Annual Report 2004 Sharing Expertise

Our principle has a long-standing tradition, a dynamic presenceand a highly promising future.

Annual Report 2004Sharing Expertise

or centuries, medical knowledge has been preserved, improved and passed

on to the next generation. Each development in modern medicine embodies a

piece of past knowledge without which the current standards of hygiene, anes-

thetics and surgical techniques would have been unimaginable. For centuries, the

transfer of knowledge has been ongoing, becoming more and more differentiat-

ed. It is a tradition to which the B. Braun family-owned business feels especially

committed, under the guiding principle of ”Sharing Expertise.”

Thus, our commitment: To share, enrich and continuously develop health care

related knowledge through dialogue with experts and users throughout the world.

This commitment is both a demand and, at the same time, a dynamic process. It

is based on the conviction that the internal and external exchange of knowledge

creates a basis for practice-oriented solutions and ensures the sustainability of

future medical practice.

Glossary Sharing Expertise

AnesthesiaLiterally: Insensitivity, in the broader sense: A means of eliminating pain either locally orgenerally by means of general narcosis,regional or local anesthesia in order to performa specific intervention on the patient.

CardiologyA branch of internal medicine concerned withthe diagnosis and treatment, prophylaxis andrehabilitation of heart or circulatory relatedillnesses.

CatheterA catheter is a rigid or flexible pipe- or tube-shaped instrument that is inserted into thehollow organs, for example a bladder catheter.

ChemotherapyUse of special substances to inhibit the growthof pathogens and tumor cells in the organism.

ChirotherapyTreatment of malfunctions of the locomotorapparatus using the hands to manipulate theaffected area.

DialyzerA special filter utilized in hemodialysis to re-move toxic substances and fluid from thepatient’s blood. The dialyzer is often referred to as an “artificial kidney.”

Extracorporeal Blood TreatmentA treatment whereby the blood is cleansedoutside of the body by means of a directconnection from the circulatory system to an“artificial kidney” (dialyzer).

Hemodialysis Blood purification (see also extracorporealblood treatment).

ImplantA substance or component that is introducedinto the human body to take the place of aspecific function, either for a limited period oftime or for a lifetime.

IncisionSurgical cut.

MRSAThe abbreviation for methicillin resistantStaphylococcus aureus, pathogens of bacterialinfectious diseases.

OncologyA branch of internal medicine concerned withthe origin and treatment of tumors and tumor-related diseases.

OrthopedicsA branch of medicine concerned with theorigin, prevention and treatment of conge-nital or acquired deficiencies and anomalies in the form and function of the locomotorapparatus.

Physiotherapy Natural healing science in the broadest senseof the term, in which the natural healingpowers of the body are consciously activated.

SepsisBlood poisoning

SurgeryLiterally: Hand craftsmanship, wound pro-cedure; a branch of medicine concerned withdiseases of the organs requiring operativetreatment.

Income Structure

2004 2003 2002

€, millions % €, millions % €, millions %

Sales 2,793.2 100.0 2,646.7 100.0 2,746.9 100.0

Costs of Goods Sold 1,518.5 54.4 1,386.8 52.4 1,462.5 53.2

Gross Profit on Sales 1,274.7 45.6 1,259.9 47.6 1,284.4 46.8

Selling Expenses 782.8 28.0 745.5 28.1 726.2 26.5

General and Administrative Expenses 188.0 6.7 226.2 8.6 222.7 8.1

Research and Development Costs 94.1 3.4 105.4 4.0 102.7 3.7

Profit after Functional Costs 209.8 7.5 182.8 6.9 232.8 8.5

Other Operational Income/Expenses 3.3 0.1 -9.7 -0.4 -31.0 -1.1

Operating Income 213.1 7.6 173.1 6.5 201.8 7.4

Financing Income / (Expense) -33.9 -1.2 13.0 0.5 -37.2 -1.4

Profits from Ordinary Business Operations 179.2 6.4 186.1 7.0 164.6 6.0

Taxes on Income and Revenue 56.2 2.0 72.7 2.7 52.4 1.9

Dividend Paid on Profit Participation Rights -1.4 0.0 -0.7 0.0 -0.7 0.0

Consolidated Annual Net Profit 121.6 4.4 112.7 4.3 111.5 4.1

2004 2003 Changes

€, millions €, millions %

Sales 2,793.2 2,646.7 5.5

Operating Profit (EBIT) 212.8 221.2 -3.8

Consolidated Annual Net Profit 121.6 112.7 7.9

Net Operating Margin % (after Taxes) 4.4 4.3 2.3

Investments in Fixed Assets and Intangibles 183.3 194.8 -5.9

Depreciation of Fixed Assets and Intangibles 152.7 155.8 -2.0

Equity Ratio (%) 32.9 29.1 13.1

Equity Ratio including Loans from Shareholders (%) 34.1 29.9 14.0

Net Cash Flow 305.4 294.4 3.7

Payroll Expenditure 1,058.4 1,017.1 4.1

Employees (Annual average including temporary staff) 29,842 29,253 2.0

B. Braun at a Glance

Sales of the B. Braun Group in FY 2004 (Figures in Million €)

Hospital Care 1,345.9 (+3.9%)

Aesculap 811.8 (+4.0%)

OPM 374.3 (+4.9%)

MedTech 248.7 (+24.0%)

Other Sales 12.5 (-1.1%)

Total: 2,793.2


Europe 1,675.8 (+6.7%)

North and South America 782.2 (+4.7%)

Asia, Australia 308.6 (+1.8%)

Africa 26.6 (+5.7%)

Total: 2,793.2

Of which Germany 665.0

At a Glance Glossary

Sales by Division Sales by Region

ABS (Asset Backed Securities)The fundamental principle of ABS financinglies in the fact that a company outsources apool of similar receivables to form a companyfor that specific purpose and uses it as the basis for securities to be issued. ABS are thussecurities whose claim to payment are backedby a pool of assets.

AssetsTotal sum of the assets of a company.

Cash FlowThe balance of the inflow and outflow offunds.

Credit Rating The credit rating describes the creditworthinessand ability of a debtor to repay his debts.

EBITAbbreviation for “Earnings Before Interest andTaxes”.

Equity Ratio The amount of equity in relation to total assets.

ERP SystemAn ERP (Enterprise Resource Planning) systemis used to handle processes such as manufac-turing, logistics, goods distribution, invento-ries, invoicing, etc.

Functional CostsFunctional costs include the costs of goods sold,research and development costs, selling expenses, as well as general and administrationexpenses.

IFRS Abbreviation for International Financial Reporting Standards. International standards for preparing balancesheets and other financial reports, according to which the companies listed on stock exchanges and having their headquarters inthe European Union, are required to preparetheir consolidated financial statements effec-tive in 2005. Companies in Germany that arenot listed on the stock exchange have a rightto choose which system they use.

Incentive PlanInvolvement of managers in developing thevalue of an individual company or group in order to create additional incentives. It isviewed as an attractive alternative to stockoption models.

In-House Cash CenterCentral office in the group that handlespayments made between the individual groupcompanies and with external business part-ners. It serves the liquidity management within the group (virtually an in-house bank).

Joint Venture Special form of co-operation between compa-nies.

Participation RightsParticipation rights are pecuniary rights thatthe holder receives from the company issuingsuch rights. The participation certificate provides confirma-tion of the holder’s participation rights.

Risk ManagementThe systematic process of identifying and evaluating potential risks, and the selectionand implementation of measures to handlesuch risk.

Sharing knowledge. Expanding horizons.

Innovation.

A dimension of Sharing Expertise.

Efficiency.


Sustainability.


Management Board/Supervisory Board 4

Preface 6

Consolidated Management Report 8

Employees 22

B. Braun Divisions 28

Hospital Care Division 30

Aesculap Division 32

OPM Division 34

MedTech Division 36

Consolidated Financial Statement 40

Contents

Sharing ExpertiseOur principle has a long-standing tradition, a dynamic presence and a highly promising future.

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Sharing knowledge. Expanding horizons. Raphael’s School of Athens

erhaps more than any other work of the Renaissance period,

the “School of Athens” symbolizes diversity and the exchange of

knowledge. In his fresco, Raphael breaks through the boundaries

of time and space. He brings together important philosophers and

scholars of the ancient world, along with their followers and stu-

dents, to form an “ideal community” of knowledge and the sharing

of thoughts and ideas. Plato, Aristotle, Pythagoras, Euclid. Each of

these great thinkers represents a certain idea or state of mind. The

“School of Athens” combines the diverse knowledge of the ancient

world that has been passed down through the ages to the present

day, some of which is timeless in its applicability. The “School of

Athens” thus embodies the guiding principle of sharing knowledge

and ideas in the ancient world: The Socratic method of discussion,

according to which the meeting of individuals with equal rights is

the basis of all education.

The inter-disciplinary dialog that forms the basis for an open exchange

of ideas continues to shape the ideal foundation for knowledge

that expands horizons and opens new perspectives. Today, technical

competence and thinking across divisions are important prerequisites

for transferring knowledge both within and outside of the B. Braun

organization. This applies not only to the implementation of theoretical

knowledge in day-to-day medical practice, but also to the future-

oriented use of knowledge within the organization.

“Sharing Expertise” summarizes the way we work at B. Braun: Openness and lively exchange create an atmosphere

in which knowledge flourishes. Every employee can contribute to the organization based on his or her own capabilities:

For innovation, efficiency and sustainability.

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Dr. h. c. Ludwig Georg Braun Chairman of the Board

Prof. Dr. Dr. Dr. h. c. Michael UngethümVice-Chairman of the Board, Aesculap Division

Dr. rer. nat. Wolfgang FellerMedTech Division

Klaus HoferHuman Resources and Legal Affairs, Chief Human Resources Officer

Dr. rer. nat. Meinrad LuganOPM Division, Hospital Care Division (effective November 18, 2004)

Caroll H. NeubauerNorth American Region

Harald NiemannFinance, Taxes and Controlling, Corporate Services

Dr. med. Martin ZügelHospital Care Division (until November 12, 2004)

Management Board

Supervisory BoardJustus Mische (Chairman), Kelkheim, Peter Hohmann* (Vice Chairman), Melsungen, Barbara Braun-Lüdicke, Melsungen Dr. rer. pol. Antonius Engberding*, Frankfurt/Main, Dr. Hubertus Erlen, Berlin, Prof. Dr. Dr. h. c. Gunter Hempelmann, Gießen Veronika Keller-Lauscher*, Hanover, Volker Ludwig*, Melsungen, Rudolf Miele (until August 19, 2004), Gütersloh, Dr. h.c. AugustOetker (effective October 13, 2004), Bielefeld, Ekkehard Rist*, Mahlstetten, Dr. Joachim Schnell, Melsungen, Sonja Siewert*,Rotenburg/Fulda * Employee-elected member

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Preface

This year’s annual report not only signals the end of another

successful fiscal year for our company, it is also an opportuni-

ty to review our five-year strategy and reflect on what we

have and have not achieved. What goals have been attained,

what remains to be done?

B. Braun Melsungen AG grew at a rate of 5.5 percent in 2004,

with simultaneous improvement of the operating profit by

23.1 percent. Naturally, we are pleased with the success

achieved in the past year. We nearly reached our five-year tar-

get, even if slightly less growth was apparent based on the

development of the Euro in relation to other major currencies.

2004 has also been a successful year for many other compa-

nies, although oftentimes the success was not as equally

consistent. Intervention in work force structures was some-

times necessary to keep the corporate ship “afloat.” It is an in-

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disputable fact that, whenever companies are in trouble –

regardless of whether they themselves are to blame – manage-

ment must take action to quickly adjust to the new situation.

One cannot simply wait for a better tomorrow, knowing that

delaying appropriate action will only make the problem worse,

requiring even greater action and harsher measures. It is im-

portant to react to new market conditions to maintain one’s

competitive position.

Based on this principle, we have, in recent years, established

new manufacturing facilities in Tuttlingen and in Melsungen,

Germany, investing approximately 200 million Euro. However,

these are only external signs of change that also increase the

number of jobs. Before these plants could be put into opera-

tion, sales organizations first had to be developed or expanded.

Research and Development had to be enhanced and employees

be given new assignments.

The result may be surprising: Despite an increase of 2.5 hours

in the weekly work hours, the employee base in Germany has

increased by 814 persons since 1999. In addition, the greater

number of employees made it necessary to increase the num-

ber of trainees by more than 7 percent.

The advantages of thinking in terms of medium and long-term

goals –a common practice among family-owned companies –

are becoming clearer.

Nearly100 years ago, we began to internationalize our business

operations. Despite the setbacks of the two World Wars, today

we have production sites and sales offices throughout the

world. Participating in the global market and supplying it with

important products has always been and continues to be our

credo.

“Sharing Expertise” is simply the modern day extension of this

traditional corporate philosophy for approximately 30,000

B. Braun employees around the world. Our international pres-

ence not only strengthens our competitive position, it has, in

recent years, helped us overcome the risks associated with

currency fluctuations.

What has now emerged is an open and transparent culture of

cooperation – spanning the entire globe – a human quality

that is the hallmark of our strength and that gives us the

confidence to move forward into the future.

What more could we ask for? In times of great change in

health care markets around the world, we are once again able

to report noteworthy results; confidence for the shareholders,

employees, suppliers and, above all, for our customers.

You can continue to count on us as you always have – as a

reliable partner for progress in medical care.

Dr. h. c. Ludwig Georg BraunChairman of the Management Board of B. Braun Melsungen AG

8

Consolidated Management Report

General Comments on the Events of the Fiscal YearThe international orientation of our company makes confron-

ting currency fluctuations imperative. In 2004, the US Dollar

lost further ground in the currency exchange market. With

President Bush elected for a second term, a quick solution to

the weak dollar is nowhere in sight. Changes in the exchange

rate at the end of the year have made it clear that we should

implement short-term measures in order to be prepared to

face new conditions in the near future. These fluctuations lead

to changes in the figures shown in our Euro-based consolidated

financial statements, which often lead to varied assessments

of the “actual” operating income in individual markets. Profits

on the corporate level, on the other hand, are shown in the

corporate currency. For this reason, we intentionally avoid

making any “currency fluctuation” comparisons and instead

prefer to show and comment on our results in the corporate

currency – the Euro.

Increase in SalesWorldwide sales increased to 2.793 billion Euro (+ 5.5 per-

cent). The varied economic situations in the different regions

are reflected clearly in these results. Ongoing discussions in

Germany concerning reforms in health care, retirement bene-

fits and taxes have unsettled the business environment, in

contrast to the situation in neighboring European countries.

This has lead to virtual stagnation in this market segment. On

the other hand, the winds of change in the new member states

of the EU have had a positive effect on demand (+ 8.4 percent

for Eastern Europe). In southern Europe (Italy, Spain, Portugal),

as well as in Great Britain, where we have been able to expand

our market position considerably; in western Europe (France,

Benelux) and in the Scandinavian countries, we have been

able to secure our market position.

Diverse International DevelopmentsIn the USA, B. Braun has begun supplying the members of the

largest hospital group purchasing organization (GPO): Premier.

This has given us the chance to enter the US market with a

potential volume of approximately 30 percent, the market

share held by Premier. Although prices are still under con-

siderable pressure, this high sales potential enables us to in-

crease profitability by benefiting from the increase utilization

of our production capacity.

Our market share in North America in the fields of surgery and

orthopedics is still relatively low. New products have met with

a high degree of acceptance and have posted double-digit

growth rates. We consider this a confirmation of our decision

to invest in expanding our respective sales organizations.

The South American organizations have also contributed posi-

tively to our growth. Despite the highly precarious economic

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climates in countries such as Argentina, Peru and Ecuador, our

companies have held their positions well. Even in Brazil, which

as been affected quite negatively up to now, we have been

able to post improvements in the business situation.

The regional growth rate of the gross national product in

Southeast Asia, China and Japan also had a very positive

effect on our business. We are striving to come closer to

our goal of participating more intensively in the vast Chinese

market by increasing local manufacturing. In 2004, construc-

tion activities commenced for the initial stages of an IV solu-

tion factory, and a factory for producing surgical instruments.

Marketing structures that were established parallel to these

factories are gearing up to sell these specialty products. While

the volume of growth has remained constant, some of our

product groups in Korea and, even more so in Japan, are

suffering under forced price reductions. A phenomenon –

similar to that in Western Europe – that has arisen from the

highly politicized discussion concerning reforms in public

health care policies.

In 2004 management systems were implemented in more of

our subsidiaries. As planned, all major production sites are

now integrated into our new central ERP system. In the USA,

Brazil and Spain, full IT integration has been completed. At the

same time, we have also harmonized the contents of our Man-

agement Information System. The introduction of a consoli-

dated balance sheet system according to IFRS is planned be-

ginning in 2005. This system will make it possible to compare

profit indicators internally and externally.

Our efforts towards optimizing inventories have shown very

promising initial results. The reduction in inventories in local

warehouses continues to be successful; hence, since summer,

we have been able to achieve major milestones towards the

optimization of logistical processes in Europe.

This special reporting system also ensures that we have the

desired delivery capacity with the optimal inventory range.

We monitor our customers’ payment cycles–especially in the

export sector–through a credit management system that

is designed to help us minimize the risks in the volume of ac-

counts receivables. Since September we have also been using

a newly implemented ABS financing instrument system. These

actions to optimize the utilization of capital as well as

the consistent use of our centralized cash center, have

contributed to increasing our equity ratio to 32.9 percent.

Sales of 2,793 million Euro during the current year were only

achievable with price concessions. Across the group, this has

led to a slight reduction of our gross profit margin to 45.6 per-

cent of sales; of which 0.6 percent can be attributed to the

start-up costs of the L.I.F.E. IV solution factory in Melsungen,

Germany.

B. Braun increased sales by 5.5 percent, reaching nearly 2.8 billion Euro.

The main contributors to this growth have been the new member countries of the EU,

the United States, South America, China and Southeast Asia.

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Successfully Maintained SG&A ExpensesWe have successfully controlled our functional costs. Although

further investments were made to expand our local sales

networks particularly in Japan and the USA, and to a lesser

extent in Italy and Britain, we were able to keep our sales and

marketing expenses constant at 28.0 percent of Sales.

Costs for general administration amounted to 6.7 percent of

sales (8.6 percent in the previous year). One major factor for

this reduction was the much lower legal consulting expenses

in the USA. Another positive effect of reducing administrative

costs was harmonizing the cost allocations within the group by

approximately 1.1 percentage points, of which 0.9 percent can

be attributed to manufacturing costs and 0.2 percent to selling

expenses. A considerable share of our research activity was

carried out in the USA. Hence, currency fluctuations led to

slight reduction in the costs for research and development. This

helped compensate for part of the gross margin loss. We have

thus been able to achieve an operating profit of 213.1 million

Euro compared to 173.1 million Euro in the previous year

(+ 23.1 percent). Investment income reported to be 48.1 mil-

lion Euro in the previous year was achieved primarily by the

sale of our participation in Spine Solutions, Inc.

We were able to keep the average utilization of credit lines be-

low the previous year’s level. Despite a slight increase in the

prime interest rate, it was possible to keep financing costs at a

low level of 1.2 percent of sales.

Profit from ordinary business activities reached 179.2 million

Euro – an increase of 41 percent compared to the previous

year, taking into account the special effects from the sales of

financial investments in the previous and current year. The tax

burden ratio decreased to 31.4 percent from 39.1 percent in

the previous year, thus enabling us to report an annual profit of

121.6 million Euro or 4.4 percent of sales.

As of the end of December 2004, 743.8 million Euro (32.9 per-

cent of the balance sheet amount) of the financing of all assets

was backed by equity capital, including profit participation

rights. Additional funds at the company’s disposal, particularly

the pension reserves of 296.9 million Euro (13.1 percent of the

balance sheet amount), provide more than sufficient coverage

for the financing of fixed assets.

Investments in the FutureIn 2004 the large scale pharmaceutical manufacturing facility,

L.I.F.E, was transferred on schedule from the property com-

pany to the user, B. Braun Melsungen AG. As planned, the pro-

duction of large volume standard IV solutions was approved

in fall 2004 by the German regulatory authorities. We expect

to receive the production licenses for additional markets in

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January 2005. Additional production lines will be validated

by April 2005.

In 2004, investment volumes amounted to 206.9 million Euro,

7.4 percent of sales, and were completely financed by operat-

ing cash flow. 12.5 million Euro went to intangible assets and

23.7 million into financial investments. Investments in tan-

gible assets increased by 8.6 percent to reach 170.7 million

Euro and were mainly related to capacity expansion measures,

as well as replacements and projects to increase productivity.

Investments in the Hospital Care Division were 76.9 million

Euro; important individual projects to be mentioned here are

the modifications to and expansions of the Duplex® product

line in the USA (3.5 million Euro), the construction of a factory

for pharmaceutical products in China (total project of

15.0 million Euro; initial amount of 2.6 million Euro), the de-

velopment of a new fluid balancing system with the major

components Infusomat® and Perfusor® Space (2.5 million

Euro), modernization and optimization measures in the pro-

duction of syringes in Bad Arolsen, Germany (2.4 million Euro)

and in a new technology center for pharmaceutical devel-

opment that meets all worldwide regulatory requirements

(1.8 million Euro).

Investment activities in the Aesculap Division focused on the

expansion of production capacities and the development of

additional markets. Mention should be made of the S4 project

– a spinal screw system, which features a high degree of

stability and simple, efficient, and thus safe, implantation.

Total investments of the Aesculap Division amounted to 40.1

million Euro.

By the end of 2004, the MedTech Division had invested

approximately 23.0 million Euro in the expansion of the

services business and the production of polysulfon dialyzers,

after taking over the Saxonia manufacturing facility at the

beginning of the year.

The OPM Division invested 6.5 million Euro, a large part of

which went to patents and trademark rights.

Funds of 36.8 million Euro were invested by our Central

Divisions in core areas for infrastructure, there of for infor-

mation technology (13.6 million Euro), process improvements

(9.2 million Euro) and logistics (8.6 million Euro).

Hospital Care Division: Strong Growth through InnovationThe Hospital Care Division offers products and services for

basic medical care, as well as comprehensive therapy concepts

for intensive care, anesthesiology and emergency medical

care. In 2004 the division achieved sales of 1.3459 billion

Euro (+ 3.9 percent). With the worldwide introduction of a

broader range of products and close cooperation with pur-

chasing groups, it was possible to achieve double-digit growth

rates in IV catheters, in anesthesia products and IV pumps.

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The division achieved considerable growth in the USA, northern

Europe, Italy, China and Australia. Conservative purchasing

and increased pressure to reduce cost in the hospital mar-

ket, however, have had negative effects on the business in

Germany.

The on-schedule inauguration of L.I.F.E., the new IV solution

factory in Melsungen, Germany in October 2004 is an important

milestone for supplying IV solutions to the European market.

Aesculap Division: Highly Successful New Products The Aesculap Division markets products and services for core

surgical processes. Sales reached 811.8 million Euro. Here, too,

the fiscal year was characterized by a stagnating market in

Germany, although sales in other European countries and in

the USA, Eastern Europe, China and Latin America showed an

increase of more than 20 percent in local currencies. Govern-

ment intervention hampered growth in Asia, mainly in Japan

and Korea, compared to the previous years.

Therapeutic methods continue to form the focal point for

new products introduced to simplify surgery – this includes a

new spine stabilization system that is currently the smallest,

but most stable, alternative for treating degenerative spinal

diseases.

There was continued improvement of the market leading

position in orthopedic navigation, above all in the USA. The

surgical sutures program continues to be the greatest con-

tributor to growth. The innovation prize awarded in the USA

for the new generation of endoscopic instruments bears

testimony to our claim to leadership in the field of surgical

instruments.

OPM Division: Strong Demand for ConsultingThe Out Patient Market (OPM) Division offers product and con-

sulting concepts for comprehensive patient care to practicing

physicians and for the home health care sector, for instance

for a state of the art skin and wound management system, for

diabetes, for enteral nutrition, for modern hygiene manage-

ment, as well as for long-term stoma and incontinence care.

Sales in this division reached 374.3 million Euro in 2004.

The TransCare service unit is dedicated to transferring patients

from the hospital to ambulatory care. A growth of almost

6.1 percent in TransCare sales reflects the growing need for

this service. With the trend towards shorter hospitalization,

there will be an even greater demand for these services in the

future.

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MedTech Division: Further Expansion of Provider ServicesSales in the MedTech Division reached 248.7 million Euro.

This division’s offerings provide a comprehensive line of

products for extra-corporeal blood treatment. The polysulfon

dialyzers introduced in 2002 have met with such high levels of

acceptance so that we are expanding capacities not only in

Saxonia Medical GmbH (manufacturer of dialyzers and a

group company since January 1, 2004), but also in Ascalon

GmbH, a manufacturer of hollow fiber membranes.

These expanded capacities will add to volumes in the first

quarter of 2005. We acquired Ascalon GmbH effective January

1, 2005. In 2004, we expanded the services business of the

MedTech Division through organic growth and acquisitions.

The acquisition of dialysis units in Spain and France increased

the number of patients treated in our own centers by 51 per-

cent, reaching 4,600.

Research and Development for Increased SafetyEvidence-based methods of treatment and increased safety

for health care providers and patients are important decision-

making criteria for our customers. In close cooperation with

health care experts, we have, therefore, focused our devel-

opment activities during the reporting period particularly

on these requirements, as well as on internationalizing our

product portfolio.

Development projects in the field of medical products have

not only improved handling, but also increased safety for

patients as well as health care providers. At the same time,

we were also able to streamline the portfolio of product lines

in the basic medical care sector.

In the fluid management product segment, we have intro-

duced a new generation of products to the market, the Space

(Infusomat®, Perfusor®, Station and Cover) product line, based

on an innovative hardware platform and manufacturing tech-

nology. It is a benchmark for minimal space requirements,

modularity, high-performance bi-directional data communi-

cation and user friendly handling.

For the North American market, the volumetric IV pump

Outlook® 100/200, the successor model of Horizon NXT®,

offers new safety functions and improvements in application.

Since its introduction in early 2004, we have achieved sales of

35.0 million Euro from this new product line.

In the market for amino acids and crystalloid standard solu-

tions, we have achieved worldwide harmonization of these

product lines, as well as product improvements through newly

developed, modern formulations.

Important measures to support these development processes

were the commissioning of the stability center in Melsungen,

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Germany for the worldwide development of pharmaceutical

products, as well as the harmonization of operations and

processes for all product categories in the field of global

research and development.

Important new products were introduced in all product

segments of the Aesculap Division. In the surgical instruments

sector, we have focused on endoscopic hand-held instruments.

A new generation of instruments was awarded the innovation

prize by the respective scientific organizations of the USA.

The S4 spinal column stabilization system is characterized,

despite its small size, by greater stability and simplest intra-

operative handling. The advantages for the patient are a high-

er level of safety with a minimal amount of intra-operative

and post-operative tissue irritations.

With additional software modules, we were also able to en-

hance our leading technological position in the field of navi-

gation for joint replacement complementing the marketing of

our prosthesis products. The hip prosthesis module for the pre-

cise positioning of the hip socket and hip shaft assists the sur-

geon in accurately adjusting the movement and load trans-

mission of the joint and avoids changes in the length of the

leg as compared to the non-operated side.

The Aesculap Division is also engaged in the highly futuristic

research field of tissue engineering, with its participation in

Tetec AG. The product Novocart® 3D has been developed in

close cooperation with biologists, chemists and material

specialists. This sponge-like collagen structure is grown in the

laboratory as part of a tissue culture that is then integrated

into the patient’s own cartilage cells. The new structure is

then implanted into a joint cartilage defect through a mini-

mally invasive operation. During the rehabilitation phase,

it then converts into healthy, resilient joint cartilage.

With the introduction of the product line Prontosan®, the

OPM Division now offers a modern skin and wound manage-

ment system, as well as a complete hygiene management

system for the MRSA patient. This innovative product line

complements our existing products in the field of wound care

and disinfection and hygiene.

Introduction of the new Dialog+® dialysis machine to the

international markets with new treatment options to reduce

the operating costs of dialysis therapy was a complete suc-

cess.

The blood filtration solution Duosol® was approved in our key

acute dialysis markets. Due to its user-friendly nature, we are

expecting a considerable increase in the sales of this two-

chamber bag container system.

In 2004 we began marketing the H.E.L.P. system for the indi-

cation of “Sudden Hearing Loss” in apheresis. With a managed

care program, we are paving the way toward the self-payer

market.

15

Increase in the Number of EmployeesAs in previous years, the B. Braun Group created new jobs in

fiscal year 2004, increasing the average number of employees

in the group to 29,842 (29,253 in the previous year).

While the number of employees in North and South America

and Asia decreased slightly or remained nearly constant, the

number of employees increased by nearly 600, particularly in

European countries other than Germany.

In Germany, there was a very marginal increase in the number

of employees (approx. 80 persons) compared to the previous

year, mainly due to an increase in the number of trainees and

the employment of experts in the field of sales and marketing.

Departures due to retirements were fully offset by hiring of

new employees as well as by taking on additional trainees.

Increased Training and Continuing EducationThe B. Braun Group has expanded its training and continuing

education activities adding to the number of employees in the

field of Management Development.

There was an increase of approximately five percent in the

number of trainees in the dual professional training system

in Germany. We passed the 500 mark for the first time:

518 young people were trained in a total of 24 different fields

at German sites.

In addition, B. Braun has initiated special programs to help

young people who do not have the opportunity to receive

professional training because they lack the education to

satisfy the professional training requirements, towards

qualification to meet these standards.

On the whole, we have increased our professional training

activities in Germany by more than eight percent.

Securing our German Presence While the “Location Retention Contract” for the Aesculap

Division is drawing to an end, with plans to extend it, with the

inauguration and commissioning of the new L.I.F.E. factory,

comes the beginning of the “Location Retention Contract” for

the Melsungen, Germany location. According to that contract,

all employees working in Melsungen have agreed to work an

additional 520 hours without additional remuneration over the

next five years, a portion of which can be used for qualification

measures.

During the term of this agreement, there can be no reduction of

workforce.

An agreement signed between the bargaining parties regulates

the details of this contract. Since the signing of these contracts

– in 1999 in the Aesculap Division and in 2001 in B. Braun

Melsungen AG – the average number of employees in these

locations has increased by 814 employees.

16

New General Employment AgreementsIn addition, a series of General Employment Agreements

(for example, the introduction of additional flexible working

hours concepts) were signed with the Workers’ Council, which

we anticipate will allow us to react more flexibly to our

customers’ requests in manufacturing.

In the IT sector, the service hours to respond to foreign com-

panies were extended through longer hours of operation.

Corporate Retirement ProgramsThe Corporate Retirement Program offerings in the B. Braun

Group were expanded again.

As part of the employer-financed company pension plan in the

form of direct commitments, we disbursed 12.5 million Euro in

employee pensions to 2,750 retirees in the recently ended

fiscal year. In addition, 4,100 employees in Germany alone

have already vested for non-forfeitable claims to corporate

pensions.

The employer-financed pension plans throughout the group,

with varying benefits, were reviewed with the goal of achiev-

ing harmonization and modernization so that, next year, there

will be a new concept, which will apply particularly to new

employees.

There is still a great deal of variation in the employee-financed

pension plans. Plans range from special group rates to def-

fered compensation programs for management to direct insur-

ance as well as pension funds according to the wage agreement

for the chemical industry, and to the wage agreement for the

metal industry. By the end of fiscal year 2004, 2,000 employees

in Germany alone had benefited from these pension plans.

Incentive Plans/Participation RightsThe initial, limited-time offer of participation rights to execu-

tives in the group was extended through a resolution passed

at the Annual Shareholders’ Meeting.

Again in the fifth year since its introduction, the majority of

executives who have been presented with such an offer, have

made use of the subscription offer and subscribed to partici-

pation rights of more than 1.5 million Euro.

For the third time, management executives were able to draw

on the special bonus of participation rights that are granted

free two years after signing on, making this incentive plan

especially attractive.

Work/Life BalanceFor decades, family-friendly human resource policies have

been part of the corporate philosophy of B. Braun Melsungen

AG. Once again, B. Braun Melsungen AG showed its commit-

ment to family and career in the closing fiscal year.

17

In fiscal year 2004, the percentage of part-time employees

increased to 11 percent; the number of part-time jobs increased

considerably and the program “Work and Family” continues to

meet with a positive response. These family-friendly human

resource policies are enhanced by the support of childcare

facilities.

Future ProspectsAs of the end of 2004, we do not anticipate any material

changes in the general business conditions in the coming

fiscal year. On the other hand, our export business to Iraq is

showing the first signs of reinvigoration of sales after the

business nearly came to a standstill since the second quarter

of 2003.

The economic situation in Germany showed a slightly positive

trend; the delayed reforms of the German government con-

tinue to destabilize the health care sector. Following the

re-election of US President Bush and the goals announced to

reduce taxes and reform social security, in an effort to reduce

the federal budget deficit, no improvement in the exchange

rate of the US Dollar is anticipated. The energy markets are

still moving towards higher selling prices; and for this reason

we must also expect an increase in the price of raw petro-

chemical materials.

On the one hand, we assume that the demand for our products

and services will continue to grow in view of the increase in

life expectancy. On the other hand, however, the additional

demand for quantities is met by limited health care budgets.

We still foresee good opportunities for our products that offer

increased safety for healthcare providers and will, therefore,

once again strengthen our efforts in the marketing of safety

products. The incremental capacities from the production of IV

solutions from the “L.I.F.E.” facility, together with economies

of scale, will enable us to enter new markets. Combining these

capacities with innovative products for apparatus-based IV

therapy will also provide us with promising marketing oppor-

tunities.

In the MedTech Division we are expecting a considerable in-

crease in production output of the dialyzers that are urgently

required for servicing the existing markets.

The Aesculap/Orthopedics Division is relying on rapid market

penetration of new spinal products – in 2005, we expect sales

of 18 million US Dollars from S4 alone – and on the availabil-

ity of drug eluting stents. In the sutures sector, we are confi-

dent that we will regain additional market shares for our

products and will bridge the gap that was created following

the termination of a joint venture.

The OPM Market will continue to grow organically as the in-

troduction of DRGs in the various markets is also designed to

significantly reduce the length of hospitalization and will thus

18

increase the need for ambulatory care and treatment. This is

exactly the niche for our TransCare concepts, which actively

accompany patients during their transition from the hospital

to ambulatory care.

We expect considerable growth rates in Asia, Eastern Europe

and Russia. Establishing our own production facilities in

China will enable us to capture additional market share even

before these plants are put into operation since we have

already obtained additional import licenses for the duration of

the construction and validation periods.

In North America, we expect to consolidate our market entry

through contracts with Group Purchasing Organizations

concluded in 2004 and by gaining considerable market share

for orthopedic and spinal products of the Aesculap Division.

In South America, we will invest in new facilities for the

production of enteral nutrition products, with which we have

currently already gained significant market share.

On the whole, for 2005 we anticipate an improvement of the

operating profits compared to 2004. We also anticipate that

the currency exchange rate of Euro/US Dollar will continue

to have an impact on the growth of sales, although its effect

on the operating profit is expected to be negligible due to

the near balance of commodity flows between the different

currency regions throughout the entire group.

RisksWe are striving to mitigate the risks arising from general

changes in the business and economic environment in the

markets we serve through timely internal reporting. This

reporting system allows us to react quickly to new market

situations and the ability to respond in detail, all the way to

the level of customer and product.

Once again the financial market nearly normalized in the last

year. Following the increasing trend of large financial institu-

tions placing greater importance on transaction-driven in-

vestment banking, we have, for some time now, seen that our

banking partners are rediscovering the significance of the

“normal” lending business. For this reason we do not anti-

cipate any risks in our ability to cover our financial needs in

this traditional manner for the years 2005/2006. The risks

associated with fluctuations in interest rates will be offset

with balanced hedging activities.

Due to the international nature of its business, the B. Braun

Group faces ongoing currency risks. We strive to minimize

these risks primarily by monitoring the invoicing currency in

the intra-group flow of commodities. Based on existing corpo-

rate guidelines, we hedge against other currency risks through

negotiable derivative financial instruments in the market.

19

The trading and use of derivative financial instruments are

regulated by internal guidelines and are subject to continuous

risk monitoring. With derivatives, we only engage in nego-

tiable hedging instruments with reliable banks as partners. In

order to reduce the risk from changes in interest rates, inter-

est swap and interest cap agreements are concluded for large

variable interest-bearing bank loans. Furthermore, on the

balance sheet closing date, there were forward foreign ex-

change transactions in US Dollars to cover for the foreseeable

portion of future excess in US Dollars that cannot be offset by

intra-group commodity and cash flows. For more details,

please refer to the statements on derivative financial instru-

ments in the accompanying notes.

The US Dollar rate has a significant impact on our consoli-

dated sales figures in Euro; approximately 40 percent of our

expected sales are directly or indirectly affected by the

exchange rate of the US Dollar. Since an equivalent part of our

production and purchasing occurs in the US Dollar region, this

shift does not affect our operating profit to the same degree.

As a business unit, however, the Aesculap Division is faced

with considerably higher sales and profit risks from fluctua-

tions in exchange rates.

Our risk management system ensures that all potential opera-

tive risks – be they in the area of purchasing, production in-

terruptions, price changes or governmental risks, for example

from approval procedures – can be detected at an early stage,

allowing us to timely implement targeted measures to combat

them.

The inability to forecast and budget for potential liability risks

and expenses for legal processes resulting from such claims is

apparent from the product liability risks that are evident in the

US market. As long as capacities in the re-insurance market

are available, we will make every effort to continue to utilize

these. However, currently comprehensive coverage is not

available.

On the whole, we are convinced that the development of the

B. Braun companies in the global marketplace will not be

significantly restricted by the identified potential risks.

Innovation 2004Impetus for a Highly Promising Future.

“Innovation” – just an empty cliché? No, a real commitment for all

those who contribute their expertise to B. Braun: The commitment to

create new products that will result in better outcomes; the drive

to constantly seek new and better products and – in the process – to

consistently validate long-established knowledge. The constant

search for a better way.

An important prerequisite: To distinguish between what B. Braun

views as innovative products and what the company wants to

market.

After all: Only innovative products for which there is a demand will

be beneficial products. This is a principle that has a long and

successful tradition at B. Braun.

It is a principle that our employees continue to implement success-

fully and that is reflected in the development of new products to

modernize medicine, such as the sterile and completely absorbable

catgut sutures (1908), Sterofundin, upon which all IV solutions are

based (1930), or the development of the first electrical surgical

motor (1935). In 1962 the “Braunüle,” the first one-piece plastic

cannula for long-term infusion, revolutionized medical practice. At

the beginning of the 21st century, the indwelling venous catheter

Introcan® Safety® with its safety clip protects health care providers

against needlestick injuries. In 1998 OrthoPilot® set a milestone in

CT-free navigation; this was followed a few years later by the small

and powerful B. Braun Space syringe pump, which was successfully

introduced in 2004.

21

Innovation 1846 First Public Demonstration of a Successful

Operation under Ether Anesthesia.

t is a elusive dream to try to escape the pain of surgical

operations and today we can no longer afford to just toy with this

idea.” In 1839, the Paris-based surgeon Alfred Almand Velpeau, after

numerous failed attempts at anesthesia, still thought it impossible to

perform painless surgery. He had no idea that just a few years later

the foundation for modern anesthesia would be laid through the first

ether anesthesia: On October 16, 1846, dentist William Thomas

Green Morton performed the first public operation under inhaled

ether anesthesia at the Massachusetts General Hospital of Boston.

After the painless operation, John Collins Warren, Chief Surgeon of

the Hospital, is said to have declared to the surprised audience:

“Gentlemen, this is no humbug!”

This event, which has been celebrated in Boston every year since

as “Ether Day,” paved the way for painless surgery and, through

numerous improvements, led to today’s modern pain therapies.

“

23

Thanks to Our EmployeesOur employees’ willingness to performance and to embrace

new ideas have contributed greatly to the long-term success

of our company. These two qualities form the basis of moti-

vated interactions between employees. We would like to thank

all the employees of the B. Braun community and their repre-

sentatives for their active involvement in the welfare of the

company and their willingness to share their knowledge and

expertise with colleagues and customers in keeping with the

principle of “Sharing Expertise.”

Increase in the Number of EmployeesWith an employee base of 29,842, the company has more

employees than ever before (+ 2.0 percent compared to the

previous year). In a period that has been characterized by

massive reductions of workforces, particularly in Germany, we

are proud that B. Braun has hired 814 new employees at its

German locations in the last five years. This development is

proof of the fact that it is possible to retain competitive jobs in

Germany, and to even create new ones, provided employees

are open to flexible concepts for increasing work schedules

without additional remuneration and willingness to assume

responsibility.

Employees

The willingness of our employees in Germany to work additional

hours without additional remuneration has led to an increase in

the number of employees. With an employee base of 29,842, today

the B. Braun community is bigger than ever.

24

Openness to New IdeasThe work environment is changing: Modern forms of work and

digitalized processes have created an environment in which

employees have to readjust and prove themselves. Programs

for training and continuing education help employees achieve

this goal. In 2004, on average every employee at the Melsungen

facilities underwent an average of 4 days of training to prepare

for new tasks. These measures are an important component

toward satisfying the conditions of the “Location Retention

Contract,” in which the employees in Melsungen have agreed

to work for an additional 520 hours without extra remunera-

tion over a period of five years.

In accordance with demographic trends, the age structure in

the company is also changing. From 2010 on, 50 percent of the

working population in Germany will be more than 40 years old;

30 percent will be even older than 50 years of age. We have

intentionally avoided early retirement incentives; we prefer

that our employees work with us longer. We wish our em-

ployees to provide B. Braun with their expertise for as long

as possible and have therefore introduced an age-based

advanced training program. The “Advanced Professionals”

program was started in 2004 and is directed, for example, at

knowledgeable executives who have many years of experience

with personnel and managerial responsibilities. It acquaints

them with new tasks and allows them to identify and realize

the opportunities that new tasks offer.

Career Entry at B. BraunTo B. Braun, responsibility also means being involved in the

professional growth of young men and women and opening

new horizons for them through initial professional training.

In countries where the traditional German system of dual edu-

cation is not as prevalent, we offer in-house training programs

and arrange apprenticeships for practical training and coop-

erate with local vocational schools.

At our German locations, B. Braun has increased the number of

trainees by nearly 30 percent in the last five years. We are

currently training more than 500 apprentices in technical and

commercial professions. This development is further proof

that the business community’s own initiatives, coupled with

corresponding wage agreements in the industrial sector,

should be given priority over proposed taxation to penalize

for cutbacks in the area of initial professional training.

Students graduating from secondary school often find it par-

ticularly difficult to enter into a profession. For those who have

not yet found an apprenticeship, we have developed and im-

plemented a special program, “Perspective Plus,” and created a

model that will give them their initial professional experience.

A one-year apprenticeship under this program at B. Braun

helps young people to acquire “training experience” and then

enter the chosen profession. At the “Committed Companies”

competition organized by the government of the state of

Hessen in Germany, B. Braun Melsungen AG took first prize for

this approach in the “large companies” category.

25

Balancing Family and ProfessionThe family is the foundation of every society. A harmonious

family and social environment not only enriches the individual,

but his or her professional activity as well. A career and chil-

dren are not mutually exclusive – in fact, they complement

each other. In many countries in the world, it is understood

that family and career coexist. While professionals in Asia can

rely on strong family ties for support, childcare networks in

Germany and some European countries are still in their early

stages and require further development. In these countries,

too, women must be able to decide to have children without

fearing that they will have to put their career on hold for their

family. As an attractive employer, B. Braun wants to simplify

this compatibility of family and career and offers a multitude

of measures in this regard, ranging from telecommuting to

flex-time jobs to financial aid for childcare for children who

have not yet reached pre-school age.

Employees by Activity

Employees by Region

Total: 29,842

Production 59.6%

Sales and Marketing 23.8%

Research and Development 3.4%

Technology and Administration 13.2%

2004 Total: 29,8422003 Total: 29,253

2000

4000

6000

8000

10000

Africa Asia and Australia North and South America Europe Germany

69 6,06

3

6,61

0

7,99

3

8,52

1

68 6.03

7

6.56

3

8.57

6

8.59

8

Efficiency 2004Demands of a Good Health Care System

Today, efficiency is more than just a business necessity. It is a duty

for all of those with responsibility in the health care sector. After all,

everyone involved follows a common goal: To utilize potential

efficiencies in order to secure our health care systems.

In many health care systems, hospitals are reorganizing and con-

centrating on what they do best – providing medical care to the

patients. Other important tasks are being outsourced to partners who

specialize in those fields.

Subsidiaries of B. Braun offer their service expertise in various fields

to hospitals worldwide: For carrying out centralized sterilization

(Sterilog), consultation in clinical process flows in various European

markets (Diomedes), as well as support in transitioning from hospi-

talization to ambulatory care (TransCare).

In the USA CAPS (Central Admixture Pharma Services) assumes

many tasks of the hospital pharmacy and meets all the stringent FDA

requirements (“USP 797”) for these heavily regulated tasks.

Efficiency 1847 Introduction of Hand Disinfection

for the Prevention of Childbed Fever

27

ts discovery is considered a milestone in battling infections:

Hungarian physician Ignaz Semmelweis realized in the mid-19th

century that sepsis could be the etiology of childbed fever, which,

until then, had been viewed as an unavoidable act of God. He found

that the attending physicians themselves were responsible for their

patients’ deaths because they came straight from the dissection table

to the delivery ward. The deadly infection was caused by the corpses’

poison on their hands. The solution was very simple and highly

effective: Semmelweis instructed all physicians to wash their hands

with a disinfecting solution of chlorine carbonate before examining

each patient. With great success: The simple, yet highly debated,

hygienic measure saved millions of women from contracting childbed

fever. However, the “savior of mothers” did not live to witness the

victory march of medical hygiene that he had initiated. He died

before his pioneering insights were recognized by medical experts.

29

In four divisions we offer our expertise to physicians, healthcare providers,

pharmacies and hospital management. Last fiscal year, new products once again

contributed to a growth of more than five percent in sales.

Networking Expertise B. Braun is one of the world’s leading health care companies.

Four divisions have focused their products and services on

different branches of medicine: Hospitals, surgery, medical

practices (home healthcare and physician’s practices) and the

extra-corporeal blood treatment sector.

We network the knowledge and expertise of our divisions and

develop solutions for the health care industry, so that products

and services evolve into systems.

Exchange for Better MedicinePractically no other field that can boast of so many new

inventions as the field of medicine. The result is a growing

desire among health care providers and administrators to keep

up-to-date in their knowledge – through the exchange of

knowledge and advanced professional training.

As early as 1995, B. Braun instituted the Aesculap Academy as

a pioneering institution offering the highest levels of training

and continuing education. The target groups: Experts in clini-

cal practice, hospitals, physicians and hospital managers.

Today, the Academy is recognized in more than 30 countries

for its interdisciplinary approach to transferring knowledge

and allows those in the health care sector to learn from the

best, in a global network of expertise.

B. Braun Divisions

Together with our customers, we strive to take advantage of

technological advances to minimize all possible sources of errors in

procedures and therapeutic techniques.

30

Hospital Care Division

Expertise for Hospitals

The Hospital Care Division sells products and services forbasic medical care and offers wide-ranging therapy concepts in the fields of anesthesia, intensive care and IVtherapy. The goal is to improve the therapies and makethem safer – and to do so by sharing expertise and knowl-edge with physicians, pharmacists, healthcare providersand hospital management.

Hospital Care 1,345.9(+3.9%)=48.2%

Total Sales: 2,793.2

Share of the Division in Total Sales (in millions of Euro)

31

Increase in SalesSales in this division reached nearly 1.350 billion Euro (+ 3.9

percent compared to the previous year). Business in this sec-

tor was characterized by high growth rates, mainly in China

and the US currency region (+ 14.4 percent in US Dollars),

followed by northern Europe and Italy.

The worldwide introduction of new products and the close

cooperation with group purchasing organizations led to

double-digit growth rates in the IV catheter, anesthesia and

infusion pump sectors.

Increased Safety for Healthcare Providers and Patients Safety in the handling of medical and pharmaceutical products

– actually, it is plain common sense, but nonetheless a very dif-

ficult goal to achieve in the hectic everyday pace at hospitals.

Studies in the USA have estimated that every year nearly 8,000

patients die from incorrectly dosed medicine.

Every year, some 1.3 million patients in the US are suffer the

ill-effects of incorrectly dosed medicines. Such statistics are

likely to be similar in other countries as well. The U.S. govern-

ment study, “To Err is Human,” estimates the costs arising

from preventable dosage errors in the U.S. alone at approxi-

mately 2 billion US Dollars annually. The errors are attributed

to mistakes in the administration of medicines: Time pressure

for physicians and healthcare providers, lack of communica-

tion between the individuals involved, mixing up medications

and inadequate knowledge about their application.

IV therapy is the segment most affected by these dosage errors.

Mistakes in this sector have the most serious consequences.

The most frequent source of error is the manual input of treat-

ment parameters into the infusion pump. For this reason, the

Horizon® Outlook® IV pump, introduced by B. Braun in 2004,

is equipped with a bar-coding module that compares the

patient-specific data with the therapy prescribed by the physi-

cian. With centralized digital entry and transfer of data, the

path of the infusion solution to the patient can be safely,

easily and consistently tracked. The pharmacist affixes a

patient-specific bar code to the IV solution container in the

hospital pharmacy. Before administering the IV solution, the

healthcare worker scans the code to ensure that the correct

medicine is being administered to the correct patient. The

pump is programmed with the treatment parameters specified

by the physician through digital data transfer. This way,

communication and dosage errors can be completely prevent-

ed. The therapy is safe and can be tracked and without the

healthcare provider losing any time in entering data and

producing documentation.

B. Braun products to guard against needlestick injuries are al-

so highly successful. The venous in-dwelling cannula Introcan®

Safety® proves its value a million times a day. The feature: Its

safety clip, which is automatically activated without requiring

additional action (“passive design”). We have applied this

principle to other sharps products, such as Vasofix® Safety and

the Safety Huber Needle.

Making complex operations simpler and more efficient – that is our goal.

In cooperation with surgeons throughout the world, we develop new products

– to ensure that the patients receive the best possible and least invasive care

during surgical procedures.

Aesculap 811.8(+4.0%)=29.1%



32

Aesculap Division

Partner in Surgery

Products and services for all core surgical processes are thefocal point of the Aesculap Division. The product range includes surgical instruments, implants for orthopedics andspinal surgery, sutures as well as cardiology products. The entire product range covers more than 30,000 items.

33

Growth in Sales through InnovationSales of the Aesculap Division reached nearly 812 million

Euro, an increase of 4.0 percent compared to the previous

year. Sales increased in the USA, China and many European

countries. Among the most successful products were surgical

sutures and knee joint prostheses. Growth in the US market

was mainly due to the market introduction of new implant

systems for the spinal column.

Exchange of Expertise for Better TherapiesAlmost 30 percent of the world’s population suffers from

degenerative disk diseases – a majority of them in the indus-

trialized nations. The main causes of this phenomenon are

often age-related “wear and tear,” as well as overweight and

the lack of exercise. Over the long term, the resulting stress

placed on the spinal column leads to disk changes; the patient

then complains of back pain, caused by the instability of certain

individual vertebrae. When conservative methods of treat-

ment, such as physiotherapy or drug therapy for pain fail,

surgery is often the only alternative: Fusion and thus stabili-

zation of individual vertebrae of the spine.

The surgeon fuses the vertebrae over a frame-like structure

(fixator), relieving the patient of pain.

This complex operation is performed by accessing the spinal

column through the back and is performed nearly half a million

times each year– about 80 percent of these procedures are

performed in the USA.

In order to perform the surgical procedure and ease discom-

fort by minimizing intervention on the patient, several

minimally invasive techniques are presently being utilized.

The smaller the implant, the smaller the incision made in

the skin, the fewer the post-operative problems from the

surrounding muscle and bone structures.

Thus, the goal of the Aesculap Division was to develop an

implant that is as small as possible while at the same time

offering the highest stability and weight-bearing capacity.

The S4 spinal system introduced in May 2004 in ten countries

including the USA, Japan and Germany does just that.

S4 (“Small, Stable, Simple, Safe”) is today the world’s smallest

and most stable system for spinal column fixation. With its

small size, allowing for minimally invasive access and its

patented joining elements and simple application mechanism,

the S4 is highly valued by orthopedic surgeons.

S4 bears testimony to the power of Sharing Expertise: It was

developed through the cooperative efforts of physicians and

development teams in the USA, Germany and Japan.

We observe changes in the health care sector and, together with our

customers, develop solutions: New products and consultation services for

patients, physicians and healthcare providers.

OPM 374.3(+4.9%)=13.4%



34

OPM Division

Expertise for Medical Practice and Home Care

The Out Patient Market (OPM) Division serves physicians inmedical practice and the ambulatory and home care sector.Product and service concepts address treatment of the effects as well as the causes of the illnesses in these sectors.

35

Growth of Sales, Again Sales in this division reached nearly 375 million Euro, an in-

crease of 4.9 percent compared to the previous year. While

sales in the North American market increased by 15.5 percent

(in US Dollars), the main growth markets in the EU were

France, Spain and Great Britain. The 10 percent discount man-

dated for our products by the most recent health care reform

in Germany hindered growth in this country. With the trend

towards shorter hospitalization, there is an increase in the

demand for services in the TransCare consulting unit.

Protection against Multi-resistant Bacteria“Risk of Infection in Hospitals,” “Sick from the Hospital” are

headlines pertaining to an ever-increasing risk: Infections of

MRSA bacteria in hospitals. MRSA (Methicillin Resistant

Staphylococcus Aureus) is a pathogen that is spread through-

out the world and is one of the most frequent causes of noso-

comial infections, i.e. infections acquired in hospitals. The

latest research shows that nearly 35,000 hospital patients are

affected annually by this disease and that it is fatal in almost

1,500 cases. The reasons for this are the resistance of the

germs to antibiotics, inadequate prophylactic hygiene mea-

sures and the fact that MRSA can be transmitted through a

simple handshake or grasp. Such contact has serious conse-

quences – especially for weakend patients in the hospital or in

assisted living and nursing homes. Although colonization of

MRSA poses little risk to healthy patients, it often leads to

infections in patients with compromised immune systems and

can also lead to further illnesses. MRSA is a high risk factor in

surgical intensive care units. The pathogen can cause lung in-

fections and wound inflammations. According to information

provided by the Robert Koch Institute, the incidences of MRSA

have almost doubled in Germany in the last couple of years.

Other European countries such as Spain, Portugal, France,

England and Italy are also significantly affected. On the other

hand, low MRSA rates in the Netherlands and the Scandina-

vian countries indicates that its spread can be hampered

through consistent prevention and adequate hygiene mea-

sures.

Since fall 2004, B. Braun is the first manufacturer to offer

a ready-to-use product range to guard against MRSA for a

variety of applications. The range of products includes rinsing

solutions for chronic wounds, solutions for anti-septic cleans-

ing of the entire body, cleaning of catheter insertion sites, as

well as the mouthwash Pront-Oral®, which is also suitable for

use by diabetic patients and oncology patients whose mucous

membranes have been affected by chemotherapy and radia-

tion. Consistent hygiene practice using B. Braun products

can not only reduce the high cost of intensive care, but also

remarkably decreases the risk of MRSA infection. In this case,

safety does not only mean minimizing risks, but controlling

costs as well.

36

In our dialysis units we take responsibility for providing the best possible

and most comfortable care to our patients. The center of all our activities:

The patient.

Expertise in Extracorporeal Blood Treatment

The MedTech Division focuses on the treatment of patientswith chronic kidney or metabolic disorders. Dialysis patientssurvive with the help of this therapy and enjoy a higherquality of life. The product range includes treatment systems for hemodi-alysis, acute dialysis as well as apheresis; B. Braun Avitumoperates its own dialysis centers in many European andAsian countries.

MedTech Division


MedTech 248.7(+24.0%)=8.9%


37

Strong Worldwide Growth in Sales The global market for the treatment of ESRD (End Stage Renal

Dialysis) patients is growing annually at a rate of eight percent

and thus has an attractive, long-term market potential. The

MedTech Division, with its growth of 24% to 250 million Euro,

far outpaced the development of the world markets. The range

of products, from dialyzers to dialysis machines, covers the

complete demand for dialysis treatment. The key growth

sectors were again Asia and the USA, following the successful

introduction of the Dialog+® dialysis machine.

Investments of 23 million Euro in new products and expanded

production capacity provide a basis for meeting the increasing

demand anticipated for the coming years.

Responsibility for PatientsMore than a million patients worldwide require dialysis. Longer

life expectancy and changing living and eating habits have led

to an increase in the number of dialysis patients.

As a developer and manufacturer of product systems for

dialysis, the MedTech Division has a broad base of expertise

that it shares with physicians, healthcare providers and

patients in the dialysis units operated by B. Braun Avitum.

Because of the routine treatments, there is very close relation

with the patients. 4,600 chronically ill kidney patients visit our

centers several times a week for their life-saving treatments.

High quality and safety are therefore important pre-requisites

to be met in order for the patients to feel comfortable and

“well cared for.”

As an operator of dialysis clinics, in the last couple of years

B. Braun has concentrated on the new EU States and has made

an important contribution to the modernization of the health

care systems in those countries. Today, after more than ten

years, there is hardly any difference compared to other Euro-

pean countries. In Hungary, almost 90 percent of the medical

dialysis services have been privatized; the trend is more or less

the same in the other eastern European countries as well.

In 88 dialysis centers in Europe and Asia, employees of

B. Braun Avitum are striving to provide the gentlest and safest

care as economically as possible. Certification of all centers

according to ISO 9001 ensures compliance with uniform

quality standards in regular dialysis centers, as well as in

vacation dialysis clinics. Despite the differences in the health

care systems, the privatization of this service helps to ensure

a uniform level of care – in the Philippines as well as in Spain,

France or Hungary.

Sustainability 2004Responsibility towards Future Generations.

Sustainability also means that we as a company unlock new vistas

for future generations, contribute to society as a responsible “corpo-

rate citizen,” and take responsibility: Through economizing respon-

sibly and carefully managing economic resources, through the

promotion of science and art, as well as through our involvement in

training the younger generation.

With the B. Braun for Children Initiative, B. Braun companies

throughout the world support at lease one project for children in

their country. Approximately 30 companies worldwide have already

begun sponsoring such projects under this program; in other

countries, they are in the preparation phase. Here are just a few of

the many examples of our companies’ support: B. Braun South

Africa supports TOPSY, an initiative based south of Johannesburg to

help children suffering from AIDS or those orphaned by AIDS.

Working closely with non-government organizations, B. Braun

Vietnam supports the “Cleft Lip Operations” initiative that performs

operations on 300 children in three cities in Vietnam each year.

B. Braun in Turkey actively supports autistic children.

Responsible handling and protection of the environment is a principle

that is practiced at all B. Braun locations. Our plant in Irvine, USA is

the proud recipient of two awards from the State of California for

long-term and consistent energy savings and waste reduction.

Sustainability of the10th Century“Medical School of Salerno” – The Nucleus of the World’s

School of Medicine in the Middle Ages of the Western World.

39

he end of the 10th century in southern Italy witnessed the

emergence of the “Medical School of Salerno,” the oldest and most

important facility of its type in Western Europe. Its worldly, inter-

national orientation with influences from the Greek and Islamic

cultures led to the development of a unique atmosphere of free

teaching and learning. Unique at its time, the school also allowed

women to study medicine and, over the centuries, determined the

curriculum of the leading centers in Bologna, Padua and Montpellier,

which later developed into focal points of medical education at

universities. Despite the changes in methodologies that occurred

at universities in subsequent centuries, the field of medicine remains

indebted to the highly progressive methods and approaches of the

Salerno school. The doctrinal poem “Regimen sanitatis Salerni-

tanum” that was developed during the heyday of the school around

the year 1150 is a comprehensive, practice-oriented collection for

healthy living habits and was the guiding principle for practicing

physicians in the 16th and 17th centuries; some parts which remain

applicable until today.

40

Consolidated Financial Statement

Auditor’s Report (Translation)

We have audited the consolidated financial statement and theconsolidated management report prepared by B. Braun MelsungenAktiengesellschaft, Melsungen for the fiscal year January 1 toDecember 31, 2004. The consolidated financial statement and themanagement report to be prepared in accordance with the provi-sions of German commercial law and supplemental provisions and incompliance with the articles of incorporation are the responsibilityof the Management Board. Our task is to express and submit anopinion on the consolidated financial statement and the managementreport on the basis of the audit we have conducted.

Our audit of the consolidated financial statement was performed inaccordance with § 317 of the German Commercial Code (HGB) andwith due regard for the principles of proper auditing established bythe Institute of Auditors in Germany (IDW). These require that theaudit be planned and conducted so as to make it possible to identifywith reasonable assurance inaccurate statements and infringementsthat have a material effect on the representation of the corpora-tion’s asset position, financial status and earnings situation asconveyed by the consolidated financial statement with due regardfor the principles of proper accounting, and by the managementreport. In determining the audit procedures, knowledge of the

group’s business activities and of its economic and legal background,and expectations of possible errors are taken into account. As part ofthe audit, the effectiveness of the system of internal checks andevidence of the statements made in the consolidated financialstatement and the group management report are assessed primarilyon the basis of random checks. The scope of the audit includes theevaluation of the financial statements of the companies included inthe financial statement, the delimitation of the reporting entity, theaccounting and consolidation principles observed and the funda-mental assessments made by the Board, as well as an appreciation ofthe overall outline provided in the consolidated financial statementand the management report. In our opinion, the audit forms a suffi-ciently sound basis for our judgment.

Our audit has led to no objections.

It is our opinion that the consolidated financial statement, with dueregard for the principles of proper accounting, presents a soundrepresentation of the group’s assets, financial status and profitposition that reflects the actual situation. Overall, the consolidatedmanagement report accurately illustrates the group’s situation anddescribes the risks of future developments.

Kassel, Germany, February 22, 2005

PwC Deutsche RevisionAktiengesellschaft

Wirtschaftsprüfungsgesellschaft

(Dreissig) (Plaum)Auditor Auditor

41

Consolidated Income Statement

Notes 2004 2003€ ’000 € ’000

Sales (1) 2,793,155 2,646,651Costs of Goods Sold (2) 1,518,439 1,386,746Gross Profit on Sales 1,274,716 1,259,905Selling Expenses 782,843 745,495General and Administrative Expenses 187,981 226,249Research and Development Costs 94,132 105,403Other Operating Income (3) 176,927 142,080Other Operating Expenses (4) 173,599 151,771Operating Income 213,088 173,067Investment Income (5) -325 48,085Interest Income (Expense) (6) -33,553 -35,076Financial Income (Loss) -33,878 13,009Profits from Ordinary Business Operations 179,210 186,076Taxes on Income and Revenue (7) 56,160 72,723Dividend Paid on Profit Participation Rights Capital -1,445 -701Consolidated Annual Net Profit 121,605 112,652Transfer to Statutory Reserve 0 -4,000Transfers to other Retained Earnings -10,000 -36,000Minority Interests -13,812 -10,608Group Profit 97,793 62,044Earnings Per Share in € (8) 5.56 5.26

42


Consolidated Balance Sheet

Assets Notes Dec. 31, 2004 Dec. 31, 2003€ ’000 € ’000

Intangible Assets (9) 79,647 67,396Tangible Assets (10) 816,684 793,400Financial Assets (11) 24,896 32,627Fixed Assets 921,227 893,423Inventories (12) 503,285 513,670Accounts Receivable and Other Assets (13) 680,981 583,774Investments (14) 37,996 32,982Cash and Cash Equivalents (15) 45,574 89,025Current Assets 1,267,836 1,219,451Tax Accruals/Deferrals (16) 52,241 52,742Prepaid Expenses and Accruals 17,079 19,633

2,258,383 2,185,249

LiabilitiesSubscribed Capital (17) 150,000 150,000Capital Reserve 10,226 10,226Retained Earnings 380,821 323,136Group Profit (18) 97,793 62,044Minority Interests (19) 89,866 78,243Profit Participation Rights Capital (20) 15,062 12,229Equity including Minority Interests 743,768 635,878Reserves for Pensions and Other

Similar Obligations (21) 296,852 285,415Other Reserves (22) 260,853 283,387Total Reserves 557,705 568,802Liabilities to Financial Institutions 555,190 568,795Other Liabilities 398,191 410,527Total Liabilities (23) 953,381 979,322Deferrals 3,529 1,247

2,258,383 2,185,249

43

Cash Flow Statement

2004 2003€ ’000 € ’000

Consolidated Annual Net Profit 121,506 112,652Depreciation of Property, Plant and Equipment 152,978 156,081Write-Ups -265 -400Change in Reserves -11,097 10,060Proceeds from Sale of Property, Plant and Equipment -9,668 -63,277Inventory Change 10,385 -22,902Change in Accounts Receivable and Other Assets -95,112 -424Change in Accounts Payable and Other Liabilities

(excluding financial liabilities) -10,169 22,176Cash Flow from Ordinary Business Operations 158,657 213,966Investments in Tangible and

Intangible Assets -183,252 -194,840Financial Investments -23,652 -13,824Other Investments 8,927 -10,810Change in Assets due to Variations in

Scope of Consolidation -7,740 2,406Proceeds of Disposals 29,068 76,976Cash Flow from Investment Activities -176,649 -140,092Dividends Paid to Shareholders of B. Braun Melsungen AG -6,000 -4,400Dividends Paid to Minority Shareholders -5,384 -4,734Participation Rights Capital Investments 2,833 2,184Change in Financial Liabilities -25,256 -28,242Cash Flow from Financial Activities -33,807 -35,192Effective Change in Cash and Cash Equivalents -51,799 38,682Effect of Exchange Rates on Fixed Assets 18,526 78,475Change in Consolidated Reserves due to Exchange

Rate Fluctuations and Scope of Consolidation -5,164 -83,291Effective Change in Value 13,362 -4,816Cash and Cash Equivalents at Beginning of Year 92,207 58,341Cash and Cash Equivalents at End of Year 53,770 92,207

Cash and cash equivalents consist of cash, securities, stock and bonds, excluding the company’s own shares.

44


Subscribed Capital CorporateCapital Reserve Equity

Earned

€ ’000 € ’000 € ’000

January 1, 2003 110,000 10,226 632,317

Dividend B. Braun Melsungen AG 0 0 -4,400Increase of Subscribed Capital 40,000 0 -40,000Transfers to Statutory Reserves 0 0 4,000Transfers to Retained Earnings 0 0 36,000Group Balance Sheet Profit 0 0 62,044Change in Holdings of Other Shareholders 0 0 0Change due to Foreign Currency Conversions 0 0 0Other Changes 0 0 17,776

December 31, 2003/January 1, 2004 150,000 10,226 707,737

Dividend B. Braun Melsungen AG 0 0 -6,000Transfers to Retained Earnings 0 0 0Group Balance Sheet Profit 0 0 97,793Change in Holdings of Other Shareholders 0 0 0Change due to Foreign Currency Conversions 0 0 0Other Changes 0 0 14,883

December 31, 2004 150,000 10,226 814,413

1) Excluding Minority Interests and Participation Rights Capital2) thereof € 77.1 million by shareholder family members

Equity Development

45

Accumulated Equity as per Non- Equity Minority Profit ConsolidatedOther Consolidated Redeemable Capital Interests 2) Participation Equity Capital

Corporate Balance Equity Rights w/o Own SharesResults Sheet 1) u .

(Equity)€ ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000

-228,591 523,952 -29,800 494,152 79,470 10,045 583,667

0 -4,400 0 -4,400 0 0 -4,4000 0 0 0 0 0 00 4,000 0 4,000 0 0 4,0000 36,000 0 36,000 0 0 36,0000 62,044 0 62,044 0 0 62,0440 0 0 0 -1,227 0 -1,227

-58,504 -58,504 0 -58,504 0 0 -58,504-35,462 -17,686 0 -17,686 0 2,184 -15,502

-322,557 545,406 -29,800 515,606 78,243 12,229 606,078

0 -6,000 0 -6,000 0 0 -6,0000 0 0 0 0 0 00 97,793 0 97,793 0 0 97,7930 0 0 0 11,623 0 11,623

-10,130 -10,130 0 -10,130 0 0 -10,130-3,112 11,771 0 11,771 0 2,833 14,604

-335,799 638,840 -29,800 609,040 89,866 15,062 713,968

46


General Principles

The consolidated financial statements of B. Braun Melsungen AG are compiled in accordance with the regulations of the GermanCommercial Code (HGB) and the supplemental regulations of the German Code for Public Shareholding Corporations (Aktiengesetz). Because of their significance, Research and Development Costs have been itemized separately in the Consolidated Income Statement. The consolidated financial statements cover the period from January 1 to December 31, 2004.

To improve the clarity of representation of the consolidated balance sheet and the consolidated income statement, individual items havebeen combined. These items are listed separately in the accompanying notes. Equity Development and Cash Flow Statement have been added voluntarily to the group annexure.

In the current consolidated financial statements, goodwill in the amount of € 10.6 million resulting from capital consolidation of acquiredcompanies was capitalized for the first time beginning January 1, 2004 in compliance with DRS4 “Acquisition of Companies in ConsolidatedFinancial Statements.” Contrary to DRS4, depreciation is conducted according to § 309 (1) line 1 of the German Commercial Code (HGB) with at least 25% in eachyear following the fiscal year in which the asset was capitalized. Otherwise, the valuation and calculation methods remained unchanged.

Scope of Consolidation

In addition to B. Braun Melsungen AG, the consolidated financial statement includes 33 German and 145 foreign subsidiaries in which B. Braun Melsungen AG directly or indirectly has a controlling interest.

The development of the number of group companies as of December 31 2004 and 2003 is shown below:

2004 2003

Included as of December 31, of the previous year 154 141Companies included for the first time 27 16Companies included in the final consolidation -1 0Companies included in the reporting year in accordance with the equity method 0 -2Companies merged -2 -1Included as of December 31 of the reporting year 178 154

The changes do not affect the comparison of the financial statement with the previous fiscal year.

In accordance with § 310 of the German Commercial Code (HGB), three German and two foreign companies are included in the consolidatedfinancial statement on an equity share basis analogous to the regulations relating to full consolidation. In accordance with the regulationsregarding associated companies, four German and three foreign holdings are included in the consolidated financial statement in accordancewith §§ 311 and 312 of the German Commercial Code (HGB). From such associated companies, € 3,042,000 result as positive differencesfrom the initial consolidation. Due to insignificance, seven associated companies were not valued in accordance with the equity method.

47

A complete list of the shareholdings held by the consolidated group and by B. Braun Melsungen AG has been filed with the District Courtin Fritzlar, Germany at its Commercial Register Department in Melsungen, Germany.

The following companies included in the Consolidated Financial Statement of B Braun Melsungen AG

B. Braun Medicare GmbH & Co. KG, Melsungen, MAT Adsorption Technologies GmbH & Co. KG, Elsenfeld,B. Braun Medizinelektronik GmbH & Co. KG, Puchheim,

meet the requirements of § 264 b of the German Commercial Code (HGB) and are therefore exempt from the requirement to publish amanagement report and notes to their financial statements.

The following companies meet the requirements of § 264, paragraph 3 of the German Commercial Code (HGB) and are also exempt fromthe requirement to publish a management report and notes to their financial statements:

B. Braun Medical AG, Melsungen,B. Braun Medizintechnologie GmbH, Melsungen,B. Braun Surgical GmbH, Melsungen,B. Braun Petzold GmbH, Melsungen,Dr. Hans Rumberg & Co. GmbH, Rellingen,Bibliomed medizinische Verlagsgesellschaft mbH, Melsungen,Diomedes Cert GmbH, Melsungen,Diomedes Health Care Consultants GmbH, Melsungen,Transcare Gesundheitsservice GmbH, Melsungen,Paul Müller Technische Produkte GmbH, Melsungen.

The above-mentioned companies exercise their right to this exemption.

Consolidation Principles

The annual financial statements of B. Braun Melsungen AG and its German and foreign subsidiaries are based on uniform accounting andvaluation principles. Different valuation methods of companies in accordance with the equity method are retained, given the insignificantsums involved.

All material annual financial statements were audited by independent auditors and received unqualified approval.

For the purpose of capital consolidation, the acquisition costs of interest in subsidiaries are netted against their book value at the time theywere acquired or initially consolidated. Any remaining balance is accounted for as an asset or a liability of the subsidiary. To the extent thatthis balance represents goodwill, in the past it was offset against capital reserves. Based on the principle of individual evaluation, whichgrants companies this choice at the time of each initial consolidation, the current financial statements have, for the first time, exercised theoption of capitalizing the same as intangible assets.

48


Differences in the valuation of holdings in affiliated companies are determined according to the same principles as apply to capital consolidation.

Retained earnings include retained income B. Braun Melsungen AG and income of subsidiaries earned following their acquisition.

Interim profits, sales, expenditures and income, as well as receivables and payables among the consolidated group, are eliminated. Write-offs of investment in consolidated companies are eliminated from the consolidated accounts if they would result in a doubledallowance for losses. Appropriate reserves have been made for additional risks at group level.

Taxes are accrued on consolidation measures affecting net income and combined with taxes on the results of consolidated companies. Tax assets are netted out against tax liabilities insofar as permitted.

Currency Conversion

In accordance with international accounting practices and as recognized by commercial law, short-term foreign currency receivables andliabilities are stated in the individual corporate financial statements using either the average market rate at the end of the fiscal year or, ifhedged, with the hedging rate. Medium- and long-term foreign currency receivables and payables are valued using either the currency rateat origin or the rate at the end of the fiscal year, whichever is higher (payables) or lower (receivables).

In the consolidated financial statements, the balance sheet values for foreign subsidiaries included in the consolidation are entered in at the year-end average currency rate, while income statements are based on the annual average currency rate. Differences resulting from the conversion of currency rates for net income or loss at the end of the fiscal year or, at the annual average rate, have respectively beenreflected in equity, with no impact on net consolidated income. To the extent that currency differentials result from minority holdings, such amounts are reflected in minority interests.

Comparison of Selected Currencies

Average market rate at end of fiscal year Change Average Annual Rate ChangeDec. 31, 2004 Dec. 31, 2003 in % 2004 2003 in %

1 EUR = USD 1.362 1.263 7.8 1.243 1.131 9.91 EUR = GBP 0.705 0.705 0.0 0.678 0.692 -2.01 EUR = CHF 1.543 1.558 -1.0 1.544 1.521 1.51 EUR = MYR 5.171 4.750 8.9 4.723 4.297 9.91 EUR = JPY 139.650 135.050 3.4 134.343 130.912 2.6

49

(1) Sales2004 2003 +-

Sales by Division € ’000 % € ’000 % in %

Hospital Care 1,345,914 48.2 1,295,669 48.9 3.9Aesculap 811,757 29.1 780,805 29.5 4.0OPM 374,321 13.4 356,933 13.5 4.9MedTech 248,702 8.9 200,641 7.6 24.0Other Revenues 12,461 0.4 12,603 0.5 -1.1

2,793,155 100.0 2,646,651 100.0 5.5

Sales by Regions € ’000 % € ’000 %

Germany 665,015 23.8 669,880 25.3 -0.7Europe (excl. Germany) 1,010,771 36.2 901,219 34.1 12.2Asia and Australia 308,640 11.0 303,163 11.5 1.8North and South America 782,170 28.0 747,262 28.2 4.7Africa 26,559 1.0 25,127 0.9 5.7

2,793,155 100.0 2,646,651 100.0 5.5

(2) Cost of Goods Sold, Gross Profit on Sales

Cost of goods sold and services rendered include the manufacturing costs of goods sold and the purchase costs of merchandise sold. Grossprofit on sales totaled 45.6% (previous fiscal year 47.6%).

Notes to the Consolidated Income Statement

50


(3) Other Operating Income2004 2003

€ ’000 € ’000

Proceeds from Disposal of Assets 13,014 17,917Proceeds from Liquidation of Reserves 12,853 12,762Foreign Exchange Gains 44,711 39,487Additional Income 82,234 46,836Other Income 24,115 25,078

176,927 142,080

The proceeds from the disposal of assets, at € 8.4 million, include the sale of a marketing license, and at € 2.5 million, the sale of real estate.

The liquidation of reserves refers to numerous reserves made in the previous years and not completely utilized.

Foreign currency exchange gains from foreign currency entries include primarily gains from exchange rate changes from the time of incurring until time of payment, as well as foreign exchange gains resulting from currency valuation utilizing qualifying dates.

The amount of € 73.2 million (€ 40.5 million in the previous year) billed by B. Braun Melsungen AG to the LIFE VermietungsgesellschaftmbH & Co. KG resulting from a general management agreement are included under “other operating income.” The corresponding expensesare shown under “other operational expenses.”

Other income consists of insurance indemnifications, license fees and commissions received, cafeteria income, rent and payments on receivables depreciated in previous years.

51

(4) Other Operating Expenses2004 2003

€ ’000 € ’000

Losses from the Disposal of Assets 3,346 3,069Transfer to Reserves 10,899 26,921Losses from Depreciation of Current Assets 6,152 7,768Foreign Currency Losses 48,658 49,395Other Taxes 3,707 2,975Other Expenses 100,837 61,643

173,599 151,771

Foreign currency exchange losses from foreign currency entries include primarily losses from exchange rate changes from the time of incurringuntil the time of payment, as well as foreign exchange losses resulting from currency valuation utilizing qualifying dates (see Note 3).

Other expenses consist of expenditures that were not allocated to specific cost centers and loss of receivables outstanding, among others.

(5) Investment Income2004 2003

€ ’000 € ’000

Income from Holdings in Associated Companies 290 193Expenses from Holdings in Associated Companies -308 -229Income from Other Holdings 1 0Income from Disposal of Financial Investments 0 48,429Depreciation of Financial Investments -308 -308

-325 48,085

52


(6) Interest Income (Expense)2004 2003

€ ’000 € ’000

Income from Other Securities and Lending of Financial Assets 150 219

Other Interest and Similar Incomes 5,860 4,961Interest Paid and Similar Expenditures -39,563 -40,256

-33,553 -35,076

(7) Taxes from Income and Revenue

Income tax includes German federal and corporate taxes and comparable income-related taxes in other countries. They are calculated on thebasis of tax regulations applicable to the individual company.

Expenses from taxes on earnings including deferred taxes are compiled as follows:2004 2003

€ ’000 € ’000

Taxes on Earnings 55,912 59,238Deferred Taxes from Periodic Differences and from Losses Carried Forward 248 13,485

56,160 72,723

Deferred taxes mainly refer to the differences between the Commercial Balance Sheet II of the consolidated companies and their annualfinancial statements by country, plus consolidation measures. The rate at which deferred taxes for differences of financial statements bycountry/Commercial Balance Sheet II are assessed is based on the respective local tax rate; the rate at which deferred taxes on consolidatedmeasures are assessed is a uniform 35% in consideration of cost-value ratio.

53

The deferred taxes have been allocated to the following balance sheet positions: 2004 2003

Assets Liabilities Assets Liabilities€ ’000 € ’000 € ’000 € ’000

Intangible Assets 2,917 3,811 2,945 3,150Tangible assets 1,674 52,765 9,511 54,397Financial Assets 177 80 359 1,741Inventories 30,811 1,418 36,191 308Receivables 12,867 495 13,086 699Trade Securities of Current Assets 4 0 3 0Pension Reserves 1,000 450 2,032 329Other Provisions/Reserves 23,869 -130 26,600 -132Liabilities 10,255 133 10,863 137Losses Carried Forward 7,152 0 4,005 0Other Items 12,719 2,642 -395 622

103,445 61,664 105,200 61,251Net Balance -51,204 -51,204 -52,458 -52,458

52,241 10,460 52,742 8,793

The existing taxable losses carried forward in the amount of € 165.384 million can be utilized for an unlimited period of time.

(8) Earnings per Share

Earnings per share are calculated by dividing consolidated balance sheet profits before transfers to other profit reserves by the number ofshares issued. The number of shares remained constant at 19,404,000 during the fiscal year. There were no shares outstanding as ofDecember 31, 2004 or December 31, 2003 that could dilute the dividend per share. Not taking into account the company’s own shares whichare not entitled to dividends, the earnings per share amount to € 5.56 (€ 5.26 in the previous year).

54


(9) Intangible Assets

Cost of Acquisition Licenses, Goodwill Advance TotalIndustrial Payments

Property andSimilar Rights

€ ’000 € ’000 € ’000 € ’000

January 1, 2003 103,699 5,811 736 110,246Foreign Currency Changes -11,313 -96 -1 -11,410Change in Consolidation Entities 72 0 0 72Additions 36,615 40 950 37,605Book Transfers 558 0 -408 150Write-ups 0 9 0 9Disposals -2,438 -6 -273 -2,717December 31, 2003/January 1, 2004 127,193 5,758 1,004 133,955Foreign Currency Changes -5,502 111 0 -5,391Change in Consolidation Entities 689 15,720 0 16,409Additions 9,751 467 2,292 12,510Book Transfers 3,144 315 -2,010 1,449Write-ups 0 22 0 22Disposals -1,732 -3,079 0 -4,811December 31, 2004 133,543 19,314 1,286 154,143Accumulated Depreciation 72,470 2,026 0 74,496Book Value December 31, 2004 61,073 17,288 1,286 79,647Book Value December 31, 2003 64,073 2,319 1,004 67,396Depreciation in the Fiscal Year 13,547 428 0 13,975

Purchased intangible assets are recorded at their purchase price and depreciated on a straight-line basis according to schedule.

The amount stated as goodwill is the amount by which the payment made for the acquisition of a company exceeds the value of thecompany’s individual assets less its debts at the time of acquisition. Goodwill is written off by scheduled depreciation over the years duringwhich it is likely to be utilized. The goodwill listed on the assets side in connection with the capital consolidation for company acquisitionsafter January 1, 2004 is depreciated by at least 25% in each of the subsequent fiscal years following the year of initial capitalization.

55

(10) Tangible Assets

Cost of Acquisition or Manufacture Land and Leasehold, Technical Other, Payments on TotalRights and Buildings Equipment Fixtures Accounts and

including Buildings on Plant and and Fittings, Tools Plant underThird-Party Property Machinery and Equipment Construction

€ ’000 € ’000 € ’000 € ’000 € ’000

January 1, 2003 593,736 1,056,177 299,674 83,821 2,033,408Foreign Currency Change -43,421 -94,249 -27,232 -7,853 -172,755Change in Consolidation Entities 305 -108 451 -5 643Additions 6,936 49,961 33,278 67,060 157,235Book Transfers -80 53,894 8,261 -62,225 -150Write-Ups 344 32 6 0 382Disposals -6,467 -44,038 -22,605 -653 -73,763December 31, 2003/January 1, 2004 551,353 1,021,669 291,833 80,145 1,945,000Foreign Currency Changes -6,462 -19,794 -5,337 -2,530 -34,123Change in Consolidation Entities 9,633 17,445 2,826 1,833 31,737Additions 15,566 53,075 31,568 70,533 170,742Book Transfers 10,696 13,779 52,710 -73,795 3,390Write-Ups 161 78 4 1 244Disposals -8,706 -33,583 -29,057 -781 -72,127December 31, 2004 572,241 1,052,669 344,547 75,406 2,044,863Accumulated Depreciation 256,955 735,101 236,123 0 1,228,179Book Value December 31, 2004 315,286 317,568 108,424 75,406 816,684Book Value December 31, 2003 312,177 316,273 84,805 80,145 793,400Depreciation in Fiscal Year 18,066 79,684 40,945 0 138,695

Tangible fixed assets are reported at the cost of purchase or manufacture less accumulated depreciation per scheduled depreciation for thefiscal year. For some companies that have been included, fixed asset values are indexed in accordance with the regulations of the respectivecountry. Cost of fixed assets produced by the company includes a proportionate share of directly attributed overheads and depreciation.Immovable fixed assets are depreciated primarily on a straight-line basis over their useful life, or on an accelerated basis if applicable. Formovable fixed assets, depreciation is calculated according to a useful period of three years or less on a straight-line basis, otherwise on anaccelerated basis. In Germany, straight-line depreciation replaces accelerated depreciation if the former results in higher depreciation. Low-cost assets are fully depreciated in the year of purchase. Additional depreciation in accordance with the tax laws in the individual financial statements iseliminated in the consolidated financial statement.

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(11) Financial Assets

Cost of Acquisition Holdings in Holdings in Other Loans to Securities Other TotalAffiliated Associated Holdings Companies held as Loans Financial

Companies Companies in which the Financial AssetsCompany Assets

holds a Participation

Interest

€ ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000

January 1, 2003 90 11,113 3,414 287 2,506 11,163 28,573Foreign Currency Changes 0 0 0 0 0 -348 -348Changes in Consolidation Entities -3,702 0 0 0 685 102 -2,915Additions 6,728 2,089 724 40 2,889 1,354 13,824Book Transfers -1,795 1,795 0 0 0 0 0Disposals -1,236 -1,945 0 -50 -107 -1,557 -4,895December 31, 2003/January 1, 2004 85 13,052 4,138 277 5,973 10,714 34,239Foreign Currency Changes 0 0 0 0 68 104 172Changes in Consolidation Entities -22,145 0 0 0 405 0 -21,740Additions 21,445 -120 139 47 74 2,067 23,652Book Transfers 1,319 -84 0 0 -1,040 -1,235 -1,040Disposals -619 -404 0 0 -234 -7,166 -8,423December 31, 2004 85 12,444 4,277 324 5,246 4,484 26,860Accumulated Depreciation 0 0 635 0 1,280 49 1,964Book Value December 31, 2004 85 12,444 3,642 324 3,966 4,435 24,896Book Value December 31, 2003 85 13,052 3,503 277 5,000 10,710 32,627Depreciation in Fiscal Year 0 0 0 0 252 56 308

Shares in subsidiaries and affiliated companies are valued at the lower of cost or other applicable valuations. Shares in associated companiesare valued at the costs of acquisition, adjusted where appropriate to reflect differences between original book value at cost and the effect ofaccounting on subsequent dividends and proportional results of these companies. Securities held as assets and loans are reported at either cost of purchase or their nominal value.

A full list of shareholdings will be filed with the local District Court in Fritzlar, Germany, at its Commercial Register Department inMelsungen, Germany.

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(12) InventoriesDec. 31, 2004 Dec. 31, 2003

€ ’000 € ’000

Raw Materials and Supplies 100,107 105,629Unfinished Products 84,526 83,107Finished Products, Merchandise 317,051 324,265Prepayments 1,601 669

503,285 513,670

Inventories of raw materials and supplies as well as merchandise are valued at the lower of actual or average replacement costs. Stocks offinished or unfinished goods are valued at their manufacturing cost, which includes cost of material, labor and overhead, cost of materialsand manufacturing in accordance with corresponding tax guidelines. In the consolidated income statement, goods and services sold arevalued at full cost. At the end of the fiscal year, all inventory groups were valued at the lower applicable rate. At the same time, appropriateinventory adjustments were made to include risks resulting from storage duration, diminished utility, etc

(13) Accounts Receivable and Other AssetsDec. 31, 2004 Thereof Dec. 31, 2003 Thereof

Total due within Total due within> 1 Year > 1 Year

€ ’000 € ’000 € ’000 € ’000

Trade Receivables 565,860 14,373 479,468 5,918Receivables due from Affiliated Companies 26 0 12 0Receivables due from Associated Companies 494 0 2.594 0Other assets 114,601 20,371 101,700 19,405Thereof Deferred Taxes and Tax Pre-Payments (28,576) (0) (28,803) (1,336)

680,981 34,744 583,774 25,323

Accounts receivable for goods and services are recorded using nominal values less appropriate individual adjustments. Promissory notesposted are reported at cash value. The general credit risk is adequately taken into account by means of a general adjustment to receivables.Other receivables and assets are entered at their nominal value less appropriate individual adjustments.

In 2004, B. Braun launched a new Asset Backed Securities Program (ABS Program) with a volume of up to € 75 million and at December 31,2004 a total of € 60.0 million (December 31, 2003, € 56.5 million) had been subscribed. The transaction is based on a non-recourse sale ofindividual B. Braun companies’ trade receivables to a company especially established to handle the program. The benefits of this ABSProgram include a more efficient management of funds with maturities of less than a year, an improvement in balance sheet ratios andaccess to additional sources of financing

Taking into account other non-recourse financing, as of December 31, 2004, receivables totaling € 61.2 million (December 31, 2003, € 92.6 million) had been sold.

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(14) InvestmentsDec. 31, 2004 Dec. 31, 2003

€ ’000 € ’000

Own Shares 29,800 29,800Other Securities 8,196 3,182

37,996 32,982

Securities belonging to current assets are valued at the lower of cost or market value at the end of the fiscal year.

By resolution of the General Assembly of Shareholders of B. Braun Melsungen AG held on September 28, 2000, the company was authorizedto repurchase up to 3.5% of its share capital over a period of no longer than 18 months from the date of authorization. The companyexercised this option and in September 2000 bought back 387,042 shares and again in January 2002 208,958 shares at a price of € 50.00per share for a total of € 29,800,000. This represents an amount of € 4,470,000 (2.98%) of the total outstanding share capital. These sharesare valued at cost.

(15) Cash and Cash Equivalents

Cash and cash equivalents include checks, cash on hand and cash held with banks and are valued at their nominal value.

(16) Tax Accruals/Deferrals

Deferred tax claims primarily result from temporally deviating valuation bases between the financial statement in accordance with theGerman Commercial Code (HGB) and the tax statements of the individual companies, as well as from the consolidation process. Reference isalso made to No. 7 “Taxes on Income and Earnings.”

(17) Subscribed Capital

The share capital of B. Braun Melsungen AG consists of 20 million shares with no par value. Each no par value share represents a calculatedvalue of € 7.50 of the share capital.

The Management Board is authorized, with the Supervisory Board’s approval, to increase the share capital by up to € 50,000,000 byDecember 31, 2008 by a single issue or multiple issues of new bearer shares against cash subscriptions. To date, the Management Board hasnot utilized this authorization.

59

(18) Retained Earnings

Retained Earnings consist of: Dec. 31, 2004 Dec. 31, 2003

€ ’000 € ’000

Statutory Reserves 4,774 4,774Reserves for Own Shares 29,800 29,800Other Retained Earnings 346,247 288,562

380,821 323,136

Development of Retained EarningsDec. 31, 2004 Dec. 31, 2003

€ ’000 € ’000

Beginning-of-Year Balance 323,136 306,532Transfer of Previous Year’s Group Profit 62,044 97,194Transfers to Subscribed Capital 0 -40,000Transfers to Statutory Reserves 0 4,000Transfers to Other Retained Earnings 10,000 36,000B. Braun Melsungen AG’s Dividends for Previous Periods -6,000 -4,400Offsetting Acquired Goodwill 0 -10,156Allocation of Negative Goodwill 0 -321Change from Currency Conversions -10,130 -58,504Other Changes 1,771 -7,209Year-End Balance 380,821 323,136

Retained earnings include, along with other profit reserves, the statutory reserve of € 4,774,000 and a reserve for own shares of € 29,800,000.

Differences resulting from initial consolidation were € 166,980,000 on assets due to acquisitions of companies by December 31, 2003 and € -5,238,000 on liabilities. This balance was offset against retained earnings.

Within retained earnings, the difference arising from currency conversions amounts to € -93,228,000 (previous year € -83,098,000).

(19) Minority Interests

Minority interests consist of third-party interests in the equity of consolidated subsidiaries, in particular minority interests in Almo-Erzeugnisse E. Busch GmbH, Bad Arolsen/Germany; B. Braun Holding AG, Emmenbrücke/Switzerland and B. Braun Austria Ges.m.b.H., Maria Enzersdorf/Austria.

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(20) Profit Participation Rights Capital

As part of the B. Braun Incentive Plan, B. Braun Melsungen AG is issuing a series of profit participation rights (Genussrechte) which theentitled executives may exercise at their discretion. In issuing rights, the company grants the employee asset rights in the form of parti-cipation in the profits and losses of B. Braun Melsungen AG in return for their investment of capital.

Profit participation rights are issued for a period of 10 years. Interest paid is equivalent to the dividends paid to shareholders of B. BraunMelsungen AG and repayment valuation corresponds to the development of the companies’ equity in accordance with commercial law. Profit participation capital includes the nominal value of € 1,375,000, the premium paid over par value of € 5,779,000 and the repaymentpremium of € 1,833,000.

The increased total amount of € 2,832,000 consists of € 330,000 in profit participation capital issued, € 1,599,000 premium and € 943,000repayment premium. Thus, as of December 31, 2004, a total of 250,015 profit participation rights were distributed occurring over the years as follows:

Year issued No. of shares

1999 35,9502001 32,9502002 59,1412003 62,0012004 59,973

250,015

This item also includes € 6,075,000 in profit participation capital (Genussrechte) raised by Avitum Austria GmbH, Maria Enzensdorf/Austria.This designated capital constitutes a contractual share in the profits and balance sheet assets of the corporation. The holder’s share of lossesis limited to the amount subscribed in profit participation capital.

(21) Reserves for Pensions and Similar Obligations

Pension reserves include current and future Pension Obligations, as well as Similar Obligations and benefits provided by the company.

Pension reserves are valued in each country in accordance with the actuarial principles in force, provided they follow a procedure similar tothat approved under German commercial law. For German companies, the actuarially computed part of the value of Pension Obligations isbased on an interest rate of 6%. Pension valuations are based on the guideline tables of Dr. Klaus Heubeck of 1998.

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(22) Other Reserves

The major reserve categories developed as follows:

Taxes Latent Employee Re- Contingent Warranties Other TotalTaxes muneration Liabilities

acc. DRS 10 and Benefits

€ ’000 € ’000 € ’000 € ’000 € ’000 € ’000 € ’000

January 1, 2003 59,066 10,443 127,535 55,776 7,222 25,181 285,223Foreign Currency Changes -3,187 0 -5,659 19 -365 -1,520 -10,712Change in Consolidation Entities 0 0 0 0 0 0 0Consumption -50,673 -1,693 -121,111 -26,707 -5,592 -22,192 -227,968Liquidation -9,435 0 -2,566 -5,583 -855 -1,823 -20,262Provision 56,813 43 130,508 33,829 7,051 28,862 257,106December 31, 2003/January 1, 2004 52,584 8,793 128,707 57,334 7,461 28,508 283,387

Foreign Currency Changes -904 0 -1,776 -887 -148 -317 -4,032Change in Consolidation Entities 134 0 1,478 0 15 892 2,519Consumption -47,579 0 -97,787 -24,861 -6,551 -29,847 -206,625Liquidation -7,080 0 -4,763 -5,222 -403 -1,321 -18,789Provision 41,838 1,667 98,213 23,619 6,844 32,212 204,393December 31, 2004 38,993 10,460 124,072 49,983 7,218 30,127 260,853

In creating other reserves, appropriate allowance was made for recognized risks and uncertain liabilities. The amount of these reserves isconsistent with sound commercial judgment.

Reserves for accrued taxes include amounts for this past fiscal year, and the periods for which tax audits have yet to be performed, as well as possible risks relating to tax audits in progress.

Reserves for employee remuneration and benefits consist mainly of provisions for annual bonuses, profit sharing, severances, earlyretirement benefits, part-time post-retirement jobs, vacation carried forward, accruals for remuneration earned and long-term serviceawards.

Other reserves are largely to cover warranties, potential losses from contracts, legal and consulting fees, deferred maintenance as well as numerous identifiable risks.

Reserve liquidation relate to numerous reserves set up in previous years and not completely utilized. Provision is assigned to the primary type of related expenditure

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(23) LiabilitiesTotal Thereof Thereof Thereof Total Thereof

Dec. 31, 2004 due within due within due within Dec. 31, 2003 due within< 1 Year 1-5 years > 5 years < 1 Year

€ ’000 € ’000 € ’000 € ’000 € ’000 € ’000

Liabilities to Banks 555,190 303,628 198,736 52,826 568,795 155,644Thereof secured by Mortgages (15,680) (16,840)

Prepayments received for Orders 659 659 0 0 1,464 1,464Trade Payables 114,314 113,351 963 0 132,306 131,594Liabilities arising from accepting

and issuing Promissory Notes 505 505 0 0 2,077 2,077Liabilities due to

Affiliated Companies 4 4 0 0 3 3Liabilities due to

Equity-Affiliated Companies 1,131 1,131 0 0 1,004 1,004Other Liabilities 281,578 207,131 63,012 11,435 273,673 176,629

Thereof Social Security-related (20,492) (20,492) (0) (0) (19,853) (19,485)Thereof Tax-related (32,877) (32,877) (0) (0) (35,509) (35,509)

953,381 626,409 262,711 64,261 979,322 468,415

Liabilities are valued at the repayable amount.

Other liabilities include loans by shareholders of B. Braun Melsungen AG totaling € 27,184,000 (previous year € 17,283,000) and loans,other than loans from banks, in the amount of € 80,430,000 (previous year € 88,644,000).

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Additional Notes

(24) Cost of Material

Sales and functional costs include the following cost of materials: 2004 2003

€ ’000 € ’000

Cost of Raw Materials, Supplies and Goods and Services Purchased 995,220 928,638

(25) Personnel Expenditures/Employees

The following payroll costs are listed as expenses in the income statement: 2004 2003

Personnel Expenditures € ’000 € ’000

Wages and Salaries 813,657 782,785Social Security Contributions 140,490 131,811Welfare and Pensions Costs 104,227 102,549Thereof Pensions (47,188) (44,809)

1,058,374 1,017,145

Employees (Annual average, including temporary staff)

Production 17,785 17,481Marketing and Sales 7,102 6,821Research and Development 1,005 1,174Maintenance and Administration 3,950 3,777

29,842 29,253Thereof employed by equity-affiliated companies 20 18

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(26) Contingent LiabilitiesDec. 31, 2004 Dec. 31, 2003

€ ’000 € ’000

Notes Payable 2,310 1,354Liabilities under Guaranty 5,183 27,489Liabilities under Warranty Agreements 6,817 5,481

14,310 34,324

(27) Other Financial LiabilitiesDec. 31, 2004 Dec. 31, 2003

€ ’000 € ’000Liabilities from Rental and Leasing Agreements

Due within 1 year 69,111 50,666Due within 1 to 3 years 97,057 72,109Due in over 3 years 200,804 117,966

366,972 240,741

Obligations from Current Capital Investments 22,497 67,647Total 389,469 308,388

The increase of rent and leasing liabilities in comparison to December 31, 2003 for the most part stems from the LIFE project of B. BraunMelsungen AG.

Aesculap AG & Co. KG, Tuttlingen, Germany has a long-term lease agreement for the Aesculap Academy and the Scheerer-Haus inTuttlingen, Germany for which it pays an annual rent of € 1.4 million through 2017. From the leasing agreement for the Benchmark Factory,Aesculap AG & Co. KG, Tuttlingen, Germany is committed to additional payments of € 1.8 million through 2012 and € 1.4 million through2023.

B. Braun Melsungen AG, Melsungen, Germany has leasing commitments in connection with the new Europa Building and the high-baystorage facility totaling € 1.9 million a year through 2011 and € 1.2 million through 2023.

Obligations arising from inheritable building rights agreements total 15,000 a year through 2037 and € 33,000 through 2052.

The decrease of liabilities from investment projects commenced can be attributed for the most part to investments associated with thegeneral management agreement between B. Braun Melsungen AG and LIFE Vermietungsgesellschaft mbH & Co. KG.

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(28) Derivatives

Derivatives are used to hedge against currency and interest rate risks in operation, investments and other financial transactions. Theyinclude, in particular, currency futures and options and interest rate swaps. At B. Braun, the use of derivatives is limited as a matter ofprinciple to risk coverage only. Company guidelines regulate their utilization.

These operations are transacted only with reputable banks. The overall credit risk for derivatives currently outstanding is not regarded assignificant. Losses that may be expected on the balance sheet date are covered by provisions to the amount of the negative market valueshould the derivative’s value fail to match that of the underlying financial instrument. Unrealized profits on market value premiums are not taken into account.

The negative market values refer to the retransfer amounts (repurchase value) of uncovered financial derivatives of the balance sheeteffective date.

Nominal volume Market valuesDec. 31, 2004 Dec. 31, 2003 Dec. 31, 2004 Dec. 31, 2003

€ ’000 € ’000 € ’000 € ’000

Currency Futures 123,881 127,870 5,384 2,910Interest Rate Swaps 146,699 147,797 -2,651 -5,820

270,580 275,667 2,733 -2,910

(29) Management and Supervisory Board Remuneration

Members of the Management Board received remunerations totaling € 4,306,000 of which the Chairman of the Management Board received € 340,000 in fixed remuneration and € 582,000 in variable, performance-related remuneration. Supervisory Board expensestotaled € 417,000. The sum of € 8,386,000 was reserved in pension provisions for former Management Board members and their surviving dependents. Pension payments totaled € 827,000.

The members of the Supervisory Board and the Management Board are listed on pages 4 and 5.

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Major Shareholdings of B. Braun Melsungen AG As of December 31, 2004 (figures in € ’000)

Company and Headquarter Location Equity Interest Subscribed Sales Employeesin percent1) Capital

GermanyAesculap AG & C0. KG, Tuttlingen 99.6 196,445 360,126 2,446Aesculap International GmbH, Tuttlingen2) 99.6 119,483 0 0Aesculap OrtecVertriebs GmbH, Berlin 99.6 1,973 16,468 16ALMO-Erzeugnisse E. Busch GmbH, Bad Arolsen 60.0 16,048 41,140 342BBD Aesculap GmbH, Tuttlingen 99.6 -3,693 34,202 97B. Braun Medicare GmbH & Co. KG, Melsungen 100.0 745 16,252 43B. Braun Medizintechnologie GmbH, Melsungen2) 94.0 87,853 124,269 568B. Braun Nordamerika Verwaltungsgesellschaft mbH, Tuttlingen 99.6 94,698 0 0B. Braun Surgical GmbH, Melsungen2) 100.0 154,465 0 0B. Braun Vet Care GmbH, Tuttlingen 99.6 980 10,004 11Saxonia Medical GmbH, Radeberg 94.0 4,218 13,220 158

EuropeAesculap Chifa SP.ZO.O., Nowy Tomysl/Poland 98.3 16,571 42,608 1,007Aesculap S.A.S., Chaumont/France 99.6 13,401 10,828 132Avitum Austria GmbH, Maria Enzersdorf/Austria 94.0 31,106 4,973 4B. Braun Austria Ges. m.b.H., Maria Enzersdorf/Austria 60.0 21,792 49,801 132B. Braun CAREX S.p.A., Mirandola/Italy 94.0 3,004 34,682 117B. Braun Holding AG, Emmenbrücke/Switzerland 51.0 115,696 0 0B. Braun Hospicare Ltd., Collooney Co Sligo/Ireland 100.0 7,422 11,906 87B. Braun Medical AB, Danderyd/Sweden 100.0 4,425 16,333 34B. Braun Medical AG, Emmenbrücke/Switzerland 51.0 77,197 136,992 714B. Braun Medical A/S, Copenhagen/Denmark 100.0 1,478 8,351 12B. Braun Medical A/S, Vestskogen/Norway 100.0 4,710 16,204 33B. Braun Medical B.V., Oss/Netherlands 100.0 7,748 36,863 113B. Braun Medical International S.L., Rubi/Spain 100.0 73,049 0 1B. Braun Medical Kft., Budapest/Hungary 60.0 18,085 41,611 622B. Braun Medical Lda., Barcarena/Portugal 100.0 30,618 41,729 121B. Braun Medical Ltd., Dublin/Ireland 100.0 4,791 17,626 46B. Braun Medical Ltd., Sheffield/England 99.8 21,272 84,647 355B. Braun Medical N.V./S.A., Diegem/Belgium 100.0 5,387 23,634 59B. Braun Medical OOO, St. Petersburg/Russia 51.0 1,446 13,197 76B. Braun Medical Oy, Helsinki/Finland 100.0 5,591 20,181 36B. Braun Medical S.A., Rubi/Spain 100.0 119,690 145,302 901B. Braun Medical S.A.S., Boulogne/France 100.0 69,518 209,160 1.311B. Braun Medical S.R.L., Timisoara/Romania 47.6 611 8,176 40B. Braun Medical s.r.o., Prague/Czech Republic 70.0 17,396 45,947 113B. Braun Milano S.p.A., Milan/Italy 100.0 7,585 72,668 136B. Braun Surgical S.A., Rubi/Spain 100.0 42,019 102,989 570EuroCare Rt., Budapest/Hungary 94.0 7,012 22,081 565

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As of December 31, 2004 (figures in € ’000)Company and Headquarter Location Equity Interest Subscribed Sales Employees

in percent 1) Capital

North and South AmericaAesculap Inc., Center Valley/USA 99.6 10,019 97,885 425B. Braun Aesculap de Mexico S.A. De C.V.Naucalpan de Juarez/Mexico 100.0 5,248 12,482 143B. Braun Medical Inc., Bethlehem/USA 94.2 -1,073 538,596 2,981B. Braun Medical Peru S.A., Lima/Peru 87.5 9,117 8,744 280B. Braun Medical S.A., Bogota/Columbia 99.6 6,038 10,966 186B. Braun Medical S.A., Santiago de Chile/Chile 46.2 7,689 16,172 128B. Braun of America Inc., Bethlehem/USA 94.2 51,443 0 0B. Braun of Puerto Rico Inc., Sabana Grande/Puerto Rico 94.2 49,490 78,447 622Burron Medical of Delaware Inc., Wilmington/USA 94.2 25,351 984 0CAPS Inc., Irvine/USA 94.2 14,740 53,456 294Laboratorios B. Braun S.A., São Gonçalo/Brazil 100.0 1,637 48,634 1,415

Asia and AustraliaB. Braun Aesculap Japan Co. Ltd., Tokyo/Japan 99.6 21,518 71,227 341B. Braun Australia Pty. Ltd., Bella Vista/Australia 99.6 9,052 27,100 76B. Braun International Pte. Ltd., Singapore 100.0 1,776 27,878 6B. Braun Korea Co. Ltd., Seoul/Republic of Korea 99.6 6,294 28,286 103B. Braun Medical (H.K.) Ltd., Hongkong/China 100.0 14,435 27,503 42B. Braun Medical (India) Pvt. Ltd., Bombay/India 100.0 1,717 8,174 231B. Braun Medical Industries Sdn. Bhd., Penang/Malaysia 100.0 65,857 115,072 4,028B. Braun Medical (Shanghai) International Trading Co. Ltd.,Shanghai/China 100.0 1,657 24,344 146B. Braun Medical Supplies Sdn. Bhd.,Petaling Jaya/Malaysia 100.0 11,825 24,434 116B. Braun Taiwan Co. Ltd., Taipei/Taiwan 100.0 3,199 11,928 58

AfricaB. Braun Medical (Pty) Ltd., Gauteng/South Africa 100.0 2,355 9,792 68

Other HoldingsBabolat VS, Lyon/France 3) 4) 27.7 19,972 52,526 159Schölly Fiberoptic GmbH, Denzlingen4) 27.9 5,219 17,100 168

1) Consolidated holding / 2) Companies with profit transfer agreement / 3) figures as of 08/31/2004 (12 months) / 4) Equity-Affiliated companies

These figures reflect financial statements compiled according to German law. Subscribed capital of foreign subsidiaries was converted at theaverage currency rate on December 31, while sales were converted at the annual currency rate for the year under review.

68

Report of the Supervisory Board (Translation)

The Supervisory Board of B. Braun Melsungen AG continued to perform its statutory duties and obligations in fiscal year 2004 in accordance with applicable law, articles of incorporation and by-laws and providing advice and overseeing management.

In three ordinary meetings, the Supervisory Board was informed by the Management Board about the company’s current businessdevelopment, its financial status and important investment projects.In light of the sustained weakness of the US Dollar, the developmentof the US subsidiary was again given special attention. Further, thereports regarding structural changes in the Hospital Care division in Germany, the major investments in the L.I.F.E IV solution factory in Melsungen and the strategic investment plans in China werespecial topics of the Supervisory Board’s deliberations. The Super-visory Board discussed and approved the 2005 budget in accordancewith the Articles of Incorporation and also accepted the risk reportsubmitted by the Management Board. There was no specific businessthat required the approval of the Supervisory Board according to thearticles of the company.

There was a regular exchange of information and ideas between the Chairman of the Supervisory Board and the Chairman of the

Management Board regarding important business developmentswithin the company and the group as well as regarding pendingdecisions.

The Personnel Committee of the Supervisory Board held twomeetings during the fiscal year. At its meeting on October 28, 2004 it appointed Dr. Heinz-Walter Große as Deputy Board Member effective April 1, 2005. Dr. Große will assume the func-tions as Member of the Board for Finances, Taxes and Control-ling from Mr. Niemann, who will retire effective March 31, 2005. At the same meeting, Dr. Martin Zügel requested that he not bere-appointed as of October 1, 2005. Dr. Zügel’s activities will be assumed by Dr. Lugan in addition to his current responsi-bilities.

On August 19, 2004, Mr. Rudolf Miele, a long-standing member of the Supervisory Board and member of the Personnel Committee of the Supervisory Board, unexpectedly passed away after a briefserious illness.

We mourn the loss of a highly respected colleague, who with hisexperience and expertise made major contributions to the company.

69

On October 13, 2004, the General Assembly of Shareholdersappointed Dr. August Oetker, the General Partner of Dr. AugustOetker KG in Bielefeld, as new member of the Supervisory Boardeffective immediately.

B. Braun Melsungen AG’s financial statements and the managementreport for fiscal year 2004, the consolidated financial statement andthe consolidated annual report were audited by PwC DeutscheRevision Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Kassel,Germany, which was appointed auditor by the General Assembly ofShareholders held on March 12, 2004. The auditor raised no objections and confirmed this in an unqualifiedaudit opinion.

The auditor participated in the deliberations of the SupervisoryBoard on the financial statements and consolidated financial statements and reported on the fundamental findings of its audit.The Supervisory Board’s review of the financial statements, themanagement report and the proposed allocations of B. BraunMelsungen AG’s balance sheet profits and the management’s annualreport agree with the findings of the auditor’s report in presentingno ground for objections. We have therefore approved the annual

financial statements compiled by the Management Board, which are thus duly established in accordance with § 172 of the GermanStock Corporation Law (AktG).

The Supervisory Board endorses the Management Board’s proposedallocation of balance sheet profits.

The Supervisory Board would like to express its gratitude to theManagement Board for a good and successful cooperation and tothe employees of the B. Braun Group for the achievements of thepast year.

Melsungen, Germany March 2005The Supervisory Board

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Asset structure Dec. 31 in % Dec. 31 in % Dec. 31 in % Dec. 31 in % Jan. 1 in % Dec. 31 in %2001 2002 2003 2004 2004 2004HGB4) d HGB HGB HGB IAS/IFRS2)M M M IAS/IFRS3)M M

Intangible Assets 57.0 2.6 47.1 2.2 67.4 3.1 79.6 3.5 83.9 3.3 96.0 3.8Tangible Assets 901.0 41.9 860.7 39.9 793.4 36.3 816.7 36.2 1,074.6 42.5 1,106.0 43.4Financial Assets 23.1 1.1 27.2 1.2 32.6 1.5 24.9 1.1 32.0 1.3 24.0 1.0Fixed Assets 981.1 45.6 935.0 43.3 893.4 40.9 921.2 40.8 1,190.5 47.1 1,226.0 48.2

Inventories 505.1 23.5 490.8 22.8 513.7 23.5 503.3 22.3 533.6 21.1 523.0 20.5Receivables1) 596.5 27.7 644.9 29.8 656.1 30.0 750.3 33.2 712.5 28.2 743.0 29.2Securities, Cash 69.6 3.2 88.1 4.1 122.0 5.6 83.6 3.7 92.2 3.6 54.0 2.1Total Assets 2,152.3 100.0 2,158.8 100.0 2,185.2 100.0 2,258.4 100.0 2,528.8 100.0 2,546.0 100.0

Capital Structure

Subscribed Capital 110.0 5.1 110.0 5.2 150.0 6.9 150.0 6.6 150.0 5.9 150.0 5.9Other Consolidated Equity 382.5 17.8 424.0 19.5 407.7 18.7 503.9 22.3 440.7 17.4 562.0 22.1Minority Interests 91.3 4.2 79.5 3.6 78.2 3.5 89.9 3.9 88.9 3.5 100.0 3.9Equity 583.8 27.1 613.5 28.4 635.9 29.1 743.8 32.9 679.6 26.9 812.0 31.9

Provisions/Reserves 516.8 24.0 558.7 25.9 568.8 26.0 557.7 24.7 612.3 24.2 614.0 24.1

LiabilitiesLiabilities to Banks 708.8 32.9 543.4 25.2 568.8 26.0 555.2 24.5 660.1 26.1 555.0 21.7Other Liabilities1) 342.9 16.0 443.2 20.5 411.7 18.9 401.7 17.9 576.8 22.8 565.0 22.3Total Capital 2,152.3 100.0 2,158.8 100.0 2,185.2 100.0 2,258.4 100.0 2,528.8 100.0 2,546.0 100.0

1) including prepaid expenses2) IAS/IFRS opening balance 3) estimated values4) German Commercial Code

Four-Year Overview (Figures in million €, unless otherwise indicated)

71

Investments/Depreciation 2001 in % 2002 in % 2003 in % 2004 in %

Net Investments in Tangible Assets 148.3 158.7 149.6 159,4Depreciation of Tangible Assets 125.6 138.6 143.5 138,7Growth rate in % 118.1 114.5 104.3 114,9

Sales/Results

Sales 2,639.6 100.0 2,746.9 100.0 2,646.7 100.0 2,793.2 100.0Change versus prior Year in % 8.2 4.1 -3.6 5.5Results after Functional Costs 228.2 8.6 232.8 8.5 182.8 6.9 209.8 7.5Operating Profit 192.2 7.3 201.8 7.3 173.1 6.5 213.1 7.6Results before Income Taxes 141.3 5.4 164.6 6.0 186.1 7.0 179.2 6.4Consolidated Annual Net Profit 70.5 2.7 111.5 4.1 112.7 4.3 121.6 4.4Earnings per Share in € 3.10 5.01 5.26 5.56

Cash flow

Cash flow 234.7 283.6 294.4 305.4in % of Group Revenues 8.9 10.3 11.1 10.9in % of Balance sheet 10.9 13.2 13.7 14.2

Personnel Expenses/Employees

Wages, Social Security and Benefit Contributions Pension/Insurance 972.4 1,019.1 1,017.1 1,058.4

Employees (Annual Average) 27,724 28,765 29,253 29,842Personnel Expenses per Employee in € 35,074 35,428 34,769 35,467

72

Executive Management

Hospital Care Division

Patryck BreitburdB. Braun Medical S.A.S.,France

Jesus Donado-MazarSales Region II,Spain

Dr. Heinz-Walter GroßeSales Region IV,Austria

Michael HastProduction,Germany

Dr.-Ing. Hans-Otto MaierResearch and Development,Germany

Roland MartiB. Braun Medical AG,Switzerland

David OatesSales Region III,Great Britain

Markus StrotmannStrategic Marketing International, Germany

Aesculap Division

Dr. Luigi BoggioSales Region II,Italy

Christof HennigfeldMarketing and Sales,Germany

Hans HuxSales Region IV,Great Britain

Dr. Joachim SchulzProduction,Germany

Dr. Harald StallforthResearch and Development,Germany

Otmar WawrikSales Region I,Germany

Dieter WunderlichProduction Sutures,Spain

OPM Division

Uwe AlterMarketing and DevelopmentSales Region I, II, VI and VII, Germany

Jean-Philippe Cottenceau Marketing and Development,Sales Region III and IV, Production,France

MedTech Division

Dr. Andrea BertramsMarketing and Development Apheresis,Germany

Dr. Michael JuchemMarketing and Development Dialysis,Germany

Hans-Joachim KolmerSales,Germany

Corporate Divisions

Dr. Annette BellerFinance, Taxes and Controlling, Finance and Accounting, Taxes, Germany

Norbert FeldhausAesculap Division, Human Resources,Germany

Dr. Heinz-Walter GroßeFinances, Taxes and Controlling, Controlling South-East EuropeAustria

73

Karl-Heinz LöwInformation Technology (IT),Germany

Volker LudwigHuman Resources Development and LegalAffairs, Human Resources Management and Benefits,Germany

Jürgen SauerwaldHuman Resources Development and LegalAffairs, Management Development,Germany

Dr. Michael SchneiderAesculap Division, Management andControlling, Germany

Jürgen VöllkopfLogistics and Supply Chain,Germany

Andreas WaldeFinances, Taxes and Controlling, Central Management and Controlling,Germany

North and South America

Willem J. deGoedeProduction,North America

Charles A. DiNardoHuman Resources and Legal Affairs, North America

Bruce A. HeugelFinance, Taxes and Controlling/Logistics,North America

Dirk KuyperAesculap Division,North America

Eric SteenSales,North America

Timothy T. RichardsMarketing,North America

Dragan SoljakovskiSales and Marketing,Laboratórios B. Braun S.A.,South America

Murilo MedeirosFinance, Taxes and Controlling, Laboratórios B. Braun S.A.,South America

Directors of Asia/Pacific Region

Michael BeckerFinance, Taxes and Controlling, B. Braun Medical Industries,Sdn. Bhd., Malaysia

HaeDong KimSales and Marketing,B. Braun Medical Industries,Sdn. Bhd., Malaysia

Christian HildebrandtB. Braun Medical (H. K.) Ltd.,B. Braun Medical PRC, Shanghai, China

Yenni LimLogistics and Supply Chain Management,B. Braun Medical Industries,Sdn. Bhd., Malaysia

Takashi MikamiB. Braun Aesculap Japan Co. Ltd.,Japan

Executive Board Departments

PD Dr. Martin KirschnerMedical Sciences,Germany

Dr. Bernadette Tillmanns-EstorfManagement Communication,Germany

Published by:

B. Braun Melsungen AGWerkanlage Pfieffewiesen Europagebäude34212 MelsungenGermanyTel + 49-(0) 56 61-71-0Fax + 49-(0) 56 61-71-45 67www.bbraun.com

For further information contact:

Dr. Bernadette Tillmanns-EstorfSenior Vice PresidentWerkanlage Pfieffewiesen Europagebäude34212 MelsungenGermanyTel +49-(0)56 61-71-38 01Fax +49-(0)56 61-71-35 69E-Mail: [email protected]

List of illustrations:

Cover “The Anatomy Lecture ofDr. Nicolaes Tulp,” Rembrandt, 1632, Mauritshuis, The Hague

p. 2 “School of Athens,”Raphael, 1510–1511, Part of Stanza della Segnatura in the Vatican, Rome

p. 20 First public demonstration of a successful operation under anesthesia (“Ether Day”), Robert Hinckley, 1882, Francis A. Countway Library of Medicine, Boston Medical Library, Cambridge

p. 26 Illustration Ignaz Philipp Semmelweis:Robert Allen Thom (1915–1979), in Great Moments in Medicine,Parke, Davis & Company 1961/1966

p. 38 Antonio da Budrio, teacher from Bologna in the early 15th century, Biblioteca Angelica, Rome

74

Imprint

Ertragsstruktur

2004 2003 2002

Mio. € % Mio. € % Mio. € %

Umsatzerlöse 2.793,2 100,0 2.646,7 100,0 2.746,9 100,0

Kosten der umgesetzten Leistungen 1.518,5 54,4 1.386,8 52,4 1.462,5 53,2

Bruttoergebnis vom Umsatz 1.274,7 45,6 1.259,9 47,6 1.284,4 46,8

Vertriebskosten 782,8 28,0 745,5 28,1 726,2 26,5

Allgemeine Verwaltungskosten 188,0 6,7 226,2 8,6 222,7 8,1

Forschungs- und Entwicklungskosten 94,1 3,4 105,4 4,0 102,7 3,7

Ergebnis nach Funktionskosten 209,8 7,5 182,8 6,9 232,8 8,5

Sonstige betriebliche Erträge/Aufwendungen 3,3 0,1 -9,7 -0,4 -31,0 -1,1

Operatives Ergebnis 213,1 7,6 173,1 6,5 201,8 7,4

Finanzergebnis -33,9 -1,2 13,0 0,5 -37,2 -1,4

Ergebnis der gewöhnlichen Geschäftstätigkeit 179,2 6,4 186,1 7,0 164,6 6,0

Steuern vom Einkommen und Ertrag 56,2 2,0 72,7 2,7 52,4 1,9

Ausschüttung auf das Genussrechtskapital -1,4 0,0 -0,7 0,0 -0,7 0,0

Konzernjahresüberschuss 121,6 4,4 112,7 4,3 111,5 4,1

2004 2003 Veränderungen

Mio. € Mio. € %

Umsatzerlöse 2.793,2 2.646,7 5,5

EBIT 212,8 221,2 -3,8

Konzernjahresüberschuss 121,6 112,7 7,9

Umsatzrendite nach Steuern (%) 4,4 4,3 2,3

Investitionen in Sachanlagen und immaterielle Vermögensgegenstände 183,3 194,8 -5,9

Abschreibungen auf Sachanlagen und immaterielle Vermögensgegenstände 152,7 155,8 -2,0

Eigenkapitalquote (%) 32,9 29,1 13,1

Eigenkapitalquote unter Berücksichtigung von Aktionärsdarlehen (%) 34,1 29,9 14,0

Netto-Cash-Flow 305,4 294,4 3,7

Personalaufwand 1.058,4 1.017,1 4,1

Zahl der Mitarbeiter (durchschnittliche Zahl inkl. Aushilfen) 29.842 29.253 2,0

B. Braun auf einen Blick

Umsatzerlöse des B. Braun-Konzerns im Geschäftsjahr 2004(Angaben in Millionen €)

Hospital Care 1.345,9 (+3,9%)

Aesculap 811,8 (+4,0%)

OPM 374,3 (+4,9%)

Medizintechnik 248,7 (+24,0%)

Sonstige Umsätze 12,5 (-1,1%)

Gesamt: 2.793,2

Umsatzerlöse des B. Braun-Konzerns im Geschäftsjahr 2004(Angaben in Millionen €)

Europa 1.675,8 (+6,7%)

Nord- und Südamerika 782,2 (+4,7%)

Asien, Australien 308,6 (+1,8%)

Afrika 26,6 (+5,7%)

Gesamt: 2.793,2

0,566dnalhcstueDnovad

Auf einen Blick Glossar

Umsatz nach SpartenUmsatz nach Regionen

ABS (Asset Backed Securities)Das Grundprinzip einer ABS-Finanzierung be-steht darin, dass ein Unternehmen einen Poolvon gleichartigen Forderungen in eine dafürgegründete Zweckgesellschaft ausgliedert undals Grundlage für zu emittierende Wertpapierenutzt. ABS sind somit Wertpapiere („securi-ties“), deren Zahlungsansprüche durch einenzugrundeliegenden Forderungspool („assets“)gedeckt („backed“) sind.

AktivaSumme der Vermögenswerte eines Unter-nehmens

Cash-FlowZahlungswirksamer Saldo aus Mittelzuflussund -abfluss.

BonitätDie Bonität beschreibt die Kreditwürdigkeitund Zahlungsfähigkeit eines Schuldners.

EBITAbkürzung für „Earnings Before Interest andTaxes“; Ergebnis vor Zinsen und Steuern.

EigenkapitalquoteKennzahl, die das Eigenkapital ins Verhältnis zuden gesamten Vermögenswerten setzt.

ERP-SystemDie Abkürzung steht für „Enterprise ResourcePlanning“. Über ein ERP-System werden Ab-läufe wie Herstellung, Logistik, Warenvertei-lung, Inventur, Rechnungen etc. abgewickelt.

FunktionskostenHierzu gehören Kosten der umgesetztenLeistungen, Forschungs- und Entwicklungs-kosten, Vertriebskosten sowie allgemeineVerwaltungskosten.

GenussrechteGenussrechte sind Vermögensrechte, die derGenussrechtsinhaber von der Gesellschafterhält, die die Genussrechte herausgibt. Der Genussschein ist die Urkunde, in der dieGenussrechte verbrieft sind.

GPOSoftware zur Geschäftsprozessoptimierung(GPO).

IFRS (International Financial Reporting Standards) Internationale Bilanzierungsstandards, nachdenen kapitalmarktnotierte Unternehmen mitSitz in der Europäischen Union ab 2005 ihreKonzernabschlüsse aufstellen müssen. Fürnicht börsennotierte Unternehmen besteht inDeutschland ein Wahlrecht.

In-House-Cash-CenterZentrale Stelle im Konzern, über die der Zahlungsverkehr zwischen den einzelnenUnternehmenseinheiten und mit externen Geschäftspartnern abgewickelt wird. Sie dient der Liquiditätssteuerung innerhalbdes Konzerns (virtuelle Hausbank).

Incentive SchemeBeteiligung von Führungskräften an der Wert-entwicklung eines Einzelunternehmens oderKonzerns, um zusätzliche Leistungsanreize zuschaffen. Gilt als attraktive Alternative zu ei-nem Stock Option-Modell.

Joint Venture (engl. = Gemeinschaftsunternehmen) SpezielleForm zwischenbetrieblicher Kooperation.

RisikomanagementSystematische Vorgehensweise, um poten-tielle Risiken zu identifizieren, zu bewertenund Maßnahmen zur Risikohandhabung aus-zuwählen und umzusetzen.

GB04_umschlag_streifen_ges 17.03.2005 15:32 Uhr Seite 2

Income Structure

2004 2003 2002

€, millions % €, millions % €, millions %

Sales 2,793.2 100.0 2,646.7 100.0 2,746.9 100.0

Costs of Goods Sold 1,518.5 54.4 1,386.8 52.4 1,462.5 53.2

Gross Profit on Sales 1,274.7 45.6 1,259.9 47.6 1,284.4 46.8

Selling Expenses 782.8 28.0 745.5 28.1 726.2 26.5

General and Administrative Expenses 188.0 6.7 226.2 8.6 222.7 8.1

Research and Development Costs 94.1 3.4 105.4 4.0 102.7 3.7

Profit after Functional Costs 209.8 7.5 182.8 6.9 232.8 8.5

Other Operational Income/Expenses 3.3 0.1 -9.7 -0.4 -31.0 -1.1

Operating Income 213.1 7.6 173.1 6.5 201.8 7.4

Financing Income / (Expense) -33.9 -1.2 13.0 0.5 -37.2 -1.4

Profits from Ordinary Business Operations 179.2 6.4 186.1 7.0 164.6 6.0

Taxes on Income and Revenue 56.2 2.0 72.7 2.7 52.4 1.9

Dividend Paid on Profit Participation Rights -1.4 0.0 -0.7 0.0 -0.7 0.0

Consolidated Annual Net Profit 121.6 4.4 112.7 4.3 111.5 4.1

2004 2003 Changes

€, millions €, millions %

Sales 2,793.2 2,646.7 5.5

Operating Profit (EBIT) 212.8 221.2 -3.8

Consolidated Annual Net Profit 121.6 112.7 7.9

Net Operating Margin % (after Taxes) 4.4 4.3 2.3

Investments in Fixed Assets and Intangibles 183.3 194.8 -5.9

Depreciation of Fixed Assets and Intangibles 152.7 155.8 -2.0

Equity Ratio (%) 32.9 29.1 13.1

Equity Ratio including Loans from Shareholders (%) 34.1 29.9 14.0

Net Cash Flow 305.4 294.4 3.7

Payroll Expenditure 1,058.4 1,017.1 4.1

Employees (Annual average including temporary staff) 29,842 29,253 2.0

B. Braun at a Glance


Hospital Care 1,345.9 (+3.9%)

Aesculap 811.8 (+4.0%)

OPM 374.3 (+4.9%)

MedTech 248.7 (+24.0%)

Other Sales 12.5 (-1.1%)

Total: 2,793.2


Europe 1,675.8 (+6.7%)

North and South America 782.2 (+4.7%)

Asia, Australia 308.6 (+1.8%)

Africa 26.6 (+5.7%)

Total: 2,793.2

Of which Germany 665.0

At a Glance Glossary

Sales by Division Sales by Region

ABS (Asset Backed Securities)The fundamental principle of ABS financinglies in the fact that a company outsources apool of similar receivables to form a companyfor that specific purpose and uses it as the basis for securities to be issued. ABS are thussecurities whose claim to payment are backedby a pool of assets.

AssetsTotal sum of the assets of a company.

Cash FlowThe balance of the inflow and outflow offunds.

Credit Rating The credit rating describes the creditworthinessand ability of a debtor to repay his debts.

EBITAbbreviation for “Earnings Before Interest andTaxes”.

Equity Ratio The amount of equity in relation to total assets.

ERP SystemAn ERP (Enterprise Resource Planning) systemis used to handle processes such as manufac-turing, logistics, goods distribution, invento-ries, invoicing, etc.

Functional CostsFunctional costs include the costs of goods sold,research and development costs, selling expenses, as well as general and administrationexpenses.

IFRS Abbreviation for International Financial Reporting Standards. International standards for preparing balancesheets and other financial reports, according to which the companies listed on stock exchanges and having their headquarters inthe European Union, are required to preparetheir consolidated financial statements effec-tive in 2005. Companies in Germany that arenot listed on the stock exchange have a rightto choose which system they use.

Incentive PlanInvolvement of managers in developing thevalue of an individual company or group in order to create additional incentives. It isviewed as an attractive alternative to stockoption models.

In-House Cash CenterCentral office in the group that handlespayments made between the individual groupcompanies and with external business part-ners. It serves the liquidity management within the group (virtually an in-house bank).

Joint Venture Special form of co-operation between compa-nies.

Participation RightsParticipation rights are pecuniary rights thatthe holder receives from the company issuingsuch rights. The participation certificate provides confirma-tion of the holder’s participation rights.

Risk ManagementThe systematic process of identifying and evaluating potential risks, and the selectionand implementation of measures to handlesuch risk.

Our principle has a long-standing tradition, a dynamic presenceand a highly promising future.

Annual Report 2004Sharing Expertise

or centuries, medical knowledge has been preserved, improved and passed

on to the next generation. Each development in modern medicine embodies a

piece of past knowledge without which the current standards of hygiene, anes-

thetics and surgical techniques would have been unimaginable. For centuries, the

transfer of knowledge has been ongoing, becoming more and more differentiat-

ed. It is a tradition to which the B. Braun family-owned business feels especially

committed, under the guiding principle of ”Sharing Expertise.”

Thus, our commitment: To share, enrich and continuously develop health care

related knowledge through dialogue with experts and users throughout the world.

This commitment is both a demand and, at the same time, a dynamic process. It

is based on the conviction that the internal and external exchange of knowledge

creates a basis for practice-oriented solutions and ensures the sustainability of

future medical practice.

Glossary Sharing Expertise

AnesthesiaLiterally: Insensitivity, in the broader sense: A means of eliminating pain either locally orgenerally by means of general narcosis,regional or local anesthesia in order to performa specific intervention on the patient.

CardiologyA branch of internal medicine concerned withthe diagnosis and treatment, prophylaxis andrehabilitation of heart or circulatory relatedillnesses.

CatheterA catheter is a rigid or flexible pipe- or tube-shaped instrument that is inserted into thehollow organs, for example a bladder catheter.

ChemotherapyUse of special substances to inhibit the growthof pathogens and tumor cells in the organism.

ChirotherapyTreatment of malfunctions of the locomotorapparatus using the hands to manipulate theaffected area.

DialyzerA special filter utilized in hemodialysis to re-move toxic substances and fluid from thepatient’s blood. The dialyzer is often referred to as an “artificial kidney.”

Extracorporeal Blood TreatmentA treatment whereby the blood is cleansedoutside of the body by means of a directconnection from the circulatory system to an“artificial kidney” (dialyzer).

Hemodialysis Blood purification (see also extracorporealblood treatment).

ImplantA substance or component that is introducedinto the human body to take the place of aspecific function, either for a limited period oftime or for a lifetime.

IncisionSurgical cut.

MRSAThe abbreviation for methicillin resistantStaphylococcus aureus, pathogens of bacterialinfectious diseases.

OncologyA branch of internal medicine concerned withthe origin and treatment of tumors and tumor-related diseases.

OrthopedicsA branch of medicine concerned with theorigin, prevention and treatment of conge-nital or acquired deficiencies and anomalies in the form and function of the locomotorapparatus.

Physiotherapy Natural healing science in the broadest senseof the term, in which the natural healingpowers of the body are consciously activated.

SepsisBlood poisoning

SurgeryLiterally: Hand craftsmanship, wound pro-cedure; a branch of medicine concerned withdiseases of the organs requiring operativetreatment.

Unser Prinzip hat eine lange Tradition,eine dynamische Gegenwartund eine vielversprechende Zukunft.

Geschäftsbericht 2004Sharing Expertise

eit Jahrhunderten werden medizinische Erkenntnisse bewahrt, erneuert und

an folgende Generationen weitergegeben. In jeder Entwicklung der modernen

Medizin findet sich ein Stück vergangenes Wissen, ohne das die heutigen

Standards in der Hygiene, der Anästhesie und den operativen Techniken nicht

vorstellbar wären. Dieser Wissenstransfer hat sich über die Jahrhunderte bewährt

und stetig weiter ausdifferenziert. Eine Tradition, der sich B. Braun als Familien-

unternehmen mit dem Prinzip „Sharing Expertise“ besonders verpflichtet fühlt.

Deswegen geben wir ein Versprechen: Wissen, das der Gesundheit dient, zu

teilen, anzureichern und im weltweiten Dialog mit Experten und Anwendern

kontinuierlich weiterzuentwickeln. Dieses Versprechen ist Anspruch und dyna-

mischer Prozess zugleich. Es beruht auf der Überzeugung, dass der interne und

externe Austausch von Wissen die Basis für praxisorientierte Lösungen schafft

und die Zukunftsfähigkeit der Medizin nachhaltig sichert.

Glossar Sharing Expertise

AnästhesieWörtlich: Unempfindlichkeit; im weiterenSinne: Bezeichnung für lokale oder zentraleSchmerzausschaltung zur Durchführungbestimmter Eingriffe am Patienten mittelsAllgemeinanästhesie (Narkose), Regional- oder Lokalanästhesie.

ChemotherapieEinsatz von speziellen Substanzen zur Hem-mung von Infektionserregern und Tumorzellenim Organismus.

ChirotherapieTherapie von funktionellen Störungen am Be-wegungsapparat mit Hilfe von Handgriffen.

ChirurgieWörtlich: Handtätigkeit, Wundarzneikunst;medizinisches Fachgebiet der operativenBehandlung organischer Leiden.

DialysatorBesonderer Filter, der während der Hämo-dialyse zur Entfernung toxischer Substanzenund überschüssigen Wassers aus dem Blutverwendet wird. Der Dialysator wird auch als„künstliche Niere“ bezeichnet.

Extrakorporale BlutbehandlungAußerhalb des Körpers erfolgende Blut-behandlung mittels einer direkt an den Blutkreislauf angeschlossenen „künstlichenNiere“ (Dialysator).

HämodialyseBlutwäsche (siehe auch extrakorporale Blut-behandlung).

ImplantatStoff oder Teil, das zur Erfüllung bestimmterZusatzfunktionen für einen begrenztenZeitraum oder auf Lebenszeit in den mensch-lichen Körper eingebracht wird.

InzisionChirurgischer Einschnitt.

KardiologieTeilgebiet der inneren Medizin, das dieDiagnostik und Behandlung, Prophylaxe undRehabilitation der Herz- und Kreislauf-erkrankungen umfasst.

KatheterEin Katheter ist ein röhren- oder schlauch-förmiges, starres oder flexibles Instrument zum Einführen in Hohlorgane, z. B. Blasen-katheter.

MRSAErreger von bakteriellen Infektionskrankheiten.

OnkologieTeilgebiet der Inneren Medizin, das sich mit derEntstehung und Behandlung von Tumoren undTumor bedingten Krankheiten befasst.

OrthopädieFachgebiet der Medizin, das sich mit derEntstehung, Verhütung und Behandlungangeborener oder erworbener Form- undFunktionsfehler des Bewegungsapparatesbefasst.

PhysiotherapieNaturheilkunde im weitesten Sinne, wobei bewusst die natürlichen Heilungskräfte im Körper angesprochen werden.

SepsisBlutvergiftung

GB04_umschlag_streifen_ges 17.03.2005 15:32 Uhr Seite 1

Annual Report 2004 Sharing Expertise

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