------- | ------- | ----------------------- | - | ------ | ----------------------- |  | - | ------- | ------- | - | ------ | ------- | ------ | --- | --- | ------- | ------- | - | - | ------- | ------ |  | --- | ------- | ------ |  | - | ------- | ------- | - | - | ------- | ------ | 
|                                                                          |                                                             | Year Ended December 31, |         |         | Year Ended December 31, |   |        | Year Ended December 31, | 
|                                                                          |                                                             | 2004                    |         |         | 2003                    |   |        | 2002                    | 
|                                                                          |                                                             |                         |         |         |                         |   |        |                         | 
|                                                                          |                                                             |                         |         | Tax     |                         |   |        |                         |  |   | Tax     |         |   |        |         |        |     | Tax |         |         |  
|                                                                          |                                                             | Pretax                  |         |         | Effect                  |   |        | Net                     |  |   | Pretax  |         |   | Effect |         |        | Net |     |         | Pretax  |   |   | Effect  |        |  | Net |        
|                                                                          |                                                             |                         |         |         |                         |   |        |                         |  |   |         |         |   |        |         |        |     |     |         |         |   |   |         |        |  |     |        
|Other comprehensive (loss) income relating to cash flow hedges:           |                                                             |                         |         |         |                         |   |        |                         |  |   |         |         |   |        |         |        |     |     |         |         |   |   |         |        |  |     |         |        |  |   |         |         |   |   |         |       
|                                                                          | Changes in fair value of cash flow hedges during the period |                         | $       | (36,192 | )                       |   | $      | 13,638                  |  |   | $       | (22,554 | ) |        | $       | 28,237 |     |     | $       | (11,114 | ) |   | $       | 17,123 |  |     | $       | 51,018 |  |   | $       | (19,736 | ) |   | $       | 31,282 | 
|                                                                          | Reclassification adjustments                                |                         |         | (9,906  | )                       |   |        | 3,449                   |  |   |         | (6,457  | ) |        |         | 8,091  |     |     |         | (3,185  | ) |   |         | 4,906  |  |     |         | 2,995  |  |   |         | (776    | ) |   |         | 2,219  | 
|                                                                          |                                                             |                         |         |         |                         |   |        |                         |  |   |         |         |   |        |         |        |     |     |         |         |   |   |         |        |  |     |        
|Total other comprehensive (loss) income relating to cash flow
    hedges: |                                                             |                         | (46,098 | )       |                         |   | 17,087 |                         |  |   | (29,011 | )       |   |        | 36,328  |        |     |     | (14,299 | )       |   |   | 22,029  |        |  |     | 54,013  |        |  |   | (20,512 | )       |   |   | 33,501  |       
|                                                                          |                                                             |                         |         |         |                         |   |        |                         |  |   |         |         |   |        |         |        |     |     |         |         |   |   |         |        |  |     |        
|Foreign-currency translation adjustment                                   |                                                             |                         | 144,784 |         |                         |   |       |                         |  |   | 144,784 |         |   |        | 200,578 |        |     |     |        |         |   |   | 200,578 |        |  |     | (38,432 | )      |  |   |        |         |   |   | (38,432 | )     
|                                                                          |                                                             |                         |         |         |                         |   |        |                         |  |   |         |         |   |        |         |        |     |     |         |         |   |   |         |        |  |     |        
|Minimum pension liability                                                 |                                                             |                         | (16,507 | )       |                         |   | 6,605  |                         |  |   | (9,902  | )       |   |        | (23,391 | )      |     |     | 9,341   |         |   |   | (14,050 | )      |  |     | (32,262 | )      |  |   | 12,905  |         |   |   | (19,357 | )     
|                                                                          |                                                             |                         |         |         |                         |   |        |                         |  |   |         |         |   |        |         |        |     |     |         |         |   |   |         |        |  |     |        
|Other comprehensive income (loss)                                         |                                                             | $                       | 82,179  |         |                         | $ | 23,692 |                         |  | $ | 105,871 |         |   | $      | 213,515 |        |     | $   | (4,958  | )       |   | $ | 208,557 |        |  | $   | (16,681 | )      |  | $ | (7,607  | )       |   | $ | (24,288 | )     
|                                                                          |                                                             |                         |         |         |                         |   |        |                         |  |   |         |         |   |        |         |        |     |     |         |         |   |   |         |        |  |     |        



|    |                             
|--- | ----------------------------
|19. | Business Segment Information





F-34



---



##### Table of Contents





|     |                                              |         |   |           |               |  |   |           |   |  |       |         |   |  |   |           |  
|---- | -------------------------------------------- | ------- | - | --------- | ------------- |  | - | --------- | - |  | ----- | ------- | - |  | - | --------- | -
|     |                                              | North   |   |           |               |  |   |           |  
|     |                                              | America |   |           | International |  |   | Corporate |   |  | Total |        
|     |                                              |         |   |           |               |  |   |           |   |  |       |        
|2004 |                                              |         |   |           |               |  |   |           |   |  |       |         |   |  |   |          
|     | Net revenue external customers               |         | $ | 4,216,017 |               |  | $ | 2,011,985 |   |  | $     |        |   |  | $ | 6,228,002 |  
|     | Inter  segment revenue                      |         |   | 1,749     |               |  |   | 38,872    |   |  |       | (40,621 | ) |  |   |          |  
|     |                                              |         |   |           |               |  |   |           |   |  |       |        
|     | Total net revenue                            |         |   | 4,217,766 |               |  |   | 2,050,857 |   |  |       | (40,621 | ) |  |   | 6,228,002 |  
|     |                                              |         |   |           |               |  |   |           |   |  |       |        
|     | Depreciation and amortization                |         |   | (126,048  | )             |  |   | (104,621  | ) |  |       | (1,917  | ) |  |   | (232,586  | )
|     | Operating Income                             |         |   | 589,608   |               |  |   | 298,083   |   |  |       | (35,346 | ) |  |   | 852,345   |  
|     | Segment assets                               |         |   | 5,479,088 |               |  |   | 2,426,820 |   |  |       | 55,633  |   |  |   | 7,961,541 |  
|     | Capital expenditures and
    acquisitions(1) |         |   | 227,377   |               |  |   | 155,593   |   |  |       | 255     |   |  |   | 383,225   |  
|2003 |                                              |         |   |           |               |  |   |           |   |  |       |         |   |  |   |          
|     | Net revenue external customers               |         | $ | 3,854,606 |               |  | $ | 1,672,903 |   |  | $     |        |   |  | $ | 5,527,509 |  
|     | Inter  segment revenue                      |         |   | 1,630     |               |  |   | 36,258    |   |  |       | (37,888 | ) |  |   |          |  
|     |                                              |         |   |           |               |  |   |           |   |  |       |        
|     | Total net revenue                            |         |   | 3,856,236 |               |  |   | 1,709,161 |   |  |       | (37,888 | ) |  |   | 5,527,509 |  
|     |                                              |         |   |           |               |  |   |           |   |  |       |        
|     | Depreciation and amortization                |         |   | (119,467  | )             |  |   | (94,922   | ) |  |       | (1,989  | ) |  |   | (216,378  | )
|     | Operating Income                             |         |   | 532,262   |               |  |   | 253,790   |   |  |       | (28,617 | ) |  |   | 757,435   |  
|     | Segment assets                               |         |   | 5,286,902 |               |  |   | 2,176,039 |   |  |       | 40,379  |   |  |   | 7,503,320 |  
|     | Capital expenditures and
    acquisitions(2) |         |   | 216,613   |               |  |   | 166,821   |   |  |       | 16      |   |  |   | 383,450   |  
|2002 |                                              |         |   |           |               |  |   |           |   |  |       |         |   |  |   |          
|     | Net revenue external customers               |         | $ | 3,747,529 |               |  | $ | 1,336,568 |   |  | $     |        |   |  | $ | 5,084,097 |  
|     | Inter  segment revenue                      |         |   | 1,966     |               |  |   | 27,222    |   |  |       | (29,188 | ) |  |   |          |  
|     |                                              |         |   |           |               |  |   |           |   |  |       |        
|     | Total net revenue                            |         |   | 3,749,495 |               |  |   | 1,363,790 |   |  |       | (29,188 | ) |  |   | 5,084,097 |  
|     |                                              |         |   |           |               |  |   |           |   |  |       |        
|     | Depreciation and amortization                |         |   | (139,309  | )             |  |   | (69,436   | ) |  |       | (1,810  | ) |  |   | (210,555  | )
|     | Operating Income                             |         |   | 491,068   |               |  |   | 222,151   |   |  |       | (18,252 | ) |  |   | 694,967   |  
|     | Segment assets                               |         |   | 5,019,281 |               |  |   | 1,735,945 |   |  |       | 24,723  |   |  |   | 6,779,949 |  
|     | Capital expenditures and
    acquisitions(3) |         |   | 167,651   |               |  |   | 151,322   |   |  |       | 22      |   |  |   | 318,995   |  






|    |                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------
|(1) | International acquisitions exclude $15,479 of non-cash
    acquisitions for 2004.                                           
|   
|(2) | North America and International acquisitions exclude $3,995 and
    $5,065, respectively, of non-cash acquisitions for 2003.
|   
|(3) | International acquisitions exclude $8,041 of non-cash
    acquisitions for 2002.                                            

|                                                  |                                                        |      |   |          |      |  |   |          |   |  |   |          |  
|------------------------------------------------- | ------------------------------------------------------ | ---- | - | -------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                                  |                                                        | 2004 |   |          | 2003 |  |   | 2002     |  
|                                                  |                                                        |      |   |          |      |  |   |          |  
|Reconciliation of measures to consolidated totals |                                                        |      |   |          |      |  |   |          |   |  |   |         
|                                                  | Total operating income of reporting segments           |      |   | 887,691  |      |  |   | 786,052  |   |  |   | 713,219  |  
|                                                  | Corporate expenses                                     |      |   | (35,346  | )    |  |   | (28,617  | ) |  |   | (18,252  | )
|                                                  | Interest income                                        |      |   | 13,418   |      |  |   | 19,089   |   |  |   | 18,053   |  
|                                                  | Interest expense                                       |      |   | (197,164 | )    |  |   | (230,848 | ) |  |   | (244,570 | )
|                                                  |                                                        |      |   |          |      |  |   |          |  
|                                                  | Total income before income taxes and minority interest |      | $ | 668,599  |      |  | $ | 545,676  |   |  | $ | 468,450  |  
|                                                  |                                                        |      |   |          |      |  |   |          |  

F-35



---



##### Table of Contents





|                               |  |         |         |  |               |             |           |       |  |   |           |  |  |   |           | 
|------------------------------ |  | ------- | ------- |  | ------------- | ----------- | --------- | ----- |  | - | --------- |  |  | - | --------- | 
|                               |  |         |         |  |               | Rest of the |           |       | 
|                               |  | Germany |         |  | United States |             |           | World |  |   | Total     | 
|                               |  |         |         |  |               |             |           |       |  |   |           | 
|2004                           |  |         |         |  |               |             |           |       |  |   |           |  |  |   |           | 
|Net revenue external customers |  | $       | 288,526 |  |               | $           | 4,216,017 |       |  | $ | 1,723,459 |  |  | $ | 6,228,002 | 
|Long-lived assets              |  |         | 169,981 |  |               |             | 4,241,987 |       |  |   | 992,192   |  |  |   | 5,404,160 | 
|2003                           |  |         |         |  |               |             |           |       |  |   |           |  |  |   |           | 
|Net revenue external customers |  | $       | 245,983 |  |               | $           | 3,854,606 |       |  | $ | 1,426,920 |  |  | $ | 5,527,509 | 
|Long-lived assets              |  |         | 148,375 |  |               |             | 4,145,453 |       |  |   | 883,752   |  |  |   | 5,177,580 | 
|2002                           |  |         |         |  |               |             |           |       |  |   |           |  |  |   |           | 
|Net revenue external customers |  | $       | 198,644 |  |               | $           | 3,747,529 |       |  | $ | 1,137,924 |  |  | $ | 5,084,097 | 
|Long-lived assets              |  |         | 125,615 |  |               |             | 4,038,613 |       |  |   | 673,333   |  |  |   | 4,837,561 | 



|    |                                    
|--- | -----------------------------------
|20. | Supplementary Cash Flow Information



|                                                   |                                                    |      |   |         |      |  |   |         |  |  |   |         | 
|-------------------------------------------------- | -------------------------------------------------- | ---- | - | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|                                                   |                                                    | 2004 |   |         | 2003 |  |   | 2002    | 
|                                                   |                                                    |      |   |         |      |  |   |         | 
|Supplementary cash flow information:               |                                                    |      |   |         |      |  |   |         |  |  |   |        
|                                                   | Cash paid for interest                             |      | $ | 201,380 |      |  | $ | 208,429 |  |  | $ | 208,271 | 
|                                                   |                                                    |      |   |         |      |  |   |         | 
|                                                   | Cash paid for income taxes                         |      | $ | 198,983 |      |  | $ | 141,278 |  |  | $ | 126,429 | 
|                                                   |                                                    |      |   |         |      |  |   |         | 
|Supplemental disclosures of cash flow information: |                                                    |      |   |         |      |  |   |         |  |  |   |        
|                                                   | Details for acquisitions:                          |      |   |         |      |  |   |         |  |  |   |         | 
|                                                   | Assets acquired                                    |      | $ | 148,324 |      |  | $ | 152,570 |  |  | $ | 105,514 | 
|                                                   | Liabilities assumed                                |      |   | 12,957  |      |  |   | 46,685  |  |  |   | 15,881  | 
|                                                   | Transaction under common control with Fresenius AG |      |   |        |      |  |   | 1,469   |  |  |   |        | 
|                                                   | Notes assumed in connection with acquisition       |      |   | 15,479  |      |  |   | 9,060   |  |  |   | 8,041   | 
|                                                   |                                                    |      |   |         |      |  |   |         | 
|                                                   | Cash paid                                          |      |   | 119,888 |      |  |   | 95,356  |  |  |   | 81,592  | 
|                                                   | Less cash acquired                                 |      |   | 15,395  |      |  |   | 3,166   |  |  |   | 1,757   | 
|                                                   |                                                    |      |   |         |      |  |   |         | 
|                                                   | Net cash paid for acquisitions                     |      | $ | 104,493 |      |  | $ | 92,190  |  |  | $ | 79,835  | 
|                                                   |                                                    |      |   |         |      |  |   |         | 



|    |                                             
|--- | --------------------------------------------
|21. | Supplemental Condensed Combining Information



F-36



---



##### Table of Contents



|                                                 |                                     |                                      |          |              |        |   |               |         |  |           |              |          |          |            |           |           |       |   |            |          |   |   |           |           | 
|------------------------------------------------ | ----------------------------------- | ------------------------------------ | -------- | ------------ | ------ | - | ------------- | ------- |  | --------- | ------------ | -------- | -------- | ---------- | --------- | --------- | ----- | - | ---------- | -------- | - | - | --------- | --------- | 
|                                                 |                                     | For the Year Ended December 31, 2004 |         
|                                                 |                                     |                                      |         
|                                                 |                                     |                                      |          | Guarantor    |        |   |              
|                                                 |                                     |                                      |          | Subsidiaries |        |   |              
|                                                 |                                     |                                      |          |              |        |   | Non-Guarantor |         |  | Combining |              |          | Combined |           
|                                                 |                                     | FMS AG                               |          |              | D-GmbH |   |               | FMCH    |  |           | Subsidiaries |          |          | Adjustment |           |           | Total |  
|                                                 |                                     |                                      |          |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Net revenue                                      |                                     | $                                    |         |              |        | $ | 967,981       |         |  | $         |             |          |          | $          | 7,086,578 |           |       | $ | (1,826,557 | )        |   | $ | 6,228,002 |          
|Cost of revenue                                  |                                     |                                      |         |              |        |   | 618,147       |         |  |           |             |          |          |            | 5,344,614 |           |       |   | (1,820,644 | )        |   |   | 4,142,117 |          
|                                                 |                                     |                                      |          |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|                                                 | Gross profit                        |                                      |          |             |        |   |               | 349,834 |  |           |              |         |          |            |           | 1,741,964 |       |   |            | (5,913   | ) |   |           | 2,085,885 | 
|                                                 |                                     |                                      |          |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Operating expenses:                              |                                     |                                      |          |              |        |   |               |         |  |           |              |          |          |            |           |           |       |   |            |          |   |   |           |          
|                                                 | Selling, general and administrative |                                      |          | 98,025       |        |   |               | 144,952 |  |           |              |         |          |            |           | 1,068,900 |       |   |            | (129,701 | ) |   |           | 1,182,176 | 
|                                                 | Research and development            |                                      |          | 2,455        |        |   |               | 33,610  |  |           |              |         |          |            |           | 15,299    |       |   |            |         |   |   |           | 51,364    | 
|                                                 |                                     |                                      |          |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Operating (loss) income                          |                                     |                                      | (100,479 | )            |        |   | 171,272       |         |  |           |             |          |          |            | 657,764   |           |       |   | 123,788    |          |   |   | 852,345   |          
|                                                 |                                     |                                      |          |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Other (income) expense:                          |                                     |                                      |          |              |        |   |               |         |  |           |              |          |          |            |           |           |       |   |            |          |   |   |           |          
|                                                 | Interest, net                       |                                      |          | 36,777       |        |   |               | 13,367  |  |           |              | 62,189   |          |            |           | 104,768   |       |   |            | (33,355  | ) |   |           | 183,746   | 
|                                                 | Other, net                          |                                      |          | (592,166     | )      |   |               | 101,430 |  |           |              | (286,567 | )        |            |           |          |       |   |            | 777,303  |   |   |           |          | 
|                                                 |                                     |                                      |          |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Income before income taxes and minority interest |                                     |                                      | 454,909  |              |        |   | 56,475        |         |  |           | 224,378      |          |          |            | 552,997   |           |       |   | (620,160   | )        |   |   | 668,599   |          
|                                                 | Income tax expense (benefit)        |                                      |          | 52,912       |        |   |               | 58,815  |  |           |              | (24,876  | )        |            |           | 237,413   |       |   |            | (58,849  | ) |   |           | 265,415   | 
|                                                 |                                     |                                      |          |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Income (loss) before minority interest           |                                     |                                      | 401,998  |              |        |   | (2,340        | )       |  |           | 249,254      |          |          |            | 315,584   |           |       |   | (561,311   | )        |   |   | 403,184   |          
|Minority interest                                |                                     |                                      |         |              |        |   |              |         |  |           |             |          |          |            |          |           |       |   | 1,186      |          |   |   | 1,186     |          
|                                                 |                                     |                                      |          |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Net income (loss)                                |                                     | $                                    | 401,998  |              |        | $ | (2,340        | )       |  | $         | 249,254      |          |          | $          | 315,584   |           |       | $ | (562,497   | )        |   | $ | 401,998   |          
|                                                 |                                     |                                      |          |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  

|                                                 |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |   |          |         |   |   |           |           | 
|------------------------------------------------ | ----------------------------------- | ------------------------------------ | ------- | ------------ | ------ | - | ------------- | ------- |  | --------- | ------------ | -------- | -------- | ---------- | --------- | --------- | ----- | - | -------- | ------- | - | - | --------- | --------- | 
|                                                 |                                     | For the Year Ended December 31, 2003 |        
|                                                 |                                     |                                      |        
|                                                 |                                     |                                      |         | Guarantor    |        |   |              
|                                                 |                                     |                                      |         | Subsidiaries |        |   |              
|                                                 |                                     |                                      |         |              |        |   | Non-Guarantor |         |  | Combining |              |          | Combined |           
|                                                 |                                     | FMS AG                               |         |              | D-GmbH |   |               | FMCH    |  |           | Subsidiaries |          |          | Adjustment |           |           | Total |  
|                                                 |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Net revenue                                      |                                     | $                                    |        |              |        | $ | 823,632       |         |  | $         |             |          |          | $          | 5,630,923 |           |       | $ | (927,046 | )       |   | $ | 5,527,509 |          
|Cost of revenue                                  |                                     |                                      |        |              |        |   | 520,605       |         |  |           |             |          |          |            | 4,098,272 |           |       |   | (920,271 | )       |   |   | 3,698,606 |          
|                                                 |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|                                                 | Gross profit                        |                                      |         |             |        |   |               | 303,027 |  |           |              |         |          |            |           | 1,532,651 |       |   |          | (6,775  | ) |   |           | 1,828,903 | 
|                                                 |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Operating expenses:                              |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |   |          |         |   |   |           |          
|                                                 | Selling, general and administrative |                                      |         | (645,049     | )      |   |               | 114,074 |  |           |              |         |          |            |           | 883,745   |       |   |          | 669,011 |   |   |           | 1,021,781 | 
|                                                 | Research and development            |                                      |         | 1,857        |        |   |               | 34,527  |  |           |              |         |          |            |           | 13,303    |       |   |          |        |   |   |           | 49,687    | 
|                                                 |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Operating income (loss)                          |                                     |                                      | 643,192 |              |        |   | 154,426       |         |  |           |             |          |          |            | 635,603   |           |       |   | (675,786 | )       |   |   | 757,435   |          
|                                                 |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Other (income) expense:                          |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |   |          |         |   |   |           |          
|                                                 | Interest, net                       |                                      |         | 35,157       |        |   |               | 11,918  |  |           |              | 63,512   |          |            |           | 138,110   |       |   |          | (36,938 | ) |   |           | 211,759   | 
|                                                 | Other, net                          |                                      |         | 229,988      |        |   |               | 83,283  |  |           |              | (251,564 | )        |            |           |          |       |   |          | (61,707 | ) |   |           |          | 
|                                                 |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Income before income taxes and minority interest |                                     |                                      | 378,047 |              |        |   | 59,225        |         |  |           | 188,052      |          |          |            | 497,493   |           |       |   | (577,141 | )       |   |   | 545,676   |          
|                                                 | Income tax expense (benefit)        |                                      |         | 46,867       |        |   |               | 58,320  |  |           |              | (25,405  | )        |            |           | 193,596   |       |   |          | (60,664 | ) |   |           | 212,714   | 
|                                                 |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Income (loss) before minority interest           |                                     |                                      | 331,180 |              |        |   | 905           |         |  |           | 213,457      |          |          |            | 303,898   |           |       |   | (516,477 | )       |   |   | 332,962   |          
|Minority interest                                |                                     |                                      |        |              |        |   |              |         |  |           |             |          |          |            |          |           |       |   | 1,782    |         |   |   | 1,782     |          
|                                                 |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Net income (loss)                                |                                     | $                                    | 331,180 |              |        | $ | 905           |         |  | $         | 213,457      |          |          | $          | 303,898   |           |       | $ | (518,259 | )       |   | $ | 331,180   |          
|                                                 |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  

F-37



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##### Table of Contents



|                                                        |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |   |          |         |   |   |           |           | 
|------------------------------------------------------- | ----------------------------------- | ------------------------------------ | ------- | ------------ | ------ | - | ------------- | ------- |  | --------- | ------------ | -------- | -------- | ---------- | --------- | --------- | ----- | - | -------- | ------- | - | - | --------- | --------- | 
|                                                        |                                     | For the Year Ended December 31, 2002 |        
|                                                        |                                     |                                      |        
|                                                        |                                     |                                      |         | Guarantor    |        |   |              
|                                                        |                                     |                                      |         | Subsidiaries |        |   |              
|                                                        |                                     |                                      |         |              |        |   | Non-Guarantor |         |  | Combining |              |          | Combined |           
|                                                        |                                     | FMS AG                               |         |              | D-GmbH |   |               | FMCH    |  |           | Subsidiaries |          |          | Adjustment |           |           | Total |  
|                                                        |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Net revenue                                             |                                     | $                                    |        |              |        | $ | 686,214       |         |  | $         |             |          |          | $          | 5,113,396 |           |       | $ | (715,513 | )       |   | $ | 5,084,097 |          
|Cost of revenue                                         |                                     |                                      |        |              |        |   | 414,559       |         |  |           |             |          |          |            | 3,723,926 |           |       |   | (710,408 | )       |   |   | 3,428,077 |          
|                                                        |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|                                                        | Gross profit                        |                                      |         |             |        |   |               | 271,655 |  |           |              |         |          |            |           | 1,389,470 |       |   |          | (5,105  | ) |   |           | 1,656,020 | 
|                                                        |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Operating expenses:                                     |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |   |          |         |   |   |           |          
|                                                        | Selling, general and administrative |                                      |         | (23,892      | )      |   |               | 103,295 |  |           |              |         |          |            |           | 794,209   |       |   |          | 40,008  |   |   |           | 913,620   | 
|                                                        | Research and development            |                                      |         | 198          |        |   |               | 34,745  |  |           |              |         |          |            |           | 12,490    |       |   |          |        |   |   |           | 47,433    | 
|                                                        |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Operating income (loss)                                 |                                     |                                      | 23,694  |              |        |   | 133,615       |         |  |           |             |          |          |            | 582,771   |           |       |   | (45,113  | )       |   |   | 694,967   |          
|                                                        |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Other (income) expense:                                 |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |   |          |         |   |   |           |          
|                                                        | Interest, net                       |                                      |         | 22,582       |        |   |               | 6,881   |  |           |              | 69,412   |          |            |           | 163,746   |       |   |          | (36,104 | ) |   |           | 226,517   | 
|                                                        | Other, net                          |                                      |         | (316,026     | )      |   |               | 76,887  |  |           |              | (202,966 | )        |            |           |          |       |   |          | 442,105 |   |   |           |          | 
|                                                        |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Income (loss) before income taxes and minority interest |                                     |                                      | 317,138 |              |        |   | 49,847        |         |  |           | 133,554      |          |          |            | 419,025   |           |       |   | (451,114 | )       |   |   | 468,450   |          
|                                                        | Income tax expense (benefit)        |                                      |         | 27,348       |        |   |               | 48,378  |  |           |              | (27,765  | )        |            |           | 169,349   |       |   |          | (42,236 | ) |   |           | 175,074   | 
|                                                        |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Income (loss) before minority interest                  |                                     |                                      | 289,790 |              |        |   | 1,469         |         |  |           | 161,319      |          |          |            | 249,676   |           |       |   | (408,878 | )       |   |   | 293,376   |          
|Minority interest                                       |                                     |                                      |        |              |        |   |              |         |  |           |             |          |          |            |          |           |       |   | 3,586    |         |   |   | 3,586     |          
|                                                        |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  
|Net income                                              |                                     | $                                    | 289,790 |              |        | $ | 1,469         |         |  | $         | 161,319      |          |          | $          | 249,676   |           |       | $ | (412,464 | )       |   | $ | 289,790   |          
|                                                        |                                     |                                      |         |              |        |   |               |         |  |           |              |          |          |            |           |           |       |  

F-38



---



##### Table of Contents



|                                                                                                                                                                                     |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           |  |            |             |            |   |           |           |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------- | ------------------------- | --------- | ------------ | --------- |  | ------------- | --------- | ------- | --------- | ------------ | --------- | --------- | ---------- | --------- | --------- | --------- |  | ---------- | ----------- | ---------- | - | --------- | --------- | --------- | 
|                                                                                                                                                                                     |                                                                 | At December 31, 2004      |          
|                                                                                                                                                                                     |                                                                 |                           |          
|                                                                                                                                                                                     |                                                                 |                           |           | Guarantor    |           |  |              
|                                                                                                                                                                                     |                                                                 |                           |           | Subsidiaries |           |  |              
|                                                                                                                                                                                     |                                                                 |                           |           |              |           |  | Non-Guarantor |           |         | Combining |              |           | Combined  |           
|                                                                                                                                                                                     |                                                                 | FMS AG                    |           |              | D-GmbH    |  |               | FMCH      |         |           | Subsidiaries |           |           | Adjustment |           |           | Total     | 
|                                                                                                                                                                                     |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 
|Current assets:                                                                                                                                                                      |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           |  |            |             |            |   |           |          
|                                                                                                                                                                                     | Cash and cash equivalents                                       |                           | $         | 2,152        |           |  | $             | 35        |         |           | $            |          |           |            | $         | 56,779    |           |  | $          |            |            |   | $         | 58,966    |          
|                                                                                                                                                                                     | Trade accounts receivable, less allowance for doubtful accounts |                           |           |             |           |  |               | 110,204   |         |           |              |          |           |            |           | 1,353,422 |           |  |            | (779        | )          |   |           | 1,462,847 |          
|                                                                                                                                                                                     | Accounts receivable from related parties                        |                           |           | 763,089      |           |  |               | 325,731   |         |           |              | 213,337   |           |            |           | 1,792,810 |           |  |            | (3,043,207  | )          |   |           | 51,760    |          
|                                                                                                                                                                                     | Inventories                                                     |                           |           |             |           |  |               | 125,952   |         |           |              |          |           |            |           | 374,560   |           |  |            | (57,593     | )          |   |           | 442,919   |          
|                                                                                                                                                                                     | Prepaid expenses and other current assets                       |                           |           | 7,347        |           |  |               | 12,254    |         |           |              | 22        |           |            |           | 224,071   |           |  |            | 399         |            |   |           | 244,093   |          
|                                                                                                                                                                                     | Deferred taxes                                                  |                           |           |             |           |  |               |           |         |           |              |          |           |            |           | 166,970   |           |  |            | 18,415      |            |   |           | 185,385   |          
|                                                                                                                                                                                     |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 
|                                                                                                                                                                                     |                                                                 | Total current assets      |           |              | 772,588   |  |               |           | 574,176 |           |              |           | 213,359   |            |           |           | 3,968,612 |  |            |             | (3,082,765 | ) |           |           | 2,445,970 | 
|Property, plant and equipment, net                                                                                                                                                   |                                                                 |                           | 227       |              |           |  | 100,496       |           |         |           |             |           |           |            | 1,121,290 |           |           |  | (40,086    | )           |            |   | 1,181,927 |          
|Intangible assets                                                                                                                                                                    |                                                                 |                           | 333       |              |           |  | 16,384        |           |         |           |             |           |           |            | 585,331   |           |           |  |           |             |            |   | 602,048   |          
|Goodwill                                                                                                                                                                             |                                                                 |                           |          |              |           |  | 3,726         |           |         |           |             |           |           |            | 3,441,426 |           |           |  |           |             |            |   | 3,445,152 |          
|Deferred taxes                                                                                                                                                                       |                                                                 |                           |          |              |           |  |               |           |         |           |             |           |           |            | 32,613    |           |           |  | 25,510     |             |            |   | 58,123    |          
|Other assets                                                                                                                                                                         |                                                                 |                           | 4,990,303 |              |           |  | 925,105       |           |         |           | 3,520,453    |           |           |            | 522,915   |           |           |  | (9,730,455 | )           |            |   | 228,321   |          
|                                                                                                                                                                                     |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 
|                                                                                                                                                                                     | Total assets                                                    |                           | $         | 5,763,451    |           |  | $             | 1,619,887 |         |           | $            | 3,733,812 |           |            | $         | 9,672,187 |           |  | $          | (12,827,796 | )          |   | $         | 7,961,541 |          
|                                                                                                                                                                                     |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 
|Current liabilities:                                                                                                                                                                 |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           |  |            |             |            |   |           |          
|                                                                                                                                                                                     | Accounts payable                                                |                           | $         | 205          |           |  | $             | 16,374    |         |           | $            |          |           |            | $         | 175,973   |           |  | $          |            |            |   | $         | 192,552   |          
|                                                                                                                                                                                     | Accounts payable to related parties                             |                           |           | 1,682,729    |           |  |               | 359,869   |         |           |              | 842,204   |           |            |           | 1,290,323 |           |  |            | (4,061,681  | )          |   |           | 113,444   |          
|                                                                                                                                                                                     | Accrued expenses and other current liabilities                  |                           |           | 15,800       |           |  |               | 79,530    |         |           |              | 541       |           |            |           | 652,379   |           |  |            | (7,175      | )          |   |           | 741,075   |          
|                                                                                                                                                                                     | Short-term borrowings                                           |                           |           | 38           |           |  |               |          |         |           |              |          |           |            |           | 419,110   |           |  |            |            |            |   |           | 419,148   |          
|                                                                                                                                                                                     | Short-term borrowings from related parties                      |                           |           |             |           |  |               |          |         |           |              |          |           |            |           | 5,766     |           |  |            |            |            |   |           | 5,766     |          
|                                                                                                                                                                                     | Current portion of long-term debt and capital lease obligations |                           |           | 770          |           |  |               | 1,145     |         |           |              | 25,000    |           |            |           | 203,264   |           |  |            |            |            |   |           | 230,179   |          
|                                                                                                                                                                                     | Income tax payable                                              |                           |           | 127,331      |           |  |               |          |         |           |              |          |           |            |           | 102,551   |           |  |            | 648         |            |   |           | 230,530   |          
|                                                                                                                                                                                     | Deferred taxes                                                  |                           |           | 990          |           |  |               | 4,178     |         |           |              |          |           |            |           | 35,962    |           |  |            | (35,971     | )          |   |           | 5,159     |          
|                                                                                                                                                                                     |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 
|                                                                                                                                                                                     |                                                                 | Total current liabilities |           |              | 1,827,863 |  |               |           | 461,096 |           |              |           | 867,745   |            |           |           | 2,885,328 |  |            |             | (4,104,179 | ) |           |           | 1,937,853 | 
|Long term debt and capital lease obligations, less current
    portion                                                                                                               |                                                                 |                           | 248,427   |              |           |  |              |           |         |           | 650,029      |           |           |            | 507,847   |           |           |  | (860,733   | )           |            |   | 545,570   |          
|Long term borrowings from related parties                                                                                                                                            |                                                                 |                           | 4,295     |              |           |  |              |           |         |           |             |           |           |            |          |           |           |  | (4,295     | )           |            |   |          |          
|Other liabilities                                                                                                                                                                    |                                                                 |                           | 41,111    |              |           |  | 5,834         |           |         |           |             |           |           |            | 93,839    |           |           |  | 15,338     |             |            |   | 156,122   |          
|Pension liabilities                                                                                                                                                                  |                                                                 |                           | 1,049     |              |           |  | 60,084        |           |         |           |             |           |           |            | 58,333    |           |           |  | (11,341    | )           |            |   | 108,125   |          
|Deferred taxes                                                                                                                                                                       |                                                                 |                           | 5,890     |              |           |  | 2,376         |           |         |           |             |           |           |            | 239,162   |           |           |  | 34,833     |             |            |   | 282,261   |          
|Company obligated mandatorily redeemable preferred securities of
    subsidiary Fresenius Medical Care Capital Trusts holding solely
    Company-guaranteed debentures of subsidiary |                                                                 |                           |          |              |           |  |              |           |         |           |             |           |           |            | 1,278,760 |           |           |  |           |             |            |   | 1,278,760 |          
|Minority interest                                                                                                                                                                    |                                                                 |                           |          |              |           |  |              |           |         |           | 7,412        |           |           |            |          |           |           |  | 10,622     |             |            |   | 18,034    |          
|                                                                                                                                                                                     |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 
|                                                                                                                                                                                     |                                                                 | Total liabilities         |           |              | 2,128,635 |  |               |           | 529,390 |           |              |           | 1,525,186 |            |           |           | 5,063,269 |  |            |             | (4,919,755 | ) |           |           | 4,326,725 | 
|Shareholders equity:                                                                                                                                                                |                                                                 |                           | 3,634,816 |              |           |  | 1,090,497     |           |         |           | 2,208,626    |           |           |            | 4,608,918 |           |           |  | (7,908,041 | )           |            |   | 3,634,816 |          
|                                                                                                                                                                                     |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 
|                                                                                                                                                                                     | Total liabilities and shareholders equity                      |                           | $         | 5,763,451    |           |  | $             | 1,619,887 |         |           | $            | 3,733,812 |           |            | $         | 9,672,187 |           |  | $          | (12,827,796 | )          |   | $         | 7,961,541 |          
|                                                                                                                                                                                     |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 

F-39



---



##### Table of Contents



|                                                                                                                                                                                       |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           |  |            |             |            |   |           |           |           | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | ------------------------- | --------- | ------------ | --------- |  | ------------- | --------- | ------- | --------- | ------------ | --------- | --------- | ---------- | --------- | --------- | --------- |  | ---------- | ----------- | ---------- | - | --------- | --------- | --------- | 
|                                                                                                                                                                                       |                                                                 | At December 31, 2003      |          
|                                                                                                                                                                                       |                                                                 |                           |          
|                                                                                                                                                                                       |                                                                 |                           |           | Guarantor    |           |  |              
|                                                                                                                                                                                       |                                                                 |                           |           | Subsidiaries |           |  |              
|                                                                                                                                                                                       |                                                                 |                           |           |              |           |  | Non-Guarantor |           |         | Combining |              |           | Combined  |           
|                                                                                                                                                                                       |                                                                 | FMC AG                    |           |              | D-GmbH    |  |               | FMCH      |         |           | Subsidiaries |           |           | Adjustment |           |           | Total     | 
|                                                                                                                                                                                       |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 
|Current assets:                                                                                                                                                                        |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           |  |            |             |            |   |           |          
|                                                                                                                                                                                       | Cash and cash equivalents                                       |                           | $         | 3            |           |  | $             | 300       |         |           | $            |          |           |            | $         | 48,124    |           |  | $          |            |            |   | $         | 48,427    |          
|                                                                                                                                                                                       | Trade accounts receivable, less allowance for doubtful accounts |                           |           |             |           |  |               | 100,011   |         |           |              |          |           |            |           | 1,129,492 |           |  |            |            |            |   |           | 1,229,503 |          
|                                                                                                                                                                                       | Accounts receivable from related parties                        |                           |           | 737,938      |           |  |               | 333,712   |         |           |              | 210,337   |           |            |           | 1,381,429 |           |  |            | (2,612,960  | )          |   |           | 50,456    |          
|                                                                                                                                                                                       | Inventories                                                     |                           |           |             |           |  |               | 126,810   |         |           |              |          |           |            |           | 370,737   |           |  |            | (52,809     | )          |   |           | 444,738   |          
|                                                                                                                                                                                       | Prepaid expenses and other current assets                       |                           |           | 7,496        |           |  |               | 15,928    |         |           |              | 23        |           |            |           | 229,847   |           |  |            | 71          |            |   |           | 253,365   |          
|                                                                                                                                                                                       | Deferred taxes                                                  |                           |           |             |           |  |               |          |         |           |              |          |           |            |           | 156,542   |           |  |            | 23,097      |            |   |           | 179,639   |          
|                                                                                                                                                                                       |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 
|                                                                                                                                                                                       |                                                                 | Total current assets      |           |              | 745,437   |  |               |           | 576,761 |           |              |           | 210,360   |            |           |           | 3,316,171 |  |            |             | (2,642,601 | ) |           |           | 2,206,128 | 
|Property, plant and equipment, net                                                                                                                                                     |                                                                 |                           | 37        |              |           |  | 95,962        |           |         |           |             |           |           |            | 1,023,169 |           |           |  | (30,022    | )           |            |   | 1,089,146 |          
|Intangible assets                                                                                                                                                                      |                                                                 |                           | 484       |              |           |  | 5,324         |           |         |           |             |           |           |            | 576,295   |           |           |  |           |             |            |   | 582,103   |          
|Goodwill                                                                                                                                                                               |                                                                 |                           |          |              |           |  | 3,455         |           |         |           |             |           |           |            | 3,284,893 |           |           |  |           |             |            |   | 3,288,348 |          
|Deferred taxes                                                                                                                                                                         |                                                                 |                           |          |              |           |  |              |           |         |           |             |           |           |            | 21,529    |           |           |  | 14,012     |             |            |   | 35,541    |          
|Other assets                                                                                                                                                                           |                                                                 |                           | 3,757,515 |              |           |  | 347,348       |           |         |           | 3,651,635    |           |           |            | 483,658   |           |           |  | (7,938,102 | )           |            |   | 302,054   |          
|                                                                                                                                                                                       |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 
|                                                                                                                                                                                       | Total assets                                                    |                           | $         | 4,503,473    |           |  | $             | 1,028,850 |         |           | $            | 3,861,995 |           |            | $         | 8,705,715 |           |  | $          | (10,596,713 | )          |   | $         | 7,503,320 |          
|                                                                                                                                                                                       |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 
|Current liabilities:                                                                                                                                                                   |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           |  |            |             |            |   |           |          
|                                                                                                                                                                                       | Accounts payable                                                |                           | $         | 621          |           |  | $             | 26,540    |         |           | $            |          |           |            | $         | 150,663   |           |  | $          |            |            |   | $         | 177,824   |          
|                                                                                                                                                                                       | Accounts payable to related parties                             |                           |           | 454,267      |           |  |               | 360,410   |         |           |              | 801,969   |           |            |           | 1,308,280 |           |  |            | (2,796,223  | )          |   |           | 128,703   |          
|                                                                                                                                                                                       | Accrued expenses and other current liabilities                  |                           |           | 49,182       |           |  |               | 73,072    |         |           |              | 2,328     |           |            |           | 565,862   |           |  |            | 1,540       |            |   |           | 691,984   |          
|                                                                                                                                                                                       | Short-term borrowings                                           |                           |           | 60           |           |  |               |          |         |           |              |          |           |            |           | 89,357    |           |  |            |            |            |   |           | 89,417    |          
|                                                                                                                                                                                       | Short-term borrowings from related parties                      |                           |           |             |           |  |               |          |         |           |              |          |           |            |           | 30,000    |           |  |            |            |            |   |           | 30,000    |          
|                                                                                                                                                                                       | Current portion of long-term debt and capital lease obligations |                           |           | 714          |           |  |               | 1,503     |         |           |              | 54,000    |           |            |           | 34,148    |           |  |            |            |            |   |           | 90,365    |          
|                                                                                                                                                                                       | Income tax payable                                              |                           |           | 96,875       |           |  |               |          |         |           |              |          |           |            |           | 80,588    |           |  |            | 648         |            |   |           | 178,111   |          
|                                                                                                                                                                                       | Deferred taxes                                                  |                           |           | 20,236       |           |  |               | 4,630     |         |           |              |          |           |            |           | 11,040    |           |  |            | (9,829      | )          |   |           | 26,077    |          
|                                                                                                                                                                                       |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 
|                                                                                                                                                                                       |                                                                 | Total current liabilities |           |              | 621,955   |  |               |           | 466,155 |           |              |           | 858,297   |            |           |           | 2,269,938 |  |            |             | (2,803,864 | ) |           |           | 1,412,481 | 
|Long term debt and capital lease obligations, less current
    portion                                                                                                                 |                                                                 |                           | 248,891   |              |           |  | 1,061         |           |         |           | 1,048,829    |           |           |            | 915,841   |           |           |  | (1,102,998 | )           |            |   | 1,111,624 |          
|Long term borrowings from related parties                                                                                                                                              |                                                                 |                           | 383,072   |              |           |  |              |           |         |           |             |           |           |            |          |           |           |  | (383,072   | )           |            |   |          |          
|Other liabilities                                                                                                                                                                      |                                                                 |                           |          |              |           |  | 4,779         |           |         |           |             |           |           |            | 114,762   |           |           |  | 9,074      |             |            |   | 128,615   |          
|Pension liabilities                                                                                                                                                                    |                                                                 |                           | 834       |              |           |  | 49,543        |           |         |           |             |           |           |            | 54,993    |           |           |  | (5,318     | )           |            |   | 100,052   |          
|Deferred taxes                                                                                                                                                                         |                                                                 |                           | 5,041     |              |           |  | 4,328         |           |         |           |             |           |           |            | 235,297   |           |           |  | 5,780      |             |            |   | 250,446   |          
|Company-obligated mandatorily redeemable preferred securities of
    subsidiary Fresenius Medical Care Capital Trusts holding solely
    Company-guaranteed debentures of subsidiaries |                                                                 |                           |          |              |           |  |              |           |         |           |             |           |           |            | 1,242,317 |           |           |  |           |             |            |   | 1,242,317 |          
|Minority interest                                                                                                                                                                      |                                                                 |                           |          |              |           |  |              |           |         |           | 7,412        |           |           |            |          |           |           |  | 6,693      |             |            |   | 14,105    |          
|                                                                                                                                                                                       |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 
|                                                                                                                                                                                       |                                                                 | Total liabilities         |           |              | 1,259,793 |  |               |           | 525,866 |           |              |           | 1,914,538 |            |           |           | 4,833,148 |  |            |             | (4,273,705 | ) |           |           | 4,259,640 | 
|Shareholders equity:                                                                                                                                                                  |                                                                 |                           | 3,243,680 |              |           |  | 502,984       |           |         |           | 1,947,457    |           |           |            | 3,872,567 |           |           |  | (6,323,008 | )           |            |   | 3,243,680 |          
|                                                                                                                                                                                       |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 
|                                                                                                                                                                                       | Total liabilities and shareholders equity                      |                           | $         | 4,503,473    |           |  | $             | 1,028,850 |         |           | $            | 3,861,995 |           |            | $         | 8,705,715 |           |  | $          | (10,596,713 | )          |   | $         | 7,503,320 |          
|                                                                                                                                                                                       |                                                                 |                           |           |              |           |  |               |           |         |           |              |           |           |            |           |           |           | 

F-40



---



##### Table of Contents



|                                                             |                                                                                                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |          |       |          |         |          |        |          |         |          |  
|------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | --------------------------------------------------- | ------------ | ------ | -------- | ------------- | ------- | ------ | --------- | ------------ | -------- | -------- | ---------- | ------ | -------- | ------- | -------- | ----- | -------- | ------- | -------- | ------ | -------- | ------- | -------- | -
|                                                             |                                                                                                                  | For the Year Ended December 31, 2004                                                 |                                                    
|                                                             |                                                                                                                  |                                                                                      |                                                    
|                                                             |                                                                                                                  |                                                                                      |                                                     | Guarantor    |        |          |              
|                                                             |                                                                                                                  |                                                                                      |                                                     | Subsidiaries |        |          |              
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |        |          | Non-Guarantor |         |        | Combining |              |          | Combined |           
|                                                             |                                                                                                                  | FMS AG                                                                               |                                                     |              | D-GmbH |          |               | FMCH    |        |           | Subsidiaries |          |          | Adjustment |        |          | Total   |         
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |         
|Operating Activities:                                        |                                                                                                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |          |       |          |         |          |        |         
|                                                             | Net income (loss)                                                                                                |                                                                                      | $                                                   | 401,998      |        |          | $             | (2,340  | )      |           | $            | 249,254  |          |            | $      | 315,583  |         |          | $     | (562,497 | )       |          | $      | 401,998  |        
|                                                             | Adjustments to reconcile net income to cash and cash equivalents
    provided by (used in) operating activities: |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |          |       |          |         |          |        |          |        
|                                                             | Equity affiliate income                                                                                          |                                                                                      |                                                     | (400,655     | )      |          |               |        |        |           |              | (286,567 | )        |            |        |         |         |          |       | 687,222  |         |          |        |         |        
|                                                             | Depreciation and amortization                                                                                    |                                                                                      |                                                     | 1,917        |        |          |               | 28,034  |        |           |              |         |          |            |        | 214,661  |         |          |       | (12,027  | )       |          |        | 232,585  |        
|                                                             | Change in deferred taxes, net                                                                                    |                                                                                      |                                                     | 636          |        |          |               | (4,241  | )      |           |              |         |          |            |        | 34,379   |         |          |       | 3,507    |         |          |        | 34,281   |        
|                                                             | Loss (gain) on investments                                                                                       |                                                                                      |                                                     | 72,100       |        |          |               |        |        |           |              |         |          |            |        | 9,287    |         |          |       | (81,387  | )       |          |        |         |        
|                                                             | (Gain) loss on sale of fixed assets                                                                              |                                                                                      |                                                     |             |        |          |               | (301    | )      |           |              |         |          |            |        | 1,036    |         |          |       |         |         |          |        | 735      |        
|                                                             | Compensation expense related to stock options                                                                    |                                                                                      |                                                     | 1,751        |        |          |               |        |        |           |              |         |          |            |        |         |         |          |       |         |         |          |        | 1,751    |        
|                                                             | Cash inflow from hedging                                                                                         |                                                                                      |                                                     | 2,928        |        |          |               | 116     |        |           |              |         |          |            |        | 11,470   |         |          |       |         |         |          |        | 14,514   |        
|                                                             | Changes in assets and liabilities, net of amounts from
    businesses acquired:                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |          |       |          |         |          |        |          |        
|                                                             |                                                                                                                  | Trade accounts receivable, net                                                       |                                                     |              |       |          |               |         | (2,142 | )         |              |          |         |            |        |          | (5,744  | )        |       |          |        |          |        |          | (7,886  | )       
|                                                             |                                                                                                                  | Inventories                                                                          |                                                     |              |       |          |               |         | 9,870  |           |              |          |         |            |        |          | 16,214  |          |       |          | 1,161   |          |        |          | 27,245  |         
|                                                             |                                                                                                                  | Prepaid expenses and other current and non-current assets                            |                                                     |              | (3,039 | )        |               |         | 5,870  |           |              |          | 658      |            |        |          | 119,533 |          |       |          | (52,989 | )        |        |          | 70,033  |         
|                                                             |                                                                                                                  | Accounts receivable from/ payable to related parties                                 |                                                     |              | (4,471 | )        |               |         | 4,882  |           |              |          | 37,235   |            |        |          | (39,766 | )        |       |          | (20,566 | )        |        |          | (22,686 | )       
|                                                             |                                                                                                                  | Accounts payable, accrued expenses and other current and
    non-current liabilities |                                                     |              | 1,680  |          |               |         | (3,935 | )         |              |          | (1,788   | )          |        |          | 38,838  |          |       |          | 1,362   |          |        |          | 36,157  |         
|                                                             |                                                                                                                  | Income tax payable                                                                   |                                                     |              | 24,353 |          |               |         |       |           |              |          | (24,876  | )          |        |          | 39,639  |          |       |          |        |          |        |          | 39,116  |         
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |         
|                                                             |                                                                                                                  |                                                                                      | Net cash provided by (used in) operating activities |              |        | 99,198   |               |         |        | 35,813    |              |          |          | (26,084    | )      |          |         | 755,130  |       |          |         | (36,214  | )      |          |         | 827,843  |  
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |         
|Investing Activities:                                        |                                                                                                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |          |       |          |         |          |        |         
|                                                             | Purchases of property, plant and equipment                                                                       |                                                                                      |                                                     | (251         | )      |          |               | (36,332 | )      |           |              |         |          |            |        | (259,097 | )       |          |       | 16,948   |         |          |        | (278,732 | )      
|                                                             | Proceeds from sale of property, plant and equipment                                                              |                                                                                      |                                                     |             |        |          |               | 1,617   |        |           |              |         |          |            |        | 16,741   |         |          |       |         |         |          |        | 18,358   |        
|                                                             | Disbursement of loans to related parties                                                                         |                                                                                      |                                                     | 29,666       |        |          |               | 108     |        |           |              | 454,404  |          |            |        |         |         |          |       | (484,178 | )       |          |        |         |        
|                                                             | Acquisitions and investments, net of cash acquired                                                               |                                                                                      |                                                     | (4,146       | )      |          |               |        |        |           |              |         |          |            |        | (103,863 | )       |          |       | 3,516    |         |          |        | (104,493 | )      
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |         
|                                                             |                                                                                                                  |                                                                                      | Net cash provided by (used in) investing activities |              |        | 25,269   |               |         |        | (34,607   | )            |          |          | 454,404    |        |          |         | (346,219 | )     |          |         | (463,714 | )      |          |         | (364,867 | )
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |         
|Financing activities:                                        |                                                                                                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |          |       |          |         |          |        |         
|                                                             | Short-term borrowings, net                                                                                       |                                                                                      |                                                     | (25          | )      |          |               |        |        |           |              |         |          |            |        | (40,802  | )       |          |       |         |         |          |        | (40,827  | )      
|                                                             | Long-term debt and capital lease obligations, net                                                                |                                                                                      |                                                     | (2,073       | )      |          |               | (1,471  | )      |           |              | (427,800 | )        |            |        | (523,596 | )       |          |       | 484,178  |         |          |        | (470,762 | )      
|                                                             | Increase of accounts receivable securitization program                                                           |                                                                                      |                                                     |             |        |          |               |        |        |           |              |         |          |            |        | 177,767  |         |          |       |         |         |          |        | 177,767  |        
|                                                             | Proceeds from exercise of stock options                                                                          |                                                                                      |                                                     | 3,622        |        |          |               |        |        |           |              |         |          |            |        |         |         |          |       |         |         |          |        | 3,622    |        
|                                                             | Dividends paid                                                                                                   |                                                                                      |                                                     | (122,106     | )      |          |               |        |        |           |              |         |          |            |        | (16,870  | )       |          |       | 16,870   |         |          |        | (122,106 | )      
|                                                             | Capital Increase (decrease) of Non-Guarantor-Subsidiaries                                                        |                                                                                      |                                                     |             |        |          |               |        |        |           |              |         |          |            |        | 3,480    |         |          |       | (3,480   | )       |          |        |         |        
|                                                             | Change in minority interest                                                                                      |                                                                                      |                                                     |             |        |          |               |        |        |           |              | (520     | )        |            |        | (276     | )       |          |       | 1,185    |         |          |        | 389      |        
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |         
|                                                             |                                                                                                                  |                                                                                      | Net cash (used in) provided by financing activities |              |        | (120,582 | )             |         |        | (1,471    | )            |          |          | (428,320   | )      |          |         | (400,297 | )     |          |         | 498,753  |        |          |         | (451,917 | )
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |         
|Effect of exchange rate changes on cash and cash equivalents |                                                                                                                  |                                                                                      | (1,736                                              | )            |        |          |              |         |        |           |             |          |          |            | 41     |          |         |          | 1,175 |          |         |          | (520   | )       
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |         
|Cash and Cash Equivalents:                                   |                                                                                                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |          |       |          |         |          |        |         
|Net increase (decrease) in cash and cash equivalents         |                                                                                                                  |                                                                                      | 2,149                                               |              |        |          | (265          | )       |        |           |             |          |          |            | 8,655  |          |         |          |      |          |         |          | 10,539 |         
|Cash and cash equivalents at beginning of period             |                                                                                                                  |                                                                                      | 3                                                   |              |        |          | 300           |         |        |           |             |          |          |            | 48,124 |          |         |          |      |          |         |          | 48,427 |         
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |         
|Cash and cash equivalents at end of period                   |                                                                                                                  | $                                                                                    | 2,152                                               |              |        | $        | 35            |         |        | $         |             |          |          | $          | 56,779 |          |         | $        |      |          |         | $        | 58,966 |         
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |        |          |               |         |        |           |              |          |          |            |        |          |         |         

F-41



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##### Table of Contents



|                                                             |                                                                                                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |          |       |          |         |          |         |          |         |          |  
|------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | --------------------------------------------------- | ------------ | ------- | -------- | ------------- | ------- | ------- | --------- | ------------ | -------- | -------- | ---------- | ------- | -------- | -------- | -------- | ----- | -------- | ------- | -------- | ------- | -------- | ------- | -------- | -
|                                                             |                                                                                                                  | For the Year Ended December 31, 2003                                                 |                                                    
|                                                             |                                                                                                                  |                                                                                      |                                                    
|                                                             |                                                                                                                  |                                                                                      |                                                     | Guarantor    |         |          |              
|                                                             |                                                                                                                  |                                                                                      |                                                     | Subsidiaries |         |          |              
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |         |          | Non-Guarantor |         |         | Combining |              |          | Combined |           
|                                                             |                                                                                                                  | FMS AG                                                                               |                                                     |              | D-GmbH  |          |               | FMCH    |         |           | Subsidiaries |          |          | Adjustment |         |          | Total    |         
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |         
|Operating Activities:                                        |                                                                                                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |          |       |          |         |          |         |         
|                                                             | Net income (loss)                                                                                                |                                                                                      | $                                                   | 331,180      |         |          | $             | 905     |         |           | $            | 213,457  |          |            | $       | 303,897  |          |          | $     | (518,259 | )       |          | $       | 331,180  |        
|                                                             | Adjustments to reconcile net income to cash and cash equivalents
    provided by (used in) operating activities: |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |          |       |          |         |          |         |          |        
|                                                             | Equity affiliate income                                                                                          |                                                                                      |                                                     | 386,166      |         |          |               |        |         |           |              | (251,564 | )        |            |         |         |          |          |       | (134,602 | )       |          |         |         |        
|                                                             | Depreciation and amortization                                                                                    |                                                                                      |                                                     | 1,989        |         |          |               | 26,995  |         |           |              |         |          |            |         | 196,831  |          |          |       | (9,438   | )       |          |         | 216,377  |        
|                                                             | Change in deferred taxes, net                                                                                    |                                                                                      |                                                     | 1,898        |         |          |               | (356    | )       |           |              |         |          |            |         | 96,630   |          |          |       | (6,860   | )       |          |         | 91,312   |        
|                                                             | Gain on sale of investments                                                                                      |                                                                                      |                                                     | (666,779     | )       |          |               | (97     | )       |           |              |         |          |            |         |         |          |          |       | 666,876  |         |          |         |         |        
|                                                             | Loss (gain) on sale of fixed assets                                                                              |                                                                                      |                                                     |             |         |          |               | 312     |         |           |              |         |          |            |         | (362     | )        |          |       |         |         |          |         | (50      | )      
|                                                             | Compensation expense related to stock options                                                                    |                                                                                      |                                                     | 1,456        |         |          |               |        |         |           |              |         |          |            |         |         |          |          |       |         |         |          |         | 1,456    |        
|                                                             | Cash Inflow from Hedging                                                                                         |                                                                                      |                                                     | 109,108      |         |          |               |        |         |           |              |         |          |            |         | 22,546   |          |          |       |         |         |          |         | 131,654  |        
|                                                             | Changes in assets and liabilities, net of amounts from
    businesses acquired:                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |          |       |          |         |          |         |          |        
|                                                             |                                                                                                                  | Trade accounts receivable, net                                                       |                                                     |              |        |          |               |         | 19,688  |           |              |          |         |            |         |          | 33,875   |          |       |          |        |          |         |          | 53,563  |         
|                                                             |                                                                                                                  | Inventories                                                                          |                                                     |              |        |          |               |         | (12,252 | )         |              |          |         |            |         |          | (19,892  | )        |       |          | 9,151   |          |         |          | (22,993 | )       
|                                                             |                                                                                                                  | Prepaid expenses and other current and non-current assets                            |                                                     |              | 2,659   |          |               |         | 3,691   |           |              |          | 3,524    |            |         |          | 51,061   |          |       |          | (780    | )        |         |          | 60,155  |         
|                                                             |                                                                                                                  | Accounts receivable from/payable to related parties                                  |                                                     |              | 37,089  |          |               |         | (12,005 | )         |              |          | 37,235   |            |         |          | 178      |          |       |          | (55,298 | )        |         |          | 7,199   |         
|                                                             |                                                                                                                  | Accounts payable, accrued expenses and other current and
    non-current liabilities |                                                     |              | 1,198   |          |               |         | 7,473   |           |              |          | 2,328    |            |         |          | (104,212 | )        |       |          | 897     |          |         |          | (92,316 | )       
|                                                             |                                                                                                                  | Income tax payable                                                                   |                                                     |              | (16,571 | )        |               |         |        |           |              |          | (25,405  | )          |         |          | 18,458   |          |       |          |        |          |         |          | (23,518 | )       
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |         
|                                                             |                                                                                                                  |                                                                                      | Net cash provided by (used in) operating activities |              |         | 189,393  |               |         |         | 34,354    |              |          |          | (20,425    | )       |          |          | 599,010  |       |          |         | (48,313  | )       |          |         | 754,019  |  
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |         
|Investing Activities:                                        |                                                                                                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |          |       |          |         |          |         |         
|                                                             | Purchases of property, plant and equipment                                                                       |                                                                                      |                                                     | (16          | )       |          |               | (28,781 | )       |           |              |         |          |            |         | (272,004 | )        |          |       | 9,541    |         |          |         | (291,260 | )      
|                                                             | Proceeds from sale of property, plant and equipment                                                              |                                                                                      |                                                     | 1            |         |          |               | 2,655   |         |           |              |         |          |            |         | 12,170   |          |          |       |         |         |          |         | 14,826   |        
|                                                             | Disbursement of loans to related parties                                                                         |                                                                                      |                                                     | (18,631      | )       |          |               |        |         |           |              | (623,756 | )        |            |         |         |          |          |       | 642,387  |         |          |         |         |        
|                                                             | Acquisitions and investments, net of cash acquired                                                               |                                                                                      |                                                     | (62,829      | )       |          |               | (6,232  | )       |           |              |         |          |            |         | (76,712  | )        |          |       | 53,583   |         |          |         | (92,190  | )      
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |         
|                                                             |                                                                                                                  |                                                                                      | Net cash (used in) provided by investing activities |              |         | (81,475  | )             |         |         | (32,358   | )            |          |          | (623,756   | )       |          |          | (336,546 | )     |          |         | 705,511  |         |          |         | (368,624 | )
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |         
|Financing activities:                                        |                                                                                                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |          |       |          |         |          |         |         
|                                                             | Short-term borrowings, net                                                                                       |                                                                                      |                                                     | 41           |         |          |               |        |         |           |              |         |          |            |         | (27,274  | )        |          |       |         |         |          |         | (27,233  | )      
|                                                             | Long-term debt and capital lease obligations, net                                                                |                                                                                      |                                                     | (6,077       | )       |          |               | (1,889  | )       |           |              | 653,607  |          |            |         | 10,683   |          |          |       | (642,387 | )       |          |         | 13,937   |        
|                                                             | Decrease of accounts receivable securitization program                                                           |                                                                                      |                                                     |             |         |          |               |        |         |           |              |         |          |            |         | (287,251 | )        |          |       |         |         |          |         | (287,251 | )      
|                                                             | Proceeds from exercise of stock options                                                                          |                                                                                      |                                                     | 1,600        |         |          |               |        |         |           |              |         |          |            |         |         |          |          |       |         |         |          |         | 1,600    |        
|                                                             | Dividends paid                                                                                                   |                                                                                      |                                                     | (107,761     | )       |          |               |        |         |           |              |         |          |            |         | (39,202  | )        |          |       | 39,202   |         |          |         | (107,761 | )      
|                                                             | Redemption of Series D Trust Preferred Stock of
    subsidiary                                                   |                                                                                      |                                                     |             |         |          |               |        |         |           |              | (8,906   | )        |            |         |         |          |          |       |         |         |          |         | (8,906   | )      
|                                                             | Capital Increase of Non-Guarantor-Subsidiaries                                                                   |                                                                                      |                                                     |             |         |          |               |        |         |           |              |         |          |            |         | 60,342   |          |          |       | (60,342  | )       |          |         |         |        
|                                                             | Change in minority interest                                                                                      |                                                                                      |                                                     |             |         |          |               |        |         |           |              | (520     | )        |            |         | (1,528   | )        |          |       | 1,782    |         |          |         | (266     | )      
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |         
|                                                             |                                                                                                                  |                                                                                      | Net cash (used in) provided by financing activities |              |         | (112,197 | )             |         |         | (1,889    | )            |          |          | 644,181    |         |          |          | (284,231 | )     |          |         | (661,745 | )       |          |         | (415,880 | )
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |         
|Effect of exchange rate changes on cash and cash equivalents |                                                                                                                  |                                                                                      | 3,794                                               |              |         |          | 42            |         |         |           |             |          |          |            | 5,736   |          |          |          | 4,547 |          |         |          | 14,119  |         
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |         
|Cash and Cash Equivalents:                                   |                                                                                                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |          |       |          |         |          |         |         
|Net (decrease) increase in cash and cash equivalents         |                                                                                                                  |                                                                                      | (485                                                | )            |         |          | 149           |         |         |           |             |          |          |            | (16,031 | )        |          |          |      |          |         |          | (16,366 | )       
|Cash and cash equivalents at beginning of period             |                                                                                                                  |                                                                                      | 488                                                 |              |         |          | 151           |         |         |           |             |          |          |            | 64,154  |          |          |          |      |          |         |          | 64,793  |         
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |         
|Cash and cash equivalents at end of period                   |                                                                                                                  | $                                                                                    | 4                                                   |              |         | $        | 300           |         |         | $         |             |          |          | $          | 48,124  |          |          | $        |      |          |         | $        | 48,427  |         
|                                                             |                                                                                                                  |                                                                                      |                                                     |              |         |          |               |         |         |           |              |          |          |            |         |          |          |         

F-42



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##### Table of Contents



|                                                             |                                                                                                                  |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |          |       |          |          |         |        |          |          |          |  
|------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ----------------------------------------- | ------------ | ------- | ------- | ------------- | ------- | ------- | --------- | ------------ | -------- | -------- | ---------- | ------ | -------- | -------- | -------- | ----- | -------- | -------- | ------- | ------ | -------- | -------- | -------- | -
|                                                             |                                                                                                                  | For the Year Ended December 31, 2002                                                 |                                          
|                                                             |                                                                                                                  |                                                                                      |                                          
|                                                             |                                                                                                                  |                                                                                      |                                           | Guarantor    |         |         |              
|                                                             |                                                                                                                  |                                                                                      |                                           | Subsidiaries |         |         |              
|                                                             |                                                                                                                  |                                                                                      |                                           |              |         |         | Non-Guarantor |         |         | Combining |              |          | Combined |           
|                                                             |                                                                                                                  | FMS AG                                                                               |                                           |              | D-GmbH  |         |               | FMCH    |         |           | Subsidiaries |          |          | Adjustment |        |          | Total    |         
|                                                             |                                                                                                                  |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |         
|Operating Activities:                                        |                                                                                                                  |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |          |       |          |          |         |        |         
|                                                             | Net income                                                                                                       |                                                                                      | $                                         | 289,790      |         |         | $             | 1,469   |         |           | $            | 161,319  |          |            | $      | 249,676  |          |          | $     | (412,464 | )        |         | $      | 289,790  |         
|                                                             | Adjustments to reconcile net income to cash and cash equivalents
    provided by (used in) operating activities: |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |          |       |          |          |         |        |          |         
|                                                             | Equity affiliate income                                                                                          |                                                                                      |                                           | (242,307     | )       |         |               |        |         |           |              | (202,966 | )        |            |        |         |          |          |       | 445,273  |          |         |        |         |         
|                                                             |                                                                                                                  | Depreciation and amortization                                                        |                                           |              | 1,810   |         |               |         | 20,170  |           |              |          |         |            |        |          | 195,153  |          |       |          | (6,578   | )       |        |          | 210,555  |         
|                                                             |                                                                                                                  | Loss on early redemption of trust preferred securities, net of
    tax               |                                           |              | 2,057   |         |               |         |        |           |              |          |         |            |        |          | 9,720    |          |       |          |         |         |        |          | 11,777   |         
|                                                             |                                                                                                                  | Change in deferred taxes, net                                                        |                                           |              | (70     | )       |               |         | (505    | )         |              |          |         |            |        |          | 52,187   |          |       |          | 6,837    |         |        |          | 58,449   |         
|                                                             |                                                                                                                  | Loss (gain) on sale of fixed assets                                                  |                                           |              |        |         |               |         | 693     |           |              |          |         |            |        |          | (3       | )        |       |          |         |         |        |          | 690      |         
|                                                             |                                                                                                                  | (Gain) loss on investments, net                                                      |                                           |              | (74,224 | )       |               |         | 189     |           |              |          |         |            |        |          |         |          |       |          | 74,035   |         |        |          |         |         
|                                                             |                                                                                                                  | Write-off of loans from related parties                                              |                                           |              | 36,531  |         |               |         |        |           |              |          |         |            |        |          |         |          |       |          | (36,531  | )       |        |          |         |         
|                                                             |                                                                                                                  | Compensation expense related to stock options                                        |                                           |              | 1,126   |         |               |         |        |           |              |          |         |            |        |          |         |          |       |          |         |         |        |          | 1,126    |         
|                                                             | Cash Inflow from Hedging                                                                                         |                                                                                      |                                           | 24,542       |         |         |               |        |         |           |              |         |          |            |        |         |          |          |       |         |          |         |        | 24,542   |         
|                                                             | Changes in assets and liabilities, net of amounts from
    businesses acquired or disposed of:                   |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |          |       |          |          |         |        |          |         
|                                                             |                                                                                                                  | Trade accounts receivable, net                                                       |                                           |              |        |         |               |         | (11,684 | )         |              |          |         |            |        |          | (1,440   | )        |       |          |         |         |        |          | (13,124  | )       
|                                                             |                                                                                                                  | Inventories                                                                          |                                           |              |        |         |               |         | (3,586  | )         |              |          |         |            |        |          | (4,752   | )        |       |          | 1,819    |         |        |          | (6,519   | )       
|                                                             |                                                                                                                  | Prepaid expenses and other current and non-current assets                            |                                           |              | (1,621  | )       |               |         | (1,211  | )         |              |          | 1,491    |            |        |          | 18,988   |          |       |          | 23       |         |        |          | 17,670   |         
|                                                             |                                                                                                                  | Accounts receivable from/ payable to related parties                                 |                                           |              | 79,893  |         |               |         | 14,916  |           |              |          | 68,441   |            |        |          | (7,832   | )        |       |          | (152,190 | )       |        |          | 3,228    |         
|                                                             |                                                                                                                  | Accounts payable, accrued expenses and other current and
    non-current liabilities |                                           |              | (456    | )       |               |         | 7,349   |           |              |          |         |            |        |          | (51,589  | )        |       |          | 2,178    |         |        |          | (42,518  | )       
|                                                             |                                                                                                                  | Income taxes payable                                                                 |                                           |              | 5,680   |         |               |         |        |           |              |          | (27,765  | )          |        |          | 16,337   |          |       |          |         |         |        |          | (5,748   | )       
|                                                             |                                                                                                                  |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |         
|                                                             |                                                                                                                  |                                                                                      | Net cash provided by operating activities |              |         | 122,751 |               |         |         | 27,799    |              |          |          | 520        |        |          |          | 476,446  |       |          |          | (77,598 | )      |          |          | 549,918  |  
|                                                             |                                                                                                                  |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |         
|Investing Activities:                                        |                                                                                                                  |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |          |       |          |          |         |        |         
|                                                             | Purchases of property, plant and equipment                                                                       |                                                                                      |                                           | (22          | )       |         |               | (26,999 | )       |           |              |         |          |            |        | (221,900 | )        |          |       | 9,761    |          |         |        | (239,160 | )       
|                                                             | Proceeds from sale of property, plant and equipment                                                              |                                                                                      |                                           |             |         |         |               | 985     |         |           |              |         |          |            |        | 36,798   |          |          |       |         |          |         |        | 37,783   |         
|                                                             | Disbursement of loans to related parties                                                                         |                                                                                      |                                           | 36,220       |         |         |               |        |         |           |              |         |          |            |        |         |          |          |       | (36,220  | )        |         |        |         |         
|                                                             | Acquisitions and investments, net of cash acquired                                                               |                                                                                      |                                           | (78,336      | )       |         |               |        |         |           |              |         |          |            |        | (77,564  | )        |          |       | 76,065   |          |         |        | (79,835  | )       
|                                                             |                                                                                                                  |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |         
|                                                             |                                                                                                                  |                                                                                      | Net cash used in investing activities     |              |         | (42,138 | )             |         |         | (26,014   | )            |          |          |           |        |          |          | (262,666 | )     |          |          | 49,606  |        |          |          | (281,212 | )
|                                                             |                                                                                                                  |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |         
|Financing activities:                                        |                                                                                                                  |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |          |       |          |          |         |        |         
|                                                             | Short-term borrowings, net                                                                                       |                                                                                      |                                           | (652         | )       |         |               |        |         |           |              |         |          |            |        | 12,031   |          |          |       |         |          |         |        | 11,379   |         
|                                                             | Long-term debt and capital lease obligations, net                                                                |                                                                                      |                                           | (1,338       | )       |         |               | (1,686  | )       |           |              |         |          |            |        | 137,336  |          |          |       | 36,220   |          |         |        | 170,532  |         
|                                                             | Redemption of trust preferred securities                                                                         |                                                                                      |                                           |             |         |         |               |        |         |           |              |         |          |            |        | (376,200 | )        |          |       |         |          |         |        | (376,200 | )       
|                                                             | Increase of accounts receivable securitization program                                                           |                                                                                      |                                           |             |         |         |               |        |         |           |              |         |          |            |        | 3,249    |          |          |       |         |          |         |        | 3,249    |         
|                                                             | Proceeds from exercise of stock options                                                                          |                                                                                      |                                           | 550          |         |         |               |        |         |           |              |         |          |            |        |         |          |          |       |         |          |         |        | 550      |         
|                                                             | Capital Increase of Non-Guarantor-Subsidiaries                                                                   |                                                                                      |                                           |             |         |         |               |        |         |           |              |         |          |            |        | 76,085   |          |          |       | (76,085  | )        |         |        |         |         
|                                                             | Dividends paid                                                                                                   |                                                                                      |                                           | (76,743      | )       |         |               |        |         |           |              |         |          |            |        | (62,639  | )        |          |       | 62,639   |          |         |        | (76,743  | )       
|                                                             | Change in minority interest                                                                                      |                                                                                      |                                           |             |         |         |               |        |         |           |              | (520     | )        |            |        | (971     | )        |          |       | 3,586    |          |         |        | 2,095    |         
|                                                             |                                                                                                                  |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |         
|                                                             |                                                                                                                  | Net cash used in financing activities                                                |                                           |              | (78,183 | )       |               |         | (1,686  | )         |              |          | (520     | )          |        |          | (211,109 | )        |       |          | 26,360   |         |        |          | (265,138 | )       
|                                                             |                                                                                                                  |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |         
|Effect of exchange rate changes on cash and cash equivalents |                                                                                                                  |                                                                                      | (1,958                                    | )            |         |         | 19            |         |         |           |             |          |          |            | (40    | )        |          |          | 1,632 |          |          |         | (347   | )       
|                                                             |                                                                                                                  |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |         
|Cash and Cash Equivalents:                                   |                                                                                                                  |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |          |       |          |          |         |        |         
|Net increase in cash and cash equivalents                    |                                                                                                                  |                                                                                      | 472                                       |              |         |         | 118           |         |         |           |             |          |          |            | 2,631  |          |          |          |      |          |          |         | 3,221  |         
|Cash and cash equivalents at beginning of period             |                                                                                                                  |                                                                                      | 16                                        |              |         |         | 33            |         |         |           |             |          |          |            | 61,523 |          |          |          |      |          |          |         | 61,572 |         
|                                                             |                                                                                                                  |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |         
|Cash and cash equivalents at end of period                   |                                                                                                                  | $                                                                                    | 488                                       |              |         | $       | 151           |         |         | $         |             |          |          | $          | 64,154 |          |          | $        |      |          |          | $       | 64,793 |         
|                                                             |                                                                                                                  |                                                                                      |                                           |              |         |         |               |         |         |           |              |          |          |            |        |          |          |         

F-43



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##### Table of Contents



Schedule II


Fresenius Medical Care AG


Financial Statement Schedule


Valuations and Qualifying Accounts


(in thousands)


|                                 |                              |            |   |            |           |  |             |             |  |  |            |         |  |  |   |         | 
|-------------------------------- | ---------------------------- | ---------- | - | ---------- | --------- |  | ----------- | ----------- |  |  | ---------- | ------- |  |  | - | ------- | 
|                                 |                              |            |   | (Addition) |           |  | (Reduction) |             |  | 
|                                 |                              | Balance at |   |            | Charge to |  |             | Deductions/ |  |  | Balance at |        
|                                 |                              | Beginning  |   |            | Costs and |  |             | Write-offs/ |  |  | End of     |        
|                                 |                              | of Period  |   |            | Expenses  |  |             | Recoveries  |  |  | Period     |        
|                                 |                              |            |   |            |           |  |             |             |  |  |            |        
|Allowance for doubtful accounts: |                              |            |   |            |           |  |             |             |  |  |            |         |  |  |   |        
|                                 | Year ended December 31, 2004 |            | $ | 166,385    |           |  | $           | 131,257     |  |  | $          | 117,725 |  |  | $ | 179,917 | 
|                                 | Year ended December 31, 2003 |            | $ | 159,763    |           |  | $           | 115,238     |  |  | $          | 108,616 |  |  | $ | 166,385 | 
|                                 | Year ended December 31, 2002 |            | $ | 138,128    |           |  | $           | 104,107     |  |  | $          | 82,472  |  |  | $ | 159,763 | 

S-1